Panel Votes to Replace Valley Towing Firm : Garages: Police board awards contract to a Pacoima operator after Fox Motors becomes the focus of a department investigation.

The Los Angeles Police Commission on Tuesday awarded a lucrative, highly coveted auto-towing contract to a Pacoima operator instead of the Van Nuys firm that has been the area’s official police garage for 36 years.

The commission’s unusual action followed a 14-month investigation into allegations that the former official garage for the Van Nuys police division, Fox Motors Inc., was improperly selling police-impounded vehicles to car dealerships owned by Fox family members.

The change came as the City Council is examining the Police Commission’s system for choosing the 16 official garages. The garages have been granted local monopolies, with no expiration date, on the towing and storing of vehicles involved in crimes, accidents and traffic violations--many of them passing on the informal franchises from generation to generation.

The commission voted 3 to 0 Tuesday to award the official police garage business for the Van Nuys Division to Mike’s Club Towing of Pacoima, replacing Fox Motors.

Police Detective Steve Bernard, who led the commission’s investigation of Fox Motors, said about 26 towing firms competed for the lucrative monopoly.

About 300,000 cars a year citywide are impounded by police-sanctioned garages, which collect a fee of $65 per vehicle plus storage charges. In a suit filed by Fox Motors against the Police Commission challenging the city’s attempt to revoke its franchise, Fox said it had been taking in about $1.5 million a year in fees.

The new designation became effective today and will last three years. It represents the first of the limited garage contracts the commission hopes to award in a revamping of the system.

Gilbert M. Archuletta, an attorney for Fox Motors, called the commission’s action “a real slap in the face to the City Council” because the council asked the commission last summer to postpone a decision on Fox Motors until the larger question of the proper method of choosing police garages had been resolved.

Archuletta also argued that state environmental law had been violated because neighbors of the Mike’s Club Towing garage at 7817 Woodley Ave. in Pacoima had not been notified of possible effects. But city officials told the commission that notifications were unnecessary because no change is being made in the use of the site, a vehicle storage yard.

City officials also said the Pacoima garage lies in a completely industrial area while Fox’s garage on Erwin Street in Van Nuys is next to an elementary school and single-family homes. Don Schultz, president of the Van Nuys Homeowners Assn., said his group and others in the Valley favored selection of the Pacoima site.

As the commission met Tuesday, Fox Motors’ attorneys were in Superior Court seeking a temporary restraining order against the commission’s action. But two judges declined to act on the matter without a full hearing, which was scheduled for Nov. 14, a commission attorney said.

Fox Motors could also ask the City Council to override the commission’s action, but Archuletta said he may wait until after a court decision.

Archuletta called the selection of Mike’s Club “biased” and said the allegations against Fox Motors were “absolutely false.” Although no criminal charges have been filed, the case remains under review by the city attorney’s office.

Bernard, the commission detective, said the Fox Motors case was not the first time the city has switched garage designations, but was the most controversial. Fox’s advocates include Arthur K. Snyder, a former Los Angeles councilman and one of City Hall’s most aggressive lobbyists.

Bernard began investigating Fox Motors in January, 1989, after a slaying victim’s ex-wife complained that the victim’s Mercedes-Benz, impounded as evidence, had been sold without the family’s knowledge. Police then found that Fox Motors had sold the car to a used-car dealership in Palm Springs, which in turn sold it to a customer for $5,695.

The Palm Springs dealership was owned by the daughter of Fox Motors’ owner Henry Fox, Bernard said. Police also learned that her former husband, who was manager of the Fox garage in Van Nuys, had been using the slaying victim’s impounded motorcycle, Bernard said.

“This is an industry that has to be regulated,” Bernard said.