A federal judge ruled today that Revere's policy on car towing - to notify the car's owner but not any companies that might have financed it -and the state law the policy relies on, is unconstitutional and so it owes Honda the full value of a car the city had towed then let a private tow company sell without first notifying the car maker's financing wing.
At issue was a 2016 Civic that Revere Police seized and had towed to police headquarters in December, 2016 as part of an investigation into stolen property and credit-card misuse - almost two months after a New York woman had bought the car with financing from Honda. Police had a local tow company take the car and store it after the investigation. Eventually, the company notified the owner she had to pay for storage or it would sell the car; when she didn't respond, that's what the company did, earning $15,000 on July 30, 2017.
Only problem: By financing the car, Honda had a lien on it and it should have been notified about the impending sale and be repaid for the value of the lien, but it wasn't. So Honda sued Revere in federal court.
In a ruling today, US District Court Judge Allison Burroughs writes that the way the car was disposed of violated Honda's Fourteenth Amendment rights to due process, and so Revere's regulations on car disposal, which do not include a requirement to alert lienholders, is unconstitutional.
Although federal courts in the district have never dealt with liens on cars in cases like this before, Burroughs cited cases involving the disposition of real estate that "the law is settled that all parties with a valid property interest are entitled to notice and a hearing" - as well as cases involving cars in New York City.
Therefore, as a lienholder, Honda should have received adequate notice and had the opportunity for a hearing before the Vehicle was put up for sale. See Ford Motor, 394 F. Supp. 2d at 610. As Honda’s opportunity for due process was in essence “reduced to zero,” any interest Revere had in favor of the policy is moot. ... Because Revere’s policy falls short of the minimum standard of Due Process guaranteed by the Fourteenth Amendment, the [state] Statute as written and as applied is unconstitutional.
Burroughs then awarded Honda $16,092, the amount it claims it could have made if it had sold the car itself.