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Chicago doesn’t have to return impounded cars to bankrupt owners, U.S. Supreme Court rules

Justice Sonia Sotomayor concurred, but noted the impact of impoundments on low-income communities, saying bankruptcy courts aren’t powerless to work out arrangements for people to get their cars back from the city so they can drive to their jobs.

Hundreds of towed vehicles are parked at an auto pound owned by the city of Chicago.
Hundreds of towed vehicles are parked at an auto pound owned by the city of Chicago.
Sun-Times file photo

Civil-rights advocates in Chicago on Thursday criticized a Supreme Court decision that says the city doesn’t have to immediately return impounded vehicles to people who’ve filed for bankruptcy.

Justice Samuel Alito wrote that a creditor — in this case the city of Chicago — doesn’t violate the law simply by “retaining” the property of someone who owes a debt.

The case, City of Chicago v. Fulton, involved people who sued the city to get their impounded cars back after they filed for bankruptcy.

The justices voted 8-0, with Justice Amy Coney Barrett abstaining because she wasn’t on the court when the case was argued in October.

The American Civil Liberties Union of Chicago called the decision a “disappointment” and said it “fails to recognize that states and cities, including Chicago, are crushing residents with exorbitant fines and fees in order to balance the budgets. Chicago’s reliance to fines and fees buries people under mountains of debt, drives them to bankruptcy, and then keeps people from the vehicles needed to work their way out.”

Robbin Fulton, lead plaintiff in the case, used her Kia Soul to get to work and take her kids to day care — until the city impounded the car in late 2017 because she got a ticket for having a suspended license. She filed for bankruptcy in late January 2018 and asked for her car back, but the city said she owned a debt of $11,831. After months of legal wrangling, the city returned her car.

U.S. Supreme Court Justice Sonia Sotomayor in 2016.
U.S. Supreme Court Justice Sonia Sotomayor in 2016.
AP

Justice Sonia Sotomayor agreed with Alito’s decision, but wrote a separate opinion highlighting the case of George Peake, who used his 2007 Lincoln MKZ to drive from his home on the South Side to his job in Joliet.

Chicago impounded his car in 2018 for unpaid parking and red-light tickets. He filed for bankruptcy but the city refused to return Peake’s Lincoln until he paid $1,250 or until after the court approved his bankruptcy plan.

“Surely Peake’s vehicle would have been more valuable in the hands of its owner than parked in the city’s impound lot,” Sotomayor wrote.

Sotomayor said bankruptcy courts “are not powerless” to come up with agreements in which people whose cars have been impounded can get them back from the city in order to go to work and get out of debt.

“Drivers in low-income communities across the country face similar vicious cycles: A driver is assessed a fine she cannot immediately pay; the balance balloons as late fees accrue; the local government seizes the driver’s vehicle, adding impounding and storage fees to the growing debt; and the driver, now without reliable transportation to and from work, finds it all but impossible to repay her debt and recover her vehicle.”

In July, the City Council agreed to rein in the city’s vehicle impoundment program. Mayor Lori Lightfoot convinced aldermen to reduce fines and expand payment plans. Fines were returned to 2011 levels and storage fees were capped at $1,000. Lightfoot introduced the measure in response to an investigation by WBEZ-FM (91.5) into motorists being saddled with thousands of dollars in storage fees that drove them into debt.

Before 2016, the city would release a vehicle if its owner filed for bankruptcy, court records show.

Fraudsters took advantage of that with a scheme that wound up sending a handful of people to federal prison in recent years.

In exchange for hundreds of dollars in cash, scammers would help people get their impounded vehicles back from the city by helping them file false bankruptcy petitions. One judge called it a “pretty good fraud” that involved a “pretty high intelligence level.” Another called it one of the more “cynical” frauds she had seen.

Daniel Rankins, Fenton Flowers and Shaun Grandison all landed federal prison sentences in connection with the scam, court records show. Rankins’ mother, Delores Rankins, was also sentenced to probation.

In 2016, the city amended the municipal code to give itself a “possessory lien” on any impounded vehicle — “a path around the bankruptcy protection afforded to debtors’ property,” one judge wrote.