Law Suits: Big Jury Verdict for Wrongful Sale

By Christopher A. LaVoy, Esq.
Tiffany & Bosco, P.C.

Juries can be unforgiving, as Public Storage recently discovered. Last month a Milwaukee, Wisconsin jury returned a $119,000 verdict against Public Storage for the wrongful foreclosure of a storage unit. Only $19,000 was for the value of the household possessions stored in the unit (which, incidentally, only fetched $660 at the foreclosure sale). The other $100,000 was a punitive damages award against Public Storage.

The Cook family stored their household possessions in the $74 per month storage unit as part of moving to Mississippi. When they went to vacate the storage unit, they discovered their possessions had been sold at a foreclosure sale for nonpayment of rent. Apparently Public Storage had not sent their monthly bills to their new temporary address, and the notices sent to their alternate address had been misaddressed. In short, the Cooks never received the invoices.

Not receiving payment, Public Storage auctioned the unit. By the time the Cooks learned of the sale, it was too late for them to recover their household possessions from the high bidder, who had since sold or discarded them.

The jury concluded not only that the Cooks had not received proper notice, but also that the auction was not a commercially reasonable sale. The jury was also obviously angry. An award of punitive damages is rare, especially in a high approximately 5:1 ratio such as here.

Frankly, the verdict strikes me as unjustified and excessive. Even if the Cooks did not receive their monthly invoices, it must have occurred to them that they needed to pay for their storage unit, or to at least call for an invoice if they had not received one. Did they suddenly think the storage unit was free? Assuming Public Storage did screw up, it would appear to have been an honest mistake, not conscious and deliberate wrongdoing as required for the award of punitive damages.

All of which brings me to my central point: juries can be unforgiving. A juror imagines himself as the tenant who lost everything and gets angry. The juror has a hard time seeing this as an honest mistake. The juror sees it as a David and Goliath fight, wanting to vindicate the little guy. All of this spells trouble for the self-storage facility (i.e., the big guy).

PRACTICAL LESSONS

There are several practical lessons that can be drawn from a case such as this.

First, make sure you send your notices to all addresses that you have for the renter before you foreclose.

Second, call the renter (assuming you have a telephone number) before you foreclose if you are not sure the renter knows about the default.

Third, if a good faith dispute develops with a renter over a foreclosure sale, do your best to resolve it short of litigation because, if it goes to a jury, you may not like the result, as Public Storage surely did not. That does not mean roll over for every disgruntled renter. But if it appears a mistake may have been made, seek a reasonable compromise with the renter.

[This article deals with a law related subject at a general level and is not intended for you to rely on. You should consult a lawyer before making a final decision in a situation involving any legal issues.]

Christopher A. LaVoy is partner in the law firm, Tiffany & Bosco, P.C., and serves as AZSA’s legal counsel.

Source: Behind Closed Doors, AZSA Newsletter Archives