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 251. 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.