S & K Towing SCRA Settlement: As Many as 148 Servicemembers' Vehicles

What happened

The United States sued S & K Towing, Inc. on March 25, 2026 in the Southern Division of the Central District of California. The complaint describes a California corporation headquartered in San Clemente, in Orange County, that provides towing and roadside assistance there. On or about August 28, 2020 it signed a Memorandum of Agreement to tow on Marine Corps Base Camp Pendleton, an installation the complaint puts at more than 42,000 active duty servicemembers. Orange County companies handle the northern half of the base, and that agreement made S & K one of only two operators called for tows north of the Las Pulgas Area (complaint paragraphs 11 to 19).

The base agreement told contractors to refrain from violations of any federal, State or city law. Even so, the complaint says, from August 28, 2020 through at least April 15, 2025 S & K had no written SCRA policies, procedures or training materials and no policy or practice of searching the Defense Manpower Data Center. It enforced its garageman's liens under the California Vehicle Code by public lien sales or sales to dismantlers and scrap iron processors, with an outside vendor preparing the paperwork. The complaint alleges sales of vehicles that held military equipment, uniforms and awards, vehicles registered to Camp Pendleton addresses including barracks rooms, and in some cases vehicles whose owners S & K had been told were in military service or deployed overseas (paragraphs 18 and 21 to 30).

In May 2024, according to the complaint, a Marine Corps Legal Assistance attorney wrote to S & K that federal law barred it from selling or disposing of an SCRA-protected servicemember's vehicle without a court order, and in or around that month spoke with a man who identified himself as its manager or owner. His reply, as the complaint quotes it: "We do this all the time." The sales continued after the letter and the call (paragraphs 31 to 33). The complaint counts as many as 148 vehicles auctioned, sold or disposed of from August 28, 2020 through April 15, 2025 (paragraph 24); its opening paragraph says approximately 148.

The case ended in a settlement agreement rather than a court order. S & K's counsel signed it on July 13 and the United States on July 14, 2026, the date on DOJ's case page; it takes effect on the last signature, runs four years, and calls for a stipulation of dismissal once the money is in escrow (agreement paragraphs 11, 22 and 47). S & K neither admits nor denies the allegations (paragraph 8).

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 .

For far too long, tow companies have sold or disposed of servicemembers’ vehicles in violation of federal law.

It is unacceptable for a business to sell or dispose of servicemembers’ vehicles without abiding by the laws that protect servicemembers.

Who was covered

Servicemembers the United States determines may have been harmed by S & K's lien sales and disposals from August 28, 2020 through the agreement's effective date, the period it calls the Covered Conduct (agreement paragraphs 12 and 22). Within 30 days S & K had to hand over a searchable spreadsheet of every vehicle it sold, auctioned or junked without a court order between April 15, 2025 and the effective date, with ticket numbers, VINs, registered owners, dispositions, dates and proceeds, which carries the review past the complaint's end date (paragraph 25). A reservist ordered to report is covered from the day the order arrives (footnote 1).

What the settlement paid

• $160,000 deposited in interest-bearing escrow within 60 days (agreement paragraph 22). The agreement says the United States accepted that amount in compromise due solely to S & K's financial condition as shown in its sworn financial disclosures (paragraph 23). If the United States learns of undisclosed assets or misstatements that change the estimated net worth by $25,000 or more, it may rescind the agreement and sue, or require S & K to deposit the net value of those assets into the fund (paragraph 9).
• Within 180 days the United States sends a final list of aggrieved servicemembers and amounts, and S & K has ten days after that to deliver a check for each; none is handed over until the servicemember signs a release (paragraphs 26 and 27). The aggregate may not exceed the fund, and anything undistributed when the agreement expires is paid to the Treasury (paragraphs 30 and 31).
• No civil penalty appears in the agreement, although the complaint asked the court to assess one under 50 U.S.C. § 4041(b)(3).
• S & K represented that it is in the process of shutting down operations and, after disposing of the vehicles still in its possession, will no longer tow or store vehicles. Once it certifies that exit in writing under penalty of perjury, it is relieved of the policy, procedure and training terms in paragraphs 15 to 21, which come back into force if it reenters the business during the four-year term (paragraph 14).

Why this case matters

The money here was sized to the company, not to the count. By the agreement's own terms, the United States accepted $160,000 for as many as 148 vehicles due solely to S & K's financial condition, with no civil penalty, and the United States decides each person's share on its final list. The other point is the letter. A Marine Corps legal assistance attorney put the law in writing to this operator in May 2024, and by the complaint's account it kept selling servicemembers' cars anyway. A contract clause requiring compliance with federal law did not stop it either.