This week, the Department of Justice (DOJ) resolved Servicemembers Civil Relief Act (SCRA) claims against two affiliated Virginia landlords for allegedly obtaining unlawful court judgments against military tenants. To settle the claims, the landlords agreed to pay restitution to affected servicemembers, a civil penalty to the United States, and various injunctive relief. This action is merely the latest in aggressive SCRA enforcement by the DOJ, which since 2011 has obtained over $476 million in monetary relief for over 121,000 servicemembers. In announcing the settlement, Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division reiterated that the department will “vigorously pursue” SCRA violations, as they affect the “readiness of our Armed Forces.”
The DOJ’s Investigation
As explained in its civil complaint, the Virginia landlords first drew the DOJ’s attention when it received notice from a Navy military legal assistance attorney, alleging that one of the two affiliated landlords used a false affidavit to evict an SCRA-protected servicemember. After launching an investigation, the DOJ found that since 2012, the landlords had “obtained numerous default judgments against SCRA-protected servicemembers by using affidavits of military service that falsely stated that the servicemembers were ‘not in military service,’ by stating that the affiants were ‘unable to determine’ if the servicemembers were in military service, or by failing to file affidavits of military service.”
The Cost of Noncompliance
Under the proposed consent order, the landlords will pay $162,971 to affected servicemembers and a $62,029 civil penalty to the United States. The landlords also must arrange to vacate the eviction judgments, repair the servicemembers’ credit, provide SCRA training to their employees, and develop new SCRA policies and procedures to avoid future violations. The landlords also agreed to reimburse servicemembers for any amounts collected under an unlawful judgment.
The Basics of SCRA Compliance
The SCRA provides temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the rights of servicemembers during their military service, so they can devote their entire energy to defending the nation. Section 3931 protects servicemembers from default judgments in circumstances in which, because of their active-duty military service, they may be unable to appear and defend themselves. If a landlord files a civil lawsuit against a tenant and the tenant does not appear in court, the landlord must file an affidavit with the court, stating whether the tenant is in the military before seeking a judgment. If the affidavit says that the tenant is on active-duty service, the court cannot enter judgment until it appoints an attorney to represent the servicemember. The court must also postpone the case for at least 90 days. 50 U.S.C. § 3931(b)(1), (d).
To identify whether an individual is a servicemember and understand what SCRA provisions may apply to them, landlords and others can search the Defense Manpower Data Center’s free database. Numerous states have SCRA analogs, so the DMDC database provides another useful tool to help ensure compliance with state laws, as we explained in our recent update on federal and state SCRA enforcement actions. But that is just the beginning of SCRA compliance. Well-planned compliance programs and procedures are key to avoiding issues.
We’re Here to Help
The DOJ continues to take aggressive action to ensure the rights of servicemembers under SCRA. It is advisable for landlords, lenders, insurance providers, and others regulated by SCRA to ensure that their compliance programs are up to date to prevent compliance issues before they occur. We have the experience to assist. Troutman Pepper’s Military Lending Practice Group includes one of the oldest and most well-respected consumer financial services and regulatory practices in the nation. Let us help you ensure our military members are being rewarded for their valuable service to our nation.