Towing company suing city over loss of contract

A prominent towing company that is in danger of losing its license is suing the city of Indianapolis for breach of contract.

Interstate/Delaware & South Towing filed suit on Dec. 28 after city officials notified the company a week earlier that its contract with the city would be canceled at the end of the year due to several “serious” issues.

The city awarded Interstate/Delaware & South a one-year contract, set to run through July 1, 2012, to provide towing services in its east district. In exchange for a winning bid, towing companies receive exclusive rights to private tows initiated by the city.

But city officials terminated the agreement, according to the lawsuit, because the company failed to meet required response times or deliver vehicles in a timely manner to an abandoned vehicle lot. It also had various paperwork violations, the city said.

Interstate/Delaware & South is disputing the allegations and said it has performed about 2,500 tows for the city since receiving the contract in August and has exceeded expectations.

The company also alleges that the city is colluding with competitor Last Chance Wrecker, which was awarded the remainder of Interstate/Delaware & South’s contract.

“If you read between the lines, I smell a rat,” said Brent Embrey, attorney for Interstate/Delaware & South Towing.

City lawyers declined to comment on the lawsuit, citing ongoing litigation.

The company is asking a Marion Superior Court judge to restore its contract with the city.

But that won't happen if Interstate/Delaware & South Towing loses its license to operate in Indianapolis.

On Dec. 19, the city’s Department of Code Enforcement issued a hearing notice to the company for license revocation or suspension, charging that it violated local ordinances and elicited more than two dozen consumer complaints.

The hearing, originally set for Jan. 10, has been continued until March 6. Interstate/Delaware & South continues to operate pending a decision by an administrative law judge.

According to the city, the company, which has locations downtown on Delaware Street and on Kitley Road on the city’s east side, has not upheld requirements to post signage and to get approval from parking lot owners or authorized agents before towing vehicles. The firm received a citation for inadequate signage in late October.

Last year, the City-County Council approved regulations to prevent companies from engaging in predatory towing practices. The new rules include caps for towing and storage fees, requirements that towing companies accept cash and credit-card payments, and 24/7 access to towed vehicles.

Interstate/Delaware & South is the first towing company to face a license hearing since those provisions were put in place.

Code enforcement officials have received 28 citizen complaints since late August that Interstate/Delaware & South violated rules, including exceeding the fee cap and failing to post sufficient signage.

Embrey, the company’s attorney, said it is dealing with the same charges on two separate issues—the city contract and license.

“On the license issue, the city said they’ve received [28] complaints,” he said. “We want everybody to be 100-percent happy, but the odds of having everyone 100-percent happy are nearly impossible.”

If its license is revoked, Interstate/Delaware & South could be prohibited from towing vehicles without consent of their owners in Indianapolis for up to a year.