“Towing” the Line – and Crossing It: Virginia’s Deregulated Towing Industry, the Rise of the Asphalt Pirates, and Strategies for Truck Owners Faced with the Risk of Excessive Towing Charges

“Towing” the Line –…

The scenario has become all too familiar to trucking and logging companies in Virginia – a truck owned by the company is involved in a collision, and the State Police arrive at the scene and immediately summon a towing company from a pre-approved rotation list maintained by the Commonwealth. Irrespective of whether the truck owner has a preferred towing company that is ready, willing and able to respond – and even if that preferred vendor can respond more quickly than can a towing operator called by the police – the pre-approved operator arrives, clears the scene, and then presents an invoice in an amount double or triple what the truck owner would have spent with its preferred vendor. The invoice includes questionable charges such as an “administrative fee,” an “emergency response activation fee,” or other dubious charges, and the towing company refuses to release the tractor and trailer – even the cargo – that it has impounded unless and until the full amount of its invoice is paid.

Compounding the problem is that the towing industry in the Commonwealth is presently unregulated. As one towing operator recently testified in a deposition, in Virginia a reasonable towing charge is “whatever the [tow operator] can sleep with at night.” Even more troubling, the towing industry some years ago lobbied the General Assembly into enacting a limited immunity statute which tow operators routinely cite as a “get out of jail free card,” Code of Virginia section 46.2-1231.1. That statute provides, in part:

No towing and recovery operator shall be liable for damages in any civil action for responding in good faith to the lawful direction of a law-enforcement . . . agency to tow, recover, or store any vehicle, combination of vehicles, their contents, or any other object. The immunity provided by this section shall not extend to the liability for negligence in the towing, recovery, or storage carried out by the towing and recovery operator. For the purposes of this section, any towing, recovery, or storage carried out in compliance with a contract between a towing business and a local law-enforcement agency or local government shall be deemed to have been performed at the lawful direction of a law-enforcement agency. Va. Code Ann. § 46.2-1231.1.

Towing operators typically cite this statute as meaning the only legal recourse that a vehicle or cargo owner has against a towing company is a suit for negligence in the company’s towing, recovery or storage operations if they damage the owner’s property. While the statute’s exception to its provision of immunity is not quite so narrow – by its terms, the statute only protects towing companies that have responded in good faith to the lawful direction of a law-enforcement agency – tow operators are quick to point to this enactment as a purported bar to any legal claim or cause of action a property owner might assert against the tow operator based on its outrageously excessive charges and conduct.

That is the lay of the land in terms of the heavy-towing situation in Virginia – excessive towing charges are routinely levied upon vehicle and cargo owners who did not choose the towing company in question, who did not request its services, and who are not even permitted to have a preferred vendor respond instead of the Commonwealth’s pre-approved operator. And the property owners are limited in their ability to fight back by the lack of a regulatory scheme for towing charges, and by the limited-immunity statute that tow companies invariably cite as a defense.

What, then, is a truck or cargo owner to do when it finds itself in this unenviable situation? If the owner has been proactive in seeing that its insurance needs were well provided for, ideally it should have insurance that applies to towing and recovery charges as well as to cargo damage or pollution expenses (applicable, for example, to cleaning up fuel spills). If the owner does not have such insurance, however, then it may be on the hook for either paying the excessive bill outright, or for incurring the cost of litigation against the towing company to fight back against the excessive charges – litigation which might, or might not, prove successful.

Clearly, it is better to have been proactive in securing insurance that might cover this situation than to find oneself without the necessary insurance. In this respect, an insurance audit can be of immense value to help a company make certain that the asphalt piracy scenario is covered under the company’s risk-management program. That is the “front-side” strategy – doing whatever reasonably can be done to obtain insurance for towing and recovery charges before the need might arise.

The “back-end” strategy amounts to refusing to be a punching bag for the towing company. If the tow operator refuses to accept reasonable terms to resolve the disputed charges, options range from reporting the towing company to the Attorney General’s Office to filing suit against the towing company on grounds such as conversion (if applicable under the facts), fraud (if applicable), breach of the implied covenant of good faith and fair dealing, and/or declaratory judgment. To the extent the “back-end” strategy requires litigation, it comes with a price tag; thus, depending on the amount of the disputed invoice, it may or may not make business sense for the property owner to litigate. By the time the litigation costs are added up, it may be more economical to pay the invoice, however outrageous it might be.

Clearly, of the two strategies, the “front-end” strategy is the more economical (and the least stressful). Thus, the proactive approach is the better one. The guidance of counsel can be of considerable benefit in this regard. If a truck owner finds itself limited to the back-end strategy of trying to negotiate an excessive invoice on its own and, failing that, litigating, then the guidance and advice of counsel are of paramount importance.

If you have questions on this point or others, please do not hesitate to contact Kevin Streit (kstreit@setlifflaw.com) at 804-377-1270, or Steve Setliff (ssetliff@setlifflaw.com) at 804-377-1261.