Legislature(2009 - 2010)CAPITOL 120

03/25/2010 01:00 PM House JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 251(JUD) Out of Committee
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 408(JUD) Out of Committee
<Bill Hearing Rescheduled from 03/24/10>
               HB 251 - PRIORITY OF TOWING LIENS                                                                            
2:36:37 PM                                                                                                                    
CHAIR RAMRAS announced that the  final order of business would be                                                               
HOUSE BILL  NO. 251, "An Act  relating to liens on  vehicles; and                                                               
providing for an effective date."                                                                                               
2:36:44 PM                                                                                                                    
CHAIR RAMRAS  [moved to adopt  the committee substitute  (CS) for                                                               
HB  251,  Version  26-LS0786\E, Luckhaupt,  3/15/10,  as  a  work                                                               
draft.]   There  being no  objection,  Version E  was before  the                                                               
2:37:24 PM                                                                                                                    
DON  HABEGER,  Staff,  Representative Jay  Ramras,  Alaska  State                                                               
Legislature,  presented  HB  251   on  behalf  of  Representative                                                               
Ramras,  sponsor.    He  explained that  there  have  been  cases                                                               
wherein  towing companies  have towed  vehicles, often  under the                                                               
authority of a public safety officer,  but have not been paid for                                                               
their service.   Mr. Habeger  stated that a court  has determined                                                               
that towing  liens are not  a priority over perfected  liens, and                                                               
banks using the vehicle as a  security have priority.  He relayed                                                               
that there are  an increasing number of cases in  which banks are                                                               
saying they will not pay the  towing company because of the court                                                               
MR.  HABEGER  directed  attention  to Section  1,  in  which  new                                                               
language  is added  to specify  that possessory  liens by  towing                                                               
companies  have  priority  over  other   liens.    He  said  this                                                               
provision would be "directly connected  to the vehicle."  He then                                                               
highlighted another  feature of  Version E,  - a  requirement for                                                               
notification -  that is found in  language in Section 2,  on page                                                               
2, lines 5-11, which read as follows:                                                                                           
     Unless  a vehicle  has already  been  reclaimed by  the                                                                
     owner,  the person  possessing the  vehicle under  this                                                                
     section shall  notify the  registered owner  or primary                                                                
     lienholder,  if any,  of the  towing, transporting,  or                                                                
     storage  of the  vehicle, by  certified letter,  return                                                                
     receipt requested,  mailed to  the registered  owner or                                                                
     primary lienholder,  if any,  within five  working days                                                                
     after the  initial towing, transporting, or  storage of                                                                
     the vehicle.                                                                                                           
2:41:25 PM                                                                                                                    
REPRESENTATIVE HERRON recounted that when  he was a city manager,                                                               
this  problem  was prevalent,  and  local  towing companies  were                                                               
refusing  orders  from police  officers  because  [they were  not                                                               
getting  reimbursed]; therefore,  he said  he supports  the bill,                                                               
because   he   said  he   thinks   it   will  benefit   everyone.                                                               
Notwithstanding that, he  asked if, under HB 251, there  may be a                                                               
chance that  towing companies would  charge exorbitant  rates for                                                               
"this special service."                                                                                                         
2:42:36 PM                                                                                                                    
MR.  HABEGER offered  his understanding  that  the likelihood  of                                                               
that happening is lessened because  of competition.  For example,                                                               
he  said there  are a  number of  towing companies  in Fairbanks,                                                               
Alaska, which  compete well  with one  another and  charge market                                                               
rates.  He  said the odd situation wherein rates  went up because                                                               
of non-notification is addressed in Section 2.                                                                                  
CHAIR RAMRAS said, "It's balanced."                                                                                             
2:43:28 PM                                                                                                                    
MARGARET RABY,  Alaska Towing Association (ATA);,  Badger Towing,                                                               
testified that ATA  has no issue with Version E  and considers it                                                               
to  be  an excellent  idea  to  give possessory  liens  priority.                                                               
However, she stated  that ATA has concerns about Section  2.  She                                                               
said   the  association   understands  the   need  for   consumer                                                               
protection, but  does not think  HB 251 is the  appropriate venue                                                               
in  which  to   address  the  issue,  which  she   said  is  more                                                               
complicated than  just notifying  within five days  or not.   She                                                               
said the  vehicle owner may have  been arrested or may  be in the                                                               
hospital   following  a   motor   vehicle   accident,  and   "all                                                               
notification does is get their  lien holder excited to take their                                                               
vehicle back,"  when there is  no need for  that to happen.   She                                                               
said  Badger Towing  just had  this situation  occur a  week ago.                                                               
Furthermore, she  relayed, notification  would drive up  the cost                                                               
for towing  companies; the time  and labor involved  could result                                                               
in an  actual mailing cost  of over $10  per vehicle.   She noted                                                               
that Section 2  limits a lien to towing and  storage charges, and                                                               
does not include compensation for  the time and money invested in                                                               
2:46:05 PM                                                                                                                    
MS. RABY stated  that towers are part of a  service industry, and                                                               
banks are  the only part of  the process not in  partnership with                                                               
towers.    Moreover,  she  said   banks  seem  to  be  in  direct                                                               
opposition with towing  companies.  She said it  makes good press                                                               
to say a  towing company held onto  a vehicle for a  long time to                                                               
drive up storage charges; however,  she explained, the reality is                                                               
that if a vehicle's residual value  is less than 30 days worth of                                                               
towing storage, it is unlikely that  there is a lien against that                                                               
vehicle  in  the  first  place,   unless  the  vehicle  has  been                                                               
destroyed and the lien holder is looking to dump it.                                                                            
MS. RABY said  Alaska law has created a situation  such that both                                                               
private  vehicle owners  and  lien holders  have  the ability  to                                                               
abandon vehicles  - which is unlawful  - and the towers  "have no                                                               
mechanism to take care of it."  She continued as follows:                                                                       
     So,  if   there  are  towing  companies   that  may  be                                                                    
     extending  the  storage  charges on  towing  a  storage                                                                    
     lien,  I can  tell  you just  from  my own  experience,                                                                    
     they're  very  likely  trying  to  cover  charges  from                                                                    
     multiple vehicles that have been  dumped on them.  This                                                                    
     is just  one more way of  cost-shifting, unfortunately.                                                                    
     It's a  practicality of trying  to make ends  meet when                                                                    
     you're a  small mom and  pop company.  It  doesn't make                                                                    
     it right, but that is what happens.                                                                                        
MS. RABY concluded  that there are a lot of  changes that need to                                                               
be made to  Alaska towing laws; however,  ATA believes suggesting                                                               
that  the entire  bulk of  monitoring and  ensuring nothing  goes                                                               
wrong and  nobody is harmed  should be the responsibility  of the                                                               
towing  companies  is putting  those  companies  in an  untenable                                                               
2:48:29 PM                                                                                                                    
SHAWN ROSS,  President, Alaska  Towing Association  (ATA); Owner,                                                               
Badger Towing,  concurred with Ms. Raby  that there are a  lot of                                                               
other costs  involved with notification.   He  questioned whether                                                               
"five working  days" refers to  the towing  companies' schedules,                                                           
which  are 24  hours a  day,  seven days  a week,  or the  bank's                                                               
schedule, which is  usually Monday through Friday.   He related a                                                               
situation in  which Badger  Towing sent  out letters  within five                                                               
days.   He said Badger  Towing understood that the  vehicle owner                                                               
was  in good  standing with  the lienholder,  but the  lienholder                                                               
repossessed the  vehicle anyway.   The towing company's  bill was                                                               
approximately  $300, but  the lienholder  ended  up charging  the                                                               
vehicle owner almost $1,100 to get his vehicle back.                                                                            
CHAIR  RAMRAS asked  Mr. Ross  if he  supports the  bill "in  its                                                               
present form."                                                                                                                  
MR. ROSS responded yes.  In  response to Chair Ramras, he related                                                               
that there  are currently  approximately 30  members of  ATA, and                                                               
they range  across the  state and  "part of  the Northwest."   He                                                               
said Sitka,  Soldotna, Nenana, and  Anderson are included  in the                                                               
list of those communities with memberships in ATA.                                                                              
2:51:07 PM                                                                                                                    
REPRESENTATIVE  GATTO  noted that  Section  2  would require  the                                                               
aforementioned notification to be  given to "the registered owner                                                           
or primary  lienholder", but  sent to  "the registered  owner and                                                       
primary lienholder".  He said he  finds the change from and to or                                                           
MR.  ROSS concurred,  and opined  that the  word "and"  should be                                                               
used in both cases.                                                                                                             
2:52:08 PM                                                                                                                    
MR.  HABEGER related  that the  bill  drafter said  the "or"  and                                                           
"and" need to be used as is.   He reminded the committee that the                                                           
notification  language  is  part  of  the  60-day  process.    He                                                               
explained that currently  a towing company has the  right to have                                                               
a lien against the vehicle for 60  days.  Under Version E, if the                                                               
towing company wants to have  that possessory title past 60 days,                                                               
it has to notify the lienholder and owner in five working days.                                                                 
REPRESENTATIVE   GATTO   expressed  dissatisfaction   with   that                                                               
2:53:37 PM                                                                                                                    
MARK ANTHONY  DAVIS, President, Interior Towing  & Salvage, Inc.,                                                               
testified that  he agrees with  Section 1, but  expressed concern                                                               
with language in Section  2, page 2, line 5, which  read:  "(b) A                                                               
lien  under  this  section  is  limited  to  towing  and  storage                                                               
charges."  He indicated the  language needs to specify associated                                                               
charges at the  end of that sentence, which would  cover the cost                                                               
of the  letters and certification.   Further,  regarding language                                                               
on page  2, line 10,  he said he  thinks the requirement  to send                                                               
notification  "within five  working  days" should  be changed  to                                                           
seven working days.   He stated his belief  that towing companies                                                               
need the  extra two  days, because  many vehicles  are registered                                                               
outside the state, and towing  companies would require extra time                                                               
to  find out  what  application  form is  needed  to request  the                                                               
information.   Furthermore, the  extra two  days would  help when                                                               
the  days include  a weekend.   Mr.  Davis concluded,  "But other                                                               
than  that I  100  percent believe  that this  bill  needs to  go                                                               
2:55:06 PM                                                                                                                    
ELISABETH  GRISWOLD, Owner/Manager,  Gabe's  Towing, said  towing                                                               
companies have been struggling with  credit unions not paying the                                                               
charges  when repossessing  vehicles.   Credit unions  would hire                                                               
lawyers that sent  the towing companies letters  stating that the                                                               
credit union  would pay  "a reasonable tow  fee" and  storage for                                                               
three to  five days;  however, the reasonable  tow fees  were way                                                               
below market price.  Ms.  Griswold expressed appreciation for the                                                               
language  change  in Section  1,  but  concurred with  Mr.  Davis                                                               
regarding the suggested changes to Section 2.                                                                                   
2:56:35 PM                                                                                                                    
WILLIAM  R.  SATTERBERG, JR.,  Attorney  at  Law, Satterberg  Law                                                               
Offices, Fairbanks,  Alaska, told the committee  that although he                                                               
has associations with and/or has served  as lawyer to some of the                                                               
individuals  who have  testified,  he is  testifying  on his  own                                                               
behalf.   He  said  he  was involved  in  the  case Ms.  Griswold                                                               
related,  and he  confirmed that  [Gabe's Towing]  had a  storage                                                               
lien trumped  by a credit  union, and it was  a fight to  get the                                                               
company paid  for the job  it did.  He  said he supports  HB 251;                                                               
however  he  said  he  thinks  the  towing  liens  need  to  take                                                               
priority.   He concurred with Representative  Gatto regarding the                                                               
disjointed language  in section 2.   Finally, he  recommended the                                                               
requirement  for   notification  be   set  within   "seven  days,                                                               
excluding weekends and holidays."                                                                                               
2:57:51 PM                                                                                                                    
REPRESENTATIVE GATTO  moved to adopt Conceptual  Amendment 1, "to                                                               
change the registered owner or  primary leaseholder to registered                                                               
owner and  primary leaseholder in the  two places where I  see it                                                               
and in any  other places."  There being  no objection, Conceptual                                                               
Amendment 1 was adopted.                                                                                                        
CHAIR RAMRAS moved  to adopt Conceptual Amendment 2,  so that the                                                               
sentence  on page  2,  line  5 would  read,  "A  lien under  this                                                               
section is limited to towing, storage, and associated charges."                                                                 
REPRESENTATIVE GATTO  objected.  He  said he would  understand if                                                               
the associated  charges were  specified as  mailing fees,  but he                                                               
expressed concern  that without  that limitation the  language is                                                               
too wide open.                                                                                                                  
CHAIR RAMRAS  [treated Representative Gatto's remark  as a motion                                                               
to  adopt  a conceptual  amendment  to  Conceptual Amendment  2],                                                               
whereby the sentence on page 2,  line 5 would read, "A lien under                                                               
this  section  is  limited to  towing,  storage,  and  associated                                                               
mailing charges."   He announced  that there being  no objection,                                                               
the Conceptual Amendment to Conceptual Amendment 2 was adopted.                                                                 
REPRESENTATIVE   GATTO  removed   his  objection   to  Conceptual                                                               
Amendment 2,  [as amended].   There  being no  further objection,                                                               
Conceptual Amendment 2, [as amended], was adopted.                                                                              
CHAIR RAMRAS  moved to adopt  Conceptual Amendment 3, on  page 2,                                                               
line 10,  so that the  language would read, "seven  working days,                                                               
excluding weekends and holidays".                                                                                               
REPRESENTATIVE GATTO  objected.   He asked if  that would  mean 7                                                               
working days.                                                                                                                   
CHAIR  RAMRAS  said  he thinks  "seven  working  days,  excluding                                                               
weekends and holidays"  would be the same as  seven working days,                                                               
but could be as much as 10 days with a weekend.                                                                                 
MR.   SATERBERG  explained   that  his   previous  recommendation                                                               
regarding  this  language  is  copied  from Civil  Rule  6.    He                                                               
explained that the  court system will often  exclude weekends and                                                               
holidays if the time period is less  than seven days.  He said he                                                               
foresees  the   use  of   the  term   "working  days"   as  being                                                               
3:01:00 PM                                                                                                                    
REPRESENTATIVE GATTO  asked if  the act of  sending a  letter and                                                               
asking for  a return receipt  satisfies all  obligations, because                                                               
the person to whom the letter is sent may never receive it.                                                                     
MR. SATTERBERG said that can be  a problem.  He said presumably a                                                               
person who is being served will  sign certified mail.  He said he                                                               
does  not know  how  the problem  Representative Gatto  described                                                               
would be handled.                                                                                                               
REPRESENTATIVE GATTO expressed concern  that the committee may be                                                               
making legislation that would lead to difficulty.                                                                               
3:02:33 PM                                                                                                                    
REPRESENTATIVE HOLMES  said she has  no problem with the  part of                                                               
Conceptual  Amendment  3 that  would  change  "five" to  "seven";                                                           
however, she  expressed concern about  the rest of  the phrasing.                                                               
She said  Civil Rule 6  defines the  meaning of "days"  under the                                                               
court system  rule.   She offered  her understanding  that Alaska                                                               
Statute  has similar  definitions  regarding working  days.   She                                                               
said  she thinks  it would  be better  to use  the term  "working                                                               
days"  and leave  off "except  weekends and  holidays", and  then                                                               
rely on Alaska Statute beyond that.                                                                                             
REPRESENTATIVE  LYNN   questioned  what  the  exact   meaning  of                                                               
"holiday" would be.                                                                                                             
3:03:32 PM                                                                                                                    
CHAIR RAMRAS withdrew Conceptual Amendment 3.                                                                                   
CHAIR RAMRAS  moved to  adopt Conceptual  Amendment 4,  to change                                                               
"five"  to  "seven".    There   being  no  objection,  Conceptual                                                           
Amendment 4 was adopted.                                                                                                        
3:03:53 PM                                                                                                                    
REPRESENTATIVE  GATTO said  the committee  has not  yet addressed                                                               
the  issue  of whether  or  not  it  is  sufficient to  send  the                                                               
notification or  if proof of its  receipt is necessary.   He said                                                               
he considers the latter sufficient.                                                                                             
3:04:32 PM                                                                                                                    
MR.  SATTERBERG  noted  that  the language  in  Section  2  would                                                               
require the notification to be  sent "by certified letter, return                                                           
receipt requested".   He  offered his  understanding that  once a                                                           
towing company  has sent  notification in  that manner,  it would                                                               
have met the requirement of notification.                                                                                       
REPRESENTATIVE GATTO  argued, though,  that it is  the obligation                                                               
of  the  sender  to  ensure   that  the  recipient  receives  the                                                               
MR.  SATTERBERG  said traditionally  the  obligation  in many  of                                                               
Alaska's notification  statutes is  to send  [to] the  last known                                                               
address.    He said  the  Division  of  Motor Vehicles  has  that                                                               
requirement and  sends notification of license  withdrawal to the                                                               
last known  address.   He stated,  "It would seem  to me  that if                                                               
it's been sent to the proper  address ... by registered mail, the                                                               
sender's met the obligation."                                                                                                   
REPRESENTATIVE DAHLSTROM  mentioned that she'd sent  something to                                                               
someone  who had  moved  without  her knowing,  and  she got  the                                                               
missive back  in the  mail.   She suggested  that the  same thing                                                               
would happen in this case.                                                                                                      
3:06:40 PM                                                                                                                    
MR.  SATTERBERG said  it  is possible;  however,  he stated  that                                                               
there is "an obligation on all of  us to make sure we have proper                                                               
addresses on record."                                                                                                           
REPRESENTATIVE  GATTO  said  typically  notices  from  the  phone                                                               
company  or  the  Internal  Revenue   Service  (IRS)  are  30-day                                                               
notices.  He indicated that seven days  is too short a time for a                                                               
recipient to respond.   He said not everyone  checks his/her mail                                                               
daily.   He expressed his  hope that consideration would  be made                                                               
to hold the bill over to address this issue further.                                                                            
3:07:56 PM                                                                                                                    
JANE  PIERSON, Staff,  Representative  Jay  Ramras, Alaska  State                                                               
Legislature, on behalf of  Representative Ramras, sponsor, stated                                                               
that current statute  allows for 60 days  [before storage charges                                                               
"cease to  be part  of the  lien"], and  sometimes notice  is not                                                               
sent out until the 59th day.   Under the proposed legislation [as                                                               
amended], she said, that notice would  have to be sent out within                                                               
seven days, which provides added  security to the person who owns                                                               
the vehicle.                                                                                                                    
REPRESENTATIVE   GATTO   expressed   dissatisfaction   with   the                                                               
language, because  he offered his  understanding that  the people                                                               
who  are supposed  to get  the notification  will suffer  if they                                                               
don't check their mail.                                                                                                         
MS.  PIERSON told  Representative Gatto  that those  people would                                                               
actually  suffer less,  because of  the proposed  legislation, as                                                               
REPRESENTATIVE GATTO  argued, though, that "they're  not notified                                                               
if they didn't get notified."                                                                                                   
MS. PIERSON  stated her belief that  it is not the  obligation of                                                               
the towing  company to "chase these  people down."  She  said she                                                               
would  rather receive  notification  within seven  days and  only                                                               
have to  pay seven  days worth  of storage  charges, than  have a                                                               
$2,000 bill  - [resulting from  a notice  sent out much  later] -                                                               
which she may not be able to pay.                                                                                               
3:10:14 PM                                                                                                                    
REPRESENTATIVE DAHLSTROM  moved to report the  proposed committee                                                               
substitute  (CS)  for  HB 251,  Version  26-LS0786\E,  Luckhaupt,                                                               
3/15/10,   as  amended,   out   of   committee  with   individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
REPRESENTATIVE GATTO objected.                                                                                                  
A  roll  call vote  was  taken.   Representatives  Herron,  Lynn,                                                               
Holmes, Dahlstrom,  and Ramras  voted in  favor of  reporting the                                                               
proposed  committee  substitute  (CS)  for HB  251,  Version  26-                                                               
LS0786\E, Luckhaupt,  3/15/10, as amended, out  of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
Representative Gatto voted against  it.  Therefore, CSHB 251(JUD)                                                               
was reported out  of the House Judiciary Standing  Committee by a                                                               
vote of 5-1.                                                                                                                    

Document Name Date/Time Subjects
HB408 Proposed CS version K 3.24.10.pdf HJUD 3/25/2010 1:00:00 PM
HB 408
01 SB60 Sponsor Statement.pdf HJUD 3/25/2010 1:00:00 PM
SB 60
02 SB60 Bill L&C CS v. S.pdf HJUD 3/25/2010 1:00:00 PM
SB 60
03 SB60 Sectional Analysis.pdf HJUD 3/25/2010 1:00:00 PM
SB 60
04 SB60-2-1-021010-LAW-N.pdf HJUD 3/25/2010 1:00:00 PM
SB 60
01 HB251 Proposed CS version E.pdf HJUD 3/25/2010 1:00:00 PM
HB 251
02 HB251 Sponsor Statement.pdf HJUD 3/25/2010 1:00:00 PM
HB 251
03 HB251-1-1-031110-CED-N.pdf HJUD 3/25/2010 1:00:00 PM
HB 251
04 HB251-2-1-031110-DOT-N.pdf HJUD 3/25/2010 1:00:00 PM
HB 251
05 HB251 version R.pdf HJUD 3/25/2010 1:00:00 PM
HB 251
06 HB251 Support documents.pdf HJUD 3/25/2010 1:00:00 PM
HB 251