The Service Members Civil Relief Act - What Businesses Should Know

By

Jason Gerber

The Service Members Civil Relief Act (“SCRA”) protects service members and their families legally and financially during deployments and extended training missions.  The SCRA is designed to allow service members to focus on their duties without the distraction of legal or financial issues impacted by their service.  However, the protections afforded by the SCRA also impact the businesses that provide services and goods to the public at large and to military members in particular. As the United States military establishment expands and overseas deployments continue, it is important for businesses to understand the protections provided by the SCRA, the affect of those protections and the consequences for businesses or individuals who fail to comply the terms of the SCRA.  

A HISTORY OF PROTECTING SERVICE MEMBERS

The SCRA is the modern version of more than a century of efforts to protect service members when their military duties infringe on their ability to appear in court or otherwise address legal disputes. Congress originally began protecting soldiers’ and sailors’ legal rights during the Civil War.  During World War I, the original Soldiers and Sailors Civil Relief Act was passed directing court’s to take whatever action equity required to protect active duty members during the war.  The SCRA was further tailored prior to World War II when Congress provided many of the protections still in effect today. 

For the past several years, Congress has continued to fine-tune the SCRA to meet the needs of the current missions and the needs of service members in all branches and their families. For instance, the SCRA was extended to National Guard members in 2002 and modernized in 2003. The SCRA now provides protections against default judgments and allows service members to stay litigation (placing it on hold) when their military service materially affects their ability to appear in court.  Additionally, the SCRA provides protections from evictions and mortgage foreclosures. 

Default Judgments

Any party, individual or business trying to bring a lawsuit against an active duty service member or a deployed service member should be aware the SCRA provides certain protections from judgments and on-going litigation. If a plaintiff sues an active duty service member and seeks to obtain a default judgment, that party must satisfy certain procedural requirements unique to the SCRA.  First, the moving party must file an affidavit informing the court the defendant is either in military service, not in military service or that status cannot be determined.  If the individual is not present in court, the judge is required to appoint an attorney on behalf of the absent service member.  Additionally, the court can order a stay of any default to allow the service member the opportunity to appear.

If a case is allowed to proceed to its conclusion the returning service member has the burden to show the case should be reopened. The military member must demonstrate his/her military service affected the ability to appear and that there is a meritorious defense to the plaintiff’s claims. Considering the current deference given to service members, especially those returning from deployments, it is likely a court will allow a case to be reopened in most circumstances.

The SCRA also provides penalties against individuals who fail to follow the procedures addressed above. The SCRA makes it a federal misdemeanor to present a false affidavit to the court. If a plaintiff lies about the status of the service member or lies about his/her knowledge of the status of the service member, the plaintiff could be liable for fines as well as up to one year in jail. Given the additional procedural steps, service member’s ability to reopen any cases and the potential criminal penalties for falsifying information, it may be wise for a business to consider other options for resolving a dispute with a service member before seeking a default.

Staying Litigation

Additionally, a service member who has appeared in a case is entitled to stay the matter where military duties materially affect the member’s ability to appear and defend his/her rights.  This provision is particularly important at a time when National Guard and Reserve service members may be called to extensive periods of active duty and training.  Any of these individuals who are involved in litigation prior to their mobilization and deployment are able to seek a stay of litigation that will likely last until their deployment ends.  In fact, any service members on active duty can use this provision to stay litigation for deployments, extended training exercises or other military duties that will impact their ability to appear in court.

A service member who wishes to exercise this protection must take certain steps before the court can issue a stay.  First, an application for stay must include correspondence from the service member detailing the military duties that are materially affecting his or her ability to appear and providing the court with a date when the member will be able to appear.  Additionally, the service members must provide correspondence from their commanding officer stating that military duties infringe on their ability to appear and that no leave has been authorized.  This stay can be requested while the soldier is on active duty and for the 90 days after the soldier’s active duty tour ends.  This additional time is clearly an allowance by Congress recognizing the demobilization requirements for any service members as they leave active duty.  A stay allowed in this case is broad and will most likely cover any claims, deadlines or other requirements in the case.  As such, any party involved in litigation with a service member should consider the possibility of the stay, the effect of the stay and the impact the stay will have on the on-going litigation.

Evictions

Any landlord should also consider the protections provided to service members for evictions.  First, the s protections against evictions extend not only to the service member but to the service member’s family.  Secondly, a landlord cannot simply summarily evict a service member or their dependants. Instead, the landlord must first obtain a court order allowing for eviction. Then, the service member or his or her dependants can petition the court stating that their military service materially affects their ability to comply with the terms of the lease. The court also has the authority to stay the eviction of the service member for up to 90 days or to adjust the obligation under the lease to preserve the interests of the parties.

The SCRA, however, does not prohibit the eviction of the service member or their dependants. Instead, the SCRA provides additional time for the service member and landlord to reach a resolution or to allow the court to fashion an equitable remedy protecting both parties. Nonetheless, a landlord considering renting to members of the military should be aware of the additional steps necessary for an eviction. Moreover, any landlord should be aware of the penalties for violating the procedures set forth in the SCRA. A landlord who violates the SCRA by proceeding with an eviction unlawfully is subject to fines and imprisonment for not more than one year.

Mortgage Foreclosures

The SCRA also provides protections, in certain situations, from foreclosure. Given the current state of the housing market and the military’s continued involvement in multiple foreign conflicts, these provisions become more and more important each day.  While the protections are more limited than those addressed above, the SCRA could still affect a mortgagor or creditor seeking to foreclose. 

First, the mortgage security must have originated before the service member’s military service began for the SCRA to apply. While this may not affect many members who have been on active duty for extended periods of time or since graduating from high school, it could affect a growing number of National Guard or Reserve members who have civilian obligations they must leave behind when called to active duty. It is not difficult to imagine a reservist who enters into a mortgage obligation while a civilian and then is called to active duty for an extended period of time. In many cases, this call to active duty may also bring with it a significant cut in pay and a decreasing ability to meet monthly obligations like a mortgage.   

Second, if a foreclosure action is filed during the service member’s military service or 90 days thereafter, the court has the authority to stay the process for 90 days if the service member’s ability to comply with the obligation is materially affected by military service.  Additionally, the court has the authority to adjust the obligation to provide relief for both parties.  A sale or foreclosure is invalid if made during the service member’s military service or 90 days thereafter unless there is a court order prior to the sale or foreclosure or an agreement between the parties allowing the foreclosure to proceed.  This protection stands above and beyond any state protections or requirements and also carries with it criminal and civil penalties for the failure to comply. 

CONCLUSION

The SCRA is a valuable and important legal tool that has been amended, refined and modernized by Congress for more than a century to protect the legal rights and benefits of those who have chosen to serve in the military. As the size and global responsibilities of our nation’s military continue to grow, the impact of the SCRA will also grow. As such, any individuals, companies or parties looking to enforce certain rights, protect their interests and fully comply with the legal rights of service members should be familiar with the SCRA, its terms, conditions and penalties.

            Jason Gerber is an attorney with the Las Vegas law firm of Marquis & Aurbach.  Mr. Gerber was an officer in the U.S. Army Judge Advocate General’s Corps who served in Iraq from 2004 – 2005.