03/09/2010 08:00 AM House STATE AFFAIRS

         HB 251-VEHICLE LIENS/TOWING/STORAGE/TRANSPORT                                                                      
                                                                                                                                
9:53:43 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  announced that the  last order of business  was HOUSE                                                               
BILL  NO.  251,  "An  Act  relating to  liens  on  vehicles;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
The committee took an at-ease from 9:54:02 AM to 9:54:37 AM.                                                                
                                                                                                                                
9:54:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JAY RAMRAS,  Alaska State  Legislature, presented                                                               
HB 251 as  prime sponsor.  He  said the issue was  brought to him                                                               
by tow  truck operators  in his  home town.   He  paraphrased the                                                               
sponsor statement,  which read  as follows  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Towing companies provide  necessary service to Alaskans                                                                    
     through the  removal of abandoned, junked,  and wrecked                                                                    
     vehicles   from   public  thoroughfares   and   private                                                                    
     property.  Alaskan towing  companies follow  prescribed                                                                    
     laws  in providing  these towing  services and  in most                                                                    
     cases are  acting under the authorization  or direction                                                                    
     of  public safety  officers.  Alaskan towing  companies                                                                    
     should  be paid  for  providing these  services to  the                                                                    
     public. Providing  a statutory mechanism so  that these                                                                    
     small towing  businesses are first in  line for payment                                                                    
     for  delivered services  will reduce  business risk  to                                                                    
     these companies.  House Bill  251 changes  the priority                                                                    
     in which payments  may be made to provide  for a fairer                                                                    
     business     environment    to     towing    companies.                                                                    
                                                                                                                                
     House  Bill  251  prioritizes  a  possessory  lien  for                                                                    
     services  lawfully  provided   in  conformity  with  AS                                                                    
     28.10.502,  and requires  towing  companies to  provide                                                                    
     timely   notification.   The  prioritization   of   the                                                                    
     possessory   lien  gives   first  position   to  towing                                                                    
     companies  for  the  purpose  of  recouping  costs  for                                                                    
     contractual vehicular  towing and storage. HB  251 also                                                                    
     adds  a layer  of  consumer protection  by requiring  a                                                                    
     towing  company  to  notify the  registered  owner  and                                                                    
     primary lienholder  of towing and storage  of a vehicle                                                                    
     within  7  business  days from  the  date  of  service.                                                                    
                                                                                                                                
     House  Bill 251  corrects a  current situation  whereby                                                                    
     some owners  and lienholders may receive  services from                                                                    
     towing companies without paying for  all or part of the                                                                    
     charges.  Current law  does  not  specifically state  a                                                                    
     possessory  lien has  precedence  over other  perfected                                                                    
     liens on  a vehicle. Nonpayment for  service situations                                                                    
     could  shift these  costs  to  other Alaskans,  raising                                                                    
     prices for all. In  extreme cases nonpayment may induce                                                                    
     business hardships and cause  business failure. This is                                                                    
     unfair  to Alaska's  towing companies.  Reducing unfair                                                                    
     business  risk  to  small  companies  is  in  the  best                                                                    
     interest of the state.                                                                                                     
                                                                                                                                
9:56:56 AM                                                                                                                    
                                                                                                                                
MARGARET RABY,  Alaska Towing  Association (ATA);  Badger Towing,                                                               
said ATA  represents towing industry members  from throughout the                                                               
state.  She said current  statute allows towing and storage liens                                                               
to be placed  against any vehicle that a towing  company tows and                                                               
stores at the  request of a police officer or  other person.  The                                                               
towing company  is supposed  to receive  payment from  the person                                                               
who has  interest in the vehicle,  at which point the  vehicle is                                                               
released to  that person.   Unfortunately, she  said, there  is a                                                               
loophole  in the  statute,  which says  the  primary lien  holder                                                               
against the vehicle has priority  over the towing company and can                                                               
clear collateral without paying for  the services provided by the                                                               
towing company.   She said  towing companies work  in partnership                                                               
with  emergency services  of Alaska.   The  only difference,  she                                                               
said, is  that towing companies  expect to be paid  directly, not                                                               
by taxpayers' money.  Ms. Raby  opined that it is not appropriate                                                               
that  towing companies  should absorb  losses for  doing services                                                               
for which the  rest of emergency workers get paid.   She said the                                                               
industry would like to see this situation corrected.                                                                            
                                                                                                                                
9:59:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  offered  his  understanding  that  the                                                               
problem arises because [towing companies]  have only a possessory                                                               
lien;  therefore,  there  is  nothing  to  prevent  a  bank  from                                                               
repossessing  a  vehicle  and  destroying  the  towing  company's                                                               
possessory lien.                                                                                                                
                                                                                                                                
MS. RABY confirmed that is the problem.                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG  explained that  a towing  company loses                                                               
its lien  once the  vehicle leaves the  lot.  He  said he  is not                                                               
familiar with the  language of Title 28.  He  asked if the towing                                                               
companies have a right to  retain possession of the vehicle until                                                               
payment is made or if  the proposed legislation should be crafted                                                               
so that the lien would "follow the vehicle."                                                                                    
                                                                                                                                
MS. RABY  opined that  the lien  should be  one that  follows the                                                               
vehicle.   She  stated, "We  utilize the  possessory lien  ... to                                                               
make  sure they  get  paid,  and it  works,  except  in this  one                                                               
situation where a perfected lien takes priority."                                                                               
                                                                                                                                
REPRESENTATIVE  GRUENBERG  suggested  that  the  House  Judiciary                                                               
Standing  Committee   can  address  that  issue,   and  that  the                                                               
legislature  might want  to  consider making  the  lien one  that                                                               
would  follow  the vehicle.    He  opined that  towing  companies                                                               
should be paid first.                                                                                                           
                                                                                                                                
10:01:26 AM                                                                                                                   
                                                                                                                                
KEN  STORLIE,  Owner, Borealis  Towing,  said  HB 251  is  needed                                                               
because  towing  companies  are  not taking  cars  at  their  own                                                               
volition, but  are doing so at  the request of others  and should                                                               
be paid.  He  concluded, "With this lien the way  it is, they can                                                               
just come and take your car."                                                                                                   
                                                                                                                                
10:02:10 AM                                                                                                                   
                                                                                                                                
MARK DAVIS, Owner, Interior Towing &  Salvage, said he was one of                                                               
the people who  brought this matter to the attention  of the bill                                                               
sponsor.   He  said he  sympathizes  with the  lien holders  that                                                               
sometimes  people "get  these cars  out there  and get  them into                                                               
trouble," but  said towing companies, as  small companies, cannot                                                               
afford  to absorb  many  situations  [in which  they  do not  get                                                               
paid].   He stated,  "There's a  few of the  lien people  who are                                                               
actually  using  it  to  their  advantage  and  are  pretty  much                                                               
basically holding us  at blackmail, threatening us to  go back to                                                               
check ...  through their records to  see if they'd ever  ... lost                                                               
any other  cars and  hold us  responsible for  any and  every car                                                               
they ever lost  through our particular custody."   He opined that                                                               
the proposed  legislation would  help correct  that problem.   He                                                               
said towing companies  are not trying to steal  anyone's cars but                                                               
are just trying to be paid for  their services.  He said he would                                                               
deeply  appreciate  whatever the  legislature  could  do to  help                                                               
towing companies in this regard.                                                                                                
                                                                                                                                
10:03:08 AM                                                                                                                   
                                                                                                                                
SHAWN HESS, S & S Towing  & Recovery, testifying in support of HB
.  He related  an incident in which he showed  up on the scene                                                               
of an  accident, recovered the vehicle,  and took it back  to his                                                               
towing yard  for storage.  A  credit union hired an  attorney and                                                               
told  him he  had  to  return the  vehicle  to  the credit  union                                                               
without being  paid, at which  point the credit union  planned to                                                               
return the vehicle to its owner.   Mr. Hess said he felt that was                                                               
unfair, and contested  that in court, but lost and  had to settle                                                               
with an  insurance company  in an attempt  to be  compensated for                                                               
the recovery of the vehicle.                                                                                                    
                                                                                                                                
10:04:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO asked if the  Alaska State Troopers would be                                                               
responsible for the request for  towing if the towing company was                                                               
not paid by any other party.                                                                                                    
                                                                                                                                
MR. HESS  answered no.  He  stated, "Unless you take  it to their                                                               
yard, they do not pay your tow bill."                                                                                           
                                                                                                                                
10:04:55 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO  asked if Mr.  Hess's company  benefits from                                                               
having  a  contract  with  the Alaska  State  Troopers  by  being                                                               
perhaps the only company that gets called to tow vehicles.                                                                      
                                                                                                                                
MR.  HESS answered  no.    He explained  that  there are  several                                                               
companies  that are  on a  rotation  list with  the Alaska  State                                                               
Troopers.  Furthermore, he said  a majority of the vehicles towed                                                               
by  S&S Towing  are left  unclaimed and  have to  be hauled  to a                                                               
landfill at a cost to the company.                                                                                              
                                                                                                                                
10:05:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG requested a copy of the judge's opinion                                                                
from the aforementioned court hearing.                                                                                          
                                                                                                                                
10:06:40 AM                                                                                                                   
                                                                                                                                
CHAIR LYNN closed public testimony.                                                                                             
                                                                                                                                
10:06:52 AM                                                                                                                   
                                                                                                                                
CHAIR LYNN announced that HB 251 was held over.