Lawsuit: Detroit cops, tow company bilking vehicle owners

George Hunter
The Detroit News
Gerald Grays of Detroit shows the damage to his 2000 Pontiac Grand Prix, which he reported stolen two years ago.  He filed suit against the city and Bobby's Towing to dispute the towing and storage charges.

Detroit — A car leasing company and two Detroit residents are suing the city and a Detroit towing company, claiming the company conspired with police to impound people's vehicles without informing them.

The suit, filed in U.S. District Court, alleges a scheme that allowed Bobby's Towing to charge exorbitant storage fees for months, sometimes years to unsuspecting car owners.

City attorneys and the state attorney general's office insist there's no merit to the lawsuit and say they'll prove it in court.

The allegations are the latest in a long line of controversies arising from Detroit's police towing operation, which for years has been plagued by scandal and corruption. The police department in October took over most of the city's towing. Officials said the move was in response to the problems permeating the process.

Jason Katz, attorney for the car leasing firm Brite Financial Services of Madison Heights, and Detroit residents Gerald Grays and Dale Riley, said the city violated his clients' constitutional rights by keeping them in the dark about the fate of their vehicles, charging thousands of dollars in storage fees, and then making them pay before they could fight the case in court.

A tow truck heads out on a call, leaving  Bobby's Towing in Detroit on Friday, December 14, 2018.

The federal suit was filed in July, but Katz is trying to have the case approved as a class action. A hearing is scheduled for Jan. 9 before U.S. District Judge Avern Cohn.

"There are likely thousands of people this has happened to," Katz said. "This is a consequence of a really poor legal system. The law doesn't protect vehicle owners, because there is no deadline to report to the owner that their car has been towed or deemed abandoned.

"So they can keep vehicles without informing the owners, and then charge ridiculous storage fees."

Detroit Deputy Corporation Counsel Chuck Raimi responded to the claims in a written statement: "We deny the allegations made in this suit and will defend against them vigorously in court."

Outgoing Michigan Attorney General Bill Schuette in November joined the lawsuit as an intervener and filed a motion to dismiss.

"(The laws being challenged) are not unconstitutional on their face because they provide for sufficient notice and an opportunity to be heard, and because they do not provide for unreasonable seizures," Schuette's motion said.

According to the 57-page suit, Grays loaned his 2000 Pontiac Grand Prix to his son on Jan. 4, 2016. Grays' son parked the car outside his girlfriend's Detroit house. When he left the house hours later, the car was gone. The next day, the elder Grays filed a stolen vehicle report with Detroit police.

"Grays heard nothing about the vehicle until two years later, on Feb. 23, 2018, when he was contacted by (Detroit police)," the lawsuit said. The police officer who called told Grays his vehicle was being held at Bobby's Towing, the lawsuit said.

When Grays went to the tow yard on Lyndon on Detroit's west side, he was told the $15-per-day storage fee had ballooned to $11,000.

"Bobby's would not provide any information as to the reason the Grays vehicle was towed," the lawsuit said. "In other words, from January 5, 2016, through February 23, 2018 ... the DPD did not report the ... vehicle as abandoned on the LEIN (Law Enforcement Information Network computer system) and no notice was otherwise provided to Grays that his vehicle had been recovered," the court filing said.

According to the lawsuit, a Detroit police officer later told Grays the storage fee had been reduced to $225. Grays said he wanted to see the condition of his car before he paid, but, according to the suit, Bobby's told him it would cost an additional $75 to see his vehicle. He refused.

About two weeks later, Grays received a notice in the mail from the state of Michigan informing him his car had been listed as abandoned, and that it hadn't been recovered by Detroit police until Feb. 23, 2018.

"It's unclear whether this misstatement of fact was deliberate," the lawsuit said.

Attorney Marc A. Deldin, who represents Bobby's Towing Services in the lawsuit, declined comment on the lawsuit when reached by The News on Wednesday.

In April, Grays filed paperwork in Detroit's 36th District Court disputing the towing and storage charges. 

"In order to obtain a hearing date, Grays had to pay $815 to Bobby's, and $115 to the 36th District Court," the lawsuit said. "These payments also enabled Grays to retrieve his vehicle. Notably, the vehicle was damaged extensively."

Riley, another plaintiff in the suit, claims he woke up one morning in October 2015 to find his 2006 Pontiac Grand Prix missing from in front of his Detroit home. He reported it to Detroit police as stolen, the suit said.

Two years later, Riley got a call from Detroit police informing him the vehicle was found in a vacant field not far from his home. Around the same time, Riley got a notice from the state that his car had been abandoned, according to the lawsuit.

"Riley received the (abandoned vehicle notice) even though he had previously filed a stolen vehicle report with DPD," the suit said. "In other words, the DPD should have known that the vehicle was not 'abandoned.'

"Assuming the DPD was truthful in terms of the Riley vehicle being retrieved from the vacant field, Riley was never given the opportunity to retrieve the vehicle from that location. Instead, Riley was required to go to DPD's impound lot, which he did on October 18, 2017."

When Riley went to the lot, he was informed the towing and storage fees were $855. "Riley was told by a DPD representative that if he did not pay the $855, his vehicle would be sold, and if the sale price was less than the towing, storage and other fees that DPD claimed Riley owed, Riley would owe the difference, plus possible additional fees," the lawsuit said.

"Because of this threat, Riley paid the $855 to the DPD to retrieve his vehicle, despite the fact that the vehicle was essentially destroyed."

At a May court hearing, a Detroit police officer said Riley had been overcharged by $460. The court ordered the police to return the money. 

"At the hearing, the DPD officer offered no explanation as to why the Riley vehicle was reported as abandoned when Riley had filed a police report that it had been stolen two years earlier," the lawsuit said.

The lawsuit's third plaintiff, Brite Financial Services, claims they leased a 2013 Chevrolet Malibu to two customers in October 2016. On June 19, 2017, one of the lessees was pulled over by a Detroit cop. According to the lawsuit, when the driver could not provide proof of insurance, the officer called Bobby's Towing to tow the car.

When the lessees, who are not named in the suit, went to pick up the car from the lot, "Bobby's refused to release the vehicle back to them — despite the fact that there was no police hold on the vehicle," the suit said.

The lessees told Brite about the problem, and the company "began a five-week campaign to attempt to retrieve the vehicle," the lawsuit said. More than two months later, Brite received a notice in the mail that the vehicle had been abandoned.

Before Brite could file a petition in court, the company had to pay $1,780, according to the lawsuit.

Katz said the way his clients were treated violates at least three constitutional amendments.

"We’re challenging whether these laws violate the Fourth Amendment (prohibition) against unreasonable seizure," Katz said. "There may also be a Fifth Amendment violation; the takings clause provides when government takes someone's property, they have to provide reasonable compensation for that taking. One of our arguments is that this law allows taking of property without proper compensation."

Katz also is arguing the towing laws violate the 14th Amendment. "It’s a due process clause of the 14th Amendment," he said. "When someone wants to challenge a government action, they're entitled to reasonable access to the court, and a prompt hearing.

"The towing laws don't provide for that. The city or tow company can wait two years, and there's no penalty for that. Then they want people to pay before they can get a court hearing. We argue that the requirement that you have to pay fees upfront before you can challenge a seizure in court is unconstitutional."

The attorney general's motion to dismiss argued that despite the claims made in the lawsuit, there is a deadline for police to report a car as stolen.

"Special Anti-Theft laws expressly provide that a police agency receiving custody of an abandoned vehicle and the secretary of state follow mandatory procedures in giving notice, after which there is an opportunity to be heard," the filing said. 

"The police agency must within 24 hours after the vehicle is taken into custody, enter the vehicle as abandoned into the law enforcement information network," the motion said.

Katz said that deadline only covers specific situations. "The law is very complicated," he said. "If it's truly an abandoned vehicle, say someone leaves it in your driveway, then the statute does provide the police have to report it within a certain time frame."

However, Katz pointed out the statute stipulates that in many towing situations, "a police agency shall enter the vehicle into the law enforcement information network as abandoned not less than 7 days after authorizing the removal." 

"So that part of the law says the police can't even report towing a car until after seven days, and there's no deadline," Katz said. "And the fact is, my clients were not informed promptly that their vehicles had been towed."
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