Tow Truck Firms Go Toe-to-Toe in Court

A decade of skirmishes between Los Angeles towing companies has given way to open warfare between two San Fernando Valley garages that are waging a bitter court fight over the right to impound cars in West L.A.

The prize: an exclusive city contract worth up to $2 million a year.

In one corner is Mark Henninger, a 40ish, Harley-Davidson-riding multimillionaire who runs Keystone Towing in Van Nuys and who has an ownership interest in Rheuban Towing, the city towing contractor in West Los Angeles.

Opposing him is Tom John Sr., the 64-year-old owner of Tom John Towing in Sun Valley and a rival bidder for the Police Commission’s West Los Angeles franchise. City officials say the pact might be awarded in the next month.

The sniping has brought into view the obscure, lucrative and often cutthroat world of city towing contracts, which for 50 years were held by a small group of families and companies, passed from father to son without having to face competitive bidding.

Four years ago, a group of outsider companies, including Tom John’s, successfully sued the city, and a judge ordered the City Council and Police Commission to open the contracts to competitive bidding for four-year pacts at the rate of about four a year.

“It’s always been emotional with these people trying to protect their dominions,” said former Councilman Marvin Braude, who spearheaded the move to competition. “These are very valuable contracts.”

John has sued Keystone, accusing Henninger’s firm of unfair competition in the bidding process, including allegations that it tried to influence Los Angeles Police Department detectives assigned to the Police Commission with gifts of vacation lodging, meals and services.

In addition, John alleged that Henninger and Keystone purchased a substantial interest in Rheuban towing without getting required city permission. And he alleged that Keystone propped up Rheuban with its own resources to improve the company’s performance so it would look good on the application to keep the West Los Angeles Official Police Garage.

In return, Keystone has raised questions in its court filings about whether Tom John Towing overcharged the public in its handling of lien sales for impounded cars, a charge John denies.

“We had some minor infractions, but nothing intentional,” John said, adding the overcharges caused by accounting glitches amounted to less than $400 and have been refunded.

With the trial tentatively set to begin Tuesday in Santa Monica Superior Court, each side accuses the other of using the legal system to settle grudges.

Jane McClure, an attorney for Keystone, charged that Tom John brought suit “to gain tactical advantage in its bidding wars with defendants” and “cast aspersions on Rheuban and Keystone in the hopes of undermining Rheuban’s otherwise superior bid.”

Sherman Oaks attorney Neil Evans, who represents John, wrote that John is being harassed in court with demands for financial and towing records. He described Keystone as an “archrival.”

The Police Commission awards one Official Police Garage contract for each of the 18 LAPD divisions, giving the holder exclusive right to respond to police and Transportation Department calls for towing and impounding abandoned vehicles and cars involved in accidents and crimes.

“The stakes are very high,” said Councilman Nate Holden, who added that he was not surprised by the level of vitriol being shown.

“It’s a tough business,” Holden said. “It’s very competitive. They have to race one another for the business, chasing accidents. If you can stomach that, you can stomach anything.”

John said each contract can gross $1 million to $2 million annually, and the exclusivity is highly prized.

“There are people out there who will jump your calls,” said John, a Sherman Oaks resident who began as a driver 29 years ago and now owns 25 trucks, with contracts to operate on freeways and in Beverly Hills.

The tightknit group of contract-holders calls itself the Official Police Garage Assn. and has spent hundreds of thousands of dollars in the past decade on lobbyists and campaign contributions to keep members’ franchises.

The amount of lobbying surprised and concerned Art Mattox, a former police commissioner and current member of the city Ethics Commission.

“That [lobbying] tells you that they want to protect their franchises and that the franchises are valuable,” he said.

The outsider firms followed up their 1995 lawsuit to win competitive bidding with a lawsuit last year charging that the city has dragged its feet at implementing open bidding, awarding only one contract in three years.

John filed the third suit, against Keystone and Rheuban, saying he is up against an unfair system.

Henninger did not return calls for comment, but denied in a deposition that he attempted to influence LAPD officials.

The court fight has even gotten down to who picked up the bill at lunches shared by Henninger and police officials.

John objected that Henninger admitted to picking up the tab on about half of the 24 lunches and breakfasts he had with LAPD Det. Dan Carson, who is assigned to the Police Commission Investigation Division as the police garage coordinator.

But Henninger said in a deposition that Carson paid the bills for the other half.

That is not an improper gift because the bills even out, said James Curry, an attorney for Keystone.

John also alleged that an LAPD official stayed at Henninger’s Lake Havasu vacation home, but the department said the official was not involved in the tow-contracting process at the time.

John further alleged that Keystone tried to gain influence with the LAPD by hosting barbecues for police officers.

LAPD officials and James Curry, an attorney for Keystone and Henninger, said the allegations of undue influence are without merit and have already been discredited by a judge.

Claims for damage and restitution were dismissed in November by Superior Court Judge Paul G. Flynn. That leaves for trial only a claim for injunctive relief to prevent Keystone from engaging in unfair business practices, including attempts to influence LAPD officials, according to Evans.

“I can tell you just parenthetically I don’t see sufficient evidence to go forward on any claim of bribery or illicit activity in that area,” Flynn said during a hearing last year.

Evans said the judge did not bar such evidence from being presented at trial, however.

Delays in the competitive bidding process have raised suspicion that the process is stacked to favor the insider firms, John said.

Braude said the City Council is partly to blame for the uncertainty and bickering that have marked the bidding process. The city should have been more decisive, he said.

“I think it’s the old story that the City Council is hesitant to say no to people,” Braude said, “to say, ‘I’m sorry, I know your family has had this contract for a long time, but it still has to be put out to competitive bidding.’ ”