DOJ Settles with California Towing Company for $160,000 Over Illegal Auctions of Servicemembers’ Vehicles
The Department of Justice announced on July 14, 2026, that S & K Towing Inc., a San Clemente, California towing company, will pay $160,000 to resolve claims that it repeatedly violated the Servicemembers Civil Relief Act (SCRA) by auctioning off vehicles belonging to members of the military without a court order. This serves as a proper reminder of how SCRA enforces action when a business attempts to bypass the verification process.
Context
According to the DOJ, the government’s lawsuit, filed in March in the U.S. District Court for the Central District of California, alleged that S & K Towing sold or disposed of as many as 148 vehicles owned by servicemembers. A majority of the vehicles were towed from Marine Corps Base Camp Pendleton. Under the SCRA, a company holding a servicemember’s vehicle needs a court order prior to selling or disposing of any vehicle. SCRA holds this standard even if a vehicle owes money in towing or storage fees. S & K’s personal contract with Camp Pendleton required it to follow federal and state law. The DOJ states that the company never enacted that requirement into how it actually operated.
What makes the case notable is that the company was warned directly. In May 2024, a Military Legal Assistance attorney told S & K that its practices violated the SCRA. A company manager reportedly responded, “We do this all the time.” The DOJ stated that the company continued to auction servicemembers’ vehicles after the warning was given. S & K had prior knowledge that many of the vehicles were registered to Camp Pendleton addresses and in some instances they were aware that some of the owners were on active duty.
Under the settlement, S & K will pay $160,000 to the affected servicemembers. The company is ceasing their towing and storage operations as part of the agreement. The company is now bound to SCRA policies if they intend on returning to business.
The DOJ has noted that it has recovered more than $489 million for over 152,000 servicemembers through SCRA enforcement since 2011. This figure continues to grow as more cases surface.
The Key Take Away
S & K had direct notice that they were illegally withholding and auctioning vehicles that belonged to service members. An assistant attorney informed the company it was violating the SCRA. It was also noted that the company’s own manager admitted that this practice was routine.
The DOJ has also stated that some vehicles were sold after S & K had prior knowledge that many owners were active duty. None of this process involved a database. The company had the information about the active duty status and still continued to illegally conduct their business.
A military status verification check is meant to catch situations like this. But a check is not implemented if a company ignores their forewarning. If a search shows no active-duty status, but the owner has already told or shown the company, through orders that they’re in the military, then that conflict must be resolved before moving forward. It can’t be set aside just because the check came back clear.
The root cause here was a company with actual notice that disregarded it. For towing and storage companies, a verification check is one piece of information, not permission to ignore everything else the company already knows.
