JOHN REYNOLDS STATE OF ALABAMA 5208 Lower Wetumpka Road DEPARTMENT OF REVENUE Montgomery, AL 36110, ADMINISTRATIVE LAW DIVISION

JOHN REYNOLDS 5208 Lower Wetumpka Road Montgomery, AL 36110, Petitioner, v. § § STATE OF ALABAMA DEPARTMENT OF REVENUE ADMINISTRATIVE LAW DIVISION ...
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JOHN REYNOLDS 5208 Lower Wetumpka Road Montgomery, AL 36110, Petitioner, v.

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STATE OF ALABAMA DEPARTMENT OF REVENUE ADMINISTRATIVE LAW DIVISION

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DOCKET NO. MV. 04-358

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STATE OF ALABAMA DEPARTMENT OF REVENUE.

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OPINION AND PRELIMINARY ORDER John Reynolds (“Petitioner”) appealed to the Administrative Law Division pursuant to Code of Ala. 1975, §40-2A-8(a) concerning the Department’s refusal to issue him a certificate of title for a 2002 Ford F250, VIN 1FTNX21F72EA49573.

A hearing was

conducted on September 8, 2004. The Petitioner attended the hearing. Assistant Counsel John Breckenridge represented the Revenue Department. Wallace Mills represented the City of Montgomery. Angela Rogers represented Allied Insurance Company. The State of Georgia initially issued Ike Young a certificate of title for the subject vehicle. Ford Credit was listed as first lienholder. The vehicle was insured by Allied Insurance. Young notified Allied Insurance in June 2003 that the truck had been stolen in Louisiana. Allied subsequently paid Ford Credit approximately $21,000 to satisfy the balance due on the loan. It also paid Young approximately $14,000 for his equity in the vehicle. Allied also learned that the vehicle had been recovered by the City of Montgomery Police Department in mid-June 2003. The Montgomery Police had instructed Waldrip’s Wrecker Service to tow the vehicle to its storage facility in Montgomery.

Allied

subsequently telephoned both the Montgomery Police Department and Waldrip’s Wrecker

2 Service in early August 2003 and notified those parties of its subrogation rights in the vehicle. Allied also attempted to obtain Ike Young’s original Georgia title for the vehicle from Ford Credit. Ford Credit indicated, however, that the title had been lost. Ford Credit eventually applied to Georgia for a replacement title for the vehicle, which was issued in January 2004. Allied then applied for and received a salvage title for the vehicle from the State of Iowa in February 2004. The City ran the Texas tag on the vehicle and discovered that it was owned by Ike Young. The City notified Young by certified mail on June 26, 2003 that if he failed to claim the vehicle, it would be sold at auction on October 8, 2003 as an abandoned motor vehicle. The notice was returned because of an insufficient address. The City subsequently published notice of the October 8 sale in the Montgomery Independent on September 18 and 25, 2003. The City of Montgomery Police Department sold the vehicle to the Petitioner for $24,000 at the October 8, 2003 auction. The City issued the Petitioner a bill of sale for the vehicle, which conveyed and transferred “all interest and title (the City) possesses in the following described property . . . under the provisions of Title 32, Code of Ala. (1975) and Article II, §25-6 and 7, Montgomery City Code.” The City also deposited the Petitioner’s check for $24,000 into one of its bank accounts. It later remitted the $24,000, less advertising costs, to Waldrip’s Wrecker Service. The Petitioner applied to the Department for a title for the vehicle on October 21, 2003. The Montgomery Police Department was listed as seller on the application. The Petitioner also submitted the bill of sale issued by the City. The Department refused to

3 process the application until further information was provided. The Petitioner reapplied for a title for the vehicle on February 13, 2004. That second application indicated that Waldrip’s Wrecker, not the City, had sold the vehicle to the Petitioner as an abandoned motor vehicle on October 8, 2003. The Petitioner also submitted a Report of Sale of an Abandoned Motor Vehicle from the Montgomery County Circuit Clerk dated February 4, 2004. He also submitted an Abandoned Motor Vehicle Record Request Response that he had obtained from the Revenue Department on January 22, 2004 indicating that the Department had no record concerning the vehicle. Alabama law requires that any person selling a vehicle as an abandoned motor vehicle is required to obtain the above form from the Revenue Department before making the sale. Code of Ala. 1975, §32-13-3(a)(3).1 The Department also refused to process the Petitioner’s second application for title because (1) the VIN on both the report of sale and the bill of sale submitted by the Petitioner was incorrect; (2) the notice of sale was not published at least 30 days before the sale, as required by §32-13-4(b); and (3) the Department is prohibited from issuing a title for the subject vehicle because an Iowa salvage title has been issued for the vehicle.

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Section 32-13-3(a)(3) was enacted by Act 2003-402, effective September 1, 2003. The provision requires that before a vehicle can be sold as an abandoned motor vehicle, the seller must first obtain a document from the Department indicating either the name and address of the owner or any recorded lienholder, or that the Department has no record concerning the vehicle. The provision is intended to prevent a seller from selling a vehicle as an abandoned vehicle without first notifying or attempting to notify the owner and any recorded lienholders.

4 The Petitioner’s frustration is understandable. He paid the City of Montgomery $24,000 for the vehicle expecting that he would easily obtain a title for the vehicle. Unfortunately, he has been unable to do so. If the Petitioner cannot have the truck with a good title, he wants his money back. Allied Insurance claims that it is entitled to the truck because of its subrogation rights in the vehicle, and because it has a valid Iowa title for the vehicle. It also argues that the Department should not issue the Petitioner a title because it was not properly notified of the October 8 sale. It has also made a claim against Waldrip’s Wrecker for the sale proceeds. The City of Montgomery contends that it sold the vehicle as agent for Waldrip’s Wrecker. It claims that the sale was valid, and that the Petitioner should be issued a title for the vehicle. Waldrip’s Wrecker presumably also contends that the sale was valid, although it was not formally represented at the September 8 hearing. The Administrative Law Division has heard numerous title disputes concerning vehicles sold at auction pursuant to the Alabama Abandoned Motor Vehicle Act, Code of Ala. 1975, §32-13-1, et seq. Those cases primarily involved whether the seller had complied with the notice provisions in §32-13-4. This case, however, is more complicated. It appears that the October 8, 2003 sale did not comply with the Abandoned Motor Vehicle Act for several reasons. First, I disagree that the City sold the vehicle as agent for Waldrip’s Wrecker. City personnel conducted the sale; the City issued the bill of sale in its name; and the Petitioner paid the City for the vehicle. The City, not Waldrip’s Wrecker, sold the vehicle. However, the City, as a municipal corporation, is not entitled to sell a vehicle pursuant to the Abandoned Motor Vehicle Act. Rather, §32-13-3(a)(1) only authorizes that “any automobile dealer, wrecker service or repair service owner, or any

5 person or firm on who’s property a motor vehicle is lawfully towed . . . , may sell the vehicle at public auction.”2 Another problem is that the City paid the entire sale proceeds of $24,000, less advertising costs, to Waldrip’s Wrecker. Section 32-13-6(a) provides that the person making the sale, the City in this case, shall deduct from the sale proceeds the reasonable cost of repair, towing and storage, and all expenses incurred in connection with such sale, and that the balance shall be submitted to the circuit court register or clerk. The statute also specifies that any costs deducted from the sale proceeds “shall in no event exceed the customary charges for like services in the community where the sale is made.” Waldrip’s Wrecker thus was entitled to a reasonable fee for its services, but the balance of the $24,000 should have been paid to the Montgomery County Circuit Clerk. Another defect in the sale is that the City failed to obtain the document required by §32-13-3(a)(3) from the Revenue Department before the sale.

As indicated, the

Department did not issue the document until January 22, 2004, over three months after the sale occurred. Finally, the Department argues that the City failed to publish notice of the sale at least 30 days before the sale date, as required by §32-13-4(b). However, that section applies only if the owner, secured parties, or lienholders are not known. If the owner is known, §32-13-3(b) only requires publication of notice at least 10 days before the sale. The City knew that Ike Young owned the vehicle, and attempted to notify him of the sale. Unfortunately, the notice was returned because of an insufficient address. 2

The City conceded at the September 8 hearing that it cannot sell a vehicle pursuant to the Abandoned Motor Vehicle Act. Effective January 1, 2004, the City is no longer involved in

6 The City did not notify the first lienholder, Ford Credit, of the intended sale because it was unaware that Ford Credit was the lienholder on the vehicle. The 30 day notice rule in §32-13-4(b) applies in such cases. The City also failed to notify Allied of the sale, even though Allied had notified the City in August 2003 of its subrogation rights in the vehicle. Whether that failure constitutes a violation of the §32-13-4(a) notice provisions turns on whether Allied’s subrogation rights made it a “secured party of record” concerning the vehicle. In prior appeals concerning disputed titles for vehicles sold as abandoned motor vehicles, the Administrative Law Division has held that the complaining party must contest the sale by filing an action in the appropriate circuit or district court, as specified in §32-134. That also applies in this case. If Allied Insurance wishes to contest the October 8, 2003 sale of the subject vehicle, it must do so by filing an action in Montgomery County Circuit or District Court.3 This case will be held for 30 days to allow Allied a reasonable time to file an action in Montgomery County Circuit or District Court. If an action is filed, the Department will be guided by the Court’s decision in the case. Allied should notify the Administrative Law Division if an action is filed.

selling such vehicles. 3 The Administrative Law Division only has authority to determine if the Department acted properly in refusing to issue the Petitioner a title for the truck. It cannot determine who is entitled to the truck or the $24,000. But if an action is filed in Montgomery County, the court hearing the case may decide those issues. I must add that because both Waldrip’s Wrecker and the City were aware of Allied’s subrogation rights in the vehicle before the vehicle was sold, an equitable solution would be for the Petitioner to get his $24,000 back, and for Allied to get the truck. Waldrip’s Wrecker may be entitled to reasonable towing and other costs incurred, but that would be between Waldrip’s Wrecker and the City. Hopefully, the parties can settle the matter without further legal action.

7 If an action is not filed in Montgomery County within 30 days, the Department may issue the Petitioner an Alabama salvage title for the vehicle. The Petitioner would then be required to have the vehicle inspected, after which a rebuilt title could be issued. However, the Petitioner would first have to resubmit his title application, and also a corrected bill of sale and Report of Sale that showed the vehicle’s correct VIN. This Opinion and Preliminary Order is not an appealable Order. The Final Order, when entered, may be appealed to circuit court within 30 days pursuant to Code of Ala. 1975, §40-2A-9(g). Entered October 14, 2004. _____________________________ BILL THOMPSON Chief Administrative Law Judge

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