Can we dispute A LIEN of sale in court, on towed/totaled vehicle that is on the towing lot in california?

My dad got into an accident 2 months ago, it was the other driver fault, it involved 2 other people. He wasn't at the car at the time.

Next thing he knows, the towing guy came in his towing truck to pick up the vehicle to tow back to the towing lot, i was wondering if it would make any difference if it was towed back to our residence instead. Can the TOWING guy do this, he falsely told my dad, that the driver at fault had "AAA" insurance. When in fact the police report showed us that the driver at fault had no insurance at all, We had a one-way insurance on our 2004 Honda.
It cost 100/day for the car being at the towing lot. And towing company recently filed a lien of sale, attempting to sell the vehicle. Now it cost 5k to remove it from the lot, for some reason my dad left it in the towing lot all this time.
From my dad, the towing guy is claiming he needs 700$cash to sell it, can they do this.
on the notice it says we can stop the lien of sale, by disputing it in car, how much weight do we have to stop the sale.
Is it possible to give him the car, and be done with it, but we use a written contract: saying, we will give you the car to sell, but you can't come after us for other cost, such as the 100/day expense.
what does this mean, on the notice it says: "Disregard the notice if you no longer own or want this vehicle so i can proceed with the sale. However, if you are the last owner of record, you may be liable for removal and disposition costs and lien not sale.
How will

Added (1). they come after us, after the towing company has sold the car? Can we dispute in court that he made these outrageous claims., that he convinced my dad to tow it back to the lot instead to our residence, and also claimed the other person that they have insurance. What can we do?
why do you think he wants to pay 700 in cash first to sell it?

Added (2). the sale of the car provbably won't even cover the cost of penatly fees.

He gets the lien to sell the car and gets what's owed during the sale. Towing and storage charges and that should be the end of it. At least in my state. CA might be different. Attorney Generals office should have a consumer affairs division call and ask them

It is called a mechanics lien and yes he can auction the car and keep the proceeds. If there's a balance after the sale he could try to collect but would probably have to go to court.