Losing one’s personal property is certainly a frustrating experience. Just think of the ramifications to privacy and financial security associated with misplacing a smartphone. But what about a motor vehicle? If a driver parks unlawfully on someone’s private property, the car could be towed. If someone gets pulled over by the police for suspicion of DUI, the police will have a towing company remove the vehicle to the tower’s lot. But what happens after that? Or, what happens after a driver leaves a vehicle at an automotive repair facility and work is completed for which the driver does not pay?
Under these scenarios, motorists often naively assume that the cost to retrieve the vehicle is free or nominal, or that one has unlimited time to retrieve the vehicle. Such assumptions are incorrect! Storage charges can accrue daily and if one does not retrieve his vehicle in short order, then a repair facility or towing company can sell the vehicle and foreclose all of the owner’s rights and interest at a public sale. This article will explore some statutory possessory liens and how those liens are enforced.
Labor and Storage Liens. Illinois law allows service providers to have a possessory lien on personal property for unpaid charges that are $2,000 and less.1 For instance, the Automotive Repair Act2 and Automotive Collision Repair Act3 specifically recognize such liens. But if the service providers fail to comply with other provisions in those statutes, the lien is lost.4 A possessory lien is typically perfected by possession of the personal property, so if the provider voluntarily relinquishes possession of the chattel, the lien is lost.5 The Labor and Storage Lien (Small Amount) Act (“Small Amount Act”) allows for enforcement of the lien through a public sale.6 If the sale conforms to the Small Amount Act’s requirements, then the provider would be immune from a lawsuit for damages.7
The hallmark of this lien, like any other lien, is the consent of the parties to the charges being assessed. If the service provider and consumer have an agreement as to each charge, then any
unpaid charges would become part of the lien. However, if, for instance, a service provider charges a daily storage fee when the consumer fails to retrieve a vehicle from the provider’s shop and any agreement between the provider and consumer is silent on storage charges, a refusal to release the vehicle until storage charges are paid would subject the service provider to liability. A typical problem arises when there are competing liens: a prior, perfected security interest of a finance company and the service provider’s possessory lien. A finance company may get notice that the provider has the vehicle and the finance company wants the vehicle back free of charge. A finance company would then file a lawsuit for replevin or detinue to get the vehicle. In such a case arising under the Small Amount Act, the service provider’s lien has priority over the finance company’s lien if it meets certain statutory requirements.8 So the finance company, if it wants the vehicle, must pay the service provider the accrued charges first. The charges are typically the work performed on the vehicle and also storage charges that may accrue daily based on the terms of the agreement between the consumer and service provider. Special attention should be paid to whether storage charges were agreed to by the service provider and consumer. If they were, then they are recoverable. If not, a service provider will have a difficult time persuading the finance company to pay those charges and could lead to a Consumer Fraud and Deceptive Business Practices Act claim for “unfair” practices.
The next logical question is what happens if the provider sells the vehicle at a public sale and the finance company does not redeem the vehicle? Does the finance company lose its prior, perfected security interest? The answer is yes based on the immunity provision in the Small Amount Act.9
The Labor and Storage Lien Act (“Lien Act”) applies to liens that are greater than $2,000.10 The Lien Act’s enforcement scheme is quite different than the Small Amount Act, so a greater attention to detail is required when enforcing the lien. And unlike the Small Amount Act, a prior, perfected security interest would not be subordinate to a possessory lien.11 The Small Amount Act’s provisions are much more favorable to a service provider than the Lien Act’s scheme.
Relocation Towing. The signs in shopping center parking lots or fast food restaurant lots advising that unauthorized parkers will be towed provide a taste of the Illinois Commercial Relocation of Trespassing Vehicles Law (“Trespass Law”).12 This law gives towing companies the right to tow unlawfully parked vehicles (typically parkers that are not patrons of the store adjoining the lot) from the parking lot. The vehicles are then towed to the towing company’s storage lot. This is also called non-consensual towing because obviously the motorist is not consenting to the vehicle being towed. Consent is implied under the Trespass Law.
The Trespass Law gives commercial relocators (the towing companies) possessory liens under the Small Lien Act.13 Vehicles that go unclaimed may then be sold/disposed of in accordance with 625 ILCS 5/4-208 and 4-209.14
Properly disposing of vehicles is a bar to any action by a person seeking damages or recovery of the vehicle.15 Given the wording of the Small Amount Act,16 it is up for debate whether the towing company’s lien is limited to $2,000 or whether it can be higher.
Police Towing. Tows authorized by law enforcement (“police tows”) are governed by Chapter 4, Article II of the Illinois Vehicle Code (“Vehicle Code”).17 These tows are typified by vehicle accidents or arrests (e.g., drug possession, DUI). The agency will set the rates for towing and storage that a tower can charge. The tower will arrive at the scene and tow the vehicle to the tower’s facility where it sits until the owner retrieves it.18 Section 1 of the Small Amount Act creates a lien for tows conducted pursuant to Sections 4-201 through 4-214.19
An “abandoned vehicle” is defined by the Vehicle Code.20 When towing a vehicle deemed by law enforcement to be presumptively abandoned, special attention must be paid to various sections of Chapter 4, Article II of the Vehicle Code. Section 4-201 makes abandoning a vehicle on a highway unlawful.21 Abandoning a vehicle on another person’s private or public property (other than a highway) is also unlawful and vehicles so abandoned can be removed by law enforcement after waiting 7 days or more.22 The owner of an abandoned vehicle is responsible for all towing, storage and processing charges and collection costs, less any amount realized from the disposal.23 However, storage fees shall not exceed 30 days.24 Charging or demanding excess storage fees could eliminate any statutory immunity for the towing company.25 Towing an abandoned vehicle, even if authorized by law enforcement, can be fraught with perils, especially if the vehicle does not meet the definition of an “abandoned vehicle” under the statute.26
In Bell Leasing Brokerage, LLC v. Roger Auto Service, Inc.,27 a law enforcement agency authorized a tow, but the trial court rejected the evidence (viz. vehicle covered with snow and dirt) that the vehicle was actually abandoned. Thus, in situations where the abandonment is contested by the owner, the best option is to first see if a negotiated settlement can be reached. If not, the owner will have a valid basis for filing suit to reclaim the vehicle and could frame the case as a class action lawsuit. Police tows generally are instigated when law enforcement contacts a tower to perform a vehicle towing.28 Section 4-203 addresses tows of abandoned vehicles and certain other kinds of tows. Tows under Sections 4-202 and 4-203 are also specifically governed by Section 4-204, which deals with payment of charges (4-204(c)) and releasing the vehicle.29 It is important to note that Section 4-204 only applies to tows conducted under Sections 4-202 and 4-203.
In Estate of Charles R. James v. Tondini,30 a towing company argued that it was entitled to a lien under Section 4-204 for towing and storage charges. However, by its terms, Section 4-204 only applies to tows conducted under Section 4-202 and 4-203, and there was no evidence that the towing at issue was conducted pursuant to either section. Thus, the towing company had to turn over the vehicle because it had no lien. However, the court opinion did not reference Section 1 of the Small Amount Act that creates a lien for tows conducted in accordance with Sections 4-201 through 4-214.31
Record Searches. Typically, when law enforcement orders the impoundment of a vehicle, it will conduct a record search and send notice to the owner, lienholder, or other person legally entitled to ownership (collectively, “interested parties”) no later than 10 days after the impoundment or the authorizing of the impoundment.32 For non-police tows, towers can process an unclaimed vehicle as abandoned by requesting a record search up to 10 days after the tow.33 The tower should then send notice to the interested parties to alert them that the tower has the vehicle. The point of giving notice is to get the interested party to reclaim the vehicle.
Communications from the Towing Company. After notice is sent, the interested parties may contact the tower seeking a release of the vehicle. But before the vehicle is released, all charges must be paid.34 Owners can reclaim the vehicles prior to sale by presenting proof of ownership or possession to local law enforcement.35 Thus, one who is unable to pay for the vehicle’s release can still reclaim it from law enforcement.36
Towers must communicate accurate information to interested parties and respond to inquiries requesting an itemization of accumulated charges. This duty is implied under Section 4-207(b).37 If there is a dispute as to the amount of the charges being assessed and if the interested party tenders the undisputed amount to get the vehicle released, the best course of action is to accept payment and release the vehicle. Retaining the vehicle and thus incurring additional storage charges may not be a recoverable expense after the demand for the vehicle has been made.38 A tower may choose to file suit for the disputed charges under some recognized legal theory.
Vehicle Disposal. If the vehicle is not reclaimed by the interested parties, the next step is disposing of the vehicle. Section 4-208(a) governs disposal in the City of Chicago. If within 18 days of law enforcement sending its notice under Section 4-205 or 4-206, the tower also sends notice to the owner and lienholder, then the vehicle can be disposed of by turning it over to a licensed automotive part recycler, rebuilder, or scrap processor. The notice should be sent by certified mail and should state a date, time and location as to when the vehicle will be disposed of so that the interested parties can reclaim the vehicle at, or prior to, the actual sale. Section 4-208(b) governs disposals in cities other than Chicago and where the vehicle is 7 years of age or newer. Section 4-209 governs disposal of vehicles that are more than 7 years of age.
If the towing company otherwise complies with the requirements under Chapter 4 of the Vehicle Code for processing, selling, or disposing of a vehicle, then the company will be entitled to immunity in any action brought by an interested party for damages.39 Towing a vehicle that is not an “abandoned vehicle” or demanding monies in excess of what is statutorily allowed would defeat immunity.40
If an interested party sues a towing company, that party may recover the vehicle or money damages. Withholding possession of a vehicle when a valid possessory lien does not exist subjects a towing company to damages equal to the fair market value of the vehicle, which can be determined by using the rental value of the vehicle during the time the vehicle has been detained.41 Courts may also award punitive damages if the towing company does not have a valid possessory lien or misrepresents the amount of accumulated charges.42 This underscores the importance or fairly and accurately communicating with the interested parties if the vehicle is to be reclaimed. If the tower has a valid lien, then it may argue that it is entitled to immunity under Section 4-213(a). A consumer may counter by arguing that the lien is not valid because one of the steps under Sections 4-208 or 209 was not followed (e.g., improper notice).
Conclusion. Personal property mechanic’s liens are the “Damocles’ sword” that service providers hold over unsuspecting consumers, but mechanic’s liens are strictly construed against the lienor. A lienor’s failure to complete the proper paperwork can prove fatal to enforcing a lien and gives the owner ammunition to defeat enforcement. Vehicle owners should not ignore communications from the service provider concerning their vehicle being sold and disposed of, because that will happen. Finance companies also stand to lose by ignoring such requests as well. Large automotive finance operations often operate from distant locales and can be slow to react to the procedures at play under these lien laws. They often become involved only after important rights have expired.
Filing a lawsuit to enjoin enforcement of the lien is only half the battle because the lienor will frequently counter-sue for unpaid charges (assuming the vehicle has not been sold) and the litigation could spiral to the point of being cost-prohibitive for all parties involved. Service providers and consumers are well advised to compromise these types of disputes before they get to court.
1. 770 ILCS 50/0.01, et seq.
2. 815 ILCS 306/1, et seq.
3. 815 ILCS 308/1 et seq.
4. 815 ILCS 306/75, 815 ILCS 308/65.
5. 770 ILCS 50/1.
6. 770 ILCS 50/3, 50/4.
7. 770 ILCS 50/5.
8. See 810 ILCS 5/9-333.
9. 770 ILCS 50/5.
10. 770 ILCS 45/0.01, et seq.
11. 770 ILCS 45/4.
12. 625 ILCS 5/18a-100, et seq.
13. 625 ILCS 5/18a-501.
14. 92 Ill. Adm. Code §1710.180.
15. 625 ILCS 5/4-213(a).
16. Cf. ¶ 1 of 770 ILCS 50/1 with ¶ 3.
17. 625 ILCS 5/4-201 through 4-215.
18. If the vehicle is evidence in a crime, the agency may have a “hold order” meaning that the vehicle cannot be released until the agency authorizes the release.
19. 770 ILCS 50/1.
20. 625 ILCS 5/1-101.05.
21. 625 ILCS 5/4-201(a).
22. 625 ILCS 5/4-201(b).
23. 625 ILCS 5/4-214(b).
25. See 625 ILCS 5/4-213(a) .
26. 625 ILCS 5/1-101.05.
27. Bell Leasing Brokerage, LLC v. Roger Auto Service, Inc., 372 Ill. App. 3d 461 (1st Dist. 2007).
28. 625 ILCS 5/4-202.
29. 625 ILCS 5/4-204(d).
30. Estate of Charles R. James v. Tondini, 2014 IL App (5th) 130031.
31. 770 ILCS 50/1.
32. 625 ILCS 5/4-205(b).
33. 625 ILCS 5/4-201(c).
34. 625 ILCS 5/4-207(b).
35. 625 ILCS 5/4-207(a).
36. Lee v. City of Chicago, 330 F.3d 456 (7th Cir. 2003).
37. 372 Ill. App. 3d at 471.
38. See Country Mut. Ins. Co. v. Styck’s Body Shop, Inc., 396 Ill. App. 3d 241 (4th Dist. 2009)
39. 625 ILCS 5/4-213(a).
40. 372 Ill. App. 3d at 472.
41. Id. at 473 (under retail installment contract, multiplying the monthly payment times the number of months the vehicle was wrongfully detained).
Donald S. Rothschild is a partner at Goldstine, Skrodzki, Russian, Nemec and Hoff, Ltd. He assists employers and employees on matters under state and federal law, provides guidance on rights pertaining to discrimination, unlawful harassment, executive employment, wrongful termination, breach of employment contracts, defamation and wage and hour disputes. Don has been active in the DCBA, National Employment Lawyers Association and the Labor and Employment Section of the ISBA, where he serves as Associate Editor of its Labor and Employment Newsletter.
Brian M. Dougherty is a senior associate in the litigation group at Goldstine, Skrodzki, Russian, Nemec and Hoff, Ltd. His practice area includes representing employees and employers in employment disputes arising under state and federal law, commercial landlord-tenant matters and business torts. Brian is a member of the DCBA Labor and Employment, Bankruptcy Law and Business Law Committees, and currently serves on the DCBA Brief’s Editorial Board.