Taxi Company Judgments

August 13, 2023


What if you have a judgment against a taxicab company or a taxi driver? How could you enforce such a judgment? What if your judgment debtor owns a taxicab medallion, can you have your Sherriff levy that medallion? This article discusses how taxi drivers, taxicab companies, and taxicab medallions operate, and how some experts have recovered these types of judgments.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion based on my experience, please consult with a lawyer if you need legal advice.

Taxicab medallions are often owned by taxicab companies and are leased to the taxicab drivers. Sometimes, an assignment order is the right way to recover a taxi-related judgment. If an assignment order is used, one must figure out who to serve the notice of the lawsuit.

There are two ways that taxi companies operate. The first model is called the “cab-lord” model. In the cab-lord model, taxi companies provide dispatch services to taxi drivers under a contract with them. The taxi drivers lease their cabs from the cab-lord (who is not necessarily connected with the taxi company). The cab-lord provides car insurance for each cab, and paints the vehicles for use by each cab company.

A typical cab driver pays the cab-lord about $90-$130 per day often for a 12-hour shift, and the drivers usually fill their gas tanks at the end of their shifts. The drivers are also supposed to clean the windows and wash their cars at the end of their shift, however few do. An experienced busy cab driver can net about $120 to $250 per shift.

Under this first cab-lord model, dispatched fares are broadcast to screens in the taxis, and any available taxi driver can take it; first-come gets the fare. The driver gets fares and tips. The driver might gross $35-$60 an hour (perhaps even more with tips), however after paying the cab-lord, the taxi company, and for gas, the driver might net about $9-$15 an hour.

The second taxicab operation model is not as common. The taxi company owns all the taxicabs and medallions. It hires the drivers as employees. The employees keep a log of all their pick-ups (both dispatched and hailed) and the meter readings and mileage. The drivers write down or record everything, except for their tips.

At the end of the shift, the driver hands over the total fares received that day, except for their tips. Every week, the taxicab company totals the fares received by the driver, and pays them (e.g., 40) percent of that total as their wages; deducting taxes of course. In this second model, the company pays for the driver’s gas and all their expenses.

If your judgment debtor owns a taxi medallion but not a taxicab, they are often paid by a cab-lord who affixes it to their cabs. You need to know what the taxi business model is, to figure out how your debtor is getting paid. Often, a judgment debtor and/or third-party examination will be needed to learn who is paying your debtor.

If your judgment debtor owns both a taxicab and a taxi medallion, that is really good news because your debtor probably earns a lot more. When your debtor is not working, other taxi drivers probably pay them to use the debtor’s vehicle. In this situation, you will need to find the names of those other taxi drivers, if you want to intercept the funds before they get to your debtor. The cab company may not be paying your debtor/medallion owner. Cab-lords sometimes lease medallions from the owners. If your debtor owns a medallion, and you want to intercept the funds that go to your debtor, then you must find the company that is functioning as their cab-lord.

Often, the cab-lord is paying a medallion-owning debtor, and that is where you should direct your assignment order, so they can start paying you money that would otherwise go to your medallion-owning debtor, who is leasing it to the cab-lord.

You could waste a bunch of time and money getting an assignment order against a taxicab company whose only service is to the drivers. Some cab companies provide only dispatch services, and they pay nothing to their drivers. If your medallion-holding debtor does not get paid by the taxicab company, your assignment order would capture zero dollars. Target the cab-lord instead, and you will probably find the income-stream.

To enforce a judgment against either a taxi driver or a taxi company, you would use either an assignment order or an accounts receivable levy. Often, an accounts receivable levy is better than an assignment order, when the levy on is an intangible asset. This is because it is faster, and the debtor never sees it coming. Also, if there is a contract in use, often an intangible levy is required. In California, the relevant laws are primarily CCPs (Civil Codes of Procedure) 680.210, 680.130, 701.010, 700.170; and Commercial Code 9102(a).

Medallions are transferable, and worth a lot of money, because often you cannot pick up paid fares without one. (Although a medallion is not needed to drop people off in most places.) If your debtor owns a taxi medallion, why not levy that medallion and have the Sheriff sell it at a public auction to pay some of your judgment back?

Medallions are very valuable, so if you schedule the sheriff’s auction sale, people will bid high. Your debtor will probably then pay you in a New York minute.

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