BILL NUMBER: S7434
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the lien law, the general business law and the adminis-
trative code of the city of New York, in relation to liens against
commercial towing companies for illegal and improper towing practices;
to amend the civil practice law and rules, in relation to grounds for
attachment; to amend the business corporation law, in relation to hold-
ing shareholders of non-publicly traded corporations personally liable
for certain judgments; and to amend the limited liability company law,
in relation to holding the ten members with the largest ownership inter-
ests in a company personally liable for certain judgments
 
PURPOSE:
This bill would place protections on consumers who may be victimized by
predatory towing.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill amends the lien law by adding a new article, 7-A,
lien on commercial towing companies for improper practices.
Section 170 under article 7-A regards the lien for violations associated
with illegal or improper practices relating to the towing of motor vehi-
cles.
Part one of section 170 establishes that a person shall have a lien
against any interest in property of a commercial towing company arising
out of any claim of illegal or improper practices relating to the towing
of motor vehicles.
Part two of section 170 states that the notice of a lien may be filed at
any time not later than three years following the violation giving rise
to the claim.
Part three of section 170 states that within five days before or thirty
days after filing the notice of a lien authorized pursuant to this arti-
cle, the lienor shall serve a copy of such notice upon the owner of the
commercial towing company if a natural person by different means of
delivery.
Part four of section 170 ensures that no lien, be it real or personal
property under this section shall be a lien for a longer period than one
year after the notice of lien has been filed, unless an extension is
filed, in which case no lien shall be extended for more than a period of
one year from the filing thereof. If a lienor is made a part of defend-
ant in an action to enforce another lien, and the plaintiff or such
defendant has filed a notice of the pendency of the action within the
time prescribed in this section, the lien of such defendant is thereby
continued. Notwithstanding the foregoing, if a lienor commences a fore-
closure action or an action to obtain a judgement on the claim within
one year from the filing of the notice of lien on real property or the
recording of the financing statement creating lien on personal property
the lien shall be extended during the pendency of the action. Therefore,
the duration of which a lien has been extended by the filing of a notice
of the pendency of an action, shall nevertheless terminate as a lien
after such notice has been canceled.
Section 171 under article 7-A regards the enforcement of the lien. Part
1 of section 171 establishes that a lien on real property authorized
under this article may be enforced against such property, and against a
person liable for the judgement upon which the lien is founded.
Part two of section 171 states that a lien on personal property speci-
fied in this article may immediately be enforced against the property
through foreclosure, or upon judgment obtained by the owner of the motor
vehicle,*or the attorney of the state of New York, and may be enforced
in any manner available to the judgement creditor.
Part three of section 171 explains that a lien, where notice has been
filed on real property or a bond given to discharge the same, may be
vacated and cancelled or a deposit made to discharge a lien, may be
returned, by an order of a court of record.
Section 2 amends subdivision 5 of section 6201 of the civil practice law
and rules, previously amended by chapter 860 of the laws of 1977 and as
renumbered by chapter 618 of the laws of 1992, and a new subdivision, 6,
is added.
Subdivision 5 changes to "include of this chapter; or".
Subdivision 6 states that if the cause of action is based on claims of
illegal or improper practices relating to the towing of motor vehicles.
Section 3 amends the business corporation law by adding a new section,
631.
Section 631 discusses the liability of shareholders of commercial towing
companies for claims of illegal and improper towing practices.
Section 4 amends section 609 of the limited liability company law by
adding a new subdivision (e).
Subdivision (e) states that the ten members with the largest percentage
of ownership interest in every limited liability company, shall jointly
and severally be personally liable for all claims due and owing to any
person as a result of an action to recover damages for violations asso-
ciated with illegal or improper practices relating to the towing of
motor vehicles.
Section 5 sets the effective date.
 
JUSTIFICATION:
Predatory towing has been a problem for many New York State motorists,
particularly those in areas where parking is limited such as New York
City. Certain towing companies, which aggressively enforce parking regu-
lations on the private property where they are authorized to tow, intim-
idate motorists into providing cash payments in excess of authorized
drop fees. While the act of towing itself is permissible depending on
posted signage, they cannot require cash payment and they are cannot
charge more than one-half of the charge allowed if the individual
arrives at the scene prior to the removal of the vehicle. Many individ-
uals who see that their vehicle is being towed are desperate to avoid
lengthy ordeals and significant hassle and are willing to meet a tow
operator's demand regardless of legality. It is only after they get
their vehicle back that they realize that they have been taken advantage
of and laws have been violated. Clearly the existing complaint process
is insufficient to deter these predatory towing companies from continu-
ing to take advantage of unsuspecting motorists.
By allowing a lien to be placed on these unscrupulous companies, this
bill will strengthen enforcement procedures of existing law and will
further protect the motorists of New York State.
According to New York City Administrative Code Section 19-169.1 Part g:
"if the registered owner or other person in control of a vehicle arrives
at the scene prior to the removal of the vehicle, and such vehicle is
connected to any apparatus for removal, the vehicle shall be discon-
nected from such apparatus and such registered owner or other person in
control of such vehicle shall be allowed to remove the vehicle from the
premises without interference upon payment of a reasonable service fee
of not more than one-half of the charge allowed for removal as provided
in subdivision a of this section, for which a receipt shall be given.
Each tow operator shall carry a legible copy of this section." Further-
more, the NYC Department of Consumer Affairs and NYPD have both stated
that tow operators cannot demand cash payment for release of a vehicle
that is being towed.
 
LEGISLATIVE HISTORY:
S.3265 of 2023-2024 (Hoylman-Sigal): Died in Judiciary
A.834 of 2023-2024 (Dinowitz): Died in Judiciary
S.0698 of 2021-2022 (Hoylman): Died in Judiciary
A.1041 of 2021-2022 (Hoylman): Died in Judiciary
S.6067 of 2019-2020 (Hoylman): Died in Judiciary
A.2593 of 2019-2020 (Dinowitz): Died in Judiciary
A.10240 of 2017-2018 (Dinowitz): Died in Judiciary
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
30 days after it has become a law.

Statutes affected:
S7434: 399-xx general business law, 399-xx(2) general business law, 609 limited liability company law