A San Clemente, California, towing company has agreed to a $160,000 settlement to resolve a federal lawsuit alleging it illegally auctioned off motor vehicles belonging to military members. The Justice Department announced the agreement on Tuesday, following allegations that S & K Towing Inc. violated the Servicemembers Civil Relief Act (SCRA).
The lawsuit, filed on March 25 in the U.S. District Court for the Central District of California, alleged that S & K Towing illegally sold or disposed of up to 148 vehicles owned by service members.
According to federal prosecutors, many of these vehicles were towed directly from Marine Corps Base Camp Pendleton. Under the SCRA, towing companies must secure a court order before they can legally sell or dispose of a vehicle belonging to an active-duty service member.
The government’s complaint stated that S & K Towing failed to make efforts to comply with these regulations, despite a contract with Camp Pendleton that explicitly required adherence to all state and federal laws. In one instance detailed in the suit, a Military Legal Assistance attorney contacted the firm in May 2024 to report that its practices violated federal law.
A manager for the company allegedly responded, “We do this all the time.” The lawsuit noted that S & K Towing continued to auction off vehicles without court orders after that conversation, including vehicles registered to Camp Pendleton addresses and others where the company had been explicitly informed of the owner’s military status.
“For far too long, tow companies have sold or disposed of servicemembers’ vehicles in violation of federal law,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “This settlement sends a strong message that all towing companies must recognize servicemembers’ rights and take the necessary steps to comply with the SCRA.”
“Members of the U.S. Armed Forces have a legal right to be protected while they serve our nation overseas,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California. “This settlement will provide compensation to impacted service members and serves as notice to all businesses to comply with federal laws that protect our military.”
Under the terms of the settlement, the $160,000 payout will go directly to compensate the affected service members. S & K Towing is currently winding down its business and shutting down operations. However, the agreement mandates that if the company ever reenters the vehicle towing or storage industry, it must implement strict policies and procedures to ensure full compliance with the SCRA.
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