Cases
United States v. McGowan Realty, LLLC, d/b/a RedSail Property Management (E.D. Va.)
On January 8, 2024, the United States Attorney’s Office filed a complaint and proposed consent order in United States v. McGowan Realty, LLLC, d/b/a RedSail Property Management (E.D. Va.), a Servicemembers Civil Relief Act (SCRA) pattern or practice case. The complaint alleges that a property management company operating throughout Hampton Roads area in Northern Virginia refused to honor the residential lease termination of a U.S. Navy Petty Officer First Class and were assessing early lease termination charges and additional rent against him. RedSail allegedly erroneously insisted that the Virginia Residential Landlord and Tenant Act (VRLTA) placed a 35-mile limitation on a servicemember’s SCRA residential lease termination rights. The complaint alleges that the Petty Officer paid $3,408.55 in early termination charges and additional rent to RedSail, which placed a considerable financial burden on him. Under the proposed consent order, which still must be approved by the court, RedSail will pay $10,225.65 to the Petty Officer and a $3,000 civil penalty. The consent order also requires RedSail to provide SCRA training to its employees, develop new policies and procedures consistent with the SCRA, and refrain from imposing the VRLTA’s 35-mile limitation on servicemembers who lawfully terminate a lease under the SCRA.
Hannah Magee Portee - Mike Morath (W.D. Tex.)
On November 20, 2023, the court granted the plaintiff’s motion for judgment on the pleadings and entered a final judgment in favor of the plaintiff in Portee v. Morath et al. in the Western District of Texas. This is the first case brought nationwide under a new Servicemembers Civil Relief Act’s (SCRA) provision that guarantees the portability of certain professional licenses held by U.S. servicemembers and their spouses when they relocate pursuant to military orders. In its order, the court held that Texas state licensing authorities violated the SCRA by refusing to recognize plaintiff’s out-of-state licenses because she had not used them continuously for the two years preceding her relocation to Texas. The judgment followed the court’s July 21, 2023 order granting the plaintiff’s motion for a preliminary injunction. The United States had filed a Statement of Interest on July 13, 2023, arguing that plaintiff was likely to succeed on the merits of her claim that her school counseling licenses are covered under the new provision, vigorous enforcement of the provision serves the public’s exceptionally strong interest in national defense and military readiness, and plaintiff had standing to bring her case.
United States v. Todisco Services, Inc. d/b/a Todisco Towing (D. Mass.)
On December 8, 2023, the court entered a consent order in United States v. Todisco Services, Inc. d/b/a Todisco Towing (D. Mass.). The complaint, which was filed by the United States Attorney’s Office on November 13, 2023, alleges that the defendant, a towing company based in Salem, Massachusetts, violated the Servicemembers Civil Relief Act (SCRA) by illegally auctioning off a vehicle belonging to a U.S. Air Force Staff Sergeant who was deployed to Qatar. The consent order requires the defendant to adopt new policies, implement new training requirements, pay $5,000 in compensation to the servicemember, and pay a $1,000 civil penalty to the U.S. Treasury.
United States v. JAG Management Company LLC (D.N.J.)
On October 4, 2023, the court entered a consent order in United States v. JAG Management Company LLC (D.N.J.). The complaint, which was filed on September 29, 2023, alleges that the property management company for more than twenty large apartment properties in several states, including Maryland, the District of Columbia, Virginia, and Florida, violated the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. § 3955, by demanding that at least nine servicemembers who were terminating their leases early following receipt of qualifying military orders repay rent concessions they had received when they signed their leases. The consent order requires the defendant to pay $41,581.95 in compensation to the servicemembers and a $20,000 civil penalty, to adopt new SCRA policies, and to obtain training on the SCRA.
Press Release - 10/2/2023
Complaint - McCullough v. Oklahoma City Public Schools
Porteé v. Morath (W.D. Tex.)
On July 21, 2023, the court granted the plaintiff’s motion for a preliminary injunction in the first case brought nationwide under a new Servicemembers Civil Relief Act’s (SCRA) provision that guarantees the portability of certain professional licenses of U.S. servicemembers and their spouses when they relocate pursuant to military orders. The court found that a military spouse met all four prongs of the preliminary injunction standard in her case alleging that Texas state licensing agencies failed to recognize her out-of-state school counselor licenses, as required by the SCRA. The United States had filed a Statement of Interest on July 13, 2023, arguing that plaintiff was likely to succeed on the merits of her claim that her school counseling licenses are covered under the new provision, vigorous enforcement of the provision serves the public’s exceptionally strong interest in national defense and military readiness, and plaintiff has standing to bring her case.
Press Release - 7/13/23
Complaint - Nicholas Whitman v. U.S. Development Corp. (AKRO Plastics)
Agreement - Nicholas Whitman v. U.S. Development Corp. (AKRO Plastics)
United States v. FPI Management, Inc. (E.D. Cal.)
On June 14, 2023, the court entered a consent order in United States v. FPI Management, Inc. (E.D. Cal.). The complaint, which was filed on June 13, 2023, alleged that FPI, a property management company, violated the Servicemembers Civil Relief Act (SCRA) by requiring nine servicemembers who were exercising their SCRA right to terminate their residential lease to repay lease incentives they had received. The consent order requires the defendant to pay a total of $51,587 to the nine servicemembers and a $22,500 civil penalty to the United States. The order also requires FPI to repair the servicemembers’ tenant database entries, implement new policies and procedures that comply with the SCRA, and train its employees on the SCRA.
Press Release - 6/13/23
United States v. Billy Joe Goines d/b/a Goines Towing & Recovery (E.D.N.C.)
On February 1, 2024, the court entered a consent order in United States v. Billy Joe Goines d/b/a Goines Towing & Recovery (E.D.N.C.). The complaint, which was filed on March 3, 2023, alleged that the defendant violated the Servicemembers Civil Relief Act (SCRA) by auctioning off, selling, or otherwise disposing of servicemembers’ motor vehicles pursuant to court judgments obtained without filing proper military affidavits. The SCRA requires a plaintiff seeking a default judgment in court to file an accurate military affidavit stating whether or not the defendant is in military service, or that the plaintiff is unable to determine the defendant’s military service status. The complaint alleged that since at least 2017, Goines disposed of motor vehicles belonging to SCRA-protected servicemembers after failing to file, or filing inaccurate, military affidavits in court proceedings against those servicemembers. The consent order requires Goines to pay $66,805.06 in relief for the impacted servicemembers and a $30,000 civil penalty, return one vehicle in storage to its servicemember owner, forgive storage fees assessed to certain servicemembers, attend SCRA training, and institute new policies and procedures that comply with the SCRA.
Espin v. Citibank, N.A. (E.D.N.C.)
September 29, 2023, the court denied Citibank’s motion to compel arbitration in Espin v. Citibank, N.A. (E.D.N.C.). This is a class action lawsuit brought under the Servicemembers Civil Relief Act (“SCRA”) by four servicemembers who held credit cards issued by, or had other interest-bearing obligations to, the bank. The complaint alleges that Citibank failed to comply with Section 3937 of the SCRA, which requires lenders to limit the interest rate charged to eligible servicemembers to 6% during periods of military service. In its Statement of Interest, which was filed on March 2, 2023, the United States argued that the SCRA gives servicemembers pursuing SCRA claims the right to participate in a class action case in federal court even where a defendant seeks to enforce a contract clause mandating individual arbitration. The United States also argued that the relevant portion of the SCRA, which became law in 2019, applies even where the arbitration agreements were executed before the change in law. The court’s opinion adopted the position advocated for by the United States.
Padao v. American Express National Bank (E.D.N.C.)
On March 2, 2023, the United States filed a Statement of Interest in Padao v. American Express National Bank (E.D.N.C.), a class action lawsuit brought under the Servicemembers Civil Relief Act (“SCRA”) by a servicemember on behalf of a class of servicemembers who held credit cards issued by, or had other interest-bearing obligations to, the bank. The complaint alleges that the defendant failed to comply with Section 3937 of the SCRA, which requires lenders to limit the interest rate charged to eligible servicemembers to 6% during periods of military service. In its Statement of Interest, the United States argues that the SCRA gives servicemembers pursuing SCRA claims the right to participate in a class action case in federal court even where a defendant seeks to enforce a contract clause mandating individual arbitration.