After Suit, Rancho Cucamonga Opting Out Of The Tow Truck Franchising Process

Legally challenged by one of the region’s most aggressively expanding towing service operators, the City of Rancho Cucamonga is discontinuing its franchising of tow truck operators.
In October 1978, Jose Acosta, using a single Ford 350 pick-up truck, went into the vehicle towing business in Los Angeles as Pepe’s Towing. He and his wife, Delfina, gradually expanded the business over the years, and by 1987, two of their sons, Jose Jr. and Manuel, were integral parts of the operation and energetically pushed the business eastward along the I-10 Freeway corridor through the Los Angeles County communities of Monterey Park, Alhambra, Rosemead, El Monte, Baldwin Park, West Covina, East Covina Pomona, Claremont and then into San Bernardino County, from Montclair to Upland, Ontario, Rancho Cucamonga, Fontana, Bloomington, Rialto, Colton, Grand Terrace, San Bernardino, Loma Linda and Redlands and ultimately south along the 215 Freeway to Riverside.
Despite the flourishing of his business, Jose Acosta proved less than adept at managing to get onto the towing rotations of the various police departments in the communities in which he was operating. Those rotations – which are regulated and controlled by the Highway Patrol, the various police departments and the sheriff’s departments in both Los Angeles and San Bernardino County, which provide contract law enforce services in those cities and incorporated towns which do not have municipal police departments – are virtual franchises. Obtaining such a franchise or being placed on the tow rotation guarantees that tow companies will get, at the very least, a minimal amount of work to allow the businesses to survive and in some cases a substantial amount of work to allow the tow companies to realize a huge profit. Ultimately, based upon the recommendations of the law enforcement agencies in each municipality or jurisdiction, those franchises are signed off on by the city councils overseeing those cities.
In the pay-to-play dominated political atmosphere of San Bernardino County, holders of those franchises have historically been expected to provide political donations to the city council members who approve the franchises. In those cases where a franchisee refuses or forgets to make those donations, he more often than not would lose the franchise. There was long in San Bernardino County a tacit understanding that once a set of tow truck operators were accepted by a particular city as members of that city’s police department’s rotation, those franchises were established and outsiders were not to be added to the rotation, lest the profit margins of those franchisees were to dip, such that they would no longer be in a position to be as generous toward the politicians as they were.
In the late 1990s, Manuel Acosta, who inherited the company from his father, intensified the company’s effort to break into the inner circle of Southern California tow companies, experienced checkered success that was only marginally better than what his father was able had achieved.
In 1999, recognizing that the City of San Bernardino, as the county seat, represented a bellwether in terms of both prestige and acceptance by the establishment among San Bernardino County cities, initiated a focused effort to obtain a position on the City of San Bernardino’s tow rotation. He renewed that effort in 2005, 2011 and 2016. Frustrated at every turn, Acosta persisted. Having found himself hemmed in and prevented from obtaining a franchise in the City of San Bernardino no matter how he approached the matter, Acosta on October 24, 2018 filed a federal lawsuit against the city and 13 individual defendants, including then-former City Manager Mark Scott, City Councilman James Mulvihill, then-City Manager Andrea Miller, City Councilman Fred Shorett, then-Mayor R. Carey Davis, San Bernardino Police Captain Paul Williams, then-City Councilman Benito J. Barrios, then-Police Chief Jarrod Burguan, then-City Councilman John Valdivia, then-Sixth District Councilwoman Bessine L. Richard, then-City Attorney Gary D. Saenz, then-City Councilwoman Virginia Marquez and then-former Chief Assistant City Attorney Jolena Grider.
The suit, filed in the U.S. District Court for the Central District of California, alleged the defendants violated the company’s rights of free speech and equal protection in the course of rejecting Pepe’s Towing’s efforts to contract with the city to handle police and code enforcement towing duties.
For years, the City of San Bernardino had rejected expanding its towing rotation beyond the group of six towing contractors that had a franchise. Acosta had been the most insistent of the tow company operators pressing the city to reopen the bidding process to all interested tow companies, of which, he maintained, his company was the most qualified. The suit alleged graft was a motivating factor in a series of decisions by succeeding city councils to confer no-bid tow contracts on six tow companies while excluding Pepe’s Towing from the city’s franchised towing rotation.
As it would turn out, Manuel Acosta’s timing in filing the suit proved impeccable. In 2020, there was a hemorrhaging of information about the graft taking place at San Bernardino City Hall. One of those accounts included a statement, under oath, by one of then-Mayor John Valdivia’s field representatives, Don Smith, recounting a late-night meeting between Valdivia and one of the franchised tow truck company owners in which Valdivia was handed an envelope stuffed with cash. As the federal suit against San Bernardino was progressing toward trial, Pepe’s Towing’s legal team armed itself with evidence and testimony to establish and prove that Pepe’s Towing had equipment and capability to match or exceed the towing ability and capability of all six of the San Bernardino’s franchised tow companies, which included City Towing, Hayes Towing, Wilson Towing, Big Z Towing, Armada Towing and Tri-City Towing. That evidence extended to multiple examples of the San Bernardino Police Department or city officials encountering circumstances in which the franchise holders were unable to handle towing assignments because of the size, weight and/or the configuration of the vehicles to be towed, after which Pepe’s Towing was brought in to clear a highway, street or roadway of the vehicle at issue in the dilemma.
In September 2020, the City of San Bernardino settled the lawsuit brought against it by Pepe’s Towing for $1.3 million and made arrangements for it to be placed on the city’s tow rotation.
A little more than two months later, on December 2, 2020, Pepe’s Towing Services filed suit against the City of Rancho Cucamonga along with the County of San Bernardino, the San Bernardino County Sheriff’s Department, and seven individuals, alleging what the company’s lawyers characterized as the unfair and sudden termination of Pepe’s Towing’s towing services agreement with Rancho Cucamonga.
The other seven individuals sued included San Bernardino County Sheriff’s Sergeant Gary Esmond and then-Chief of Police Donny Mahoney, Rancho Cucamonga City Manager John Gillison, then-City Attorney James Markman, Mayor Dennis Michael, city council members Lynne Kennedy, Ryan Hutchison, Kristine Scott, and then-City Councilman Sam Spagnolo. The San Bernardino County Sheriff’s Department provides the City of Rancho Cucamonga with contract law enforcement services by assigning a contingent of its personnel to serve as the city’s police department.
The complaint alleged violation of Pepe’s Towing’s First Amendment and Fourteenth Amendment rights.
The events at the center of the dispute began in 2018 when Chief Mahoney issued four reprimands to Pepe’s Towing within six weeks, alleging towing service agreement violations for being late to towing service requests which the company was required, under the towing services agreement, to respond to within 20 minutes. All four reprimands were successfully appealed and removed from Pepe’s Towing’s record.
After the successful appeal, Chief Mahoney unjustly and unfairly directed his deputies to favor the city’s other towing operators, according to the lawsuit.
Thereafter, several instances occurred where a large number of vehicles needed to be towed, and Pepe’s Towing was told it was only permitted to tow a fraction of what the other tow operators were allowed to tow despite the company’s availability and towing capacity, and the terms and requirements of Pepe’s Towing’s presence on the city’s tow rotation. When Pepe’s Towing lodged complaints about that action, the company’s towing services agreement was unilaterally terminated by the city.
Manny Acosta publicly lamented at the time the suit was filed that “The City of Rancho Cucamonga and San Bernardino County Sheriff’s Department have a history of unfair and discriminatory practices against Pepe’s Towing. Despite abiding by protocols and our successful track record with numerous cities and law enforcement agencies, we have been targeted at the direction of Chief Mahoney.”
Pepe’s Towing secured and presented to the court information and materials to illustrate that at least some of the tow companies on Rancho Cucamonga’s franchised towing rotation had similarly fallen short of the city’s specified tow response time limits as was alleged against Pepe’s Towing by Rancho Cucamonga officials but that those companies had not been reprimanded. In addition, according to Pepe’s Towing, other franchises failed to meet other criteria in their towing service agreements but were not held to account by the city.
The complaint against the City of Rancho Cucamonga and its affiliated co-defendants stated that San Bernardino County Sheriff’s Executive Director John Fogerty showed favoritism and made backdoor deals with other tow companies based on his relationships with the owners.
According to Pepe’s Towing, relaxed towing enforcement following COVID-19-related stay-at-home orders made it even more difficult for tow companies to stay afloat, coupled with the fact that the City of Rancho Cucamonga increased the monthly tow operator fees by $1,000 per month.
Pepe’s Towing’s complaint included claims for violation of the equal protection clause of the Fourteenth Amendment; violation of the First Amendment right to free speech; a conspiracy to violate Pepe’s constitutional rights; failure to prevent the violation of Pepe’s constitutional rights; so-called Monell violations as final policymaker; Monell violations for failure to train the city’s law enforcement officers properly, supervisorial liability under §1983 of Title 42 of the United States Code relating to civil action for deprivation of rights; and Monell violations for ratification of the city’s policy.
The term Monell references the case of Monell v. Department of Social Services of the City of New York in which the U.S. Supreme Court held that a governmental entity can be held liable for the actions of its employees even if the governmental entity’s policies did not explicitly violate a litigant’s civil rights.
In addition, Pepe’s towing maintains that city management improperly dealt with the entirety of the circumstance relating to city tow franchise operations by not ensuring that the city’s standards for towing companies on the city rotations were uniformly applied.
Since the filing of the lawsuit, Mahoney no longer serves in the capacity of the Rancho Cucamonga Sheriff’s Station commander, a position tantamount to Rancho Cucamonga police chief. Rancho Cucamonga City Attorney James Markman has retired. Councilman Sam Spagnolo died in May 2022.
Recently, Rancho Cucamonga Assistant City Manager Elisa Cox wrote to all of the city’s current tow truck franchise holders and applicants for such franchises that the city’s participation in granting those franchises and maintaining them will come to an end next month.
“Thank you for responding to the City of Rancho Cucamonga’s RFP [request for proposal, i.e., bid invitation] for 2023-2026 police tow services,” Cox wrote. “I am writing to inform you that the city intends to discontinue its police tow rotation program at the conclusion of the current rotation cycle in order to focus its administrative resources on other priorities. At its July 19, 2023 meeting, the Rancho Cucamonga City Council will be presented with an ordinance to formally discontinue the city’s police tow rotation program, and to discontinue the current RFP process. If the city council approves those actions, responsibility for police tow services within Rancho Cucamonga will return to the San Bernardino County Sheriff’s Department, similar to the tow process in other contract cities in San Bernardino County. In preparation for this expected transition, the San Bernardino County Sheriff’s Department has begun an open enrollment process for tow providers for the Rancho Cucamonga Station’s tow rotation. Please contact the sheriff’s department with any questions about its open enrollment, as the City of Rancho Cucamonga is not involved in that process.”
Cox concluded the communication by stating, “The city will return your RFP application fee in the next two weeks. Once again, thank you for responding to the RFP.”
The city’s opting out of the franchising process is widely seen as, at the very least, an appearance, and quite possibly an admission, that city management engaged in impropriety by permitting favoritism in the granting, perpetuation and discontinuation of the towing franchises.
-Mark Gutglueck

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