First American Bank, N.A. v. District of Columbia
583 A.2d 993 (1990)
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Rule of Law:
When a government entity or its contractor tows and impounds an illegally parked vehicle, a bailment for hire is created due to the mutual benefit involved, thus imposing a duty of ordinary care for the vehicle and its known contents.
Facts:
- First American Bank employed Ronald Armstead as a courier to make deliveries between bank branches.
- Armstead parked the bank's station wagon in a clearly marked "No Parking Rush Hour Zone."
- Four locked bank dispatch bags, containing checks and valuable documents, were in the rear of the station wagon and visible from the outside.
- Armstead had a history of receiving parking tickets at this location, which the bank paid without disciplining him.
- As a tow truck from Transportation Management, Inc. (TMI) began to tow the vehicle, Armstead ran out and requested to either drive the car away or at least remove the dispatch bags.
- The TMI tow truck operator ignored both of Armstead's requests and proceeded to tow the vehicle to an impoundment lot with the bags still inside.
- Upon arriving at the impoundment lot, a lot attendant certified that all the vehicle's doors were locked.
- One and a half hours later, a bank supervisor retrieved the vehicle and discovered the driver's door was unlocked and one of the dispatch bags was missing.
Procedural Posture:
- First American Bank sued the District of Columbia and Transportation Management, Inc. (TMI) in the trial court for breach of bailment and conversion.
- Following a trial without a jury, the trial court ruled that the defendants were gratuitous bailees, liable only for gross negligence.
- The trial court found that the bank had not proven gross negligence and was barred from recovery by contributory negligence and assumption of the risk.
- The trial court entered judgment for the defendants.
- First American Bank, as appellant, appealed the trial court's judgment to this court (the intermediate appellate court).
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Issue:
Does the towing and impounding of an illegally parked vehicle by a government entity and its contractor create a bailment for hire, imposing a duty of ordinary care for the vehicle and its contents?
Opinions:
Majority - Belson, Associate Judge
Yes. The towing and impounding of an illegally parked vehicle creates a quasi-bailment for hire, holding the government and its contractor to a standard of ordinary care. A bailment for hire is established not by explicit agreement, but by the existence of a mutual benefit. Here, the District of Columbia and TMI benefit by receiving towing and storage fees and by furthering the public interest in traffic flow. The vehicle owner benefits from having their vehicle safeguarded until it can be retrieved. This standard is consistent with the long-standing principle that law enforcement seizing property under a writ of attachment must exercise ordinary care. The bank's illegal parking was too remote from the theft to constitute contributory negligence, and the bank's driver did not assume the risk of theft from the impoundment lot, only the risk of being towed.
Dissenting - Farrell, Associate Judge
No. The government acts as a gratuitous bailee when enforcing motor vehicle laws and should only be liable for gross negligence. The government's primary purpose is not to generate profit but to exercise its police function for the public's benefit by abating the 'parking nuisance.' Any fees collected are incidental to this public safety function, not compensation that would create a bailment for hire. The cases involving writs of attachment are distinguishable because the officer's role in those situations is to preserve property value for a judicial proceeding, which is more akin to a commercial function. Holding the government to a standard of ordinary care for this police function creates a disincentive for effective enforcement of parking laws.
Analysis:
This decision significantly lowers the plaintiff's burden of proof in cases involving property loss from vehicles impounded by the government. By classifying the relationship as a bailment for hire rather than a gratuitous bailment, the court shifts the required standard of care from gross negligence to ordinary negligence. This exposes municipalities and their towing contractors to greater liability and incentivizes them to implement more robust security measures at impoundment lots. The ruling clarifies that even when acting in a regulatory capacity, a government entity that charges a fee for a service like impoundment takes on the same legal responsibilities as a private commercial entity.
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