IN THE UNITED STATES BANKRUPTCY COURT FOR THE …omnimgt.com/cmsvol2/pub_47170/615756_27.pdfMotion for Summary Judgment and a Counter-Motion for Partial Summary Judgment. On March

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re:

UNITED ROAD TOWING, INC., et al.,

Debtors.

Chapter 11

Case No. 17-10249 (LSS)

Joint Administration Requested

Re: D.I. 9

Hearing Date: Feb. 7, 2017 at 9:30 a.m.

OBJECTION OF RIGHT CHOICE CREDIT UNION A/K/A FIRST

SERVICE CREDIT UNION TO DEBTORS’ MOTION FOR ENTRY

OF AN ORDER AUTHORIZING THE DEBTOR TO (I) PAY

PREPETITION CLAIMS OF CERTAIN CRITICAL VENDORS,

(II) HONOR CERTAIN ORDINARY COURSE ADVANCED PAYMENT

OBLIGATIONS AND (III) GRANTING RELATED RELIEF

Right Choice Credit Union a/k/a First Service Credit Union (“RCCU”), by and through its

undersigned counsel, objects (“Objection”) to the Debtors’ Motion For Entry of An Order

Authorizing The Debtor To (I) Pay Prepetition Claims Of Certain Critical Vendors, (II) Honor

Certain Ordinary Course Advanced Payment Obligations and (III) Granting Related Relief (the

“Motion”) (D.I. 9) and states as follows:

1. RCCU is the largest unsecured creditor in the above-captioned Debtors’ bankruptcy

cases commenced on February 6, 2017 (the “Bankruptcy Cases”). RCCU’s claim is based on the

July 1, 2015 Findings of Fact and Conclusions of Law (“Findings of Fact”) entered by the District

Court in Clark County, Nevada, Eighth Judicial District Court (“District Court”), in which it

awarded damages to RCCU in the amount of five million dollars ($5,000,000) plus pre-judgment

and post-judgement interest. The damages arose from the Debtor’s unlawful billing policy for

non-consent towing in Nevada during the specified time period. In addition, on July 16, 2015, the

District Court entered its Judgment ordering the amount of $5,000,000 and appropriate interest

Case 17-10249-LSS Doc 27 Filed 02/06/17 Page 1 of 3

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(“Judgment”). A true and correct copy of the Findings of Fact and Judgment are attached hereto

as Exhibit A.

2. Based on the District Court’s findings, and based upon the Debtors’ past practices

and actions, RCCU has serious questions regarding the nature of the Debtors’ bankruptcy cases.

In particular, and without limitation, RCCU is concerned that the Debtors will treat most, if not

all, of the unsecured creditors (other than RCCU and perhaps those creditors who likely will not

wish to be involved in these Bankruptcy Cases due to relatively small claims) as critical vendors

and pay such creditors immediately in order to potentially frustrate the process to allow for

oversight of the Debtors, including the process to appoint an unsecured creditors committee.1

3. Especially at this early stage of these Bankruptcy Cases, and in light of the findings

of the District Court, RCCU believes that any determination on the Motion should be delayed until

after the United States Trustee has been able to hold the meeting to form the unsecured creditors

committee, and until after RCCU has had the opportunity to fully review all relevant documents

regarding these Bankruptcy Cases and conduct an educated and informed analysis.

4. In addition, all parties in interest must be afforded a reasonable opportunity to

review the Debtors’ critical vendor plan and the appropriateness of payments to any parties.

THIS SPACE INTENTIONALLY LEFT BLANK

1 In addition, eliminating most unsecured creditors would leave these Bankruptcy Cases as largely a two-party

dispute.


3

WHEREFORE, RCCU respectfully requests that this Court sustain the Objection and

enter an order denying the Debtors’ Motion, and grant such other relief as may be just and proper.

DATED: February 6, 2017

Wilmington, Delaware

GELLERT SCALI BUSENKELL & BROWN

LLC

/s/ Brya Keilson

Ronald S. Gellert (DE # 4259)

Brya Keilson (DE # 4643)

Evan Rassman (DE #6111)

1201 N. Orange Street, Suite 300

Wilmington, DE 19801

Phone: (302) 425-5800; Fax: (302) 425-5814

[email protected]

[email protected]

[email protected]

Counsel for Right Choice Credit Union a/k/a First

Service Credit Union


EXHIBIT A

Case 17-10249-LSS Doc 27-1 Filed 02/06/17 Page 1 of 32

1 FFCL

3

Judge Ronald J. Israel 2 Eighth Judicial District Court

Department XXVIII Regional Justice Center

4 200 Lewis A venue

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Las Vegas, Nevada 89155 (702) 671-3631

ORIGI

DISTRICT COURT

CLARK COUNTY, NEVADA

Electronically Filed 07/01/201510:58:19AM

,

~j.~~ ... CLERK OF THE COURT

9 FIRST SERVICE CREDIT UNION, CASE NO. A-1O-616806-C DEPT. NO. XXVIII

10 Plaintiff,

11 v.

12 UNITED ROAD TOWING, INC. et aI.,

13 Defendants.

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FINDINGS OF FACT AND CONCLUSIONS OF LAW

AFfER BENCH TRIAL

o Non-Jury Disposed After Trial Start

• Non-Jury Judg,nentReached

D Transferred before Trial

o Jury Oliposed Mer Trial SIan o Jury \Jenllet Reached

DOttIer·


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Table of Contents

PROCEDURAL HISTORY .............................................................................................. 1

FIND IN G S OFF ACT ....................................................................................................... 3

A. Defendants United Road Towing. Inc. and City Towing. Inc .............................. 3

B. The Class Representative Plaintiff and the Certified Class ................................. .4

C. Defendants' Billing and Collection Practices for Non-Consent Tows ................. 6

a) During the Class Period Defendants Did Not Provide Class Members With a Bill Itemizing Each Rate Used or Fee Chargedfor Non-Consent Tows . ......................................................................................................... 6

b) During the Class Period Defendants Did Not Provide Class Members With Written Substantiation Attached to the Bill for Non-Consent Tows. 8

c) Defendants Collect Tow Fees for Non-Consent Towsfrom Class Members Either Through Direct Payment by the Class Member for the Release of the Vehicle or Through the Sale at Auction of the Vehicle ....................... 9

D. Plaintiff and Class Members' Experiences ........................................................... 11

E. The Amount of Tow Fees Collected by Defendants from the Class .................... 13

CONCLUSIONS OF LAW .............................................................................................. 15

A. Defendants' Billing Practices Violate Nev. Admin. Code 706.420 ..................... 15

a) Defendants Violated NAC 706.420 by Failing to Provide Class Members with a Bill Before Collecting Tow Fees for Non-Consent Tows ............... 15

b) Defendants Violated NAC 706.420 by Failing to Attach Written Substantiation to Their Bills for Non-Consent Tows ................................ 20 .

B. Declaratory ReI ief ........................................................... " .................................... 21

C. Unjust Enrichment ................................................................................................ 21

a) Through direct payment or proceeds from the liquidation of their equity in their vehicle, the class has conferred a benefit on Defendants, and Defendants appreciate the benefit . ........................................................... 21

b) Because Defendants have no legal power to collect unsubstantiatedfees, Defendants' collection of those fees is inequitable ....... .... " ...................... 22

D. Conversion ............................................................................................................ 22

RELIEF GRANTED ......................................................................................................... 23

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2 I.

The Court hereby enters its findings of fact and conclusions of law as to Plaintiffs claims.

PROCEDURAL HISTORY

3 Plaintiff First Service Credit Union ("Plaintiff') commenced this action in May 2010, asserting

4 claims for conversion, fraud. unjust enrichment, declaratory relief and replevin. On February 24. 2012,

5 Plaintiff, on its own behalf and on behalf of all persons similarly situated. filed an amended complaint

6 asserting the claims for declaratory and injunctive relief. violations of NRS Chapter 706, conversion.

7 fraud. unjust enrichment. and replevin.

8 On April 9. 2013. the Court granted Plaintiff s motion for class certification, certifying the

9 following class: "all owners of motor vehicles, excluding any employees of Brooks Bauer LLP and any

10 sitting member of the judiciary, who had their vehicle towed in Nevada without their prior consent by

11 United Road Towing, Inc. since February 2. 2006. were charged fees arising from the tow, and were

12 denied recovery of their vehicle absent payment of the fees in full."

13 On June 26, 2014, Plaintiff filed its second amended complaint. which is the operative complaint

14 at the time of trial. Plaintiffs second amended complaint asserts the following claims on its own behalf

15 and on behalf of others similarly situated: (i) Count One - Declaratory Relief; (ii) Count Two -

16 Violation of Chapter 706 of the Nevada Revised Statutes; (iii) Count Three - Conversion; (iv) Count

17 Four - Unjust Enrichment; (v) Count Five - Replevin.

18 On August 21. 2014. Plaintiff and Defendant United Road Towing, Inc. and City Towing. Inc.

19 stipulated to a binding court order. which was ordered and entered by the Court on August 27, 2014 (the

20 "August 27th Stipulation and Order"). Pursuant to the August 27th Stipulation and Order. the parties

21 agreed "to the amendment, nunc pro tunc, of the class definition to the definition of the certified class in

22 the Court's April 9. 2013. Order Granting Class Certification to read as follows:

23 All owners of motor vehicles, excluding any employees of Class Counsel

24 and any sitting members of the Judiciary, who had their vehicle towed in

25 Nevada without their consent by United Road Towing, Inc. and/or City

26 Towing. Inc. from February 2, 2006, to March 21. 2013. were charged

27 fees arising from the tow, and were denied recovery of their vehicle absent

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payment of the fees in full."

[August 27th Stipulation and Order at page 2, lines 4 to 10. J

On March 16, 2015, the Court granted in part Defendants' Motion in Limine No.1 to Exclude

Claims Barred by the Statute of Limitation. Pursuant to the Court's March 16,2015 Order, the Class'

unjust enrichment claims are limited to those claims that arose on or after February 24, 2008 (that is,

four years before the February 24, 2012, filing date of Plaintiffs First Amended Complaint) and all

other claims by the Class are limited to those claims that arose on or after February 24, 2009 (that is,

three years before the February 24, 2012, filing date of Plaintiff s First Amended Complaint).

In addition to the amendment of the class definition, pursuant to the August 27th Stipulation and

Order: (i) "URT and CTI agree and stipulate that each is joint and severally liable for any rulings,

findings, verdicts and/or judgments issued against the other" [August 27th Stipulation and Order at page

2, lines 2 to 31; and (ii) "URT and CTI further agree and stipulate that any evidence, documents, and/or

facts used and/or established as to one, will be considered established to the other." [August 27th

Stipulation and Order at page 2, lines 11 to 12.1

In December 2014, Defendants filed a Motion for Summary Judgment as to Plaintiffs Individual

Claim in their Entirety and for Summary Adjudication and/or Partial Summary Judgment as to Each of

Plaintiffs Individual Causes of Action. On January 2, 2015, Plaintiff filed its Opposition to Defendants'

Motion for Summary Judgment and a Counter-Motion for Partial Summary Judgment. On March 16,

2015, the Court denied Defendant's Motion for Summary Judgment as to Plaintiff s Individual Claim in

their Entirety and for Summary Adjudication and/or Partial Summary Judgment as to each of Plaintiffs

Individual Causes of Action. On March 16, 2015, the Court also denied Plaintiffs Counter-Motion for

Partial Summary Judgment.

The instant order follows a bench trial that commenced on Monday, March 16, 2015, and

concluded on Tuesday, March 24, 2015. I Following the close of evidence, both sides submitted written

closing briefs, with Plaintiff submitting its initial closing brief on April 24, 2015, Defendants submitting

I Trial was held and evidence was taken by the Court on March 16th, March 17th, March 19th, March 20th and March 24th of 2015.

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their closing brief on May 26. 2015, and Plaintiff submitted its rebuttal closing brief on June 9. 20 IS.

On April 21, 2015, Defendants filed two motions as for judgment as a matter of law; specifically.

Defendants filed: (i) a Motion for Judgment as a Matter of Law as to Plaintiffs Individual Claims and

(ii) a Motion for Judgment as a Matter of Law as to Class Claims. Plaintiff filed its oppositions to

Defendants' two post-trial motions on May 13,2015, and Defendants filed their reply briefs on May 28.

2015. On June 3, 2015, the Court denied Defendants' Motion for Judgment as a Matter of Law as to

Plaintiffs Individual Claims and also denied Defendants' Motion for Judgment as a Matter of Law as to

Class Claims.

Pursuant to the August 27th Stipulation and Order, all findings of fact and conclusions of law set

forth herein, apply to both Defendant United Road Towing, Inc. CURT") and Defendant City Towing,

Inc. ("CT["). For purposes of both clarity and conciseness, the Court's use of "URT" shall be

understood to include both CTI and URT. [n the findings, the phrase "this order finds ... " or "this

Court finds ... " are occasionally used to emphasize a point. The absence of either phrase, however,

does not mean (and should not be construed to mean) that a statement is not a finding. All declarative

statements set forth in the findings of fact are factual findings. To the extent that any findings of fact are

included under conclusions of law they shall be deemed findings of fact, and to the extent that any

conclusions of law are included under findings of fact they shall be deemed conclusions of law. See

Miller v. Fenton, 474 U.S. 104, 113-114 (1985). This order incorporates all of the previous orders of

this Court which are cited herein.

II. FINDINGS OF FACT

The findings of fact which follow are taken from direct or circumstantial evidence presented at

trial or from inferences drawn from such evidence.

A. Defendants United Road Towing, Inc. and City Towing, Inc.

1. Defendant United Road Towing, [nco ("URT") owns approximately 20 different

entities across the country. [Tr. of Trial Proceedings 49:4-13 (March 19,2015).1 In Nevada URT

owns three entities which it operates as subsidiaries: 0) Sunrise Towing; (ii) City Towing, Inc. dba

Quality Towing; and Ken Lehman Enterprises. dba South Strip Towing. [Id. at 7: 19-8:9, 22:21-

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23:1. 49:4-13. 55:17-20.1

2. Defendant City Towing, Inc. dba Quality Towing (''CTI'' or "Quality Towing") is the

largest of URT's three Nevada subsidiaries, accounting for approximately 90 percent of URT's Nevada

business. [Tr. of Trial Proceedings 55:17-25 (March 19,2015).1 cn, which has three locations in

Nevada. has municipal contracts to provide towing services with the North Las Vegas Police

Department, the Nevada Highway Patrol. the Las Vegas Metropolitan Police Department, the Park

Service and the U.S. Marshals. [Id. at 54: 16-55:2.1

3. CTI is divided into the following departments: (i) the shop department, which is

responsible for repairing equipment; (ii) the customer service department. which is responsible for

fielding questions and releasing towed vehicles to owners. insurance companies or salvage people;

(iii) the dispatch and operations department, which oversees the drivers. drivers' trucks and

dispatching; (iv) the accounting department, which oversees all of the accounting; (v) the claims

and safety department. which oversees claims; and (vi) collections department. [Tr. of Trial

Proceedings 56:3-57:4 (March 19,2015).1

4. Pursuant to the parties' stipulation. which was entered as an order by this Court on

August 27. 2014, URT and cn are joint and severally liable for any rulings. findings, verdicts and/or

judgments issued against the other. [August 27th Stipulation and Order at page 2, lines 2 to 3.1 In

addition, pursuant to the parties' stipulation, which was entered as an order by this Court on August 27.

2014, any evidence, documents. and/or facts used and/or established as to either URT or CTI. will be

considered established to the other. 1 August 27th Stipulation and Order at page 2. lines 11 to 12·1

5. In accordance with the August 27th Stipulation and Order. the Court's use of the terms

"Defendants, "URT." and "cn" herein shall be understood to include both CTI and URT unless

specifically stated otherwise.

B. The Class Representative Plaintiff and the Certified Class

6. Plaintiff First Service Credit Union ("Plaintiff'), formally known as "Right Choice Credit

Union." is the lienholder of a 2007 Chevrolet Suburban (Vehicle Identification Number

3GNFCI6027G307987) which was towed by URT in December 2009.ITr. of Trial Proceedings 72:17-

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1 74:25 (March 16, 2015); Pl.'s Trial Ex. 3.1 Plaintiff filed the complaint initiating this action in May

2 2010.

3 7. On April 9, 2013, the Court granted Plaintiffs Motion for Class Certification, which

4 certified the following class (as modified, nunc pro tunc, by the August 27th Stipulation and Order):




8 Towing, Inc. from February 2, 2006 to March 21,2013, were charged fees

9 arising from the tow, and were denied recovery of their vehicle absent

10 payment of the fees in full.

11 [August 27th Stipulation and Order at page 2, lines 4 to 10.1

12 8. Pursuant to the Court's April 9, 2013, Order Granting the Plaintiffs Motion for Class

13 Certification and Appointment of Class Counsel, Plaintiff is designated the Class Representative of the

14 Class. I April 9, 2013 Order at page 7, lines 1 to 2.1

15 9. On March 16, 2015, the Court granted in part Defendants' Motion in Limine No.1 to

16 Exclude Claims Barred by the Statute of Limitation. Pursuant to the Court's March 16,2015 Order, the

17 Class' unjust enrichment claims are limited to those claims that arose on or after February 24. 2008 (that

18 is. four years before the February 24, 2012 filing date of Plaintiff s First Amended Complaint) and all

19 other claims by the Class are limited to those claims that arose on or after February 24, 2009 (that is,

20 three years before the February 24,2012 filing date of Plaintiffs First Amended Complaint).

21 10. Based on the Court's Order granting in part Defendants' Motion in Limine No. 1 to

22 Exclude Claims Barred by the Statute of Limitation, the certified class consists of:




26 Towing, Inc. from February 24, 2008 to March 21, 2013, were charged

27 fees arising from the tow, and were denied recovery of their vehicle absent

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payment of the fees in full [herein, the "Class" or "Certified Class"l.

11. Based on the Court's Order granting in part Defendants' Motion in Limine No. 1 to

Exclude Claims Barred by the Statute of Limitation, the period of liability for the Class runs from

February 24, 2008 to March 21, 2013 [herein, the "Class Period"J.

C. Defendants' Billing and Collection Practices for Non-Consent Tows

a) During the Class Period Defendants Did Not Provide Class Members With a

Bill Itemizing Each Rate Used or Fee Charged for Non-Consent Tows.

12. Kimberly Vestuto is Defendants' customer service manager. [Tr. of Trial Proceedings

114:17-20 (March 17,2015).1 As Defendants' customer service manager, Ms. Vestuto is responsible for

training and supervising Defendants' customer service representatives. As part of her duties, it is Ms.

Vestuto's responsibility to know Defendants' policy regarding what is require for the release of towed

vehicles and the collection of fees for non-consent tows and to ensure that the policy is followed. [Id.

114:21-115:3,116:20-22,118:18-19.1 Ms. Vestuto was designated by Defendants as their Nev. R. Civ.

P. 30(b)(6) witness concerning "any communications with any member or the member's representative

regarding any rate, fare, charge, or fee that defendants charged or billed for nonconsent tows conducted

during the class period," the "payment of any rate, fare, charge, or fees" charged by Defendants for

nonconsent tows during the class period, and Defendants' "collection of any rate, fare, charge or fee" for

nonconsent tows during the class period. [Id. 110:9-114:3.1

13. Ms. Vestuto testified that Defendants did not provide vehicle owners who sought to

obtain the release of their vehicle with a bill itemizing each rate used or fee charged for the non-consent

tow but would instead demand payment by verbally informing the vehicle owner or his agent of the total

amount of tow charges sought by Defendants. [Tr. of Trial Proceedings 128: 11-20 (March 17, 2015 ).,

14. Ms. Vestuto additionally testified that Defendants only provided vehicle owners who

sought to obtain the release of their vehicle with a "printout of the tow fees that were being charged" by

Defendants for a non-consent tow after the vehicle owner paid the tow charges in full. ITr. of Trial

Proceedings 128: 11-20 (March 17, 2015).1 However, the "printout" that Defendants provided vehicle

owners or their agents after paying for the release of their vehicle is labeled a "Call Receipt" - not a

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1 "bill". [Pl.'s Trial Ex. 19 (Ex. 4 to the Deposition of Kimberly Vestuto).] In addition to indicating the

2 amount of tow charges, the Call Receipt also indicates the method and amount paid for the release of the

3 vehicle. (ld.]

4 15. Class member testimony confirms that it was Defendants' policy and practice to seek and

5 demand payment of tow fees for non-consent tows without providing vehicle owners or their

6 representatives with a bill itemizing each rate used or fee charged for the non-consent tow.

7 a. Class member David Crosby testified that when he went to retrieve his vehicle,

8 Defendant did not provide him with a bill but instead verbally told him how much he had

9 to pay to retrieve the vehicle [Tr. of Trial Proceedings 59: 13-20 (March 16. 2015 ).]

lOb. Class member Anita Montoya testified that she never received a bill from Defendants on

11 any of the three times her vehicle was towed. ITr. of Trial Proceedings 94:21-95:4,

12 98:11-18,102:22-103:1 (March 16,2015).]

13 c. Class member Maurice Carroll testified that he specifically requested that Defendants

14 provide him with a bill itemizing the fees before he paid anything to recover his vehicle.

15 ITr. of Trial Proceedings 5:2-4, 10:9-24 (March 17, 2015).1 Defendants refused to

16 provide him with anything. [[d. 10: 18-11 : 1.1 Having no other options if he wanted to

17 reclaim his towed vehicle, Mr. Carroll paid the tow fees without receiving a bill. lId.

18 11:2-22·1

19 d. Class member Sandy Marriott testified that she never received a bill prior to paying the

20 tow fees imposed by Defendants. ITr. of Trial Proceedings 23:4-6. 23: 16-25: 10 (March

21 17,2015).1

22 16. Defendants do not dispute - and provided no evidence at trial disputing - that, during the

23 Class Period, Defendants did not provide vehicle owners or their agents with a bill itemizing each rate

24 used or fee charge for a non-consent tow if the vehicle owner or his agent did not .first pay, in full. the

25 tow fees verbally demanded by Defendants.

26 17. While Defendants maintain that the document. which is called and labeled by Defendants

27 a "Call Receipt" I see PI.' s Trial Ex. 19 (Ex. 4 to the Deposition of Kimberly Vestuto) I. constitutes a

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1 "bill," the Court rejects this contention. The label of the document (i.e., "Call Receipt"), the fact that the

2 document indicates the date, amount and method of payment, and the fact that the document is provided

3 to Class Members (if at all) only after payment of the tow fees all establish that the "Call Receipt" is

4 exactly what it purports to be, a receipt - not a bill.

5 18. Defendants do not dispute - and provided no evidence at trial disputing - that, during the

6 Class Period, the document that Defendants assert constitutes a "bill" (i.e., the "Call Receipt") was

7 provided to a Class Member (i) only (/'the Class Member directly paid Defendants all tow fees verbally

8 demanded by Defendants and (ii) only after the Class Member directly paid Defendants all tow fees

9 verbally demanded by Defendants.

10 19. This Court finds that, during the Class Period, Defendants did not provide Class

11 Members or their agents with a bill itemizing each rate used or fee charged for non-consent tows.

12 20. To the extent that Defendants provided a document itemizing each rate used or fee

13 charged for non-consent tows to Class Members or their agents who paid for the release of their vehicle

14 (i.e., the "Call Receipt"), this Court finds that said document was a "receipt" - not a "bill" - and further

15 finds that said document was provided to a Class Member (i) only if the Class Member directly paid

16 Defendants all tow fees verbally demanded by Defendants and (ii) only after the Class Member directly

17 paid Defendants all tow fees verbally demanded by Defendants.

18 b) During the Class Period Defendants Did Not Provide Class Members With

19 Written Substantiation Attached to the Bill for Non-Consent Tows.

20 21. Ms. Vestuto testified that the only document provided to vehicle owners who paid for the

21 release of their vehicle (again, only after the vehicle owner or his agent has paid, in full, the tow fees

22 demanded by Defendants) by Defendants that sets forth the amounts that a vehicle owner has to pay is

23 the "Call Receipt." [Tf. of Trial Proceedings 136:12-19, 165:17-166:12 (March 17,2015).1 Ms. Vestuto

24 additionally testified that Defendants do not provide vehicle owners with any backup information that

25 would substantiate the fees that are set forth in the Call Receipt. lid. at 166: 13-16.J Indeed, Ms. Vestuto

26 testified that it is Defendants' policy to not even permit vehicle owners to look at any backup

27 documentation that Defendants may have that would substantiate the tow fees that are being charged.

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I [Id. at 166: 17-167: Il.l

2 22. Bruce San Filippo, Defendants' general manager of the Las Vegas office, confirmed that

3 that Defendants' do not attach any written substantiation to the Call Receipt. [Tr. of Trial Proceedings

4 73:6-10 (March 19,2015)·1

5 23. Mr. San Filippo additionally testified that Defendants "maintain paper records of backup

6 documentation to support the call receipts." [Tr. of Trial Proceedings 100:18-20 (March 19,2015).1

7 Indeed, Mr. San Filippo testified that these are the very types of documents that "would substantiate the

8 bill" (such as, for example, original tow ticket). lid. at 100:25-101:11.1 Despite claiming that

9 Defendants have "substantiation documents," Mr. San Filippo confirmed that these documents are not

10 provided to vehicle owners. [Id. at 102:6-13.1

11 24. Thus, although some of Defendants' records may substantiate some of the tow fees

12 charged by Defendants for non-consent tows, Defendants flatly refuse to provide these documents to

13 vehicle owners or their agent. [Tr. of Trial Proceedings 135:22-136:25, 147:23-148:24 (March 17,

14 2015)·1 Instead, Defendants assert that they store those records in a warehouse, only to be produced if a

15 vehicle owner files a lawsuit or a claim with the Nevada Transportation Authority. [Id. 134:4-15, 135:4-

16 9, 146: 19-21; Tr. of Trial Proceedings 113:2-114: II (March 19, 2015 ).1

17 25. This Court finds that Defendants did not attach written substantiation of the tow charges

18 imposed for non-consent tows to the "Call Receipt" document that was provided to those Class

19 Members who paid the tow fees imposed by Defendants in order to reclaim their vehicle. As such, to

20 the extent that the "Call Receipt" document could be considered a "bill" pursuant to NAC 706.420, the

21 Court finds that all charges itemized in that bill were not substantiated in writing and attached to the bill.

22 c) Defendants Collect Tow Fees for Non-Consent Tows {rom Class Members

23 Either Through Direct Payment by the Class Member for the Release of the

24 Vehicle or Through the Sale at Auction o{the Vehicle.

25 26. Ms. Vestuto testified that Defendants' customer service representatives must charge

26 vehicle owners the total amount of tow fees as set forth in the Call Receipt and have no discretion to

27 charge less than what is shown on the Call Receipt. (Tr. of Trial Proceedings 164:21-165:8 (March 17,

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1 2015).]

2 27. Ralph Sedillo - Defendants' auction and lien manager for their Las Vegas office and

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Defendants' Nev. R. Civ. P. 30(b)(6) designee on the auction process - testified that, if a vehicle owner

is unable to pay the total fees demanded by Defendants or is unwilling to do so until they received a bill,

Defendants would refuse to release their lien on the vehicle and would instead enforce their lien through

the sale of the vehicle at auction. I Tr. of Trial Proceedings 88: 20-89: 12, 106: 2-8 (March 17, 2015 ).]

28. Defendants do not dispute - and provided no evidence at trial disputing - that, during the

Class Period, Defendants would not release a vehicle that was subject to a non-consent tow to Class

Member or his agent unless the Class Member or his agent paid the tow fees imposed by Defendants in

full.

29. This Court finds that during, the Class Period, Defendants would only release a vehicle

that was subject to a non-consent tow if the Class Member or his agent paid the tow fees imposed by

Defendants in full. Accordingly, this Court finds that if Defendants released a vehicle to a Class

Member or his agent, the tow fees charged by Defendants for the non-consent tow of that vehicle was

paid in full by the Class Member or his agent.

30. This Court additionally finds that for any vehicle where the Class Member or his agent

did not pay the tow fees imposed by Defendants in full, the vehicle was sold at auction by Defendants.

31. For vehicles sold by Defendants through an auction, Defendants receive auction proceeds

in the fonn of money from third party buyers or a credit bid from Defendants. ITr. of Trial Proceedings

92:14-93:6 (March 17, 2015); Tr. of Trial Proceedings 10:2-8, 12:20-13:13 (March 19, 2015).]

Defendants use those proceeds towards satisfaction of the tow fees that Defendants have charged for the

non-consent tow of the vehicle. ITr. of Trial Proceedings 10:25-12:6, 12:20-13: 13 (March 19, 2015).1

32. If Defendants' tow fees exceed the auction proceeds, Mr. Sedillo, Mr. San Filippo, and

Sherry Franco (Defendants' controller) all testified that Defendants maintain a policy of pursuing Class

Members "through collections the unpaid portion of the tow fees for vehicles that were sold at auction."

ITr. of Trial Proceedings 101:18-102:2 (March 17,2015); Tr. of Trial Proceedings 12:7-10, 109:3-22

(March 19,2015).1

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33. The testimony of Maurice Carroll, a class member, confirms that Defendants directly

pursue tow fees that are not satisfied through the auction sale of the towed vehicle through collections.

Mr. Carroll testified that, years after his second vehicle was towed by Defendants - despite being legally

parked - and subsequently auctioned, he received a letter that purported to be a "collection letter from a

law firm stating that I he J owed fees" for the tow and storage of this vehicle. I Tr. of Trial Proceedings at

17:5-25 (March 17,2015).]

34. This Court finds that for those vehicles that were not released to Class Members or their

representatives, Defendants collected some or all of the tow fees imposed by Defendants for the non

consent tow of the vehicle through the sale of the vehicle at auction.

D. Plaintiff and Class Members' Experiences

35. Plaintiff First Service Credit Union had its vehicle towed by Defendants without any

notice of the tow until it received a single-page bill from Defendants about a month after the tow. ITr. of

Trial Proceedings 72:17-74:4 (March 16,2015); Pl.'s Trial Ex. 3.J The letter showed that Defendants

charged $2,222.35 in various fees, but there is no documentation explaining how or why Defendants

charged those fees. ITr. of Trial Proceedings 77: 10-13 (March 16,2015); Pl.'s Trial Ex. 3.] Defendants

ultimately auctioned the vehicle for an amount slightly less than the amount indicated in the "lien letter."

ITr. of Trial Proceedings 83:24-84:1 (March 16, 2015); PL's Trial Exs. 3, 4.] First Service never

received a final bill for the tow and sent a written request to Defendants for a copy of the auction receipt.

ITr. of Trial Proceedings 84:20-25 (March 16, 20 IS).] Without this request, First Service would not

have received notification that an auction even occurred. lId.; Tr. of Trial Proceedings 86: 19-23 (March

17,2015). J

36. Class member David Crosby, a licensed Nevada attorney, testified that he felt that

Defendants overcharged him for towing his vehicle from an accident scene. ITr. of Trial Proceedings

55:20-23, 56:3-25,63:22-64:4 (March 16, 2015).1 After making payment in full to recover his vehicle,

Mr. Crosby sent at least three written demands for this information (two of which were via certified

mail). lId. 61:20-24, 63:9-12, 63:20-66:2.J Defendants not only refused to show him the alleged "back

up documents," they refused to even respond. lId. 64:5-16, 65:8-66:2.1

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37. Class member Anita Montoya testified that Quality towed her vehicle, which had been

legally parked in the parking lot of Wildfire, a video poker restaurant/lounge. ITr. of Trial Proceedings

91:8-92:3 (March 16,2015).1 Wildfire management advised her that Wildfire had not requested the

towing of any vehicle, but that a Quality tow-truck had been trolling in the vicinity, so she should

contact Quality. lId., 92:4-93 :5.1 Mrs. Montoya and her husband went to Defendants' location. were

told the total charges Defendants imposed. but were never provided with any document that showed the

charges and the basis for the charges - not a call receipt. a bill, an itemization of fees. or anything else.

Od .. 93:6-95:17.) Instead. they were provided with only a "release of vehicle." which did not contain

any listing of charges. [Id., 103:2-7.1 Within weeks, Defendants again towed their vehicle, under the

same exact circumstances. and again refused to provide them with any bill or receipt, let alone the

documents substantiating the charges. [Id., 97-98.1 This occurred again only weeks after the second

tow, under identical circumstances, and this third time Mrs. Montoya and her husband attempted to

negotiate a lower charge. I Id., at pp. 99-102. [ Defendants refused to entertain their request, they were

unable to afford this third tow, and Defendants auctioned their vehicle. [ld.1 Mr. and Mrs. Montoya

were never given a call receipt or other bill itemizing Quality'S charges. (Id.1

38. Class member Maurice Carroll testified that he asked Defendants to provide him with a

bill itemizing the fees before he paid anything to recover his vehicle. ITr. of Trial Proceedings 9:22-

10:11, 10:12-24 (March 17,2015).1 Defendants refused to provide him with anything. [Id. 10:18-11:1.1

Having no other options if he wanted to reclaim his towed vehicle, Mr. Carroll paid the fees-sight

unseen-and received a receipt of payment without any substantiation of the fees. [Id. 11 :2-22.1 But for

another tow by Defendants, Mr. Carroll received a demand for thousands of dollars for the release of the

vehicles without any explanation of how Defendants came up with the amount. [Id., 15-16.1 Mr. Carroll

ultimately decided that he could not justify paying over $1,000.00 to reclaim his vehicle, especially

where he had no justification for those fees. so he declined to retrieve the vehicle. lId. 16: 19-25.1 Mr.

Carroll testified that. years after his second vehicle was towed by Defendants~espite being legally

parked-and subsequently auctioned. he received a letter that purported to be a "collection letter from a

law firm stating that [hel owed fees" for the tow and storage of this vehicle. lid. 17:5-25.1

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1 39. Class member Sandy Marriott also testified about her experience when her and her

2 husband's vehicle was towed by Defendants. ITr. of Trial Proceedings 23:4-6, 23: 16-25: 10 (March 17,

3 2015).] Upon learning that her vehicle had been towed, Mrs. Marriott called Defendants to inquire

4 about her vehicle and was told that she would need to make an appointment to view her vehicle.

5 Incredibly. although Mrs. Marriott was able and willing to go retrieve her vehicle immediately, she was

6 told that she would have to wait two days for her appointment. lid. 26: 12-27:5.] On the day of their

7 "appointment," Mrs. Marriott and her husband discovered that the engine and transmission had been

8 removed from their vehicle. [Id. 28: 11-16.] Defendants' representative told them that daily storage fees

9 would continue to accrue unless they paid all outstanding tow fees in full and had the inoperable vehicle

10 removed from the storage lot. [Id. 28:18-22,29:21-23.] The Marriotts. however. could not afford to

11 purchase and install a new engine/transmission and have the vehicle towed from the lot to their home.

12 [Id. 28:23-29:3. 29:24-30:6. 31:7-8.J When they advised Defendants' representative of their

13 predicament. the representative suggested that they could just sign over title of the vehicle to

14 Defendants. (Id. 30:25-31: 10·1 Despite giving the vehicle to Defendants, the Marriotts were still

15 required to pay all of the tow and storage fees charged for the non-consent tow of their vehicle

16 (including the days during which they had to wait for the "appointment"). rid. 31:11-16.1 With no other

17 option. the Marriotts signed title over to Defendants. and paid the towing and storage fees in the amount

18 demanded. [Id.] The Marriotts never received a bill prior to payment. lid. 31: 17 -20.]

19 E. The Amount of Tow Fees Collected by Defendants' from the Class

20 40. At trial Plaintiff presented the expert testimony of Jeremy Aguero. an economic analyst,

21 who testified as to the specific amount paid to Defendants for the release of the Class members' vehicles

22 and the specific amount collected by Defendant from the sale of Class members' vehicles at auction. [Tr.

23 of Trial Proceedings 3:9-10, 4:3-19, 9:7-16 (March 20, 2015).J Mr. Aguero testified that he used the

24 data produced by Defendants to formulate the damage amounts that he presented at triaL f Id. 4:3-5:7.

25 10:13-11:13,11:25-12:18,13:4-6,13:10-14:9,38:10-14.]

26 41. The data that Defendants produced in this litigation - and that Mr. Aguero used in

27 preparing his damage calculations - were limited to non-consent tows as established by the testimony of

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1 David Strawn, the Rule 30(b)(6) corporate designee regarding Defendants' production of electronic data

2 that Defendants produced regarding the collection of class list data. [Tr. of Trial Proceedings 47:3-12

3 (March 17,2015)·1 At trial Mr. Strawn - on behalf of Defendants - that the class list data produced by

4 Defendants was limited to non-consent tows. [Tr. of Trial Proceedings 46:19-47:7 (March 17,2015).]

5 42. Despite the binding testimony of Mr. Strawn, their 30(b)(6) designee, Defendants assert

6 that Mr. Strawn's unequivocal testimony that all of the data that produced by Defendant was limited

7 "solely to non-consent tows" should be disregarded. In support of this assertion, Defendants reference

8 the testimony of Bruce San Filippo for the proposition that "not all police tows are nonconsensual tows."

9 At trial Mr. San Filippo testified some "police tows" are done at the vehicle owner's request. [Tr. of

10 Trial Proceedings 91: 15-92:7 (March 19, 2015).1

11 43. However, at trial Mr. San Filippo acknowledged that within their database contains a

12 field labeled "reason code" which allows Defendants to identify whether a policy tow was done at an

13 owner's request. rTr. of Trial Proceedings 115:4-9 (March 19,2015).'

14 44. Mr. Aguero explained at trial, that his damage calculations excluded any tows where the

15 field labeled "reason code" indicated that the tow was an "owner request" tow. rTr. of Trial Proceedings

16 28:14-30:17 (March 20, 2015).1 As such, Mr. Aguero excluded from his damages calculations the tows

17 in the data produced by Defendants which indicated that they were an "owner request" tow. The

18 removal of these tows from the damages calculation completely negates the issue raised by Mr. San

19 Filippo' s testimony.

20 45. Not only did Mr. Aguero not consider any information expressly related to consent tows,

21 he also limited the period of consideration to a period from February 24, 2008 to March 21, 2013. [Tr. of

22 Trial Proceedings 11:8-24 (March 20, 2015).1 From that new period, Mr. Aguero opined that

23 Defendants collected $33,022,532.00 in fees paid by class members in recovering their vehicle. [Id. at

24 31:2-14.] And Defendants collected $17,169,656.00 in auction proceeds towards the fees owed by the

25 class members. [Id. 39:8-11.1 These two amounts - totaling $50,1 92,188.00 - represent the fees actually

26 collected by Defendants for non-consent tows during the Class Period. ITf. of Trial Proceedings 166:7-

27 24 (March 17,2015).1

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III. CONCLUSIONS OF LAW

A. Defendants' Billing Practices Violate Nev. Admin. Code 706.420

46. Bills for non-consent tows must satisfy two separate requirements. First. the tow

5 operator must set forth on the bill itself an itemization of the rates and fees charged for each service

6 purportedly done by the tow operator: "The operator of a tow car shall itemize on the bill for a

7 nonconsensual tow each rate used or fee charged to compute the total bill." NAC 706.420( I). Second,

8 the tow operator must additionally - and separately - attach to the bill written substantiation establishing

9 that it actually performed the services for which it is charging: "All charges must be substantiated in

IO writing and attached to the bill." N AC 706.420(1) (emphasis added). The rationale for these two.

i1 distinct requirements for non-consent tows is self-evident: since a vehicle owner did not request the tow

12 - and does not have any say over what additional services, if any. were undertaken as part of the tow - it

13 is not enough to provide the vehicle owner with a bill listing what is being charged, it is also necessary

14 to show the vehicle owner that what is being charged was actually done.

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47. If a tow operator fails to comply with these two requirements. Nevada law bars collection

of the unsubstantiated fees: "If a bill is prepared incorrectly or is incomplete. only the substantiated

charges may be collected." NAC 706.420(3) (emphasis added). Logically, if there is no bill, no fees

have been substantiated and no fees may be collected. This is true whether the fees were collected by

obtaining payment directly from a vehicle owner (or the owner's representative) for the release of the

vehicle or collected through the sale of the vehicle pursuant to Chapter 108 of the Nevada Revised

Statutes. A tow operator's failure to provide a bill itemizing fees with attached written substantiation of

those fees is a per se violation of Nevada law, rendering all fees collected unlawful.

48. The Court finds that Defendants' billing practices fail to satisfy the requirements

delineated in NAC 706.420.

49.

a) Detendants Violated NAC 706.420 by Failing to Provide Class Members with

a Bill Before Collecting Tow Fees for Non-Consent Tows.

As set forth in above in the Findings of Fact, Defendants never provided Class Members

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1 with a bill itemizing the rate or fee charged to compute the total bill before collecting tow fees for non-

2 consent tows - regardless of whether those tow fees were collected by obtaining payment directly from a

3 vehicle owner (or the owner's representative) for the release of the vehicle or collected through the sale

4 of the vehicle pursuant to Chapter 108 of the Nevada Revised Statutes.

5 50. Defendants assert that their failure to provide Class Members with a bill itemizing the

6 rate or fee charged to compute the total bill before collecting tow fees for non-consent tows does not

7 violate NAC 706.420 because NAC 706.420 merely requires that Defendants provide vehicle owners

8 with a bill only after a vehicle owner has paid, in full. the non-consent tow fees charged by Defendants

9 for the release of the vehicle. Defendants forward four arguments in support of their position. The

10 Court will address briefly address each argument.

11 51. Defendants' first argument centers on the language of NAC 706.422(2), which provides

12 in relevant part: "A copy of the bill for a nonconsensual tow must be given to the person paying the rates

13 and charges." Defendants argue that NAC 706.422(2) supports their position because its use of the

14 phrase "to pay" suggest that the bill needs to be given at the time payment is made. Defendants'

15 argument is not only wrong, it is illogical. If the drafters intended to allow a tow company to issue a bill

16 after payment. they would have written that a copy of the bill must be given "to the person who paid the

17 rates and charges" instead of "to the person paying the rates and charges." Paramount Ins .. Inc. v.

18 Rayson & Smitley, 86 Nev. 644,649,472 P.2d 530, 533 (1970) ("(N)o part of a statute should be

19 rendered nugatory, nor any language turned to mere surplusage, if such consequences can properly be

20 avoided.") (internal citations omitted). Indeed. the very use of the word "bill" (as opposed to "receipt")

21 compels the conclusion that the "bill" must be provided before tow fees can be collected. Under its

22 plain and ordinary meaning, a "bill" is "a statement of charges for goods supplied or services rendered"

23 or "the amount owed." See Automated Bus. Companies v. ENC Tech. Corp., No. CIV.A.H.-06-1032,

24 2009 WL 3190448, at *23 (S.D. Tex. Sept. 30, 2009) (emphasis added). In contrast, a "receipt" is "[a]

25 written acknowledgment that something has been receivedL.J esp[eciallyJ a piece of paper ... that one

26 has paid for something." Black's Law Dictionary (10th ed. 2014). In short, a "bill" must precede

27 payment, whereas a "receipt" follows payment.

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52. Allowing tow operators to provide a bill only after payment in full, as Defendants

maintain. would fundamentally undermine the policy rationale for requiring tow operators to provide

vehicle owners with a bill of all charges to which is attached written substantiation of those charges.

Common sense dictates that a tow operator should provide a vehicle owner with the opportunity to at

least review the bill and the attached substantiation before collecting the fees for a non-consent tow.

Accepting Defendants' interpretation would force vehicle owners to not only decide whether to payor

not pay non-consent tow fees but also actually pay those fees with no idea of what they are paying for.

Under Defendants' reading, the only mechanism available to vehicle owners for obtaining the

substantiation to which they are entitled is to file a lawsuit or (possibly) a claim with the Nevada

Transportation Authority. That cannot possibly be what is intended by NAC 706.420, which clearly

imposes an affirmative duty on Defendants to substantiate their fees. In short, the Court finds that

Defendants' position is totally contrary to normal daily activities and a perversion of the plain meaning

doctrine.

53. Defendants' second argument is that there is no way they could provide a bill prior to

payment because a bill given prior to the payment of charges could be inaccurate when the vehicle

owner attempted to render payment. According to Defendants, this potential inaccuracy stems from the

fact that some tow charges (such as storage fees) accrue daily and. as such, providing a bill prior to

payment would thus run the risk of providing an inaccurate bill should the vehicle owner decide not to

pay the charges at that time. This argument is utterly specious. Nothing precludes Defendants from

printing-out an updated bill if a previous bill is no longer accurate. A restaurant, for example. does not

require its customers to pay all charges before providing a bill because a customer may, after receiving a

bill. decide to get desert or have another drink. Defendants' argument is not only illogical. it is

completely undermined by the fact that (although Defendants did not provide vehicle owners with bills

prior to payment during the Class Period) they now do. ITf. of Trial Proceedings 123: 19-124:2 (March

17.2015).]

54. Defendants fail to explain why it is impossible to provide vehicle owners with a bill prior

to payment during the Class Period when they can and do now.

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55. Defendants' third argument is that they do not have to provide a bill before payment in

full because, essentially, there is nothing vehicle owners could do with the bill except pay the charges in

full. In other words, according to Defendants, since all vehicle owners who want to retrieve their

vehicle have no choice but to "pay-up and shut-up," it really makes no difference whether they are

provided with a bill and written substantiation. While the evidence does establish that Defendants

certainly employed a "pay-up and shut-up" policy when dealing with vehicle owners, the suggestion that

this policy was somehow countenanced by the law is disingenuous. NRS 706.766 provides that tow

operators cannot charge "greater or less compensation for any service" than what is set forth in its tariff.

NRS 706.766(1) (emphasis added).) That does not mean, however, that a tow operator is mandated to

collect whatever it decides to list on its bills. In fact, a tow operator is specifically precluded from

collecting for services that it did not provide. Thus, while vehicle owners cannot negotiate the amounts

charged for a particular service (which are subject to the tariff). they certainly can contest whether a

service was actually provided. As discussed above, the principle purpose for providing vehicle owners

with a bill with written substantiation attached thereto is to provide vehicle owners with the ability to

confirm that Defendants actually provided the services for which they are charging. Defendants' "pay

up and shut-up" argument is not supported by the law and does not condone Defendants' policy during

the Class Period to refuse to provide vehicle owners with a bill before payment.

56. Defendants' fourth and final argument is that they are not required to provide bills to

vehicle owners whose vehicles were sold at auction because the sale of a vehicle at auction is not a

"collection" of tow charges. In making this argument, Defendants seek to conflate the term "collection"

with the term "payment." As noted above, NAC 706.420(3) provides: "If a bill is prepared incorrectly

or is incomplete, only the substantiated charges may be collected." (Emphasis added.) The term

"collected" could have been limited by, for example, specifying the method in which charges where

collected (i.e., whether the collection is from direct payment or through the sale of a vehicle at auction).

The term "collected" in this provision, however, is not limited in any way. Defendants' attempt to imply

a limitation to the scope of the term "collected" when it could have - but was not - easily included the

language of the provision itself is entirely unwarranted. The court's reasoning in Matter of landel, 8

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I B.R. 855 (Bankr. S.D. Ohio (981) is instructive.

2 57. In Matter of Jande! involved an adversarial proceeding before the bankruptcy court '-..

3 brought by the plaintiff-debtor against various defendants, including, Precision Colors, Inc. At the time

4 of bankruptcy the plaintiff-debtor was the president of Precision Colors, Inc. and owned shares of the

5 company worth $650,000. Matter of Jande!, 8 B.R. 856. The plaintiff-debtor filed a plan to repay his

6 creditors; that plan included a provision that the debtor would sell his share in Precision Colors to pay-

7 off secured creditors with the initial payment going to First National Bank of Dayton (which was the

8 pledgee of the debtor's shares in Precision Color as collateral for a loan).ld. Upon receiving payment of

9 its loan, First National Bank assigned the shares of stock to the other named defendants. Id. These

10 defendants then proceeded to use their ownership of these shares to fire plaintiff-debtor from Precision

11 Colors. Id. Plaintiff-debtor brought an adversarial proceeding asserting that the assignment of shares by

12 First National Bank to the other defendants violated the automatic stay provisions of 11 U .S.c.

13 362(a)(6), which provides that the filing of bankruptcy "operates as a stay, applicable to all entities, of

14 [ ... J any act to collect, assess, or recover a claim against the debtor that arose before the commencement

15 of the case under this title." Id. at 857. The defendants moved to dismiss arguing that they did not

16 violate the automatic stay since their actions did not constitute collection of a debt. Id. at 858-859. The

17 court rejected the argument, explaining: "A careful reading of the above sections reveals that the actions

18 prohibited need not be done directly against the debtor himself. For example, section 362(a)(6) does not

19 say "any act to collect, assess, or recover from the debtor a claim against the debtor that arose before the

20 commencement of the case .... " "Any action to collect" means any act to collect from any source

21 whatsoever." Matter (~f Jandel, 8 B.R. 859.

22 58. First National Bank additionally argued that "receiving of value where that value comes

23 from someone other than the debtor" is not collection. In support of its argument, First National Bank

24 offered the following analogy: "If the debtors' parents offered gratuitously to pay all debts, the mere act

25 of acceptance by the Bank and the assignment of the Note would certainly not constitute a violation of

26 the automatic stay." Matter of Jande!, 8 B.R. 859. The court rejected the argument, noting the logical

27 fallacy in the Bank's argument: "If the hypothetical parents gratuitously used their own funds to pay an

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1 obligation of the debtors, we would not say that the Bank should forego acceptance of the payment.

2 However, at the moment the Bank would transfer the Note to the parents in consideration for the parents

3 paying the obligation, the Bank would be in the same posture as it is under the present situation. The

4 crux of this transaction is not the Bank's acceptance of payment from a third party in satisfaction of

5 the debtors' obligation to the Bank; the crux is that the Bank, in exchange for, presumably, a cash

6 settlement of its claim, transferred to the third party property which was undisputedly owned by the

7 debtors on the date they filed their petition with this Court." Matter of Jandel, 8 B.R. 859 (emphasis

8 added).

9 59. Just as the Bank in Matter of Jandel "collected" a debt when it transferred the debtor's

10 property (shares in Precision Colors) to a third party for payment, Defendants' "collected" tow fees

11 when they transferred Class members' property (their vehicles) to a third party for payment.

12 60. Accordingly, this Court finds that Defendants' failure to provide Class Members with a

13 bill before collecting tow fees for non-consent tows violates NAC 706.420.

14 b) Defendants Violated NAC 706.420 bv Failing to Attach Written Substantiation

15 to Their Bills for Non-Consent Tows.

16 61. As set forth in above in the Findings of Fa,ct, in those cases where Defendants did provide

17 Class members with a bill - which is actually a "receipt" since it is provided only after the payment of

18 the tow fees in full - Defendants provide no written substantiation (attached to the "bill" or otherwise)

19 of the charges imposed.

20 62. As noted above, NAC 706.420 provides, in relevant part: "The operator of a tow car shall

21 itemize on the bill for a nonconsensual tow each rate used or fee charged to compute the total bill. All

22 charges must be substantiated in writing and attached to the bill." NAC 706.420 (emphasis added).

23 This Court finds that the plain meaning of 706.420 requires exactly what it states: that all charges must

24 be substantiated in writing and attached to the bill.

25 63. Defendants argue that the Call Receipt that they provided to some Class Members after

26 they paid the tow fees in full satisfies the substantiation requirement NAC 706.420. In order to make

27 this argument, Defendants take the position that act of applying ink or toner to paper when printing a

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Call Receipt constitutes "attaching" substantiation to the bill. Defendants' position twists the language

NAC 706.420 to the point of absurdity.

64. Accordingly, this Court finds that Defendants' failure to provide substantiation In

writing and attached to the bill violates NAC 706.420.

B. Declaratory Relief

65. [t is settled law that Nev. Rev. Stat. 30.040 authorizes courts to resol ve a dispute over the

parties' adverse views of whether a party has complied with a statute by declaring the parties' rights

with respect to that statute. See Nev. Rev. Stat. 30.040(1)~ Prudential Ins. Co. of Am. v. Ins. Comm'r, 82

Nev. 1,4-5,409 P.2d 248, 250 (1966). As explained above, Defendants have violated Nev. Admin.

Code 706.420 by collecting fees for non-consent tows from the class without first providing a final bill

itemizing the fees or attaching written substantiation for the fees charged to the bill. As such, this Court

finds that declaratory relief is warranted.

C. Unjust Enrichment

66. Under Nevada law, "{ulnjust enrichment occurs whenever a person has and retains a

15 benefit which in equity and good conscience belongs to another." Unionamerica Morlg. & Equity Trust

16 v. McDonald, 97 Nev. 210, 212, 626 P.2d 1272, 1273 (1981). It "exists when the plaintiff confers a

17 benefit on the defendant, the defendant appreciates such benefit, and there is acceptance and retention by

18 the defendant of such benefit under circumstances I where I it would be inequitable for I the defendant I to

19 retain the benefit .... " Certified Fire Prot. Inc. v. Precision COllStr., 128 Nev. _, 283 P.3d 250, 257

20 (2012).

21 a) Through direct payment or proceeds from the liquidation o{their equity in

22 their vehicle, the class has conferred a benefit on Defendants, and Defendants

23 appreciate the benefit.

24 67. Benefit in the unjust enrichment context can take the form of money or property, such as

25 a vehicle. Cert{fled Fire Prot., 283 P.3d at 257 (2012). Indeed, it is not even necessary that a plaintiff

26 have directly conferred the benefit to a defendant. The Nevada Supreme Court has held that unjust

27 enrichment applies not only when defendants retain money or equipment provided directly by the

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plaintiff, but also when, unbeknownst to the plaintiff, defendants retain an indirect benefit. Topaz Mut.

Co., Inc. v. Marsh, 108 Nev. 845, 856, 839 P.2d 606, 613 (1992) (holding that funds lent to a company

and used for an unrelated purpose-to postpone foreclosure-created a benefit of allowing defendant to

remain in property longer and so that value could be considered as part of the unjust enrichment damage

award); see also John A. Artukovich. Etc. v. Reliance Truck, 126 Ariz. 246, 248. 614 P.2d 327. 329

(1980) (trucking company was liable to owner of crane under theory of unjust enrichment because

trucking company received a benefit by using the crane).

68. Here, the evidence presented at trial establishes Defendants' receipt of a benefit from

each Class Member. Specifically, a portion of the Class Members directly benefited Defendants when,

as discussed above, they paid Defendants the full amount indicated on the unsubstantiated bill in order

to reclaim their vehicle. And the remaining portion indirectly benefited Defendants when, as discussed

above. Defendants auctioned off those Class Members' vehicles, collected the fees from the Class

Members' equity in the vehicle via the auction proceeds. and pursued recovery of any deficiency.

b) Because Defendants have no legal power to collect unsubstantiated lees,

Defendants' collection ofthose lees is inequitable.

69. Unlawful collection of fees constitutes unjustified enrichment because "Iulnjustified

enrichment is enrichment that lacks an adequate legal basis .... " Sobel v. Hertz Corp., 291 F.R.D. 525,

540 (D. Nev. 2013) (quoting Restatement (Third) of Restitution & Unjust Enrichment § 1, comment b

(2011»; see also Feldman v. State, 96 Nev. 614,615 P.2d 238. 241 (1980) (Since the "service fees"

were procured without authority. Feldman is not entitled to retain them.").

70. As explained above. the fees violate NAC 706.420 because Defendants failed to

substantiate the fees prior to collecting them through direct payment or proceeds from the auction of the

class members' vehicle. As such. Defendants "wi ere I without legal power to collect the ... fees." Cf.

Sobel, 291 F .R.D. at 540.

D. Conversion

71. Conversion is the wrongful exercise of dominion over the property of another. Evans v.

Dean Witter Reynolds. Inc .. (16 Nev. 598, 606. 5 P.3d 1043. 1048 (2000). A claim for conversion

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requires the plaintiff's ownership or right of possession at the time of the conversion, the defendant's

conversion by a wrongful act of disposition of property rights. and damages. Id. "[Clonversion is an act

of general intent, which does not require wrongful intent and is not excused by care. good faith. or lack

of knowledge." /d. "Money can be the subject of a conversion [claim I if a specific. identifiable sum is

involved." Ortega v. Toyota Motor Sales, USA, Inc .. 572 F.Supp.2d 1218. 1220 (S.D. Cal. 2008).

72. Here. the evidence presented at trial demonstrates that Defendants wrongfully exerted an

act of dominion over the certified Class' money while knowing that they had no right to the money. As

discussed above. Defendants implemented a policy of taking specific amount of the Class Members'

money - through direct payment or auction proceeds - to pay the amount charged for the non-consent

tows. See. e.g .• Pelletier v. Pelletier. 103 Nev. 408, 742 P.2d 1027. 1028 (1987) ("An exercise of the

rights of ownership sufficient to constitute conversion is present when a tortfeasor takes possession, sells

the property. and pockets the proceeds of the sale.").

IV. RELIEF GRANTED

73. This Court finds that Plaintiffs request for declaratory relief is appropriate. necessary

and warranted. Accordingly. a declaratory judgment shall be entered in favor of Plaintiff and the Class

and against Defendants declaring Defendants' billing policies for non-consent tows conducted by

Defendants in Nevada during the Class Period unlawful. A separate declaratory judgment will issue.

74. This Court finds Plaintiff and the Class are entitled to damages. Class damages need not

19 be calculated with absolute precision. See Eastman Kodak Co. v. Southern Photo Materials Co .• 273

20 U.S. 359, 379 (U.S. 1927) (,'It is sufficient if a reasonable basis of computation is afforded. although the

21 result be only approximate.... [AI defendant whose wrongful conduct has rendered difficult the

22 ascertainment of the precise damages suffered by the plaintiff, is not entitled to complain that they

23 cannot be measured with the same exactness and precision as would otherwise be possible.").

24 75. This Court finds Plaintiff and the Class are entitled to damages in the amount of

25 $5,000,000.00 (five million dollars).

26 76. Plaintiff and the Class are entitled to prejudgment interest pursuant to NRS 17.130.

27 Interest should accrue beginning on April 9, 2013 (the date that the Court issued its Order certifying the

28 - 23 -


1 Class) and shall continue until the judgment is satisfied.

2 77. As the prevailing party, Plaintiff and the Class are entitled to costs of suit and are directed

3 to file a memorandum of costs pursuant to NRS 18.110.

4 78. The total of the damages, interest and punitive damages awarded to Plaintiff and the

5 Class will constitute a Common Fund for the benefit for the Class.

6 79. Class Counsel is entitled to an award of attorneys' fees and reimbursement of non-cost

7 expenses to be paid from the Common Fund for serving as Class Counsel. Additionally, Plaintiff is

8 entitled to an incentive payment to be paid from the Common Fund for serving as the Class

9 Representative. Plaintiff is directed to file a motion for an award of attorneys' fees, reimbursement of

lOnon-cost expenses and incentive payment.

11 80. The Common Fund, less any attorneys' fees and incentive award, will be allocated

12 among each Class Member based on the tow fees charged to each Class Member. Plaintiff is directed to

13 file a plan for the allocation and disbursement of the Common Fund 30 days after the Court's order on

14 Plaintiff's motion for an award of attorneys' fees, reimbursement of non-cost expenses and incentive

15 payment.

16 81. Plaintiff is directed to file a proposed form of judgment, capturing the central points of

17 this Order, no later than 10 days after the entry of this Order.

18 III

19 III

20 III

21 III

22 III

23 III

24 1//

25 III

26 III

27 1/1

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1 82. Finally, this Court did not consider the evidence and/or other papers filed after the close

2 of evidence and conclusion of the bench trial that Defendants obtained as the result of a hearing they

3 requested before the Nevada Transportation Authority on the matters at issue here. Rather, the Court

4 will consider Defendants' improper attempt to influence this decision at a hearing to be held pursuant to

5 NRCP l1(c)(1)(B).

6 The Court will retain jurisdiction to enforce this Order.

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to

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IT IS SO ORDERED.

DATED this _ ..... 1 __ day of 1uly, 2015. .1 "/

HE HONOR BtE RONALD 1. ISRAEL District Court 1 uqie A-IO-616806

CERTIFICATE OF SERVICE

I hereby certify that on or about the date signed, a copy of this Order was electronically served and/or placed in the attorney's folders maintained by the Clerk of the Court and/or transmitted Via

facsimile and/or mailed, postage prepaid, by United States mail to the proper parties as follows:

Gregg A. Hubley, Esq. Ramir M. Hernandez, Esq. BROOKS HUBLEY, LLP All e-sen-ice recipients listed ill Wi;:netlOdyssey (See attached (ist)

Mike Arias, Esq. (Admitted Pro Hac Vice) Alfredo Torrijos, Esq. (Admitted Pro Hac Vice) ARIAS OZZELLO & GIGNAC LLP All e-sen'ice recipients listed ill Wi;:netlOdyssey (See attached list)

David R. Sidran, Esq. Hayden S. Alfano, Esq. TOSCHI, SIDRAN ET AL. All e·sen'ice recipients listed in Wi::.netlOdyssey (See affached list "

pqj..Kj' a Jeter udicial Execu ive Assistant

'-...--

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$ .:LtlU - c-t-liing &. I:::-~ervlce t-ees _._- ~. . "--,,-, ... _,--"--" .... _._-------, .. -

Close Service Recipients i . - __ - .___ _. ______________________________________ 1

13 of 13 selected

Select All Select NoDe I:.., ~ 0zzeI0 &. Gignac ll.P

IIame Emal Select:

A1fredoTorrfjos [email protected] ~ ~ Mike Arias marias~ouUo.com 19 ~

-~;"s Ozzelo &. Gignac LLP Name Email Select Mischa Barteau mbarteau @aQQlIg.com B ~

.,rooks HUbley, UP IIame Email Sdect Efile @ Brooks Hubley I LLP efile @brookshubiey:.com 19 ~ Gregg Hubley ahubley:@brookshuble~. com ~ [ill

Jasmim Hernandez ihernandez@brookshubley:.com B ~ Michael R. Brooks, Esq. [email protected]. com B ~ Rami Hernandez rhernandez@brookshuble~. com rs::I ~

Iroschi, Sidraf\, Collins a Doyle Name Email Select

Angie Bangert abangert imroschisidr an. com rs::I ~ David Sidran dsidr an @toschisidran.com ~ ~ Hayden Alfano halfano @toschisidrSiln I tQm rs::I ~

Iwolf, Rifkill, Shapiro, Sdlulman &. Rab~ l.l.P llame Email Select

Danriele Fresquez [email protected] 19 ~

lWoIf .. Rifkin, shapno,. Schulman&. Rabkin,. LLP Name Email Select Justin Jones ijones @Wrslawvers.com 19 ~

Your File Number: L.IA_-1_0_-6_i_6_S0_6_-C ______________ ..-.--J

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1 JUDG Gregg A. Hubley

2 Nevada Bar No. 7386 E-mail: [email protected]

3 Ramir M. Hernandez Nevada BarNo. 13146

4 E-mail: [email protected] BROOKS HUBLEY, LLP

5 1645 Village Center Circle, Suite 200 Las Vegas, Nevada 89134

6 Tel: (702) 851-1191 I Fax: (702) 851-1198

7 Mike Arias (Admitted Pro Hac Vice)

8 E-mail: [email protected] Alfredo T orrij os

9 (Admitted Pro Hac Vice) E-mail: [email protected]

10 ARIAS OZZELLO & GIGNAC LLP 6701 Center Drive West, 14th Floor

11 Los Angeles, California 90045

12

13

14

Tel: (310) 670-1600 I Fax: (310) 670-1231

Attorneys for Plaintiff First Service Credit Union and the Certified Class

DISTRICT COURT CLARK COUNTY, NEVADA

Electronically Filed 07/17/201502:49:00 PM

,

~j'~A4F CLERK OF THE COURT

15 FIRST SERVICE CREDIT UNION, a Federal Credit Union, individually and on

16 behalf of all persons similarly situated,

Case No.: Dept. No.:

A -1 0-616806-C 28

17 Plaintiffs,

18 v.

19 UNITED ROAD TOWING, INC. doing business as QUALITY TOWING, a Delaware

20 corporation; and DOES II through X, inclusive, and ROE CORPORATIONS XI

21 through XX, inclusive,

22 Defendants. ~----------------------------~

23

JUDGMENT

Page 1 of3

I I34-00011154220.docx


1 This action came on for a bench trial before the Court, the Honorable Ronald J. Israel, District

2 Judge, presiding. Following that trial, and as set forth in the Com1's July 1, 2015 Findings of Fact

3 and Conclusions of Law After Bench Trial, the Court found in favor of Plaintiff First Service Credit

4 Union and the Certified Class and against Defendant United Road Towing, Inc. and Defendant City

5 Towing, Inc. Therefore, the issues having been duly tried and a decision having been duly rendered:

6 IT IS ORDERED, ADJUDGED AND DECREED that Plaintiff First Service Credit Union and

7 the Ce11ified Class (as defined in the July 1, 2015 Finding of Fact and Conclusions of Law After

8 Bench Trial) recover from Defendant United Road Towing, Inc. and Defendant City Towing, Inc.,

9 jointly and severally, the sum of $5,000,000.00 for the period from February 24, 2008 to March 21,

10 2013; plus pre-judgment interest on that amount calculated from the date that the Court granted

11 Plaintiffs Motion for Class Certification (April 10, 2013) to the date of the Judgment at the present

12 legal rate of 5.25 percent, per annum; plus post-judgment interest on that total at the rate provided by

13 law from the date of the Judgment until such is paid and satisfied;

14 IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the total of the

15 $5,000,000.00, pre-judgment interest, and post-judgment interest awarded herein will constitute a

16 Common Fund for the benefit of the Certified Class; the Common Fund, less any attorneys' fees to

17 Class Counsel and incentive award to the Class Representative, will be allocated among each member

18 of the Ce11ified Class based on the tow fees charged;

19 IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Plaintiff First Service

20 Credit Union recover from Defendant United Road Towing, Inc. and Defendant City Towing, Inc. its

21 costs of action; and

22 IT IS FURTHER ORDERED, ADJUDGED AND DECREED that, within 10 days of the entry

23 of this Judgment, Plaintiff First Service Credit Union shall file a motion addressing whether the

Page 2 of3

1134-0001/JS4220.docx


. ,

1 imposition of punitive damages against Defendant United Road Towing, Inc. and Defendant City

2 Towing, Inc., is warranted in this action.

3

4 Dated: July ,2015.

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9 Submitted by:

10 BROOK HUBLEY L B

11

12 e, B 7386

13 ndez, BN 13146 enter Circle, Suite 200

14 Las Vegas, vada 89134 Tel: (702) 8 1-1191

15 Attorney for First Service Credit Union

16 and the Certified Class

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I 134-000 lIJ54220.docx

District Cou Judge

Page 3 of3


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