In the ongoing struggle between the trucking industry and the towing industry in Virginia over excessive towing and recovery bills, a state Supreme Court decision from 2020 has begun to figure heavily into the debate of which charges are, and are not, recoverable by a towing company. That one decision, T. Musgrove Construction Company v. Young, 840 S.E.2d 337 (Va. 2020), looms particularly large in the legal landscape, as it is, to date, the Supreme Court of Virginia’s only decision relating to charges for which a towing company can recover for its services when it is called to a crash scene by state authorities. As such, Musgrove deserves some close scrutiny. Of particular interest is how Musgrove is to be interpreted in conjunction with the statute on which towing companies typically base their demands for payment, Code of Virginia § 46.2-1212.1, and whether the statute provides a right of action to collect on towing invoices.
Musgrove in Context
Code section 46.2-1212.1 provides, in part, that “[a]s a result of a motor vehicle accident or incident, the Department of State Police . . . may, without the consent of the owner or carrier, remove . . . [a] vehicle, cargo, or other personal property that has been (i) damaged or spilled within the right-of-way or any portion of a roadway in the primary state highway system and (ii) is blocking the roadway or may otherwise be endangering public safety. . . .” Va. Code Ann. § 46.2-1212.1.A. The statute further provides that the “owner and carrier, if any, of the vehicle, cargo, or personal property removed or disposed of under the authority of this section shall reimburse . . . individuals or entities acting pursuant to a contract with the Department of Transportation for, or that includes, traffic incident management services as defined in [Code of Virginia section] 46.2-920.1 . . . for all costs incurred in the removal and subsequent disposition of such property.” Va. Code Ann. § 46.2-1212.1.C. Code of Virginia section 46.2-920.1 provides, in turn, that “[f]or purposes of this chapter and Chapter 12 (§ 46.2-1200 et seq.) . . . ‘traffic incident management services’ means services provided in response to any event or situation on or affecting the Department of Transportation right-of-way that impedes traffic or creates a temporary safety hazard.” Va. Code Ann. § 46.2-920.1.B. Under Code section 46.2-1212.1, therefore, a towing company can only recover charges to the extent the charges are for “traffic incident management services” by which the trucking company was benefited.
The extent to which Code section 46.2-1212.1 factored into the Supreme Court’s decision in Musgrove has generated some debate, with towing companies generally arguing that the decision should be limited to its somewhat unusual facts (thus making it inapplicable to virtually any other situation), and trucking companies arriving at various interpretations of the decision. Drilling down into Musgrove’s facts, the appellate record, and the law as enunciated by the Supreme Court are therefore critical to arriving at an accurate understanding of the case and its import.
In Musgrove, the court considered an appeal from the trial court’s judgment in favor of a towing company, Foxfire Towing, for its recovery of one of Musgrove’s trucks involved in a single-vehicle crash that resulted in the truck overturning on a public highway and spilling a load of raw logs. The truck accident at issue in Musgrove occurred while the truck was being used by the son of T. Musgrove Construction Company’s owner for a purpose unrelated to the company’s business. Foxfire was called to the scene by another towing company that the police had called in, as the first towing company lacked the equipment necessary for the job. Foxfire then responded, and it billed Musgrove for its services. Musgrove declined to pay, and Foxfire then sued Musgrove to recover payment for charges that included, inter alia, an “administration fee” covering “paperwork, clerical work, answer[ing] . . . phone calls . . . clean[ing] . . . vehicles . . . [and] clos[ing] . . . gates. . . .” Musgrove, 840 S.E.2d at 343. The case was tried to a jury, and the trial court ultimately entered a judgment in Foxfire’s favor for $58,595.11. See id. at 340. Musgrove then appealed.
The Supreme Court affirmed the trial court’s decision, in part, and reversed it, in part. While recognizing that Code of Virginia section 46.2-1212.1 “allows the State Police or local law enforcement agency to remove ‘a vehicle, cargo, or other personal property that has been (i) damaged or spilled within the right-of-way or any portion of a roadway in the primary state highway system and (ii) is blocking the roadway or may otherwise be endangering public safety,’” id. at 341 n.4 (quoting Va. Code Ann. § 46.2-1212.1(A)(1)), the Supreme Court analyzed Foxfire’s rights under the equitable doctrine of unjust enrichment, or quasi-contract. The court observed that “[w]hen [a] defendant has not requested the plaintiff’s services, a plaintiff’s claim is for unjust enrichment” rather than quantum meruit. Id. at 341. In such circumstances, the law implies a contract, or “quasi-contract,” placing the provider of services and the recipient of those services in a relationship of privity just as if they had entered into an express contractual agreement. See id. at 341 n.3. See also Norfolk v. Norfolk County, 91 S.E. 820, 824 (Va. 1917) (privity is implied by law where the court finds a quasi-contract to exist). In these instances, “the legal duty imposed [by law] upon the defendant defines the contract.” Spectra4, LLP v. Uniwest Comm’l Realty, Inc., 772 S.E.2d 290, 294 (Va. 2015) (cit. omit’d).
To prove a right to recover from a defendant under the doctrine of unjust enrichment, a plaintiff must prove that it “conferred a benefit on [the] defendant . . . [the] defendant knew of the benefit and should reasonably have expected to repay [the] plaintiff . . . and . . . [the] defendant accepted or retained the benefit without paying for its value.” T. Musgrove Constr., 840 S.E.2d at 342-43 (int’l cits. & punct. omit’d). Therefore, in a quasi-contract “the measure of recovery for unjust enrichment is ‘limited to the benefit realized and retained by the defendant.’” Fessler v. IBM, 959 F.3d 146, 157 (4th Cir. 2020), quoting 840 S.E.2d at 341. In short, that is the situation presented by towing and recovery services performed pursuant to Code section 46.2-1212.1, where the towing company performs the services at the direction of law-enforcement authorities and without a request from the owner of the vehicle or cargo in question: the towing company is entitled to recover on a theory of unjust enrichment, in an amount representing the benefit that it provided to the beneficiary of its services – and no more. See 840 S.E.2d at 342-43.
Applying these principles, in Musgrove the Supreme Court held that the towing company, Foxfire, had failed to prove that the “administration fee” included in its invoice benefited Musgrove in any respect. Instead, the “administration fee” benefited only Foxfire because it represented “a charge to cover Foxfire’s administrative overhead.” Id. at 343. The fee therefore could not be recovered from Musgrove. See id.
Musgrove’s discussion of Code section 46.2-1212.1, unfortunately, was limited to a footnote, which did little to clarify whether the statute was applicable to the case on appeal, or whether the statute provided a right of action. The appellate record before the Supreme Court did, however, make clear that Foxfire was relying upon the statute as the basis for its recovery of unpaid charges: Foxfire expressly cited the statute. See Appellee’s Br., T. Musgrove Constr. Co. v. Young, record no. 190180, 2019 VA S. CT. BRIEFS LEXIS 964, *13 (Nov. 22, 2019) (“It is equally important to this claim that the owner of a motor vehicle that is involved in a motor vehicle accident in Virginia has the responsibility to remove the vehicle and remediate the damages”) (cit’g Va. Code Ann. § 46.2-1212.1)). Taken in this context, the Supreme Court’s discussion of the statute – even if limited – clearly went to the heart of the issue before the court. See Musgrove, 840 S.E.2d at 341-42. Musgrove’s legal analysis of unjust-enrichment principles therefore cannot be divorced from Code section 46.-1212.1. Arguably, the Supreme Court had to engage in that analysis, for one simple reason: the statute in question did not provide a private right of action.
Importantly, however, the Supreme Court’s discussion in Musgrove specifically noted that Code section 46.2-1212.1 and other associated statutes in the same chapter of Title 46.2 were implicated whenever a law-enforcement official summoned a towing company to clear a highway. See id. at 341. The individual who called in Foxfire, Ken Morris, was with the first towing company that had been called to the scene, and he “requested assistance from Foxfire” because Foxfire was “the only company in Franklin County with the equipment to handle th[at] kind of job.” Musgrove, 840 S.E.2d at 340. The appellate record made clear that Mr. Morris’ company, Ken Morris Garage (“KMG”), was called to the scene by “Virginia State Trooper Jeffrey Todd Haynes,” who dispatched KMG to the scene “around 5:16 P.M. . . .” Appellant’s Br., T. Musgrove Constr. Co. v. Young, record no. 190180, 2019 VA S. CT. BRIEFS LEXIS 905, *6 (Oct. 30, 2019) (cit’g Jt. Appx. 64:21-23 & 191:13-21). Because KMG was summoned to the scene by the Virginia State Police and KMG, in turn, asked Foxfire to assist it, the statute was, at least arguably, implicated. Foxfire certainly took the position that it was. See T. Musgrove Constr. Co. v. Young, 2019 VA S. CT. BRIEFS LEXIS 964, *13.
Musgrove’s very text appears to indicate that the Court found the statute applicable. The Court specifically noted that according to the record before it, a “truck owned by Musgrove crashed and, because it had tipped over onto its side, had to be brought upright and then towed. The law forbids leaving a vehicle immobilized for more than 24 hours on or adjacent to a roadway . . . or leaving vehicles on private property. . . .” Musgrove, 840 S.E.2d at 341, cit’g Va. Code Ann. §§ 46.2-1209, 46.2-1215. In the context of that same discussion of statutes implicated by the facts on record, the Court then pointed out that “Code46.2-1212.1(A)(1) allows the State Police or local law enforcement . . . to remove ‘a vehicle, cargo, or other personal property that has been (i) damaged or spilled within the right-of-way or any portion of a roadway in the primary state highway system and (ii) is blocking the roadway or otherwise may be endangering public safety.” Id. at 341, n.4. The Court noted, too, that pursuant to the statute’s subsection C, “under certain circumstances not present here . . . the owner may have to reimburse the Department of Transportation, the State Police, and others for costs associated with the removal and subsequent disposition of property.” Id.
As its discussion reflects, the Supreme Court considered Code section 46.2-1212.1.A as a key feature of its analysis, a point underscored by the fact that Foxfire Towing expressly relied upon the statute. See T. Musgrove Constr., 2019 VA S. CT. BRIEFS LEXIS 964, *13. It is that that very fact, however – Foxfire’s express reliance on Code section 46.2-1212.1 – which appears to bind the court’s discussion of unjust-enrichment principles to the statute itself, and with good reason: the statute, at least arguably, does not provide a private right of action.
Virginia Law Determining whether a Statute Provides a Private Right of Action
“Under Virginia law, private citizens are generally unable to enforce a statute unless a private right of action is provided.” Peabody v. Rector & Visitors of the U. Va., No. 3:21cv44, 2022 U.S. Dist. LEXIS 77263, *8 (W.D. Va. Apr. 27, 2022) (int’l punct. & cits. omit’d). “In Virginia, ‘substantive law’ determines whether a private claimant has a right to bring a judicial action.” Michael Fernandez, D.D.S., Ltd. v. Comm’r of Hwys., 842 S.E.2d 200, 202 (Va. 2020). “Substantive law includes the Constitution of Virginia, laws enacted by the General Assembly, and historic common-law principles recognized by [the Commonwealth’s] courts. A ‘right of action’ is a legally recognized ‘remedial right’ to ‘enforce a cause of action,’ which is simply the set of operative facts’ that causes a claimant to assert his claim.” Cherrie v. Va. Health Servs., Inc., 787 S.E.2d 855, 857 (Va. 2016) (cits. omit’d).
The Supreme Court of Virginia “has made abundantly clear that when a statute . . . is silent on the matter of a private right of action, one will not be inferred unless the General Assembly’s intent to authorize such a right of action is ‘palpable’ and shown by ‘demonstrable evidence.’ It is simply not enough that the plaintiff has ‘a personal stake in the outcome of the controversy,’ or that ‘the plaintiff’s rights will be affected by the disposition of the case.’” Michael Fernandez, 842 S.E.2d at 202-03 (cits. omit’d). “Similarly, [Virginia courts] do not infer a private right of action when the General Assembly expressly provides for a different method of judicial enforcement.” Id. at 203.
Applying these principles, the Supreme Court has declined to find private rights of action under regulations of the Virginia Board of Health, see Cherrie, 787 S.E.2d at 856-59; under Title 22.1 of the Code of Virginia, see Lafferty v. Sch. Bd. of Fairfax Co., 798 S.E.2d 164, 168-69 (Va. 2017); under the Virginia Relocation Assistance Act, see Michael Fernandez, 842 S.E.2d at 201-03; under Title 15.2 of the Code of Virginia, see Stoney v. Anonymous, No. 200901, 2020 Va. Unpub. LEXIS 19, *5-*7 (Va. 2020) (unpub’d); or under Code of Virginia § 38.2-3445, see HealthKeepers, Inc. v. Dominion Surg’l Specs., LLC, No. 201106, 2021 Va. Unpub. LEXIS 19, *3-*9 (Va. 2021) (unpub’d). The common thread among these decisions is that the “express language of the statute[s] [in question] [did] not provide for . . . a private right of action[,] [t]he statute[s] were silent concerning a private right of action and there [was] no demonstrable evidence that the statutory scheme necessarily implie[d] that one should be created.” HealthKeepers, 2021 Va. Unpub. LEXIS 19, *9-*10.
As discussed above, Code section 46.2-1212.1 provides, in part, that “[a]s a result of a motor vehicle accident or incident, the Department of State Police . . . may, without the consent of the owner or carrier, remove . . . [a] vehicle, cargo, or other personal property that has been (i) damaged or spilled within the right-of-way or any portion of a roadway in the primary state highway system and (ii) is blocking the roadway or may otherwise be endangering public safety. . . .” Va. Code Ann. § 46.2-1212.1.A. The statute further provides that the “owner and carrier, if any, of the vehicle, cargo, or personal property removed or disposed of under the authority of this section shall reimburse . . . individuals or entities acting pursuant to a contract with the Department of Transportation for, or that includes, traffic incident management services as defined in [Code of Virginia section] 46.2-920.1 . . . for all costs incurred in the removal and subsequent disposition of such property.” Va. Code Ann. § 46.2-1212.1.C. While the statute thus states certain legal rights both for law enforcement officials and for entities providing “traffic incident management services,” it does not expressly state any right of action at law – a “‘remedial right’ to ‘enforce a cause of action’. . . .” Cherrie, 787 S.E.2d at 857 (emphs. supp’d). And “when a statute . . . is silent on the matter of a private right of action, one will not be inferred unless the General Assembly’s intent to authorize such a right of action is ‘palpable’ and shown by ‘demonstrable evidence.’” Michael Fernandez, 842 S.E.2d at 202.
Of particular note here is the Fairfax County Circuit Court’s holding in Virginia Automobile Dealers’ Association v. Tesla Motors, Inc. There, the court was presented with demurrers from the two defendants, one of which argued, inter alia, that the statute on which the plaintiff had sued, Code of Virginia section 46.2-1566, did not afford a private right of action against defendant Tesla. See Va. Auto. Dealers’ Assoc. v. Tesla Motors, Inc., 94 Va. Cir. 269, 269-272 (Fairfax 2016). Code section 46.2-1566 “require[d] a car manufacturer to file a prospective franchise agreement with the DMV ‘no later than 60 days prior to the date the franchise or sales agreement is offered,’” id. at 272, and plaintiff VADA argued that Tesla had violated the statute by failing to comply with the terms of a settlement agreement between Tesla and VADA as they related to that timing, and which expressly incorporated Title 46.2 of the Code. See id. at 272-73.
After reciting the black-letter principles discussed above, the court applied them to hold that “[t]here is no private cause of action in [Code] § 46.2. . . . As a result, VADA [could not] pursue a cause of action under the statute,” id. at 275, and the court dismissed VADA’s case, with prejudice. See id. Thus, according to Tesla Motors none of the provisions in Title 46.2 affords a private right of action. Assuming the Supreme Court of Virginia would agree, it is doubly notable that in Musgrove the Court discussed Code section 46.2-1212.1 and its related statutes, and then applied equitable principles of unjust enrichment to resolve the towing company’s claim.
That is the situation apparent in Musgrove: the Supreme Court appears to have recognized that under Code section 46.2-1212.1, the owner of property is required to pay the reasonable cost of services provided by a towing company to clear the owner’s property from a highway and store it, but the statute provides no private right of action allowing a private litigant to enforce its statutory rights. Thus, the Court held – consistent with the position taken by the towing company itself, Foxfire – that the towing company could seek relief under equitable principles of unjust enrichment. See Musgrove, 840 S.E.2d at 341-43; cf. T. Musgrove Constr., 2019 VA S. CT. BRIEFS LEXIS 964, *12-*16. Even if the Supreme Court’s reasoning in that regard was not made explicit, that appears to be the only interpretation of Musgrove consistent with the provisions of Title 46.2 of the Code of Virginia, Virginia law on the measure of damages for breach of a contract implied by law, and the Commonwealth’s clear principles for determining whether a statute affords a litigant a private right of action. If a towing company has any avenue of relief for enforcing the rights provided under Code section 46.2-1212.1, that relief is in equity, and not statutory or common law.
So what does all of this mean for trucking companies, and their insurers, confronted with an excessive towing invoice in Virginia? Musgrove appears to stand for the fact that the statute on which most towing companies rely to try to recover their charges, Code of Virginia § 46.2-1212.1, does not create a private right of action; rather, the statute merely creates an implied contract between a towing company called to the scene of a heavy truck collision by state authorities, on the one hand, and the trucking company (and also the cargo owner), on the other. As an implied contract, the rights of the parties to the implied contract are determined under principles of equity – and specifically, principles of unjust enrichment. Under those principles, a towing company may only recover charges that have directly benefited the trucking company. Therefore, a towing company arguably cannot simply rely upon the statute to argue that the company is automatically entitled to recover every single charge stated in its invoice, because Musgrove seems to establish that the statute does nothing more than create an implied contract between the parties. A deep understanding of what Musgrove means is thus imperative in the current climate of excessive towing charges that plague the transportation industry.