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Intek Auto Leasing, Inc. v. TND Trucking Corporation

A-609-04T5 (N.J. Super. App. Div. 2005) (Unpublished)

LIENS; GARAGES; LEASES—Under the Garage Keeper’s Lien Act, if a garage doesn’t notify a vehicle lessor of the lien within seven days of when the charges began, then it cannot collect charges that run from the end of the seven days through when it sends its notice.

A leasing company leased a truck to a customer. The truck was later found abandoned and unregistered. A police-authorized towing company removed and stored the truck. About three weeks later, the police authorized release of the vehicle. The truck’s driver ” refused to pay the towing and storage fees and, consequently, the vehicle remained at [the towing company’s] garage.” Two weeks later, the towing company sent a letter to the leasing company asking the leasing company to contact it. The letter explained the circumstances as to how the truck came to be located on the leasing company’s lot and inquired of the leasing company’s “interest, if any, in this vehicle.” The letter went on to state that there were charges owing from and after the date it was first towed. The leasing company did not respond for over a month. It then tried to resolve its dispute with the towing company but, when ultimately unsuccessful, it sued for release of the vehicle. The towing company answered with a counterclaim asserting that the leasing company and the company that had leased the truck were liable for the towing and storage charges. The lower court found that there were two relevant periods: the first from when the truck was towed until when the police authorized its release; and, the second being the period thereafter. With respect to the second period, the lower court considered it to be two sub-periods: the first being the thirty days from the time that the police authorized release of the truck; and, the second being the period of time after the towing company notified the leasing company as to the whereabouts of the truck.

According to the relevant municipality’s ordinance, towing and storage charges from the time that the police had the vehicle picked up until the time the police released it were the obligations of the vehicle’s owner. Consequently, the lower court found that the leasing company was responsible for those charges. As to the second period, the lower court looked at the Garage Keeper’s Lien Act. According to the Act as interpreted by the New Jersey Supreme Court, notice of intention should be provided within seven days, and “[i]f such notice is given, the garage keeper is ‘entitled to a lien for both the cost of storage for those initial seven days and the cost of any storage that occurs after the lessor receives notice and an opportunity to reclaim the vehicle.’ ... ‘In contrast, a garage keeper who notifies the lessor after seven days have passed will not be permitted to hold the lessor responsible for the storage charges incurred from the end of the initial seven-day period until the time of notification.’” For that reason, the leasing company was found liable for the towing and the initial period of storage until the police directed the vehicle to be released and then from the date of the towing company’s notice to the leasing company until the vehicle was removed from storage.

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