House Veterans' Affairs Subcommittee on Economic Opportunity Hearing

Madam Chairwoman, Ranking Member Boozman, Members of the Subcommittee:

I am John S. Odom, Jr., a practicing attorney from Shreveport, Louisiana. From 1973 to 2005, I served as a judge advocate in the United States Air Force, retiring in 2005 in the grade of Colonel. I continue to teach the Servicemembers Civil Relief Act (SCRA) as a volunteer member of the adjunct faculty at the Air Force Judge Advocate General's School at Maxwell AFB, Alabama, the Army TJAGLC at Charlottesville, Virginia and the Naval Justice School at Newport, Rhode Island. I have lectured and taught extensively for local, state and national bar associations, judges' conferences, consumer advocacy groups, bankruptcy trustee associations and financial service groups around the country on the SCRA. In my civilian practice, I have represented servicemembers in a number of Federal actions throughout the country in suits against violators of the SCRA for damages. I have been accepted as an expert witness for the plaintiff in Hurley v. Deutsche Bank Trust Company Americas, an action pending in the Western District of Michigan (Case No. 1:08-CV-361). I was also counsel for the plaintiff in Cathey v. First Republic Bank, 2001 U.S. Dist. LEXIS 13150 (W.D. La.) which, after a similar motion to dismiss by the defendant was denied by the court, settled for $2.35 million. In each of the major SCRA cases I have handled, the defendants have caused extensive, expensive and time-consuming motion practice by seeking--unsuccessfully thus far--to have the servicemembers' suit dismissed on a claim that the SCRA has no specific provision for private causes of action to sue violators for damages.

This testimony is submitted in support of H.R. 2696. There is a problem with the current SCRA that is hurting our troops. With the passage of H.R. 2696, Congress could immediately fix the problem by amending the SCRA to specifically provide that violators can be pursued by the Department of Justice or by private attorneys who are willing to represent servicemembers in such cases. A similar amendment to the SCRA was proposed in Section 513 of S. 1033.

When the working group (comprised of four judge advocates, one each from the Army, Air Force, Navy and Marine Corps) re-drafted what ultimately became the SCRA, they did their work in 1992-93. However, it was not until the House Committee on Veterans Affairs re-engaged after the commencement of the war in 2001 that the old Soldiers' and Sailors' Civil Relief Act (SSCRA), a venerable statute that had survived in one form or another since 1917, was updated and re-enacted as the SCRA. I have a close professional relationship with Gregory Huckabee, Lt Col, USA (Retired), who chaired that 1992-93 working group. He and I have team taught the SCRA on a number of occasions and served together on the ABA's Standing Committee on Legal Assistance to Military Personnel. I asked Col Huckabee why the drafting committee did not add a specific provision authorizing private causes of action. He advised me that they did not think one was needed, because there were already so many reported cases involving the SSCRA (the predecessor statute) that they assumed no one would question whether or not Congress would have enacted such a comprehensive set of protections for servicemembers unless those same servicemembers had a right to go to court and sue for damages when a violation occurred.

While Col Huckabee's answer makes perfectly good sense from an intellectual standpoint, that is not how counsel defending banks, mortgage companies, automobile finance companies and apartment complex management companies--just to name a few--are defending lawsuits brought against them by servicemembers. In virtually every major case, I encounter either a motion for summary judgment or a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure, seeking to dismiss the servicemember's suit because there is no specific provision in the SCRA authorizing suits for damages under the statute. In every case thus far, we have been successful in convincing the court that unless a cause of action is inferred from the SCRA, the Act would constitute a right without a remedy, which would lead to an absurd end result. However, getting from Point A to Point Z and protecting the rights of servicemembers--both those in the particular cases involved and all those whose future cases have yet to develop--has required literally hundreds and hundreds of unnecessary hours in briefing and arguing these defense motions.

The Hurley case in Michigan is a prime example of why this amendment is so badly needed. Sergeant James Hurley's house was foreclosed upon in violation of the SCRA while he was protected by the SCRA (50 USC App [Subsec.]516, 533). His Michigan National Guard unit had been mobilized and deployed to Iraq, where he served for over a year. While Sergeant Hurley was in Iraq fighting, his home was sold by Deutsche Bank Trust Company Americas after the expiration of a 180 day period during which foreclosed property could have been redeemed by the debtor. However, pursuant to 50 USC App [Sec.]526, that redemption period never commenced to run against Sergeant Hurley for as long as he was on active duty. He came home from the war to find his wife and children evicted from their home, his house and property owned by someone else and the mortgage company claiming he owed them a huge deficiency judgment on property he no longer owned.

When Sergeant Hurley sued the mortgage company and their foreclosure attorneys for damages--since his rights had been violated not just once (as a result of the bank's non-judicial foreclosure in violation of Section 533) but also when the property was thereafter sold despite the fact that the redemption period had never commenced to run much less expired (in violation of Section 526), the bank defended with a motion for summary judgment claiming that there was no private cause of action under the SCRA to sue them for damages resulting from their actions. I had been retained as an expert in the SCRA by Hurley's attorneys and I assured them that we would answer the bank's motion and the court would find, as almost all courts had previously held, that there was a private cause of action under the SCRA, even though it had to be inferred.

Imagine our shock and concern when the district court ruled in favor of the defendants and dismissed Hurley's SCRA claims altogether, finding that the SCRA did not provide for a private cause of action. The court's ruling was based on a case from the Northern District of Texas (Batie v. Subway Real Estate Corp., Case No. 3:07-CV-1415-M). However, because I had also consulted with Lt Col Batie's counsel in his case in Dallas, I knew that the Batie decision (finding no private cause of action under the SCRA) cited by the Michigan Federal court had subsequently been vacated by the Texas Federal court after we filed a motion for reconsideration and pointed out to the court several previous cases in that same court in which a private cause of action to enforce the SCRA had, in fact, been allowed to proceed. In other words, the Michigan court just did not pick up on the fact that Batie I had been vacated and overruled by Batie II. No problem, we thought--just file a motion for reconsideration in the Michigan case and all will be well. But, it did not work out that way at all. The court in Michigan denied Sergeant Hurley's motion for reconsideration despite the fact that we pointed out that the earlier decision had been based on a decision of the Texas court that had been vacated. The Michigan court simply reiterated that the SCRA does not contain a specific provision authorizing suits for damages against violators.

By this point in time, all of us were working on a case that had consumed tens of thousands of dollars of legal talent time, and no one had been paid a penny for all the work we had done on the servicemember's behalf. However, the issue was so vitally important that we had to keep on working. A Federal district court had ruled that a servicemember whose property was literally stolen from him in violation of Federal law could not go to court and sue for damages. With Hurley on the books, every servicemember thereafter who had someone violate their SCRA rights was at risk of their future case being thrown out of court based on the Hurley court's ruling of "no private cause of action." Without the future protections that would result from the enactment of H.R. 2696, the same nightmare of endless litigation motion practice initiated by counsel for the creditors--who are always paid by the hour--will continue to be an unnecessary risk encountered by every servicemember and a burden to our courts.

In Hurley, the procedural solution to seek a reversal of the Michigan Federal district court's incorrect ruling was to file a motion with the court seeking certification of the ruling for an appeal to the Court of Appeals for the Sixth Circuit under 28 U.S.C. [Sec.]1292(b). After that motion was filed, on March 13, 2009, the district court reversed itself, vacated the grant of summary judgment in favor of the bank and granted summary judgment in favor of Sergeant Hurley. The court went on to find that as a matter of Federal law, punitive damages were available under the SCRA. As satisfying as that ruling was, nevertheless, five years after his property was seized in violation of the SCRA, Sergeant Hurley still has not been compensated for his damages and his fight continues.

This overly-long saga about the Hurley case is merely illustrative of the need for H.R. 2696. Unless Sergeant Hurley had found several really hard-headed counsel who simply decided that fighting the first two incorrect decisions was more important than collecting a fee practicing law, he would have been poured out in the Michigan case. This is not what our servicemembers should expect. Not every soldier, sailor, airman or Marine is going to find Sergeant Hurley's legal team, a group of supporters of our military who simply refused to quit when such an important principle was at stake. A relatively simple legislative fix, such as H.R. 2696, would eliminate the need for such battles in the future.

When our National Guardsmen and Reservists get their mobilization orders, they have to know that "someone has their Six" as we say in the Air Force. They have to know that if something goes wrong while they are off fighting for their country, when they come home someone can seek to straighten things out and if it takes a lawsuit to do it, they will have the right to go to court and seek damages if their rights under the SCRA have been violated.

The provisions in H.R. 2696 concerning damages and attorneys fees are consistent with numerous other Federal consumer-oriented statutes. From personal experience I can assure you that many of these cases in which there are clear violations of servicemembers' SCRA rights involve relatively small sums of money. This has two ramifications: it makes it much more difficult for the servicemember to find an attorney willing to take the case and it gives the violator a feeling of "what have I got to lose?" If those same violators knew that they might be exposed to payment of attorneys fees if they fought the case and lost, there would be significantly more voluntary settlements to properly compensate servicemembers and, ultimately, fewer violations of the SCRA.

I appreciate the opportunity to have presented testimony to this Subcommittee and thank you for all you do and continue to do for the men and women in our Armed Forces. I ask that this statement be included in the record of the Subcommittee's hearing on H.R. 2696.

Respectfully,

John S. Odom, Jr., Colonel, USAF (Ret.)

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