Virginia Legal Trends and More: Sailor Can Sue Under Servicemembers Relief Act

Interesting article by VLW:

By Deborah Elkins
Published: February 16, 2011

A U.S. Navy sailor can sue to recover damages from the towing company that allegedly towed and sold his SUV while he was deployed; the 4th Circuit says the recent amendment to the Servicemembers Civil Relief Act included an express private right of action for federal courts that applies retroactively, and the district court’s dismissal of the sailor’s suit is reversed.

The district court sua sponte determined that it lacked subject matter jurisdiction because the SCRA did not provide a cause of action for damages. It dismissed plaintiff’s suit against Pete’s Towing and dismissed a motion for stay as moot.

After plaintiff filed this appeal, Congress addressed the very issue confronted by the district court. The Veterans Benefits Act of 2010, signed into law on Oct. 13, 2010, added § 802 to the SCRA to provide that any person aggrieved by a violation of the SCRA may in a civil action obtain any appropriate equitable or declaratory relief and recover appropriate relief, including monetary damages.

Because the amended statute plainly provides the cause of action without working an impermissibly retroactive effect, we must reverse the judgment of the district court.

Before enactment of the SCRA § 802(a), the SCRA § 307(a) right of non-foreclosure was already enforceable in a Virginia conversion action. In Virginia, the tort of conversion encompasses any wrongful exercise or assumption of authority over another’s goods, depriving him of their possession; and any act of dominion wrongfully exerted over property in denial of the owner’s right, or inconsistent with it. That plaintiff has an enforceable right to prevent foreclosure of a lien on his car is not a change from prior law.

Even if the new statute does not alter the parties’ rights and duties, Pete’s Towing contends that SCRA § 802(a) would have retroactive effect if applied to this case because it would increase the defendant’s potential liability. Section 802(a)(2) does allow successful plaintiffs to recover all other appropriate relief, including monetary damages, and Pete’s Towing states this liability can encompass both compensatory and punitive damages.

This argument fails to show, however, that this liability is any departure from the status quo under Virginia conversion law. Compensatory damages are certainly available in conversion actions, as are punitive damages when the defendant’s conduct was “willful and wanton.”

Given that SCRA § 802(a) does not alter the rights, liabilities or duties of Gordon or Pete’s Towing, its effect in this case is limited to providing a federal forum. In essence, this is a jurisdictional change.

Section 802(a) simply allows service members to enforce their SCRA rights – previously enforceable in state tribunals – in federal court. Applying the express right of action under § 802(a) to this matter would pose no retroactivity problem. The presumption against retroactivity is therefore not triggered.

Reversed and remanded.

Gordon v. Pete’s Auto Service of Denbigh Inc. (Wilkinson, J.) No. 09-2393, Feb. 24, 2011; USDC at Newport News, Va. (Smith) Rebecca S. Colaw for appellant; Nathaniel S. Pollock, USDOJ, for appellee. VLW 011-2-034, 11 pp.