CLM’s Transportation Committee regularly gathers together claims and legal experts in the transportation community to discuss trends in the industry. In this edition, moderator James Foster leads a discussion on strategies for dealing with tow yards.
James Foster, Cassiday Schade LLP: Have you had a memorable experience—good, bad, or outrageous—with a tow truck company that taught you a lesson about dealing with tow yards? Have you had an experience with a tow truck company not releasing your truck, trailer, and/or cargo without an inflated and excessive payment?
Andrew Stephenson, Franklin & Prokopik: Hardly a week goes by that I don’t get a complaint from a client about an outrageous tow, or that I encounter an outrageous tow in conjunction with a catastrophic loss emergency response investigation. Almost invariably, all such situations involve involuntary tows, like those ordered by police. In fact, I had a screaming match with a Maryland towing company at the scene of an emergency response on New Year’s Eve. I forced them to unhook our vehicle in order to allow our preferred vendor to come and take over.
Tamara Warn, Superior Risk Management: In Virginia, there are regulations protecting towing companies, and towing companies can even file complaints with the Virginia Department of Insurance (VDOI). VDOI can then determine if a motor carrier’s insurer is responsible for the towing charges. I have opposed this in cases where the insurance policy was not issued in Virginia and, thus, VDOI does not have jurisdiction over the policy language.
Cheryl Ubick, TFI International: While I cannot say that I have had a particularly memorable experience with a tow company, I have definitely had experience dealing with a tow truck company holding our equipment and cargo hostage. I have received invoices in excess of $150,000 for charges relating to recovery only—not even including the outrageous storage charges per day. These situations are beyond frustrating and are happening more and more frequently, but there are things we can do to combat this.
Foster: What types of email and other communication should be sent to the tow truck company to secure the truck, trailer, and/or cargo in order to limit the recovery, towing, and storage charges to a “reasonable” amount?
Stephenson: Fortunately, Maryland law does not allow a towing company to take a vehicle hostage once a formal request for release has been made. As such, we immediately send written notice of our desire to have our own preferred vendors take over and/or to release our vehicle if it’s already in their possession or in storage. We also threaten—and sometimes even file—a temporary restraining order demanding replevin and posting the necessary bond. Usually, the tow company comes to their senses immediately upon receipt of such an action.
Warn: Sending a letter where I point out that the towing company is required to have a minimum of $750,000 in insurance under the Federal Motor Carrier Safety Administration’s financial responsibility regulations for a tow truck over 10,000 pounds. I then bring up any other state or local rules in the communication, too. In many states, there are limits and you can use those to dispute the bill. By demonstrating that I know the regulations and rules, sometimes towing companies become more cooperative.
Ubick: Beyond trying to negotiate fees, I have seen various methods used, such as having defense counsel write a strongly worded letter all the way up to filing a petition to include posting a towing and storage bond. In some states, if the vendor was a police-called tow company, towing and storage fees are set by an agreement with the police agency, so it may be worth a call to police to verify fees before responding to the tow truck company.
Foster: What tips can you give if there are time-sensitive issues, like pressure from the customer to deliver their products or if the cargo needs to be refrigerated?
Stephenson: Establish early written communications with the tow company outlining the sensitivity, the potential damages, and cost of their illegal actions and an intention to pursue legal recourse.
Warn: If the tow company refuses to release the cargo and the load is perishable or the towed vehicle requires specific security while in the tow company storage, I have sent emails, faxes, and letters advising the tow company of its obligation to maintain the refrigeration, tarp the equipment, or prevent any inspections or destruction.
Ubick: If you are dealing with a time-sensitive issue, then you may want to jump right to the legal bonding process. Engage your attorney to file a petition and start the process right away. At that point, you can calculate what a fair price is and pay that up front in order to get the equipment released immediately. Now at least you have your equipment and cargo out and you can let the rest of the process play out.
Foster: What lessons have you learned about dealing with a tow truck hostage situation?
Stephenson: Know the state law, know the local laws, know your rights. Get the individual who manages the tow list at the relevant police authority involved. The last thing a tow company wants is to be struck from the list. The last thing the police want is to be dragged into these disputes. There is leverage there to apply, and it should be exploited.
Warn: I try to get the cargo loaded into a different trailer and will even pay the towing company to perform the transload. Then I argue that I am not removing the equipment that was towed, but rather a different piece of equipment. In many states, there are regulations that the towing company cannot prevent the removal of personal property. This approach does not always work, but it is worth a try and argument with the towing company.
Ubick: The biggest lesson I have learned is that the best offense is a good defense—try to prevent it from happening in the first place. As soon as we know that our equipment will require a tow, we call one of our preferred towing companies. Make sure to tell the drivers of your vehicles that a tow company is coming out so they can update the officer on scene. If it is easier, ask the driver to hand the phone to the officer and tell that officer directly the tow truck is on the way. If we can proactively get a tow truck of our choosing on the way to the scene, then it helps reduce the number of times we encounter this situation. K
Meet the Panel
James A. Foster is a partner at Chicago-based Cassiday Schade LLP. He leads an emergency response team for catastrophic transportation accidents and serves as co-chair of CLM’s Transportation Committee. He is also on the faculty and executive council of CLM Claims College’s School of Transportation.
Andrew T. Stephenson is a senior principal at Franklin & Prokopik, a Mid-Atlantic defense firm. A seasoned civil litigator, trial lawyer, and passionate advocate, Stephenson has fought for corporations facing civil lawsuits involving catastrophic losses for two decades. His record of favorable outcomes extends to all of his practice areas, including construction, commercial transportation, paratransit, intentional torts, premises liability, products liability, and insurance coverage.
Tamara Warn is currently a complex litigation adjuster for Superior Risk Management, where she handles all manner of trucking accident claims. She has also worked as a safety director, vice president of risk management, and corporate counsel for several large trucking companies.
Cheryl Ubick has been handling claims in the trucking industry for 19 years and is the senior claims manager at TFI International. She has accountability for overseeing all TForce Freight (formerly UPS Freight) claims as well as all of the claims for TFI’s Canadian divisions. Prior to being at TFI, Ubick worked at Schneider in a variety of roles ranging from claims adjuster to leadership.