Opinion
No. CV 10 6005122S
April 21, 2011
MEMORANDUM OF DECISION
The plaintiff, Towing Recovery Professionals of Connecticut, Inc. (TRPC), appeals from an April 6, 2010 final decision of the department of motor vehicles (DMV). The final decision denied a petition for adjustment to existing rates for nonconsensual towing and transporting of motor vehicles and for storage of motor vehicles.
TRPC is aggrieved as its application was denied by the DMV.
A DMV hearing officer issued the final decision after a hearing conducted on November 19, 2009. There was testimony at the hearing from witnesses called by TRPC, as well as objections to any change in rates from an attorney representing the Legal Assistance Resource Center and two attorneys from insurance companies. The hearing officer made the following findings of fact in the final decision (Return of Record, ROR, Item #9):
Section 14-66(a) requires, on application by towing companies for amended rates, that the petition be directed to the commissioner of DMV, that the commissioner should consider statutorily-stated factors, and that "[t]he commissioner shall hold a public hearing for the purposes of obtaining additional information concerning such rates and charges." The court rejects TRPC's contention that the commissioner alone must determine whether a rate is appropriate, and may not delegate that determination to a hearing officer. Throughout the motor vehicle statutes, the legislature has directed the commissioner to take actions, but the DMV has delegated these functions to hearing officers. See, e.g., § 14-227b(e): "Any person whose operator's license or nonresident operating privilege has been suspended in accordance with this subsection shall automatically be entitled to a hearing before the commissioner to be held in accordance with the provisions of chapter 54 and prior to the effective date of the suspension."
"Section 14-66 of the Connecticut General Statutes provides that the Department of Motor Vehicles (DMV) is responsible to `establish and publish a schedule of uniform rates and charges for the nonconsensual towing and transporting of motor vehicles and for the storage of motor vehicles which shall be just and reasonable.' The Statute further provides that any licensed tower may petition the DMV, not more frequently than once every two years, for an adjustment to the then existing rates. A `nonconsensual tow' is any tow from a public highway initiated by a law enforcement officer or traffic control authority. Adjustments in rates are warranted upon a finding, after public hearing, that current rates are not just and reasonable. The most recent adjustment to tow and storage rates was approved and effective January 1, 2007. The current petition for revision to rates was dated September 16, 2009 and filed with the DMV September 17, 2009 by the Towing and Recovery Professionals of Connecticut (TRPC) on behalf of its member companies licensed to tow and store motor vehicles in Connecticut. A public hearing was scheduled for and held on November 19, 2009, notice of which was published October 20, 2009 in the Connecticut Law Journal.
"The Towing and Recovery Professionals of Connecticut, Inc. (TRPC) seeks an increase in the maximum rates and charges for nonconsensual towing or transporting of a motor vehicle and for storage of a motor vehicle. In addition, the TRPC seeks to establish new fees in connection with storage and a new category of tow characterized as `Heavy Duty Rotator.'"
The hearing officer sets forth two tables to show the present and proposed rates. For example, to summarize, the present base tow charge is $88; under the proposed rate, it would increase to $125. The present mileage charge is $4.75; the increased rate is $5.75. A heavy duty vehicle currently towed at $200 per hour would, under the proposed rate, pay $325 per hour. The present storage rate for vehicles under 20 feet is $27 for less than five days and $34 for more than five days. The proposed charge for this class of vehicles is $32 under five days and $39 over five days. Other increases to storage rates apply to lengthier vehicles.
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"According to the testimony of the President of TRPC, his organization represents the 300 plus members comprising TRPC. He indicated that the previous fee increase for nonconsensual tows and storage was granted by the DMV in 2006, effective January 1, 2007. He further indicated that the organization had sought an increase in fees in 2008 which had been denied but had been granted a fuel surcharge based upon a petition filed and heard in 2008. The crux of the argument for an increase in fees was deemed to be rooted in five industry fixed costs that have increased since the last approved rate change. Specifically, towing equipment costs, diesel fuel, insurance, property taxes and cost of living were all declared to have increased and therefore justified a change in rates. Of the five arguments set forth pertaining to industry fixed costs which are to justify fee increases, it should be noted that three bases are of questionable value in evaluating the TRPC petition, specifically property taxes, fuel costs and cost of living.
"TRPC represents an industry which is statewide but limited its argument to tax considerations in the City of Hartford only. Further, when questioned regarding the proposed 21% increase in the per mile fuel charge, the petitioner clearly indicated that the basis for this was rooted in its `speculating' on higher fuel costs to come, current rates being considered `temporary.' TRPC, while requesting an increase in the per mile charge, seeks to maintain the $4.00 surcharge granted by the DMV when fuel costs exceed $3.50 per gallon. Further, the petitioner, in its written rate proposal, indicated that another basis justifying increases at this time was the cost of living. No information was presented indicating how the cost of living has changed to benefit the TRPC request since the last rate adjustment.
"In the course of the hearing, Joe Miano, TRPC President, indicated that over one year ago, a meeting had been held with Commissioner Ward which it had been suggested that TRPC provide a cost analysis of the base tow rate so that current approved rates could be viewed in relation to actual per tow costs. In the hearing, Mr. Miano followed the Commissioner's suggestion and proceeded to detail per tow costs based upon a two-truck company. The analysis by Mr. Miano indicated the following per tow costs as percentages of the base rate for an average of 150 tows: 35.04 percent for certified operator, 6.53 percent for fuel, 55.02 percent for cost of equipment maintenance and taxes, and 3.41 percent for insurance. Figures provided for determining total overhead costs were based upon a number of assumptions including monthly place of business, rent, truck mileage per month and assumptions regarding allocation between towing, repair operation and storage costs. There was no evidence presented to indicate the basis for the cost of business operation assumptions. The presentation admitted that the cost estimates could vary based upon different sized companies and number of trucks in service. The estimate of total costs per month was $17,572.27 which, when divided by 150 tows per month, means a cost of $117.15 per tow. The presentation, while appearing to accurately reflect the costs of business components, did not clearly indicate why a tow-truck company has been chosen, why 150 tows was the average and whether consensual or nonconsensual tows were both included. The possible effect of volume of business on fixed costs was not addressed.
"The TRPC argument for the increase in storage and tow rates is also based upon towing equipment costs and insurance premium increases. As it relates to the first of these arguments, TRPC provided figures from New England Truck Master indicating that towing equipment costs have increased by 13% for light duty equipment and from 25% to 28% for heavy duty equipment from 2006 through 2009. This statistic would no doubt be significant if the average lifespan of such equipment was three years. No evidence was presented to provide substantive meaning to the equipment cost increase and, therefore, the overall value of said information is negligible as a basis for fee increases. As to the argument by TRPC that soaring health and liability insurance premiums should be a basis for rate increases, this is in part a national issue with which all businesses must deal and which, in and of itself, cannot be a principal basis for the proposed rate increase.
"TRPC seeks new categories for the imposition of fees. In the towing and recovery area, it seeks to establish a separate category of `Rotator/Recovery' for vehicles having a G.V.W.R. of greater than 26,000 pounds. Of the some 300 members of TRPC, only ten to twelve members have the capability of providing this service, which can only be accomplished by the use of a rotator truck. The proposed fee for this service is $750.00 per hour with a minimum of four (4) hour set up and take down charge. Testimony by TRPC indicated that the proposed fee was determined by `neighboring states' and `value of equipment' but no other formal documents were provided in justification.
"New fees were also proposed by towers for services provided at the time that the vehicle is in the custody of the tower. Specifically, the TRPC seeks to charge a `pull out' fee where they must make an inoperable vehicle available. As rightfully argued by Larry Alan, J.D. Nationwide Insurance Office of General Counsel, `tow shop owners have complete control over how they manage their storage lots . . . Such vehicles can be placed where tow equipment can have easy access.' In addition to the `pull out' fee, the TRPC seeks to create two other new fees, an `escort' fee and a `release' fee. Apparently the `escort' fee can be charged to a vehicle owner who wishes to retrieve personalty from a motor vehicle and such a fee could presumably be charged when appraisers, accident investigators or others wish to have access as well. Finally, TRPC seeks to impose a `release fee' which simply is a fee when removing a motor vehicle from a company's premises.
"Regulations pertaining to the conduct of nonconsensual tows are set forth in Sections 14-63-36a, 14-63-36b and 14-63-36c of the Motor Vehicle regulations. It is apparent from the Regulations that the legislature intended that tow service did not end at the placement of the vehicle at the tow yard. While fees may be charged by a tower in connection with an after hours release, Section 14-63-37a prescribes the procedure with which a facility must comply. As correctly pointed out at the within hearing by Susan Giacalone, Counsel to the Insurance Association of Connecticut, Section 14-63-36c(e) of the Motor Vehicle regulations states that `No additional fees shall be charged by a licensed wrecker service for releasing a vehicle to its owner or a person legally entitled to its custody.' In fact, the legislature makes it perfectly clear that there will be no fees beyond the tow fee except as set forth in the Regulations. In this instance, the Regulations, therefore, preclude `pull out' fees, `escort' fees and `release' fees."
Based on the foregoing findings, the hearing officer concluded: "Section 14-66 of the Connecticut General Statutes provides in part, that the Commissioner may amend the rates and charges at any time that he determines that they are no longer just and reasonable. The statute directs the Commissioner to consider factors such as the rates set by other jurisdictions, the charges for towing services provided pursuant to contacts with automobile clubs and rates published in standard service manuals. In the instant matter, the statutory considerations were essentially not part of the argument of the petitioner. Rather, the petitioner relied upon towing equipment costs, diesel fuel, insurance, property taxes and cost of living as the basis for the nonconsensual tow and storage rate increases. For the reasons outlined above, each of these issues has failed to provide substantial evidence to support the requested fee increase either because insufficient evidence was provided or because, as is the case of cost of living, no argument was made at all.
"As to the two rates, the petitioner seeks increases of 42% for vehicles of less than 10,000 G.V.W.R. and over 60% for medium duty and heavy duty tows. Proposed storage rate increases vary from a minimum of 14% to a high of 21% depending upon time and location of storage. These are not modest increases but substantial increases being sought. The justifications argued for the petition do not warrant granting the requests at this time.
"Insofar as the proposed new category of Rotator/Recovery, the category needs more study and definition and in its present proposed form, is inadequate for consideration."
TRPC has appealed from this final decision, arguing that the hearing officer failed to discuss fully the issues raised by its application and that his conclusions were not supported by substantial evidence. The court reviews the contentions of TRPC under the following standard:
During oral argument, TRPC contended that the commissioner of DMV had in prior rate applications adjusted the proposed amended rates sought by TRPC, so that if the proposed rates were denied, there would still be some increase put in place by the DMV. It contended that the hearing officer failed to follow this procedure in his final decision. With the permission of the court, TRPC submitted documentation to advance this position. See Supplemental Return of Record (SROR), March 22, 2011. The court has reviewed this material and finds that the correspondence related only to the DMV commissioner's decision on October 3, 2008 to allow TRPC to have a fuel surcharge in the amount of $4.00. (SROR, Item #7.) Indeed, TRPC's attorney wrote to the commissioner on July 14, 2008 that the availability of a fuel surcharge was unrelated to any application for a general rate increase. (SROR, Item #3.) Therefore, the court rejects the argument that the hearing officer erred by not "compromising" on an amount of a proposed rate increase. Moreover, TRPC made a specific application for a rate increase (ROR, Item #3) that did not suggest that the rates should be adjusted by the commissioner if the full rates proposed were not adopted.
"[J]udicial review of the commissioner's action is governed by the Uniform Administrative Procedure Act (UAPA) . . . and the scope of that review is very restricted . . . [R]eview of an administrative appeal decision requires a court to determine whether there is substantial evidence in the administrative record to support the agency's findings of basic fact and whether the conclusions drawn from those facts are reasonable . . . [T]he trial court may [not] retry the case or substitute its own judgment for that of the administrative agency on the weight of the evidence or questions of fact . . . Our ultimate duty is to determine, in view of all of the evidence, whether the agency, in issuing its order, acted unreasonably, arbitrarily, illegally or in abuse of its discretion.
"The substantial evidence rule governs judicial review of administrative fact-finding under the UAPA . . . An administrative finding is supported by substantial evidence if the record affords a substantial basis of fact from which the fact in issue can be reasonably inferred . . . The substantial evidence rule imposes an important limitation on the power of the courts to overturn a decision of an administrative agency . . ."
"It is fundamental that a plaintiff has the burden of proving that the commissioner, on the facts before him, acted contrary to law and in abuse of his discretion . . . The law is also well established that if the decision of the commissioner is reasonably supported by the evidence, it must be sustained." (Brackets omitted; citations omitted; internal quotation marks omitted.) Murphy v. Commissioner of Motor Vehicles, 254 Conn. 333, 343-44, 757 A.2d 561 (2000). The Appellate Court approved this same rule most recently in Charbonneau v. Commissioner of Motor Vehicles, 124 Conn.App. 556, 559, 4 A.3d 887 (2010).
TRPC first notes that § 14-66(a)(1) provides that the "commissioner may consider factors, including, but not limited to, the Consumer Price Index, rates set by other jurisdictions, charges for towing and transporting services provided pursuant to a contract with an automobile club or association . . . and rates published in standard service manuals." TRPC contends that the hearing officer narrowly construed § 14-66(a)(1) and did not properly consider the reasons given to justify its application.
On the other hand, as seen above, the factual findings made by the hearing officer encompassed each of the factors raised by TRPC. This included consideration of fuel costs, increased cost of living, equipment replacement costs, property tax and insurance increases, and proposals for new types of towing charges. TRPC fails therefore to demonstrate that the hearing officer failed to consider the justifications raised by TRPC.
TRPC's second issue is that the hearing officer improperly weighed the evidence to reach his conclusion. At the March 16 hearing, TRPC conceded that, as the hearing officer noted, it produced no evidence on cost of living increases and it agreed with the hearing officer on insurance expenses. With regard to fuel costs, the record shows that TRPC's evidence was speculative, as fuel expenses had recently dropped off. (ROR, Item #7, transcript, p. 11). In addition, the commissioner had granted a $4.00 surcharge in the past year.
With regard to equipment replacement, TRPC's evidence was inconsistent, as there was testimony that equipment must be replaced every three years (ROR, Id., pp. 7-8), while another witness testified that the length of service of equipment was four to five years. (ROR, Id. p. 29.) At oral argument, TRPC admitted that the evidence was not clear on that point. The hearing officer also noted in his final decision that TRPC, in its materials, did not explain why evidence was presented only on the increased costs affecting a two-tow truck company, as opposed to another size company.
The hearing officer did not accept the need for developing a charge for a tow requiring a rotator. He asked that this be studied further and made a part of a future application. Finally, the hearing officer had, as precedent, earlier DMV decisions, approved by this court, that current statutes do not allow a gate fee charge. This would also apply to an escort fee, a pull-out fee or a release fee. See Connecticut Motor Cars v. Commissioner of Motor Vehicles, Superior Court, judicial district of New Britain, Docket No. CV 08 4016399 (May 5, 2009, Cohn, J.), aff'd, 300 Conn. 617 (2011).
In Connecticut Motor Cars, this court ruled as follows, quoting in part from § 14-66(a)(3), a DMV final decision, and a California appellate decision: "Call the fee at issue a `gate fee' or a `gate/labor fee,' the label is irrelevant because the underlying activity is included in the release of the motor vehicle and thus is included in the tow charge . . . The act of moving a car for release is a service that is included in a tow charge . . . [S]torage of a towed vehicle at a storage yard after its transport is a service incident or related to the carriage . . . The `labor' fee is related to the carriage and storage of the automobile . . . [and] exceeded `the rates and charges published by the [DMV]." See also Connecticut Motor Cars v. Dept. of Motor Vehicles, supra, 300 Conn. 623 ("The tow charge therefore includes all of the services rendered in the plaintiff's gate fee, which is a fee for the labor and equipment needed to move a wrecked or disabled vehicle from the secured storage area to the designated vehicle retrieval area").
The findings of fact and conclusions of the hearing officer are supported by substantial evidence and are not arbitrary or in abuse of discretion. Therefore the plaintiff's appeal is dismissed.