Honolulu and All Island Towing SCRA Case: Cars Lost With Owners at Sea

What happened

On February 15, 2018 the United States sued the City and County of Honolulu and P M Autoworks, Inc., which does business as All Island Automotive Towing, in the District of Hawaii, and signed a settlement agreement with both defendants the same day. All Island, based in Kapolei, had been the City's sole general contractor for police tows since January 1, 2014, supervising subcontractors with exclusive zones and allowed to dispose of vehicles that did not sell at the City's auctions. Neither defendant admitted or denied the allegations (agreement paragraphs 3 and 5).

Under the City's system, the complaint says, a car left unlawfully parked and unattended for 24 hours or more could be deemed abandoned, notice went out by registered or certified mail and was assumed received five days after mailing, and a car not reclaimed within ten days of mailing could be auctioned after a newspaper advertisement. Each of the three servicemembers in the case had filled out a non-resident form at registration that identified them as servicemembers and exempted them from certain vehicle weight taxes (complaint paragraphs 18 to 20, 29, 39 and 52).

A Navy petty officer second class deployed on May 17, 2010; her Volkswagen Jetta was towed from in front of her home that July and auctioned on September 10, 2010. A Navy chief petty officer learned on Facebook in November 2014 that his truck had been towed; the subcontractor holding it refused the power of attorney he had executed aboard ship and would not let his agent take tools and personal items from the trunk, and after the truck failed to sell on December 3, 2014 All Island disposed of it. A Marine staff sergeant on a Navy ship bound for Camp Foster in Okinawa had his Dodge Ram, which carried Department of Defense base decals, auctioned on July 8, 2015; the City's notice did not reach him aboard ship until July 24 (complaint paragraphs 29 to 60).

Military lawyers had been writing to the City for years. The complaint describes demand letters for all three that Honolulu ignored or refused, except an April 2016 offer of $1,971, the excess sale proceeds less fees, against a $12,253 demand. DOJ's release says two Navy legal assistance attorneys sent letters to Honolulu's Corporation Counsel for more than five years. When the United States asked in May 2016 for every lien sale since January 1, 2011 made without a court order, Honolulu listed more than 17,000 vehicles, 1,440 of them owned by people who had identified themselves as active duty servicemembers when registering (complaint paragraphs 35 to 37, 47 to 50, 59 and 61).

The law behind this: 50 U.S.C. § 3958

Enforcement of storage liens: read the statute , or read § 3958 in plain English, with its enforcement record .

The Justice Department is committed to working tirelessly to protect the rights of the servicemembers who make great personal sacrifices in service to our country.

My office will continue to work with the Civil Rights Division to ensure that servicemembers who dedicate their lives to preserving our security and freedom do not forfeit their rights in doing so.

Who was covered

The three servicemembers paid by name, plus others the United States determines were harmed by auctions, sales or post-auction disposals without court orders or SCRA waivers (agreement paragraphs 16 and 17). Honolulu had to publish a notice at least three times each in the Honolulu Star-Advertiser, the Hawaii Army Weekly, the Marine Star and the Ho'okele News, and mail it to everyone who identified as a servicemember at registration and lost a vehicle this way from April 1, 2009, when its computerized auction records begin, inviting them to contact the United States within 180 days. Servicemembers with earlier losses could still claim if they could document their military service at the time (paragraph 18 and footnote 3).

What the settlement paid

• $27,889.95 to the chief petty officer, $17,253 to the staff sergeant and $10,715 to the petty officer second class, due within 30 days and delivered only after each signs a release (agreement paragraph 16). DOJ's case page gives the three together as $55,857.95. Their military lawyers had demanded $22,889.95, $12,253 and $5,715 (complaint paragraphs 35, 49 and 59).
• A $150,000 Settlement Fund encumbered within 30 days, on top of those three payments (paragraph 17). Within 240 days the United States makes preliminary determinations, each supported by the claimant's sworn declaration; either defendant has 30 days to submit anything it believes refutes a claim, and the United States makes the final decision (paragraph 19). Checks may not exceed the fund, and whatever remains afterward escheats to Honolulu rather than going to the Treasury (paragraph 19(g) and (h)).
• A $60,788 civil penalty within 20 days (paragraph 20). Honolulu pays all of the money: in exchange, All Island released the City from any claims it had over the events behind the case (paragraph 42). The agreement ran three years (paragraph 35).

Why this case matters

This settlement is about notice as much as money. Honolulu had to give servicemembers at least 60 days to answer an abandoned vehicle notice before starting court proceedings, collect phone numbers, email addresses and an emergency contact on its military registration certificates, and contractually require every towing company it uses to accept a copied, scanned or faxed power of attorney and release the car to the named representative once the fees are paid (agreement paragraph 13). That last term answers exactly what happened to the chief petty officer, whose agent was turned away at the subcontractor's lot holding a power of attorney emailed from a ship.