Title loan lenders serving active-duty service members NO-NO!

“Department of Justice (DOJ) goes after car title loan lenders and city government for their repossession by tow truck vendors for towing, selling and auctioning active service member automobiles.”

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Even city government can screw up when dealing with active-duty service members. A specific example? On June 22, 2015, Chief Petty Officer Hartzog’s military legal assistance attorney sent a letter to Pinky Tows that outlined the facts and applicable SCRA provisions and sought restitution of $22,889.95 for the value of the 1997 Chevrolet S-10 and for the tools and personal items that were stored in the motor vehicle.

The Service members Civil Relief Act (SCRA) requires a person, a car title loan company, city governments… having a lien on a vehicle owned by an active-duty service member to obtain a court order before enforcing a lien.  The DOJ’s complaint alleges that Honolulu and their tow truck general contractor violated the SCRA by towing vehicles belonging to three active-duty service members identified in a complaint and the subsequent disposition of these vehicles without court orders.  The settlement agreement states that a DOJ investigation – launched in response to information provided by military attorneys – revealed that between 2011 and 2016, the city of Honolulu auctioned 1,440 vehicles registered to individuals who identified themselves as service members on city forms during their motor vehicle registration process.

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NATURE OF THE ACTION
1. This action is brought by the United States to enforce the provisions of the Service members Civil Relief Act (“SCRA”), 50 U.S.C. §§ 3901-4043, against the City and County of Honolulu, Hawaii (hereinafter “Honolulu”) and P M Autoworks, Inc. d/b/a All Island Automotive Towing (hereinafter “All Island Towing”) (collectively “the Defendants”) for illegally auctioning, selling, or otherwise disposing of the motor vehicles and personal effects of active-duty service members.

2. The purpose of the SCRA is to provide service members with protections against certain civil proceedings that could adversely affect their legal rights while they are in military
service. One of those protections is the requirement that a person holding a lien on the property or effects of an active-duty service member obtain a court order prior to enforcing the lien. The
court may stay the proceedings for a period of time or adjust the obligations to preserve the interests of all parties.

3. Neither Honolulu nor its contracted towing company, All Island Towing, determines whether the motor vehicles they auction, sell, or otherwise dispose of are owned by active-duty service members.

4. By failing to obtain court orders before auctioning, selling, or otherwise disposing of the motor vehicles and personal effects of protected service members, the Defendants prevented service members from obtaining a court’s review of whether the lien sales should be delayed or adjusted to account for their military service.

5. Since January 1, 2011, the Defendants have auctioned, sold, or otherwise disposed of the motor vehicles of 1,440 individuals who had identified themselves as active-duty service members during the motor vehicle registration process. The Defendants auctioned, sold, or otherwise disposed of these vehicles to satisfy liens without obtaining court orders.

6. Prior to January 1, 2011, Honolulu and/or its contracted and subcontracted towing companies auctioned, sold, or otherwise disposed of the motor vehicles of other active-duty service members to satisfy liens without obtaining court orders.

Here’s the details on one of the 3 cases – the DOJ filed on. Chief Petty Officer Hartzog and his 1997 Chevrolet S-10.

Neither Honolulu nor its current contracted towing company, All Island Towing, determines whether the motor vehicles they auction, sell, or otherwise dispose of are owned by active-duty service members.

Honolulu’s Lien Sale of CPO Hartzog’s 1997 Chevrolet S-10

At all times relevant to this complaint, CPO Hartzog’s motor vehicle was registered in Hawaii. During the motor vehicle registration process, CPO Hartzog completed a non-resident driver form which identified him as a servicemember and exempted him from paying certain state and county motor vehicle weight taxes on that basis.

30. In October 2014, CPO Hartzog was aboard a U.S. Navy ship being transported to his temporary duty station in East Asia. Without his permission, his roommate drove his 1997 Chevrolet S-10 and was subsequently arrested. The motor vehicle was towed by Pinky Tows, a subcontractor of All Island Towing.

31. In early November 2014, CPO Hartzog learned via Facebook that his truck had been towed. On November 5, 2014, he executed a power of attorney onboard the naval ship, designating a fellow chief petty officer as his agent. On the same date, he scanned and emailed the executed power of attorney to his agent in Honolulu.

32. On or about November 11, 2014, the agent took the document to Pinky Tows in an attempt to retrieve CPO Hartzog’s motor vehicle and his personal effects. Pinky Tows refused to accept the power of attorney or release the motor vehicle. Pinky Tows refused to allow the agent to remove valuable tools and personal items from the trunk of the motor vehicle because the agent was not the motor vehicle’s legal owner.

On December 3, 2014, Honolulu attempted to auction the motor vehicle and its contents, but they did not sell. Honolulu released the motor vehicle to All Island Towing, and All Island Towing subsequently disposed of the motor vehicle and its contents. Neither Honolulu nor All Island Towing obtained a court order prior to putting CPO Hartzog’s motor vehicle up for auction or before disposing of the motor vehicle.

34. On February 5, 2015, CPO Hartzog returned from deployment.

35. On June 22, 2015, CPO Hartzog’s military legal assistance attorney sent a letter to Pinky Tows that outlined the facts and applicable SCRA provisions and sought restitution of $22,889.95 for the value of the 1997 Chevrolet S-10 and for the tools and personal items that were stored in the motor vehicle.

36. Pinky Tows responded by letter on July 16, 2015, stating that it had only towed and stored CPO Hartzog’s truck, and that the truck was put up for auction by Honolulu and was scrapped by All Island Towing.

37. On August 12, 2015, the military legal assistance attorney sent a similar demand letter to Honolulu. Honolulu did not respond.

38. The Department of Defense’s Defense Manpower Data Center (“DMDC”) website shows that CPO Hartzog was an active-duty service member when his motor vehicle was towed, put up for auction, and subsequently scrapped. The DMDC is the central source for identifying, authenticating, and providing information on Department of Defense personnel, including verifying  service members’ active duty status.

Here’s a link to the rest of this Case: https://www.justice.gov/

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