Tuesday, August 18, 2009

Auto Body Shop's Failure to Send 5-Day Notice Precludes Recovery of Storage Charges

Matter of Vaul Trust v. Brothers II Auto Body Shop, Inc.
(Sup. Ct., Albany Co., decided 8/12/2009)

Practicing insurance coverage law can be fun for the new discoveries it occasions.  Like this morning.  I did not know there was an entire statutory article devoted to mold liens (the tool and die variety, not fungi) in New York's Lien Law. Or one for the "service" of stallions or bulls.

I headed over to the Lien Law this morning for a link to the garageman's lien section, Lien Law § 184, because, believe it or not, auto insurers and vehicle owners and lessors occasionally become embroiled in disputes with auto body shops over the amount and validity of their asserted liens on vehicles towed to and stored at their facilities.  Article 9 of the Lien Law provides for the enforcement of liens on personal property, or "chattel", and section 201-A enables a vehicle's owner or lienholder to commence a special proceeding to determine the validity and amount of the asserted garageman's lien. 

Petitioners in this case were the lienholders of a 2007 Cadillac that respondent Brothers II Auto Body Shop of South Fallsburg, New York (near Monticello) intended to sell to satisfy its claimed $3,602 garageman's lien. Brothers II had originally submitted an invoice to petitioners for $6,323.40, which included towing charges and storage fees at $75 per day.  On May 8, 2009, Brothers II served petitioners with a Notice of Lien and Sale pursuant to Lien Law § 201, and petitioners then commenced this special proceeding to determine the validity of the claimed garageman's lien. As is often the case, the petitioners did not dispute an obligation to pay the towing charges, but rather contested the amount of the claimed storage fees.  

Petitioners venued the special proceeding in Albany Supreme Court and had the good fortune of pulling Justice Joseph Teresi, who has previously decided garageman's lien issues and proceedings, as the assigned judge.  Judge Teresi began his decision with the fundamental principles governing this  type of special proceeding:
Lien Law §184, which authorizes a garageman's lien for the towing and storage of motor vehicles, "is in derogation of common law and thus is strictly construed." (Grant Street Const., Inc. v. Cortland Paving Co., Inc., 55 AD3d 1106, 1107 [3d Dept. 2008]; Slank v. Sam Dell's Dodge Corp., 46 AD2d 445 [3d Dept. 1975]). "In response to a challenge to [a garageman's) lien pursuant to Lien Law §201-a, the lienor must make a prima facie showing ofthe validity of the lien and entitlement to the amount claimed." (BMW Bank of North America v. G&B Collision Center, Inc., 46 AD3d 875, 876 [2d Dept. 2007]).
Lien Law § 184(2) provides that:
A person who tows and stores a motor vehicle at the request of a law enforcement officer authorized to remove such motor vehicle shall be entitled to a lien for the reasonable costs of such towing and storage, provided that such person, within five working days from the initial towing, mails to the owner of said motor vehicle a notice by certified mail return receipt requested that contains the name of the person who towed and is storing said motor vehicle, the amount that is being claimed for such towing and storage, and the address and times at which said motor vehicle may be recovered. Such notice shall further state that the person mailing said notice claims a lien on said motor vehicle and that said motor vehicle shall be released to the owner thereof or his or her lawfully designated representative upon full payment of all charges accrued to the date that said motor vehicle is released. A person who mails the foregoing notice within said five day period shall be entitled to a lien for storage from and after the date of initial towing, but a person who fails to mail such notice within said five day period shall only be entitled to a lien for storage from and after the date that the notice was mailed. A failure to mail such notice in a timely fashion shall not affect a lien for towing.  (Emphasis added.)
Because Brothers II had not mailed a Lien Law § 184(2) notice to the vehicle's owner and lienholder either within five days of the vehicle's initial towing or at all, the court held that it had no valid lien for and was not entitled to recover storage fees.  Nor did Brother II's May 8th notice of lien and sale constitute sufficient notice under § 184(2). 

On petitioners' concession that the proper towing charge was $232, the court held that Brothers II's valid lien on the vehicle was limited to that amount.

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