Modzelewski's Towing & Storage, Inc. v. Comm'r of Motor Veh.

316 A.3d 780

225 Conn.App. 386

MODZELEWSKI’S TOWING & STORAGE, INC., et al.

v.COMMISSIONER OF MOTOR VEHICLES et al.

(AC 45605)

Appellate Court of Connecticut.

Argued January 11, 2024

Officially Released May 14, 2024

Jesse A. Langer, New Haven, with whom, on the brief, was Jeffrey D. Bausch, for the appellants (plaintiffs).

Drew S. Graham, assistant attorney general, with whom, on the brief, was William Tong, attorney general, for the appellee (named defendant).

Moll, Cradle and Westbrook, Js.

CRADLE, J.

₃₈₉The plaintiffs, Modzelewski’s Towing & Storage, Inc., and Modzelewski’s Towing & Recovery, Inc., appeal from the judgment of the trial court dismissing their appeal from the final decision of the named defendant, the Commissioner of Motor Vehicles (commissioner), concluding that the plaintiffs had violated the regulations established by the commissioner governing permissible fees for the nonconsensual towing¹ ₃₉₀and storage of motor vehicles and ordering the plaintiffs to make restitution to the defendant Sentry Select Insurance Company (Sentry),² and to pay a civil penalty to the Department of Motor Vehicles (department). On appeal to this court, the plaintiffs claim that the trial court improperly concluded that (1) the fees charged for the tow at issue were in conflict with § 14-63-36b (4) and (5), and § 14-63-36c (c) of the Regulations of Connecticut State Agencies; (2) their posted rate schedule did not comply with § 14-63-36b (4) and (5), and § 14-63-36c (c) of the regulations; (3) the department properly imposed a civil penalty of $4000 against them; and (4) substantial evidence supported the inclusion of Modzelewski’s Towing & Recovery, Inc., as a respondent in the underlying administrative proceedings.³ We affirm the judgment of the trial court.

The following facts and procedural history are relevant to our resolution of the plaintiffs’ claims. The plaintiffs are licensed motor vehicle dealers and repairers. On December 4, 2014, the plaintiffs were summoned by the Connecticut State Police to perform recovery and towing services involving a tractor trailer in connection with an accident that had occurred on Interstate 84 in Danbury. The tractor trailer, which was severely damaged and had become wedged beneath the metal guardrail, was owned by David Tuttle doing business as Big ₃₉₁Daddy Trucking of Waymart, Pennsylvania (Big Daddy), and was insured by Sentry. Upon receiving the call from the state police, the plaintiffs dispatched to the scene a 1075 rotator truck, an Occupational Safety and Health Administration (OSHA) rigging supervisor, a scene supervisor and a major response truck that contained equipment to handle debris and leaks. The plaintiffs used the 1075 rotator truck, which had been set up on an OSHA certified platform, to disentangle the tractor trailer from the metal guardrail. Within approximately one hour, the plaintiffs cleared the tractor trailer and debris from the highway and towed the tractor trailer to a nearby parking lot to further secure the vehicle for towing to the plaintiffs’ storage facility. The tractor trailer remained at the storage facility for twenty-eight days.⁴ The plaintiffs invoiced Tuttle for towing, recovery ₃₉₂and storage services in the amount of $29,339. Sentry paid the invoice in total, under duress, to secure the release of the tractor trailer and filed an administrative complaint with the department, contesting the reasonableness of the fees charged by the plaintiffs on the grounds that they were "unreasonable, excessive and not keeping within industry standards or the Connecticut standards for nonconsensual towing or transportation, further codified in §§ 14-63-34 to 14-63-37b of the Regulations of Connecticut State Agencies."

On August 28, 2020, after a hearing, the department’s hearing officer issued his decision with respect to Sentry’s complaint. The hearing officer first indicated that, because Modzelewski’s Towing & Storage, Inc., and Modzelewski’s Towing & Recovery, Inc., are both owned and operated by James E. Modzelewski, his decision would reference the two entities as a single entity for purposes of the administrative appeal. The hearing officer explained that the plaintiffs had asked that the case be dismissed as to Modzelewski’s Towing & Recovery, Inc., because it was not involved in the tow at issue. The hearing officer denied that request on the ground that the invoices submitted to Sentry "were entitled Modzelewski’s Recovery, Inc." As to Sentry’s challenge to the reasonableness of the invoiced fees, the hearing officer explained that, "[r]ather than using and charging the approved rates, the [plaintiffs] established, posted and used [their] own rate schedule based on [the] equipment [used]. The [plaintiffs] charged for equipment using [their] schedule, as opposed to using the approved hourly rate for labor schedule." On that basis, the hearing officer concluded that the plaintiffs had overcharged ₃₉₃Sentry and ordered the plaintiffs to repay Sentry $24,687.22 as restitution and, also, imposed a civil penalty of $4000 against the plaintiffs. The plaintiffs appealed to the Superior Court.

On July 1, 2021, after a hearing, the court, Hon. Henry S. Cohn, judge trial referee, issued a decision agreeing with the hearing officer’s interpretation of the applicable regulations, concluding that § 14-63-36c (c) of the regulations states that "the towing company is entitled to an additional charge for its ‘labor’ and does not mention equipment costs." The court found "problematic," however, the hearing officer’s determination that, "[r]ather than using and charging the approved rates, the [plaintiffs] established, posted and used [their] own rate schedule based on [the] equipment [used]. The [plaintiffs] charged for equipment using [their] schedule, as opposed to using the approved hourly rate for labor schedule." Specifically, the court found it unclear whether the hearing officer meant that the plaintiffs were required to bill in accordance with the commissioner’s approved rates even though § 14-63-36c (c) permits the towing company to use their own labor rate for exceptional services. The court also noted that the hearing officer failed to address whether the plaintiffs had posted a labor schedule in accordance with the regulations. Additionally, the court found problematic the hearing officer’s statement that the plaintiffs charged only for equipment, not labor. The court explained: "The existing record is ambiguous on this point. The invoices state that the plaintiffs ‘used’⁵ certain equipment to remedy the situation at the scene and sets forth a charge. … There is nothing in the record or in the final decision to explain whether each charge was for their labor or the equipment itself or both. [Modzelewski’s] testimony at the department’s hearing of January 10, 2020, ₃₉₄is ambiguous. While he sets forth how he calculated the equipment charge, and did not include labor, he then states that he did bill on the basis of labor." (Footnote altered.) Finally, the court held that, "even if the plaintiffs may claim that some or all of their charges are due to a properly posted labor schedule, the hearing officer may reject any or all of the billed charges as not reasonable or necessary. This is not discussed in the final decision." Accordingly, the court remanded the matter to the department to address three issues: (1) whether the plaintiffs had posted an appropriate sign in their workplace setting forth labor charges; (2) whether the plaintiffs had submitted invoices consistent with the labor charges, and, if so, which ones may be considered labor, and which of the labor charges also included an equipment charge; and, (3) assuming that there are labor charges, whether those charges are reasonable and necessary. The court noted that, "[i]n its discretion, the department may need to conduct a further hearing."

On November 18, 2021, the hearing officer issued a written decision in response to the court’s remand. Preliminarily, the hearing officer declined to "[reopen the] case for a limited remand hearing" because the parties had been afforded "ample opportunity" to introduce evidence "without restriction." The hearing officer then responded to the court’s directions on remand. In addressing the court’s inquiry about whether the plaintiffs had posted an appropriate sign in their workplace setting forth their labor charges, the hearing officer explained: "The plaintiffs did not post an appropriate sign or signs in [their] workplace setting forth [their] allowed labor charges. The rate schedule posted [by the plaintiffs], beyond what in part appear to be hourly labor charges in five categories (Certified Driver, Certified Man Power, Clean-Up Supervisor, Extra Man, Rigging Supervisor), is not a schedule of hourly charges for labor. Consistent with the hearing decision, labor ₃₉₅charges are permitted labor charges for nonconsensual tows as allowed by statute and regulation. According to the testimony of [Modzelewski], these fees were posted in his office and included fees for what he considered exceptional services. [Modzelewski testified that, in] arriving at these rates, ‘the exceptional services and the specialized recovery equipment is not used every day. So, we take a ratio of what the equipment costs, the depreciation, the insurance, the maintenance, obviously the cost of the equipment, and we put that together and we come up with a rate for that piece of equipment.’ … Upon later questioning by [the plaintiffs’ counsel], he admitted that the fees did not include charges for individual labor, but the charges or fees did include the vehicle and the operator. … In response to [a] question [from the commissioner’s counsel], ‘do you have a numerical breakdown for each, how much did you charge for the operator or how much you charged for the equipment? … do you have a breakdown for each?’ … his response was, ‘I don’t.’ … In this case, where the plaintiffs did...