Settlement reached in federal lawsuit against Wilmington's towing practices

A tentative settlement agreement has been reached in a federal lawsuit against Wilmington that alleges the city's towing practices violated the U.S. Constitution.

The "detailed, written settlement" avoids a trial that was set to begin in July in U.S. District Court in Delaware.

The lawsuit, filed in September 2021, claimed Wilmington's towing practices violated the U.S. Constitution by illegally seizing cars for nonpayment of parking tickets, impounding them and allowing private towing companies to scrap the vehicles and keep the proceeds if the owners do not pay the outstanding debt within 30 days.

A letter filed in federal court Friday by city attorneys said the settlement "will include modifications to procedures for towing and impoundment of vehicles" in Wilmington, some of which require Wilmington lawmakers to amend the City Code.

"The settlement also provides for the court to retain jurisdiction to enforce the settlement," said Steven Wood, the outside attorney representing Wilmington in the matter, in the letter to U.S. District Chief Judge Colm Connolly.

While the details of the settlement agreement were not divulged by attorneys Friday, Institute for Justice attorney Will Aronin, who represented plaintiffs Ameera Shaheed and Earl Dickerson in the suit, said he was pleased with the outcome.

"We and the city have worked hard to resolve this case and I’m really excited by what we’ve come up with so far," he said. "We’re not done yet, but I’m very hopeful and cannot wait to share details once we cross the finish line."

POISED FOR TRIAL: 'Wilmington can't have it both ways,' federal judge orders towing suit to move forward

Connolly granted the order requesting an adjournment of the planned July 15 trial date start shortly after the letter was submitted. Attorneys asked for six months' leeway to allow the parties to finalize the settlement and give Wilmington City Council time to approve the "required legislative amendments."

Should these amendments not be approved, attorneys asked Connolly to set a trial date. A proposed pretrial order is due Dec. 19, with a final pretrial conference set for Jan. 9, 2025, should the legislative efforts fail.

The city of Wilmington did not respond to requests for comment.

How we got here

Wilmington officials have resisted calls for reform to its parking and towing practices for years, despite the federal lawsuit that was ordered to move forward by Connolly in 2022.

The lawsuit alleges the city allows private companies to tow legally parked cars that have unpaid parking tickets totaling over $200. If the owners do not pay the outstanding debt within 30 days, the tow companies can scrap the vehicles and keep the proceeds. This created a structure where tow companies were incentivized to sell or scrap cars they towed and, in turn, violated multiple constitutional rights, the lawsuit alleged.

One particular towing company, New Castle-based City Towing Services, had repeatedly won contracts with Wilmington to provide towing and impoundment services because it would promise to charge nothing for storing vehicles and only a penny for each car towed.

But a 2022 Delaware Online/The News Journal review of state Justice of the Peace Court filings showed City Towing charged fees for storing vehicles towed in Wilmington anyway, taking owners and lienholders to court for thousands of dollars when those fees went unpaid.

However, this year, City Towing – which was awarded the Wilmington contract for towing and impoundment services – sought payment for those services in its latest bid.

CITY PARKING ISSUES: Parking woes targeted for audit in Wilmington as federal suit goes to trial

Action taken by council members

The City Council passed a resolution in April calling for the city to audit its parking, towing and booting practices in response to the lawsuit. Council members expressed concerns over equity and shifting dynamics in downtown Wilmington — which have led to more people visiting the city in the evenings and weekends when there is no parking enforcement — as reasons for the audit.

City councilors said the audit should also explore the frequency of street cleaning, whether parking enforcement should remain under the city's Finance Department and the parameters and rules of engagement for towing companies operating in the city.

They also acknowledged that the resolution and demands for an audit were largely symbolic.

Wilmington Mayor Mike Purzycki’s administration has repeatedly denied a need for any audit beyond the city's "normal review schedule."

This article originally appeared on Delaware News Journal: Wilmington towing practices: Agreement reached in federal lawsuit