Oregon State Bar Bulletin — JULY 2009

Jeffrey Linscott has changed how we practice law in Oregon.

Of course, most of us have never heard of Jeffrey Linscott, or his helicopter with the dodgy turbine, or his many thousands of dollars in attorney’s fees (not necessarily a bad thing, from our point of view).

But we have heard about the Reserves and the National Guard, even if we don’t understand the difference. And the Professional Liability Fund has warned us to consider the implications of the Servicemembers Civil Relief Act (SCRA) in every case we handle, especially since 3,500 members of the Oregon National Guard were activated in May — the largest deployment of military personnel from Oregon since World War II.

So when we learn that Linscott was a Reservist who had to hire an attorney to attack the default judgment a turbine-repair company took against him while he was deployed, we can understand why new state legislation that gives the federal SCRA some teeth is called “the Linscott Bill.”

The bill, which the Legislature passed unanimously, became effective on May 8. It provides for attorneys’ fees and damages for active-duty service members whose SCRA-created right to be protected against — among other things — default judgments, as well as interest rates, mortgages or rent that they no longer can afford to pay because they’ve been called to active-duty.

“Oregon is the first state in the nation to pass such a law,” crows Jesse Barton, legislative contact for the Oregon State Bar’s Military Assistance Panel (MAP), which drafted the bill.

“In the grand scheme of things, maybe ‘the Linscott Bill’ isn’t as monumental as the 1973 legislature’s passage of SB 100 (the statewide land-use planning law),” acknowledges Barton, a Salem private practitioner who has served on the MAP since its inception in 2002. “But I suspect that a service member, or the family of a service member, who’s shipping out would think otherwise, and that’s what counts.”

Keeping a Sharp Focus
The SCRA’s stated purpose is to enable service members “to devote their entire energy to the defense needs of the Nation” while being temporarily — not permanently — shielded from being prejudiced at home as a result.

“It’s to afford a fair shake to those who are protecting the rest of us,” says MAP member Mark Holady, a Beaverton sole practitioner who also is in the U.S. Army Reserve’s Judge Advocate General’s (JAG) Corps. “We ask soldiers and service members to put themselves in harm’s way or, if not literally in harm’s way, to disrupt their lives. This is a small way to return the grace that is extended to us by the service members and by their families as well.”

This principle can be traced back to the Civil War, when Congress passed a moratorium on all civil actions against Union sailors and soldiers until they returned home.

In 1918, the year after the United States entered World War I, Congress passed the Soldiers’ and Sailors’ Relief Act, which — while not the Civil War’s complete moratorium on all civil actions — provided most service members with some civil
legal protections.

In 1940, Congress replaced the 1918 act, which has lapsed, with similar protections for service members who would fight World War II.

Unlike the 1918 version, the 1940 act did not expire. But it did fail to keep pace with changes in the U.S. military, in which the draftees of World Wars I and II were replaced by Reservists and National Guard members who can be activated and deployed for multiple tours of duty, including overseas.

So, in 2003, following the ‘90-91 First Gulf War, Congress enacted the SCRA (50 USC Appendix Sections 501-596).

According to the website About.com, “This law completely rewrites the Soldiers and Sailors Civil Relief Act of 1940, expanding many of the previous law’s civil protections.”

Among other things, the act, which was amended in 2004 and again in 2008, now covers administrative as well as court actions. It specifically includes child-custody proceedings and extends its protection to members of the National Guard who have been called to active duty by the president.

“(The) SCRA does not regulate one substantive area or particular set of circumstances,” MAP member Velda Rogers wrote in the PLF’s newsletter, In Brief, in February. “The act focuses on the person … and conveys a wide bundle of rights.”

The bottom line, said Rogers, is simple: “Regardless of what area of law your practice involves, (the) SCRA could affect you.”

It’s All In the Definitions
To determine whether the SCRA is going to affect a specific case, the place to start is with its definitions.

The act defines covered service members to include members of all five branches of the military and members of their Reserves who are on active duty. It also covers members of the National Guard when the president has called them to active service for more than 30 days to respond to a presidentially declared national emergency.

For those who lack military backgrounds, Holady describes the difference between the National Guard and Reservists this way:

“The National Guard goes back to the 1600s in Massachusetts. It’s very much the citizen-soldier idea, called out in an emergency and under the authority of each state’s governor.”

“The Reserves started out just before WWI as a way to correct the problem of a lack of military physicians in the Army. It was such a successful program that they decided to expand it to areas (other than medical) and throughout the armed forces.”

“The reserves component of the armed forces includes the National Guard. But when you talk about The Reserves under that name — The Reserves — you’re talking about people who serve in a federal unit, only, and not as part of a state militia (the National Guard).”

It’s because of National Guard members and Reservists — who, at least prior to the wars in Afghani0stan and Iraq, led largely civilian lives — that another of the SCRA’s definitions becomes crucially important: dependent.

Under the act, a service member’s dependents include anyone for whom he or she provided more than one-half of support for the 180 days immediately preceding application for relief under the SCRA; his or her child or resident step-child and spouse.

It is the service member’s spouse who often is the one left to deal with a creditor, landlord or institution that pursues a course of action in violation of the service member’s and/or his dependents’ SCRA-protected rights.

“My husband just retired after 28 years as a Reservist,” says Donna Moursund Brann, herself a former Reservist member of the Army’s JAG Corps who became presiding administrative law judge for the state Office of Administrative Hearings in 2008.

“He was sent overseas a number of times,” says Brann, “so I’ve seen it (military deployment) from the perspective of a wife, a JAG, an attorney, a judge. The state’s Office of Administrative Hearings gets the calls from the staff sergeants: ‘I have Private ‘X’ on his way to Iraq; he got a call from his wife that his unemployment benefits hearing is in two days, what should he do?’”

Brann’s office gets such calls because of another crucial SCRA definition: court.

Unlike its predecessor legislation, the SCRA defines “court” to include administrative agencies as well as all local, state and federal courts, including bankruptcy court.

“The law has changed dramatically,” says Brann, who took part in an OSB Continuing Legal Education (CLE) program on the SCRA in March and also has done training on the act around the country.

“Oregon has a National Guard but doesn’t have a military base, so there’s no active-duty JAG office here,” says Brann. “My department has been very proactive in lending me out to do training. The bar has been very proactive. It’s a slow process because people say, ‘The SCRA doesn’t apply (to administrative proceedings).’ But the word is getting out.”

Brann says that her office, which handles administrative hearings for most state agencies, most frequently sees the SCRA come up in three types of cases: employment (i.e., the service member had applied for unemployment benefits before he was called to active duty); child support (i.e., a hearing to determine paternity) and suspension of a service member’s driver’s license as a result of a failed or refused blood alcohol test.

The latter category may come as a surprise, since the SCRA – being a civil relief act – doesn’t cover criminal actions.

However, as Brann points out, a service member’s arrest for Driving Under the Influence of Intoxicants starts two actions: a criminal prosecution and a civil suspension under Oregon’s implied consent law.

“The differences (between the actions) are huge,” says Brann.” What if the person stopped is on active duty, or just home for the weekend from Afghanistan? The (police) officer doesn’t know he’s on active duty. The officer has no way to stop the (implied-consent suspension) process. If the service member doesn’t stop it, he’s essentially taken a default on his license suspension.”

That brings us to the fourth key definition in the SCRA: judgment.

Under the SCRA, a judgment includes any judgment, decree, order or ruling, final or temporary.

That’s crucial to know because, under the SCRA, taking a default judgment against a covered service member — as “judgment” is broadly defined — is a big no no. (See sidebar.) In fact, as MAP member Velda Rogers warned in her February In Brief article, “Proceeding with the case (in violation of the SCRA’s provisions)…will, at the least, result in any judgment being voidable. At most, it may result in a civil or criminal action permitted by (the) SCRA. It may also result in a disciplinary action against the attorney and/or the judge…”

In 2008, the default-judgment section of the SCRA was amended to specify that child-custody proceedings are covered. Prior to that amendment, as Rogers said in her In Brief article, “In several state SCRA cases, judges decided the case based on Oregon law while either overlooking or trying to explain away the pre-emptive nature of (the) SCRA.”

Nor can clients circumvent the SCRA’s coverage.

“Clients cannot change custody of minor children by issuing a power of attorney to another family member,” warns Holady. (For Oregon statutes involving child custody and service members’ rights, see ORS 107.135(13) and 107.169(6)(a).)

The Cost of War
In addition to protecting them against default “judgments,” the SCRA also allows active-duty service members, in certain circumstances, to avoid the following:

Paying more than six percent annual interest on mortgages, car loans, credit-card debts or other obligations (except guaranteed student loans) if the obligations were entered into prior to being called to active duty;

Being evicted, or having their dependents evicted, without court order;

Having real or personal property (including vehicles) repossessed or installment contracts for the lease or purchase of such property rescinded or terminated without court order;

Having mortgages foreclosed on without court order; and

Being unable to suspend or terminate residential, vehicle or other leases based on deployment to other locations.

All but the latter provision require the service member to show that his or her ability to pay an obligation incurred before active duty was materially affected by his or her activation. This typically occurs when the service member’s military pay is less than he made in his civilian job.

Holady says that in his role as a military lawyer, he’s seen all of these provisions violated.

“It’s not that people aren’t aware of the law, but they think they can ignore it,” he says.

For example, he says that when his JAG attachment was mobilized four years ago, one of his fellow lawyer/officers, “Seamus,” had trouble getting out of the lease he’d signed two months before.

“The landlord looked at his orders and said, ‘I’ll let you out of your lease, but you’re foregoing your security deposit and last month’s rent,’” says Holady. Seamus said, ‘No, you don’t understand. This is not a voluntarily choice on my part or on your part.’ The landlord said, ‘I don’t think I have to.’ Seamus said, ‘I’m a military lawyer and you do.’ He didn’t have to sue, but he did have to send a letter, the day before he left, before he finally got his refund.”

“We’ve had soldiers come in with cell phones,” continues Holady. “One reason the new law covers cell phones is they were not being let out of their contracts even if they were sent overseas. Or they were asking for international chips and being told that they had to finish their old contracts. We’ve been able to persuade the providers that, as a matter of fact, they don’t have to continue with the old contracts.”

State Sen. Brian Boquist (R-Dist. 12), a lieutenant colonel in the Army Reserve Special Forces and a supporter of “the Linscott Bill,” says that when he was deployed to Iraq in 2003-04, he saw soldiers under his command being charged interest rates in excess of six percent.

“I remember, in multiple cases, getting on the phone, e-mail, back and forth,” says Boquist. “Mostly it was credit-card companies: really just the big companies. In fact, if you look at the companies receiving TARP (federal Troubled Asset Relief Program money), you’ll recognize the ones doing this. It wasn’t small local banks or credit unions; once they became aware of the law, they stopped.”

Credit Where Credit is Due
It was a case of credit-card companies that wouldn’t stop charging excessive interest that got MAP member Barton fired up about putting some teeth behind the SCRA’s protections.

One of his MAP clients, Kevin Scott, a Yamhill County mill worker, was being charged what Barton calls “excessive” rates of interest while he was doing “a really tough tour of duty” around Fallujah, Iraq with the National Guard in 2003-2005.

“I contacted them (the companies) and they were just obnoxious,” says Barton. “It was a couple thousand dollars: he could never afford to litigate it. So I contacted (former U.S. Rep.) Darlene Hooley; her office contacted them and they jumped. I looked at her stationery and saw that she was a member of the House’s Budget and Banking and Veterans’ Affairs committees. It was great for my client to be able to contact Hooley’s office, but what if his representative was some obscure freshman?”

Then Barton learned about a non-MAP case — Jeffrey Linscott, for whom “the Linscott Bill” was named — from Linscott’s Portland attorney, Michael “Mike” Mendelson.

In 2002, Linscott, the owner of an Oregon helicopter business who also was a major in the Air Force Reserve, was ordered to serve six months of active duty.

While he was gone, a Canadian helicopter company, with which he’d been wrangling over a helicopter turbine he’d twice sent in for repair, sold it after Linscott refused to pay for the repairs until they had been satisfactorily completed.

It also obtained a $110,000 default judgment against Linscott in Canada that included 18 percent interest.

“Oregon recognizes Canada basically as a sister state, so if you get a Canadian judgment, all you have to do is register it,” says Mendelson. “We made the agonizing decision not to attack the judgment itself in Canada because a large part of our defense was the SCRA, which recites that it’s an important part of our national defense. We felt that it wouldn’t be given the weight in Canada it was given in the United States. So we filed in federal court in Oregon to enjoin them from enforcing the judgment in Oregon.”

“If you want to enjoin a foreign judgment,” Mendelson continues, “you have to show that you didn’t have a full and fair opportunity to litigate in the foreign court. (Magistrate Judge Dennis) Hubel said, in oral argument, ‘You had an opportunity to litigate in Canada; why shouldn’t I enforce this?’ I said, ‘Because it’s tainted; it contains 18 percent interest, against a strong national policy of the United States. You can’t just separate out the interest; a judgment is a judgment. By seizing the turbine, they also violated the act by exercising a lien on a service member’s property.”

Mendelson got Linscott the injunction and, ultimately, a settlement from the repair company. The PLF, which was defending Linscott’s previous attorney’s failure to assert his right under the SCRA to have the default judgment set aside within the allowable time, also eventually settled.

“That’s one reason the PLF sponsored the March CLE (on the SCRA),” says Mendelson. “The potential damages, we felt, were enormous. But it was (also) enormously expensive to litigate this: even though my client got a good recovery, a substantial portion had to go to attorneys’ fees. So I got together with Jesse Barton and e-mailed him some proposals.”

An ad hoc committee of MAP members hammered out the legislation that became “the Linscott Bill,” aka House Bill 2303, which was approved by the bar’s Board of Governors and its Public Affairs Committee.

The law provides for a private, state cause of action for violation of the SCRA and exempts it from arbitration. It also mandates an award of reasonable attorneys’ fees if the court finds the service member made written demand for relief at least 30 days before filing and the opposing party did not tender an amount equal to or greater than the damages awarded to him. It mandates the greater of $1,000 or actual damages, including damages for emotional distress, if the court finds that timely written demand was made. Damages increase to up to $5,000 or three times actual damages, whichever is greater, for willful misconduct.

As a result, says Barton, “Credit-card companies won’t ignore people in the future.”

“They aren’t going to run up attorneys’ fees to defend a $1,000 debt they’ll never be able to collect,” he says. “Everybody’s got a congressman (like Darlene Hooley) now.”

A handout from the SCRA CLE is available from www.osbplf.org. Click on Programs on Audio; scroll to Servicemembers’ Civil Relief Act and click the “download handout” link.

Janine Robben has been a member of the Oregon State Bar since 1980. She is a frequent contributor to the Bulletin.

© 2009 Janine Robben

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