Tow companies file lawsuit accusing Detroit police of running illegal tow operation

Six of the seven private towing companies contracted with the Detroit Police Department have filed a lawsuit in federal court against the City of Detroit this month accusing the department of running a fraudulent municipal towing operation.

The 81-page complaint, filed on Dec. 13 in the U.S. District Court for the Eastern District of Michigan, alleges that the police department breached its contract with the towing firms and defrauded the companies under false pretenses.

James Austin, a lawyer representing the plaintiffs in the case, says the grievances go all the way back to September of 2018, when the DPD reportedly rushed a vote by the Detroit Board of Police Commissioners to approve its proposal to start a municipal towing business — just 10 days before a new state law was set to go into effect barring local units of government from operating its own towing service or storage facility.

“They were grandfathered in if they already had one in place,” said Austin. “So 10 days before the September 30 effective date of the new law, the City of Detroit threw together a very ragtag bunch of tow trucks and said, ‘hey, we’ve got a towing operation.’”

According to transcripts from the Sept. 20 meeting — entered as exhibits in the lawsuit — the “joint directive” from Detroit Mayor Mike Duggan and then DPD Chief James Craig was put before the board accompanied by no formal report for the body’s review, and the 7-2 resolution vote to approve the towing operation was held prior to any public comment period being given on the proposal.

Then Assistant Chief James White also indicated at the meeting that the Department had already purchased six tow trucks and hired drivers who they planned to train within the next week.

Austin says those facts show that the city did not have a full-fledged towing service when the law took effect, making the operation illegal.

“They hadn’t trained any of their drivers; they had just gotten trucks; they had just figured out what land they were going to use,” he said. “We want a judicial opinion as to whether they are lawfully running a towing operation or not. And in fact, we don’t think that they are and we’d like to see it shut down.”

Listen: Attorney James Austin speaks with WDET about his clients’ lawsuit against the City of Detroit

Another major contention in the lawsuit is the department’s allocation of towing and storage jobs between the city’s operation and the private towers.

Austin says the contract his clients entered into with the city in December 2022 included a letter from Craig stating the city’s towing operation would cover no more than 25% of all police authorized towing, leaving the rest to private contractors. But the plaintiffs posit that has not been the case.

“Based on the numbers that my clients are doing now, we feel that they are doing far more than 25%,” Austin said. “And we feel that it’s a breach of contract that they’re doing more than the 25%.”

The six plaintiffs in the case — Troy’s Towing, Inc., H&B Land, Inc., Wayne’s Service, Inc., 7 D’s Towing and Storage, Inc., ABA Impound, Inc. and Bobby’s TCB Towing Service Inc. — filed the lawsuit out of sheer desperation after feeling as though their grievances were falling on deaf ears, Austin said, but they hope to work out a reasonable arrangement with the city.

“They’ve made this big investment, and they’re counting on the contract [with the city] to provide them with income that will help counter that investment. And then that income is going away,” he said.

“My folks want to tow for the city. They want to do it under the terms of the contract that they worked out… And hopefully the City of Detroit wants to do the same thing. We’re ready to sit and talk. We don’t want to be here, but they forced our hand.”

Chuck Raimi, deputy corporation counsel for the city, told WDET in a statement that “the claims made against the city all lack merit and the city expects the case will be dismissed in due course.”

Austin says he expects the city to be served with the lawsuit this week.

A troubled track record

At the same time the Detroit Police Department began its municipal towing operation, a federal probe had been digging into findings of widespread corruption within city government and the police department relating to the towing industry.

The investigation, known as “Operation Northern Hook,” led to multiple convictions of city and police officials — including former Detroit City Councilmember Andre Spivey; a former Detroit police detective; the former police lieutenant in charge of DPD’s Integrity Unit; the department’s former attorney and others — for reportedly steering towing jobs to companies that paid them bribes.

In October 2018, a federal grand jury indicted former Detroit City Councilman Gabe Leland on charges of bribery and conspiracy to commit bribery, alleging that Leland conspired with one of his campaign workers to solicit and accept $15,000 worth of bribes in cash and free auto body work from a local business owner. Those charges were dismissed as part of a plea agreement, and he resigned shortly after pleading guilty to state charges of misconduct in office, receiving a sentence of 30 months’ probation.

The homes of two other Detroit City Council members, Janeé Ayers and Scott Benson, and Detroit City Hall were also raided by the FBI as part of the probe into towing contracts in the city, however neither council member were ever charged with a crime. Benson remains on the council today, representing District 3.

The creation of the department’s municipal towing operation was, in part, an effort by the police department to stamp out such instances of fraud,  among other changes.