Key Points

  • The Kentucky Consumer Protection Act did not apply because owners of towed vehicles did not purchase or lease services from the tow operator and had no privity of contract with it.
  • Jurisdiction is judged from the face of the complaint, and pleading a consumer-protection claim that cannot apply as a matter of law does not confer circuit court jurisdiction.
  • Under Imhoff v. House, class members' Louisville towing-ordinance claims could not be aggregated to exceed the $5,000 circuit court threshold, and no plaintiff's claim came close.
  • Because the Jefferson Circuit Court lacked subject-matter jurisdiction from the outset, the panel vacated all verdicts, awards and judgments and ordered the case transferred to district court.
  • The panel admonished both parties for omitting preservation statements and noted that Dave's Towing never sought a writ of prohibition.

The Kentucky Court of Appeals on Oct. 30 threw out every ruling in an eight-year-old class action accusing a Louisville tow company of illegally impounding cars, holding that the trial court never had the power to hear the case because no vehicle owner's claim was large enough to belong in circuit court.

A unanimous three-judge panel vacated a Jefferson Circuit Court directed verdict in favor of Dave's Towing Service Inc. on the claims of the certified class. It also vacated a separate directed verdict awarding damages to the two named plaintiffs. Judge Eckerle wrote the opinion, joined by Judges Cetrulo and Moynahan, and the case now goes back with directions to transfer it to district court.

The panel held that the plaintiffs could not reach circuit court through the Kentucky Consumer Protection Act, a statute that lets buyers of consumer goods and services sue in circuit court, because towed-car owners buy nothing from the tow operator. Without that claim, the court held, the owners' small-dollar claims under a Louisville towing ordinance fell below the $5,000 floor for circuit court and could not be pooled to clear it. "The entire eight-year course of the litigation was improper in a Circuit Court," Judge Eckerle wrote.

The suit began with two tows in 2017. Scott O'Loughlin's car was hauled from his condominium lot on Bardstown Road while the lot was being resurfaced, and he paid $213 in cash to get it back two days later after the company refused credit cards. Stefan Gearhart paid $138 in cash after Dave's Towing removed his car from a lot on Story Avenue.

The two men sued in October 2017, alleging that the company towed cars without written, signed, contemporaneous authorization from parking lot representatives and refused credit cards, both in violation of the ordinance. The trial court certified a class in December 2023 of everyone who paid Dave's Towing impound fees for cars towed in Jefferson County between June 11, 2012, and Nov. 16, 2021. Gearhart estimated class-wide damages at "no more than $2,228,306."

In discovery and at trial, the company's sole owner, David Jones, admitted violating the ordinance. The panel noted that the record showed Jones "was consistently belligerent with opposing counsel and patently defiant about following the Ordinance."

At a June 2025 jury trial, Judge Susan Schultz Gibson directed a verdict against the consumer-protection claim, finding the owners had not purchased services from Dave's Towing. The judge declined to dismiss the remaining claims for lack of jurisdiction. Judge Gibson said from the bench that "once jurisdiction is established in Circuit Court, I don't think I lose it mid-trial because the count that mandated it be here fails on the proof," according to the opinion.

Judge Gibson then ruled against the class for failing to prove which of thousands of tows came from private property. In a separate ruling, the judge awarded O'Loughlin and Gearhart damages on their individual claims that the company had violated the ordinance by refusing credit cards.

The Court of Appeals agreed that the consumer statute did not apply, relying on its 1992 holding that the law requires privity of contract, a direct contractual relationship, between plaintiff and defendant. "There being no direct consumer transaction, agreement, or privity of contract between the Vehicle Owners and Dave's Towing, we uphold the Trial Court's ruling that the KCPA does not apply as a matter of law," Judge Eckerle wrote.

But the panel parted ways with the trial judge on why. It held that the defect appeared on the face of the complaint from the start, not from a failure of proof at trial. The opinion recorded that the owners' counsel told the panel at oral argument that they "were not fighting that point on appeal," and that he said, "Jurisdiction is not a result-based issue." The court held that "the insertion of a meritless KCPA claim into a pleading does not operate to bestow Circuit Court jurisdiction by itself."

The ordinance claims could not carry the case alone, the panel held. The ordinance authorizes only actual compensatory damages, with no punitive damages or attorney fees, and Kentucky law gives district court exclusive jurisdiction over civil cases worth $5,000 or less. Under the Kentucky Supreme Court's 2021 decision in Imhoff v. House, class members may not add their claims together to reach that threshold.

"Even after issuing class notice, Vehicle Owners could not produce one single plaintiff whose damages exceeded the presumed-maximum, impound fee of $138, a sum far below the jurisdictional prerequisite," Judge Eckerle wrote. Relying on Imhoff, the panel rejected the trial court's concern that dismissal would leave the owners without a remedy, quoting the high court's conclusion: "Expansion of subject-matter jurisdiction is completely within the purview of the legislature."

The panel also criticized how both sides litigated the case. It said Dave's Towing "could have sought a writ of prohibition but failed to do so." It noted the company's 2024 appeal of class certification was dismissed as untimely, and it called the company's request for relief on appeal "perplexing" because it should have asked the court to void the trial court's actions entirely. The court admonished both parties for leaving preservation statements out of their briefs and warned them "to expect no such continued leniency in the future."

Lawyers for the vehicle owners included Sean A. McCarty; Dave's Towing was represented by Nader George Shunnarah.

The panel remanded the case to Jefferson Circuit Court "with directions to transfer the case to District Court, which has jurisdiction, to determine the viability of the other claims." The opinion is designated for publication.