Roberts v. Chips Express Inc
Filing
51
ORDER signed by Judge J P Stadtmueller on 10/12/12: granting 29 plaintiff's Motion for Partial Summary Judgment; granting 34 intervenor-plaintiff's motion to amend its name to "Owners Insurance Company"; denying as moot 40 plaintiff's Motion to Strike the Affidavit of Thomas T. Calkins; and denying 43 defendant's Motion for Leave to File Supplemental Material. See Order. (cc: all counsel) (nm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
CDR. WILMA J. ROBERTS,
Plaintiff,
Case No. 12-CV-42-JPS
OWNERS INSURANCE CO.,
Intervenor-Plaintiff,
v.
CHIPS EXPRESS, INC.,
ORDER
Defendant.
The plaintiff, Wilma Roberts, filed a motion for partial summary
judgment on August 13, 2012. (Docket #29). She requests that the Court
determine that the defendant, Chips Express (“Chips”), is liable under
Servicemembers Civil Relief Act (SCRA), 50 U.S.C. App. § 537, for the
unauthorized sale of the contents of Ms. Roberts’ storage locker while Ms.
Roberts was deployed. (Docket #30). Ms. Roberts’ motion is now fully
briefed, and the Court will issue its decision on the matter. (Docket #31, #37,
#41).
1.
BACKGROUND
The relevant facts in this case are not in dispute.
Ms. Roberts is a member of the United States Navy. (PPFF ¶ 1). In
June of 2008, Ms. Roberts was deployed overseas. (DPFF ¶ 7).
To accommodate Ms. Roberts’ deployment, the Navy arranged for Ms.
Roberts’ personal property to be stored at a facility owned by Chips. (DPFF
¶ 7–8). In making this arrangement, the Navy submitted DD Form 1299 to
Chips; this form listed Ms. Roberts’ residence as being located in Fort Collins,
Colorado. (DPFF ¶¶ 7, 9). The Navy planned to cover the costs of storing Ms.
Roberts’ property during her deployment. (See DPFF ¶ 7).
Unfortunately, prior to Ms. Roberts’ return from overseas, there was
a profound record-keeping error by the Navy. On September 9, 2010, while
Ms. Roberts was still deployed, the Navy sent DD Form 1164 to Chips,
informing Chips that the Navy would no longer pay for Ms. Roberts’ storage
locker, and that Ms. Roberts, herself, would be responsible for future
payments. (DPFF ¶¶ 10, 12).
Armed with this erroneous information, Chips began to send invoices
to Ms. Roberts, seeking payment for the rental of the storage space. (DPFF
¶ 13). However, because Ms. Roberts’ address was listed as being in Fort
Collins, Colorado, on both the 1164 and 1299 forms (as opposed to her
address where she was deployed), Ms. Roberts never received those invoices.
(DPFF ¶ 13). Each invoice was returned to Chips as “undeliverable as
addressed.” (DPFF ¶ 13). After not receiving any payment on the invoices it
had sent, Chips sent a final notice of invoice to the same address in Fort
Collins, Colorado—Ms. Roberts, of course, did not receive that notice, which
was returned as “undeliverable as addressed.” (DPFF ¶ 13). Chips made one
final attempt to contact Ms. Roberts, this time through email, but received
notice that the email address was not available due to its being “over quota.”
(DPFF ¶ 15).
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Having failed to receive a reply or payment,1 Chips contacted the
Navy to request to dispose of Ms. Roberts’ property. (DPFF ¶ 14). Chips
alleges that its representative was informed by a Navy employee that the
Navy was no longer responsible for Ms. Roberts’ property, and therefore
Chips could proceed to dispose of it like a civilian lot. (DPFF ¶ 16).
After contacting the Navy, Chips elected to proceed with the sale of
the contents of Ms. Roberts’ storage locker. On April 15, 2011, Chips
published a notice asserting a warehouseman’s lien on the locker’s contents.
(Roberts Br. in Supp. Ex. E). Then, pursuant to that lien, on July 2, 2011, Chips
auctioned off the locker’s contents. (Roberts Br. in Supp. Ex. A, ¶¶ 7–8; Ex.
B, ¶¶ 1–2; Ex. F). Chips did not obtain a court order authorizing that sale.
(Roberts Br. in Supp. Ex. B, ¶ 2).
The cruel irony is that—after this seemingly-lengthy period of time
passed, during which invoices were sent, the Navy was contacted, and
arrangements of sale were made—Ms. Roberts returned to the United States
mere days after the auction. (Roberts Br. in Supp. Ex. A, ¶ 7). On or about
July 9, 2011, only one week after the auction, Ms. Roberts returned to the
United States and learned that her property had been sold. (Roberts Br. in
Supp. Ex. A, ¶ 7).
Ms. Roberts then brought suit against Chips in this Court, alleging
that Chips should be held liable for damages under the SCRA, 50 U.S.C. App.
1
While it is certainly true that Chips did not receive a reply or payment, the
Court wonders whether such reply or payment could rationally have been expected
by Chips—every item they had attempted to send to Ms. Roberts had been returned
as undeliverable. By Chips’ own admission that all items had been returned as
undeliverable (DPFF ¶¶ 13, 15), the Court can easily infer that Chips knew that Ms.
Roberts’ had not received notification of the relevant invoices or final notices.
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§ 537. She filed a motion for summary judgment on August 13, 2012, seeking
a determination that Chips is liable under the SCRA for its actions; according
to Ms. Roberts, such determination would leave only the issue of damages
for trial by jury. (Roberts Br. in Supp.)
2.
SUMMARY JUDGMENT STANDARD
The Court should grant summary judgment “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). The purpose of the summary judgment motion is to
determine “whether there is a genuine need for trial.” Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
3.
DISCUSSION
The relevant statutory provision in this case, 50 U.S.C. App. § 537,
reads as follows:
(a)
Liens
(1) Limitation on foreclosure or enforcement. A person
holding a lien on the property or effects of a
servicemember may not, during any period of military
service of the servicemember and for 90 days thereafter,
foreclose or enforce any lien on such property or effects
without a court order granted before foreclosure or
enforcement.
(2) Lien defined. For the purposes of paragraph (1), the
term “lien” includes a lien for storage, repair, or
cleaning of the property or effects of a servicemember
or a lien on such property or effects for any other reason.
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The only issue that the Court must address in deciding Ms. Roberts’
motion for summary judgment is a legal one directly related to that statute:
whether § 537 of the SCRA, under which Ms. Roberts argues that Chips
should be held liable, holds individuals holding liens over the goods of
servicemembers strictly liable for their failure to obtain a Court order prior
to enforcing their lien. If the Court determines that the statute imposes strict
liability, then the issue of Chips’ liability is settled and the Court must grant
Ms. Roberts’ motion, because there can be no dispute that Chips failed to
obtain a court order prior to enforcing its lien, as required by § 537. If, on the
other hand, the statute does not impose strict liability, then Chips’ liability is
a factual question of whether Chips acted negligently in selling Ms. Roberts’
property—in which case the Court must deny Ms. Roberts’ motion because
that factual question must be presented to the jury.
Thus, in deciding this motion, the Court must engage in the singular
legal analysis of determining whether § 537 imposes strict liability. In
performing that analysis, the Court will first look to the text of the statute,
then to the sparse case law on the topic, and finally to the policy implications
surrounding a determination that § 537 imposes (or does not impose) strict
liability upon lienholders.
3.1
Statutory Interpretation
The Court will begin by interpreting the text of the statute. It will first
determine whether the text of the statute is clear; if it is, then it should stop
there unless such reading leads to an absurd result. Krzalic v. Republic Title
Co., 314 F.3d 875, 879–80 (citing Public Citizen v. U.S. Dept. of Justice, 491 U.S.
440 (1989); Green v. Bock Laundry Machine Co., 490 U.S. 504, 527 (1989); AM
Int’l, Inc. v. Graphic Management Assoc’s Inc., 44 F.3d 572, 577 (7th Cir. 1995)).
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The clear language of the statute does not include any mens rea
requirement, and therefore the Court determines that it imposes strict
liability on lienholders such as Chips. 50 U.S.C. § 537(a)(1) clearly states
that any person holding a lien over a servicemember’s property “may
not…foreclose or enforce [that] lien…without court order granted before
foreclosure or enforcement,” while the servicemember is on active duty. The
statute does not say that its limitation applies only when the lienholder knows
that the servicemember is on active duty. Rather, on the plain terms of the
statute, all that is required for there to be a violation is: (1) a servicemember
on active duty; (2) a lien over that servicemember’s property; (3) foreclosure
or enforcement of that lien; and (4) absence of a court order. Simply put, on
the plain terms of the statute’s language, it does not matter whether the
lienholder’s foreclosure was entirely innocent and negligence-free—where
the four above-noted requirements are satisfied, there is liability regardless
of mens rea: strict liability.
Moreover, the Court is unable to conclude that a finding of strict
liability is an absurd result, and therefore it will adopt the plain reading of
the statute and impose strict liability on Chips. The SCRA was enacted to
protect the rights of servicemembers, and § 537(a)(1)’s imposition of strict
liability will do just that. See Conroy v. Aniskoff, 507 U.S. 511, 517–18 (1993)
(“Congress made a deliberate policy judgment placing a higher value on
firmly protecting the service member’s” rights than on other typicallyapplicable collection rights). Surely, it will require that lienholders such as
Chips jump through the extra hoop of obtaining a court order before
foreclosing on a servicemember’s property. But that is not an absurd result.
Rather, in reality, it could have prevented the very problem now presented
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to the Court, by either delaying the foreclosure process or ferreting out the
fact that Ms. Roberts was, in fact, still on active duty when Chips foreclosed
on her property. Given the difficult circumstances that arise in many
instances involving contacting servicemembers, strict liability will force
companies like Chips to take the extra step of obtaining a Court order when
foreclosing on the property of a potentially-active servicemember; in fact,
that result could very well have been intended by the law’s drafters. Surely,
if Chips had feared civil liability for foreclosing on Ms. Roberts’ property,
they may very well have made more diligent attempts to establish contact
with her.
Chips argues that strict liability is disfavored as a matter of law, and
therefore the Court should shy away from finding it in this case. (See Chips
Resp. 9–11 (citing Jansen v. Packing Corp. of America, 123 F.3d 490 (7th Cir.
1997)). Citing dicta from Judge Coffey’s dissent and concurrence in Jansen,
Chips argues that strict liability is typically reserved for situations involving
“‘abnormally dangerous’ or ‘ultra hazardous’ activity that results in harm.”
(Chips Resp. 10 (quoting Jansen, 123 F.3d at 521 (itself citing Opal v. Material
Service Corp., 9 Ill. App. 2d 433, 133 N.E.2d 733 (1956)))). Even if one were to
assume that general statement were binding law (which to be sure it is not),
the Court would still conclude that strict liability is appropriate here. In
many ways, the storage of servicemember property is abnormally
dangerous—given the long deployment times and frequent moves
experienced by many servicemembers, it is logically more dangerous for
individuals to store the possessions of servicemembers when compared to
the possessions of the general public. This case itself provides a perfect casein-point: due to the Navy’s bookkeeping errors, Ms. Roberts’ deployment,
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and her multiple addresses, Chips failed to locate her and sold her property
in error through no fault of her own. For that reason, even knowing of the
general disfavor exhibited toward strict liability, the Court determines that
50 U.S.C. App. § 537(a)(1) imposes strict liability upon lienholders.
Having determined that the plain language is clear and that such
reading does not lead to an absurd result, the Court finds that 50 U.S.C. App.
§ 537(a)(1) imposes strict liability upon Chips.
3.2
Case Law
The Court’s determination is further buttressed by the fact that the
U.S. District Court for the Eastern District of Virginia held in Gordon v. Pete’s
Auto Service of Denbigh, Inc., that 50 U.S.C. App. § 537(a)(1) imposes strict
liability. Gordon v. Pete’s Auto Service of Denbigh, Inc., 837 F. Supp. 2d 581, 585
(E.D. Va. 2011) (“Section 307(a) [50 U.S.C. App. § 537(a)(1)] is a strict liability
statute; it does not require proof of any mens rea to establish civil liability.”)
(citing United States v. B.C. Enters., Inc., 667 F. Supp. 2d 650, 662–64 (E.D. Va.
2009)). While this is a question of first impression in the Seventh Circuit, and
has been confronted only one other time throughout the nation—by the
Gordon court—this Court takes confidence in the fact that it is not alone in
reaching the strict liability conclusion.
In addition to Gordon, the Supreme Court has voiced its favor for
interpreting the SCRA to have been intended as a very servicememberfriendly statute. See Conroy, 507 U.S. at 517–18. In Conroy, the court
determined that a servicemember’s rights trumped the state of Maine’s rights
to collect on a tax deficiency. Id. If the Supreme Court views the SCRA to
value a servicemember’s rights over that of a state, this Court is confident in
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believing that it should hold a servicemember’s rights over the rights of a
private individual to quickly foreclose upon a servicemember’s property.
In sum, between the Court’s interpretation of 50 U.S.C. App.
§ 537(a)(1) and the discussed law, the Court is justified in concluding that the
statute imposes strict liability on lienholders to obtain a court order before
foreclosing on an active servicemember’s property.
3.3
Application of Strict Liability to Chips’ Actions
As stated above, the Court views 50 U.S.C. App. § 537(a)(1) as
applying when an active servicemember’s property is foreclosed upon by a
lienholder without a court order approving such foreclosure.
That clearly applies to the situation in this case. Here, Ms. Roberts was
on active duty overseas. Chips held a lien over her personal property. After
several months without contact or payment, Chips foreclosed on that lien by
auctioning off Ms. Roberts’ property. Chips did so without first obtaining a
court order.
Every requirement of 50 U.S.C. App. § 537(a)(1) is satisfied—as the
court has already determined that the statute has no mens rea requirement,
imposing strict liability on lienholder—and, therefore, the Court is obliged
to determine that Chips is liable to Ms. Roberts under the statute. As such,
the Court will grant Ms. Roberts’ motion for summary judgment on the issue.
(Docket #29).
4.
CONCLUSION
Having determined that it is appropriate to find Chips liable under 50
U.S.C. App. § 537(a)(1), that issue will not need to be tried to a jury.
The matter of liability is not entirely settled, though. Rather, at trial,
Chips may still argue and try to prove that Ms. Roberts was contributorily
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or comparatively negligent in Chips’ sale of her property, as Wisconsin law
allows for defendants in strict liability cases to attempt to diminish their
liability by arguing contributory and comparative negligence in cases such
as product liability and safe-place statutes. See, e.g., Morden v. Continental AG,
2000 WI 51 ¶¶ 42–45, 235 Wis. 2d 325, 611 N.W.2d 659; D.L. by Friedrichs v.
Huebner, 110 Wis. 2d 581, 645–46, 329 N.W.2d 890, 920–21 (1983); Dippel v.
Sciano, 37 Wis. 2d 443, 461–62, 155 N.W.2d 55, 64–65 (1967); Presser v. Siesel
Construction Co., 19 Wis. 2d 54, 119 N.W.2d 405 (1963); Besnys v. Herman
Zohrlaut L. Co., 157 Wis. 203, 210–12, 147 N.W. 37 (1914); Erik J. Pless,
Wisconsin’s Comparative Negligence Statute: Applying It to Liability Cases
Brought Under a Strict Liability Theory, WIS. LAWYER (August, 1998). Of course,
the SCRA being a federal statute, Wisconsin’s courts have not determined
whether defendants governed by its provisions should be allowed to argue
contributory or comparative negligence; nonetheless, the Court believes that
Chips should be allowed to raise those arguments in this matter. As
protective as the Court should be of servicemembers’ rights, it does not wish
to blindly protect those rights at the expense of harming innocent
lienholders. Here, Chips certainly could have obtained a court order and also
could have made more devoted attempts to reach Ms. Roberts. However, if
there is evidence that Ms. Roberts, herself, had some negligent hand in the
outcome of this situation, then the Court believes that loss should lie with the
appropriate party. That is, if Ms. Roberts had some duty to inform the Navy
or Chips of her most-current forwarding address, and failed to adequately
satisfy that duty, then she may well be held contributorily or comparatively
negligent.
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Furthermore, as the parties agree, the issue of damages must also be
presented to the jury. The issue of damages encompasses Ms. Roberts’
alleged failure to mitigate, and therefore that issue of mitigation should also
be presented to the jury, as requested by Chips. (Chips Resp. 17).
Nonetheless, at this time, the Court will grant the plaintiff’s motion for
partial summary judgment (Docket #29), and leave the other remaining
issues to be addressed at trial.
The Court will also address three additional minor matters raised by
the parties. First, it will grant the intervenor-plaintiff’s motion to correct its
name from Auto-Owners Insurance Company to Owners Insurance
Company. (Docket #34). Second, it will deny as moot Ms. Roberts’ motion to
strike the affidavit of Thomas T. Calkins, because the Court did not rely on
that affidavit in reaching its findings of fact. (Docket #40). Third, on October
3, 2012, Chips filed a motion for leave to file additional materials relating to
the Navy’s policy on the storage of servicemember property under the
SCRA. (Docket #43). The Court will deny that motion, because the offered
material is irrelevant to the dispute here—regardless of the Navy’s policy
relating to the SCRA, the Court has determined that 50 U.S.C. App. § 537
imposes strict liability upon lienholders to obtain a court order prior to
foreclosing upon that lien. Thus, the Navy’s policy is wholly immaterial, as
Chips’ failure to obtain a court order—and that fact standing alone—exposes
Chips to liability.
Accordingly,
IT IS ORDERED that the plaintiff’s motion for partial summary
judgment (Docket #29) be and the same is hereby GRANTED;
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IT IS FURTHER ORDERED that the intervenor-plaintiff’s motion to
amend its name to Owners Insurance Company (Docket #34) be and the same
is hereby GRANTED;
IT IS FURTHER ORDERED that the plaintiff’s motion to strike the
affidavit of Thomas T. Calkins (Docket #40) be and the same is hereby
DENIED as moot; and
IT IS FURTHER ORDERED that the defendant’s motion for leave to
file supplemental material (Docket #43) be and the same is hereby DENIED.
Dated at Milwaukee, Wisconsin, this 12th day of October, 2012.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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