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Insurance Refusal to Pay Storage Fees

We paid the towing fees to bring a customer’s classic vehicle to our facility for restoration. The customer declined to go ahead with the job. The vehicle has been in our possession since Dec. 8, 2014, and the customer has failed to pick up the vehicle. What can we do?

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Barrett has authored numerous industry trade journal/magazine articles, including several cover stories for BodyShop Business. Having grown up in a family-owned collision repair business and owner/operator of two successful collision repair facilities; his ongoing efforts as industry speaker and repairer coach-consultant are geared toward educating professionals and consumers to achieve equally successful resolutions to automotive-related property damage issues. Such issues include proper and thorough repair, reasonable repair profitability for repairers as well as equitable claim settlements for both claimants and the responsible/paying parties. ADE offers numerous professional services nationwide.

We are a body shop in Huntington Beach, Calif. We paid, at the customer’s request, the towing fees to bring a classic vehicle to our facility for restoration. We wrote an estimate, and the customer declined to go ahead with the job. The vehicle has been in our possession since Dec. 8, 2014, nearly nine months, and the customer has failed to pick up the vehicle despite innumerable calls to him and requests that he reimburse us for the towing fees. What are our rights as far as storage goes? I contacted two auto attorneys, but they were not familiar with the laws regarding this type of situation. We’re tired of the abuse and have charged him $300 per month, which, of course, he’s refusing to pay. Can anybody help?

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First of all, understand that I’m not an attorney, so I do not and cannot provide legal counsel. What I can do is offer my experience from owning and operating my own collision repair facilities in Florida where many of the laws governing auto repair may be similar to California’s. Still, you’ll need to do research or seek legal counsel to know your specific rights.

Here are my observations and thoughts based upon your inquiry:

  1. The fact that your customer contacted you to arrange the relocation of their vehicle to your shop may place you in a good position as opposed to if you were asked to bring the vehicle in by investigating law enforcement, tow rotation, etc. In Florida and many other states, the customer’s request to have a vehicle moved to a repairer provides “implied consent” and serves as the customer’s authorization.
  2. Because you elected to bring the vehicle in and secure it, it places your company in a “bailment” situation, which places your company in “care, custody and control” of the subject vehicle. As such, you incur certain liabilities relative to the safekeeping of the subject vehicle. Therefore, you have a duty to protect the car and mitigate any damages while it’s in your care, custody and control and therefore have a right to charge a fair and reasonable amount to do so. Such charges may include:
  • A reasonable mark-up for your company’s payout for tow and storage charges.
  • Reasonable efforts to protect the subject vehicle (i.e. cover openings, cover, car or store inside to protect the interior from the elements, etc.
  • Labor activities to re-locate the disabled vehicle to the storage area (after being dropped off by the tow service)
  • Administrative fees including time to set up file, photos, estimates, research, activities in speaking with customer, etc.
  • Administrative activities and related fees and costs associated with filing of garagekeeper’s/mechanic’s lien notices, etc.

When at all possible, you’ll want to have the customer come in and sign a well-constructed repair authorization that clearly outlines the responsibilities and obligations of both the repairer and customer.

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With that stated, there are generally certain duties repairers have in keeping with local and state guidelines and mandates regarding storage lien laws. You as a businessperson need to be familiar with them or know where to go to get them. You may wish to find and contact a local vehicle title lien service company that deals with such issues and ask that they begin the process of filing for a lien and potential title of ownership of the subject vehicle.

Vehicle title lien service companies will generally know and understand your company’s legal and statutory obligations, such as when to send and file lien notices in the local paper and sending proper notices to all interested parties regarding the pending lien and sale of the vehicle at public auction as well as setting the date, time and place for the auction (i.e. your facility).

Keep in mind that depending upon your local and state regulations, you may or may not be able to assess storage fees for the entire time you’ve had the vehicle in your possession if you have not met the mandated requirements to do so.

For example, in Florida, if we don’t file a lien within 15 days of acquiring the vehicle, we can only assess 15 days of storage until such time as the lien is filed. Once filed properly, one is able to charge the storage and other related fees until either the vehicle is picked up or has been sold, etc.

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Here are some tips:

  1. Document. Once an issue occurs, keep all communications between you, the vehicle owner and other interested parties in writing only so you can track the send and receive dates. You may never need this information, but it’s priceless to have when you do. Keep notes on your efforts to call the customer as well as discussions with others about the matter. Note the date, time and person you spoke to along with the conversation.
  2. Contact your local vehicle title lien service company and see if they can assist you in securing a possessory and/or mechanic’s or garagekeeper’s lien on the subject vehicle.
  3. Ensure that your company’s repair authorization/contract is well crafted to account for the various contingencies in this and other matters that you may be confronted with.
  4. Know and understand your local and state regulations regarding this and other matters pertaining to your business.
  5. Find an attorney who has a good understanding of such issues. Being proactive in these matters will pay major dividends if and when a similar case comes up in the future.
  6. Have the number of a vehicle title lien service company handy.

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