DOJ settlement: towing company to pay $160,000 over SCRA auctions without court orders
The U.S. Department of Justice (DOJ) announced a settlement on July 14, 2026 resolving a federal lawsuit accusing S & K Towing Inc. of selling or disposing of Servicemembers Civil Relief Act (SCRA)-protected vehicles without the court orders DOJ says federal law requires.
DOJ says the agreement requires $160,000 in an interest-bearing escrow fund, and it lays out operational steps the company must follow if it returns to towing or vehicle storage—including using the Defense Department’s DMDC database to verify military status and obtaining court orders before certain lien- and disposal-related actions.
What DOJ alleged, and why it matters
DOJ’s complaint and settlement materials say the alleged conduct involved as many as 148 vehicles owned by servicemembers. DOJ also says many of those vehicles were towed from Marine Corps Base Camp Pendleton.
In the settlement agreement, the covered timeline is described as August 28, 2020 through at least April 15, 2025. DOJ’s position is that the towing company proceeded with vehicle lien foreclosure/sale/disposal steps without obtaining court orders during covered periods when SCRA protections apply.
What SCRA generally requires in this towing/lien context
SCRA is meant to help prevent certain legal enforcement actions from moving forward against servicemembers during protected military service periods (and a covered post-service window) without the additional safeguards the law requires.
In this type of case, the key practical point for readers is simple: DOJ says SCRA can require a court order before a towing or lien-related vehicle sale/disposal proceeds for an SCRA-protected servicemember during the covered period.
What the settlement requires—and what it doesn’t
DOJ says S & K Towing agreed to pay $160,000 into a Settlement Fund intended to compensate servicemembers the federal government determines may have been harmed.
This is a settlement of the lawsuit, not a trial result deciding every contested issue on the merits.
DOJ also emphasizes that servicemembers who believe their rights were violated should contact the appropriate legal help—rather than assuming eligibility automatically.
Operational changes the company must make (DMDC checks, court orders, training)
The settlement spells out specific compliance steps for towing/storage operations involving SCRA-protected situations, including:
- SCRA-compliant policies and procedures for selling or disposing of vehicles in a way that matches DOJ’s reading of SCRA requirements.
- DMDC database verification, including searching the Defense Department’s DMDC SCRA eligibility database for evidence that a vehicle owner is SCRA-protected.
- Court-order prerequisites when enforcement or disposal actions are tied to an owner who is in military service (or within the covered post-service period).
- Employee training for covered staff, including annual compliance training and training for new covered employees within 30 days of hiring.
If your vehicle was auctioned or sold while you were on active duty
If you believe your vehicle was auctioned/sold/disposed of during a time when SCRA protections may have applied, the most practical next steps are to save your paperwork (towing notices, lien/disposal notices, auction/sale date, VIN, and any buyer/sale information) and get legal assistance.
DOJ specifically says servicemembers and dependents who believe their SCRA rights may have been violated should contact their nearest Armed Forces Legal Assistance Program Office.
If the settlement process involves any waiver or release language, DOJ’s approach is to have servicemembers seek proper legal help before signing.
What to watch next
The settlement sets out time-based milestones measured from the agreement’s “effective date” (the date of the signature of the last signatory). The key reader-facing events to monitor include:
- Escrow funding (the settlement requires deposit into the Settlement Fund).
- The vehicle list submission required under the agreement.
- DOJ providing a final list of potentially aggrieved servicemembers and the amounts to be paid from the Settlement Fund.
The settlement agreement states that DOJ will provide that final aggrieved list within 180 days after the agreement’s effective date, subject to limited extension if needed.
Sources
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