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A01041 Summary:

BILL NOA01041
 
SAME ASSAME AS S00698
 
SPONSORDinowitz
 
COSPNSRGottfried, Benedetto, Cymbrowitz, Seawright, Rivera J, Glick, Barron, Niou, Fahy, Joyner, Cook, Colton, McDonough
 
MLTSPNSRAbbate, De La Rosa
 
Add Art 7-A §§170 & 171, Lien L; amd §399-xx, Gen Bus L; amd §20-509, NYC Ad Cd; amd §6201, CPLR; add §631, BC L; amd §609, Lim Lil L
 
Authorizes a lien against personal and real property of the owner of a commercial towing company for illegal and improper practices; creates personal liability for members of an LLC and certain corporate shareholders.
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A01041 Actions:

BILL NOA01041
 
01/07/2021referred to judiciary
01/05/2022referred to judiciary
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A01041 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1041
 
SPONSOR: Dinowitz
  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 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 companies for claims of illegal and Section 4 amends section 609 of the adding a new subdivision (e). of shareholders of commercial towing improper towing practices. limited liability company law by 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 associated with illegal or improper prac- tices 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 individuals 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 continuing 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 disconnected from such appa- ratus and such registered owner or other person in control of such vehi- cle 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." Furthermore, the NYC Department of Consumer Affairs and NYPD have both stated that tow opera- tors cannot demand cash payment for release of a vehicle that is being towed.   FISCAL IMPACT ON THE STATE: None   LEGISLATIVE HISTORY: 2019-20: A.2593 - Referred to Judiciary / S.6067 - REFERRED TO JUDICIARY 2017-18: A.10240 - Referred to Judiciary   EFFECTIVE DATE: 30 days after it has become a law.
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A01041 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1041
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                     January 7, 2021
                                       ___________
 
        Introduced  by  M.  of  A.  DINOWITZ,  GOTTFRIED, BENEDETTO, CYMBROWITZ,
          SEAWRIGHT, J. RIVERA, GLICK, BARRON, NIOU, FAHY, JOYNER, COOK, COLTON,
          McDONOUGH -- Multi-Sponsored by -- M. of A. ABBATE, DE LA ROSA -- read
          once and referred to the Committee on Judiciary
 
        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
          holding 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  interests  in a company personally liable for certain judg-
          ments
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The lien law is amended by adding a new article 7-A to read
     2  as follows:
     3                                 ARTICLE 7-A
     4         LIEN ON COMMERCIAL TOWING COMPANIES FOR IMPROPER PRACTICES
     5  Section 170. Lien  for  violations  associated  with illegal or improper
     6                 practices relating to the towing of motor vehicles.
     7          171. Enforcement of lien.
     8    § 170. Lien for violations associated with illegal or  improper  prac-
     9  tices relating to the towing of motor vehicles. 1. A person shall have a
    10  lien  against  any  interest  in property of a commercial towing company
    11  arising out of any claim of illegal or improper  practices  relating  to
    12  the  towing of motor vehicles, as defined in section one hundred seven-b
    13  of the vehicle and traffic law, including  by  not  limited  to  section
    14  19-169.1  of  the  administrative  code of the city of New York, for the
    15  agreed price of such towing or, if the  towing  was  without  the  prior
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02636-01-1

        A. 1041                             2
 
     1  consent or authorization of such motor vehicle owner, the amount charged
     2  for  the  service,  from  the  time  of  filing a notice of such lien as
     3  prescribed in this chapter. In a city with a population of  one  million
     4  or  more, charges for towing and associated storage shall not exceed the
     5  amounts set forth in section 20-509 of the administrative  code  of  the
     6  city  of  New  York. A lien under this section may be had for any amount
     7  over the limits set forth in such section. A lien under this article may
     8  be had against an interest in real property and against an  interest  in
     9  personal  property that can be sufficiently described within the meaning
    10  of section 9-108 of the uniform commercial  code,  except  that  a  lien
    11  under  this  article  shall  not  extend to deposit accounts or goods as
    12  those terms are defined in section 9-102  of    the  uniform  commercial
    13  code.
    14    2.  Notice  of  a lien under this section may be filed at any time not
    15  later than three years following violation giving rise to the  claim.  A
    16  notice  of  lien  on  personal  property  must be filed, together with a
    17  financing statement, in the filing office as set forth in section  9-501
    18  of the uniform commercial code.
    19    3. Within five days before or thirty days after filing the notice of a
    20  lien  authorized pursuant to this article, the lienor shall serve a copy
    21  of such notice upon the owner of the commercial  towing  company,  if  a
    22  natural  person, (a) by delivering the same to him or her personally, or
    23  if the owner cannot be found, to his or her agent or attorney, or (b) by
    24  leaving it as his or her last known place of residence or business, with
    25  a person of suitable age and discretion, or (c) by registered or  certi-
    26  fied mail addressed to his or her last known place of residence or busi-
    27  ness, or (d) if such person owns real property, by affixing a copy ther-
    28  eof conspicuously on such property, between the hours of nine o'clock in
    29  the  forenoon  and four o'clock in the afternoon. The lienor also shall,
    30  within thirty days after filing the notice of lien, affix a copy thereof
    31  conspicuously on the real property identified in  the  notice  of  lien,
    32  between  the  hours  of nine o'clock in the forenoon and four o'clock in
    33  the afternoon. If the commercial towing company be a  corporation,  said
    34  service  shall  be  made  (i) by delivering such copy to and leaving the
    35  same with the president,  vice-president,  secretary  or  clerk  to  the
    36  corporation,  the  cashier,  treasurer  or  a director or managing agent
    37  thereof, personally, within the state, or (ii) if such officer cannot be
    38  found within the state, by affixing a copy thereof conspicuously on such
    39  property between the hours of nine o'clock  in  the  forenoon  and  four
    40  o'clock  in  the  afternoon,  or  (iii)  by registered or certified mail
    41  addressed to its last known place of business, or (iv)  by  delivery  to
    42  the  secretary of the department of state in the same manner as required
    43  by subparagraph one of paragraph (b) of section three hundred six of the
    44  business corporation law. Failure to file proof of such a  service  with
    45  the  county  clerk  within  thirty-five days after the notice of lien is
    46  filed shall terminate the notice as a lien. Until service of the  notice
    47  has  been  made,  as  above provided, an owner, without knowledge of the
    48  lien, shall be protected in payment made in  good  faith  to  any  other
    49  person claiming a lien.
    50    4. (a) No lien on real property under this section shall be a lien for
    51  a  longer  period than one year after the notice of lien has been filed,
    52  unless an extension to such lien is filed with the county clerk  of  the
    53  county  in  which  the  notice of lien is filed within one year from the
    54  filing of the original notice of lien, continuing  such  lien  and  such
    55  lien  shall  be redocketed as of the date of filing such extension. Such
    56  extension shall contain the names of the lienor and  the  owner  of  the

        A. 1041                             3

     1  real  property  against  whose  interest therein such lien is claimed, a
     2  brief description of the property affected by such lien, the  amount  of
     3  such  lien,  and the date of filing the notice of lien. No lien shall be
     4  continued by such extension for more than one year from the filing ther-
     5  eof.  In  the event an action is not commenced to obtain judgment on the
     6  claim or to foreclose the lien within such extended  period,  such  lien
     7  shall be extinguished unless an order be granted by a court of record or
     8  a  judge  or justice thereof, continuing such lien, and such  lien shall
     9  be redocketed as of the date of granting such order and a statement made
    10  that such lien is continued by virtue of such order.
    11    (b) No lien on personal property under this section shall  be  a  lien
    12  for a longer period than one year after the financing statement has been
    13  recorded,  unless  an  extension  to such lien, is filed with the filing
    14  office in which the financing statement is required to be filed pursuant
    15  to section 9-501 of the uniform commercial code within one year from the
    16  filing of the original financing statement, continuing such  lien.  Such
    17  extension  shall  contain  the  names of the lienor and the owner of the
    18  property against whose interest therein such lien is  claimed,  a  brief
    19  description  of  the  prior  financing statement to be extended, and the
    20  date of filing the prior financing statement. No lien shall be continued
    21  by such extension for more than one year from the filing thereof. In the
    22  event an action is not commenced to obtain judgement on the claim or  to
    23  foreclose  the  lien  within  such  extended  period, such lien shall be
    24  extinguished unless an order be granted by a court of record or a  judge
    25  or justice thereof, continuing such lien, and such lien shall be refiled
    26  as  of  the  date  of granting such order and a statement made that such
    27  lien is continued by virtue of such order.
    28    (c) If a lienor is made a party defendant  in  an  action  to  enforce
    29  another  lien, and the plaintiff or such defendant has filed a notice of
    30  the pendency of the action within the time prescribed in  this  section,
    31  the  lien  of  such defendant is thereby continued. Such action shall be
    32  deemed an action to enforce the lien of such defendant lienor. The fail-
    33  ure to file a notice of pendency of action shall not abate the action as
    34  to any person liable for the payment of the debt specified in the notice
    35  of lien, and the action may  be  prosecuted  to  judgment  against  such
    36  person.  The  provisions  of  this section in regard to continuing liens
    37  shall apply to liens discharged by deposit or by order on the filing  of
    38  an  undertaking.  Where  a  lien is discharged by deposit or by order, a
    39  notice of pendency of action shall not be filed.
    40    (d) Notwithstanding the foregoing, if a lienor commences a foreclosure
    41  action or an action to obtain a judgment on the claim  within  one  year
    42  from  the filing of the notice of lien on real property or the recording
    43  of the financing statement creating lien on personal property, the  lien
    44  shall  be extended during the pendency of the action and for one hundred
    45  twenty days following the entry of final judgment in such action, unless
    46  the action results in a final judgment or administrative  order  in  the
    47  lienor's  favor  on  the  claims  and the lienor commences a foreclosure
    48  action, in which instance the lien shall be valid during the pendency of
    49  the foreclosure action. If a lien is extended due to the pendency  of  a
    50  foreclosure  action  or an action to obtain a judgment on the claim, the
    51  lienor shall file a notice of such pendency and extension with the coun-
    52  ty clerk of the county in which the notice of lien is filed,  containing
    53  the  names  of  the parties to the   action, the object of the action, a
    54  brief description of the property affected  thereby,  and  the  time  of
    55  filing the notice of lien, or in the case of a lien on personal property

        A. 1041                             4
 
     1  shall  file  such  notice with the office authorized to accept financing
     2  statements pursuant to section 9-501 of the uniform commercial code.
     3    (e) A lien, the duration of which has been extended by the filing of a
     4  notice  of  the pendency of an action as above provided, shall neverthe-
     5  less terminate as a lien after such notice has been canceled as provided
     6  in section sixty-five hundred fourteen of the  civil  practice  law  and
     7  rules  or  has ceased to be effective as constructive notice as provided
     8  in section sixty-five hundred thirteen of the  civil  practice  law  and
     9  rules.
    10    §  171.  Enforcement  of  lien.  1. A lien on real property authorized
    11  under this article may be enforced against such property, and against  a
    12  person  liable  for  the  judgment upon which the lien is founded, by an
    13  action, by the lienor, his assignee  or  legal  representative,  in  the
    14  supreme  court  or  in  a  county  court  otherwise having jurisdiction,
    15  regardless of the amount of such judgment,  or  in  a  court  which  has
    16  jurisdiction  in  an  action  founded  on  a contract for a sum of money
    17  equivalent to the amount  of  such  judgment,  in  the  same  manner  as
    18  prescribed in article three of this chapter.
    19    2.  A  lien  on  personal property specified in this article may imme-
    20  diately be enforced  against  the  property  through  a  foreclosure  as
    21  prescribed in article nine of the uniform commercial code, or upon judg-
    22  ment obtained by the owner of the motor vehicle, or the attorney general
    23  of the state of New York, and may be enforced in any manner available to
    24  the judgment creditor pursuant to article nine of the uniform commercial
    25  code or other applicable laws.
    26    3.  A  lien,  where  notice  has been filed on real property or a bond
    27  given to discharge the same, may be vacated and cancelled or  a  deposit
    28  made  to discharge a lien pursuant to section twenty of this chapter may
    29  be returned, by an order of a court of record. Before such  order  shall
    30  be  granted, a notice shall be served upon the lienor, either personally
    31  or by leaving it at his last known  place  of  residence  or  attorney's
    32  place  of  business,  with  a person of suitable age, with directions to
    33  deliver it to the lienor.  Such  notice  shall  require  the  lienor  to
    34  commence  an  action  to  enforce  the lien, or to commence an action to
    35  obtain judgment on the claim upon which the lien was established, within
    36  a time specified in the notice, not less than ninety days from the  time
    37  of  service, or show cause at a special term of a court of record, or at
    38  a county court, in a county in which the property is situated, at a time
    39  and place specified therein, why the notice of lien filed  or  the  bond
    40  given  should  not be vacated and cancelled, or the deposit returned, as
    41  the case may be. Proof of such service  and  that  the  lienor  has  not
    42  commenced the action to foreclose such lien or an action to obtain judg-
    43  ment  on  the  claim upon which the lien was established, as directed in
    44  the notice, shall be made by affidavit, at the time of applying for such
    45  order.
    46    § 2. Subdivision 2 of section 399-xx of the general business  law,  as
    47  added by chapter 690 of the laws of 2004, is amended to read as follows:
    48    2. Requirements. A commercial tower who responds to a call for assist-
    49  ance from an owner or operator of a vehicle that is inoperable or cannot
    50  be  safely operated or who offers to transport, repair, or render safely
    51  operable such a vehicle shall, in compliance with any reasonable request
    52  of an owner or operator of such vehicle, repair the vehicle or transport
    53  the vehicle and its  occupants  to  a  reasonably  safe  location  where
    54  repairs  can  be  made.  The  commercial  tower shall not be required to
    55  transport all vehicle occupants if the number of occupants  exceeds  the
    56  number of passengers that can be safely transported. The owner or opera-

        A. 1041                             5
 
     1  tor  of the vehicle shall be liable to the commercial tower for the cost
     2  of towing and repair services provided.  A written invoice  stating  the
     3  cost  of the towing and/or services, signed by both the commercial tower
     4  and the owner or authorized user of the motor vehicle, shall be provided
     5  prior  to  any  towing or services being performed. The commercial tower
     6  shall accept cash and all other forms of payment  that  such  commercial
     7  tower  accepts  in the ordinary course of business, including credit and
     8  debit cards as those terms are defined in section five hundred eleven of
     9  this chapter as payment for all or part of the charges  for  towing  and
    10  repair  services accepted and provided. The commercial tower may require
    11  such proof of identification from persons making payments in forms other
    12  than cash as the commercial tower requires  for  such  payments  in  the
    13  ordinary  course  of  business.  If  the  owner or operator of a vehicle
    14  declines services of the commercial tower or cannot or will not  provide
    15  payment  and  identification for towing or repair services, a commercial
    16  tower shall notify law enforcement about the location and identification
    17  of the vehicle and its occupants. The provisions of this section do  not
    18  apply to a vehicle which is lawfully parked at the home of the vehicle's
    19  owner or operator.
    20    § 3. Section 20-509 of the administrative code of the city of New York
    21  is amended by adding a new subdivision e to read as follows:
    22    e.  A  written  invoice  stating  the cost of the towing and/or repair
    23  services, signed by both the commercial tower and the owner  or  author-
    24  ized user of the motor vehicle, shall be provided prior to any towing or
    25  repair services being performed, except where the towing was without the
    26  prior  consent  or  authorization of such motor vehicle owner.  Upon the
    27  release of a towed motor vehicle the  owner  shall  receive  an  invoice
    28  stating the amount charged and the amount paid.
    29    §  4.  Subdivision  5  of  section  6201 of the civil practice law and
    30  rules, as amended by chapter 860 of the laws of 1977 and  as  renumbered
    31  by  chapter  618 of the laws of 1992, is amended and a new subdivision 6
    32  is added to read as follows:
    33    5. the cause of action is based on a judgment, decree or  order  of  a
    34  court  of  the  United States or of any other court which is entitled to
    35  full faith and credit in this state, or on a  judgment  which  qualifies
    36  for  recognition  under the provisions of article 53[.] of this chapter;
    37  or
    38    6. the cause of action is based on claims of illegal or improper prac-
    39  tices relating to the towing of motor vehicles, including but not limit-
    40  ed to violations of section 19-169.1 of the administrative code  of  the
    41  city of New York.
    42    §  5.  The business corporation law is amended by adding a new section
    43  631 to read as follows:
    44  § 631. Liability of shareholders  of  commercial  towing  companies  for
    45           claims of illegal or improper towing practices.
    46    (a)  The  ten largest shareholders, as determined by the fair value of
    47  their beneficial interest  in  every  domestic  corporation  or  of  any
    48  foreign corporation, no shares of which are listed on a national securi-
    49  ties  exchange  or regularly quoted in an over-the-counter market by one
    50  or more members of a national or an affiliated  securities  association,
    51  shall  jointly and severally be personally liable for all claims due and
    52  owing to any person as a result of an  action  to  recover  damages  for
    53  violations associated with illegal or improper practices relating to the
    54  towing  of  motor  vehicles,  including but not limited to violations of
    55  section 19-169.1 of the administrative code of the city of New York.

        A. 1041                             6
 
     1    (b) A shareholder who has paid more than his or  her  pro  rata  share
     2  under  this  section shall be entitled to contribution pro rata from the
     3  other shareholders liable under this section with respect to the  excess
     4  so  paid,  over  and  above  his or her pro rata share, and may sue them
     5  jointly  or  severally  or  any number of them to recover the amount due
     6  from them.  Such recovery may be had in a separate action.  As  used  in
     7  this  paragraph,  "pro  rata"  means  in  proportion to beneficial share
     8  interest. Before a shareholder may claim contribution from other  share-
     9  holders  under this paragraph, he or she shall give them notice in writ-
    10  ing that he or she intends to hold them so liable to him  or  her.  Such
    11  notice  shall  be  given by him or her within twenty days after the date
    12  that notice was given under paragraph (a) of this section.
    13    § 6. Section 609 of the limited liability company law  is  amended  by
    14  adding a new subdivision (e) to read as follows:
    15    (e) Notwithstanding the provisions of subdivisions (a) and (b) of this
    16  section,  the ten members with the largest percentage ownership interest
    17  of every limited liability  company,  shall  jointly  and  severally  be
    18  personally liable for all claims due and owing to any person as a result
    19  of  an  action to recover damages for violations associated with illegal
    20  or improper practices relating to the towing of motor vehicles,  includ-
    21  ing but not limited to violations of section 19-169.1 of the administra-
    22  tive code of the city of New York.
    23    §  7.  This  act shall take effect on the thirtieth day after it shall
    24  have become a law.
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