Ex-Operator of Police Garage Sued : Dealerships: The city attorney says Fox Motors improperly sold vehicles after impounding them.

The city attorney’s office filed a civil suit Thursday against the operators of a former Van Nuys police garage, charging they improperly sold impounded vehicles to car dealerships owned by relatives.

The lawsuit filed in Los Angeles Superior Court alleges that executives of Fox Motors Inc. and several related companies purchased impounded vehicles at below-market prices by failing to properly advertise their sale at public auction.

Fox Motors officials also undervalued cars before their sale, did not properly report profits to the state Department of Motor Vehicles and sold some vehicles being held as evidence that they had no right to sell at all, the suit claims.

Deputy City Atty. Fay Chu said investigators have documented the improper sale of 47 vehicles from the Fox Motors garage and suspect that many more were similarly funneled to Fox-owned car dealerships. She said the case was important because consumers were denied access to what should have been public auctions, and vehicle owners did not receive the returns they might have earned had their cars been sold to the highest bidder.

Defendants include Henry F. Fox, president and director of Fox Motors; his children, William H. and Lillian A. Fox, who manage used-car dealerships in Van Nuys and Palm Springs, respectively, and his former son-in-law, Edward Mulder, who was general manager of Fox Motors from 1980 to 1989.

The suit seeks $2,500 in civil fines against each defendant for each violation of the state’s Business and Professions Code, and also asks that the vehicles now in their possession be properly auctioned and that restitution be paid to victims.

An attorney for the Foxes, Gilbert Archuletta, declined to comment Thursday, saying he had not seen the suit and was representing Fox Motors chiefly to preserve its city franchise as an official police garage.

On Tuesday, the Los Angeles Police Commission replaced Fox Motors as the official police garage for the Van Nuys division--a position it had held for 36 years.

The commission’s unusual action and the lawsuit filed Thursday stemmed from a 14-month police investigation into alleged improprieties by Fox Motors, located at 15152 Erwin St. in Van Nuys. The investigation began when a murder victim’s ex-wife complained that his Mercedes-Benz and motorcycle had been sold without his family’s knowledge.

The city’s 16 police-sanctioned garages enjoy lucrative, geographic monopolies on towing cars involved in accidents, traffic violations and crimes. Fox Motors took in about $1.5 million a year in towing and storage fees, according to a lawsuit Fox Motors has filed challenging the city’s attempts to withdraw its franchise.