Thursday, May 21st, 2015

Appellate Court Calls into Question Administrative Impound Fees

The Fifth District Appellate Court in Carter v. City of Alton addressed a challenge to the administrative fees assessed by four municipalities for vehicle impoundments. The fees ranged from $100 to $500. The specific basis of the challenge was that the impound fees were excessive and not reasonably related to the actual cost incurred by municipalities to impound vehicles.

The court’s actual holding was that the plaintiffs’ case should not have been dismissed by the trial court because an issue of fact remained to be determined as to whether or not the fees were rationally related to the actual cost to the municipalities. So while the case was sent back to the trial court for further litigation, the court in Carter made several additional statements that question the sufficiency of administrative impound fees.

The court stated that, because the impound fees are based on criminal actions, the fee had to specifically relate to expenses incurred in impounding vehicles and not to general expenses. For example, the cost of having an officer direct traffic to avoid a hazard of a vehicle waiting to be towed is specifically related to impounding a vehicle, whereas the expense of issuing an arrest report is a general expense that is applicable to various criminal offenses, not just impoundments. The court thus undermined any justification for an impound fee that is predicated on general expenses.

The court went further and questioned whether even the specific expenses incurred by a municipality relating to vehicle impoundment were already being credited to municipalities, via the State and most particularly the court system. While there was no actual evidence that such was the case, the court still conjectured that if the fee duplicated a State fee, the municipality could not base an impound fee on those expenses for which it already received an offset.

Also, the court analyzed several previous cases and determined that it was not clear whether so-called “impound fees” were actually fees and not fines. The court explained that municipalities have little flexibility to assess fees and that any fee must be primarily designed to recuperate or offset actual expenses. However, the court explained, municipalities have broader discretion to assess fines pursuant to police power to punish and deter criminal activity. The court closely examined a prominent Second District Case, Ratliff, and rejected its holding that a municipality does not have to prove how its actual expenses relate to an impound fee. In Ratliff, the court determined that a $500 impound fee was a “reasonable proxy” for administrative costs as well as “societal costs” caused by the defendant, even though there was no actual asserted basis to justify the $500 fee.

The Carter holding will not necessarily be applied by other appellate courts, but the likelihood is that it will be considered by other appellate courts and possibly adopted by some, and that at some point the State Supreme Court will address the apparent rift that Carter created in the court system. As such, until more clarity emerges from future court decisions, public bodies are advised to review any fees (not fines) on the books and determine whether the local government could provide sufficient proof that the fee is based on some reasonable approximation of actual incurred expenses, if it were challenged in court. Also, a local government should consider whether its minutes or records indicate the vehicle impound fee (or any other fee) was adopted, in part, for financial gain to the government. Courts would most likely frown upon any fee which was expressly predicated on making money for the unit of government.


Brad Stewart

Author: Brad Stewart