Law Suits: You’re Not Immune

By Richard Marmor, Esq.
AZSA Legal & Legislative Chair

Most of us have a tendency to think that our operations are too small or too isolated to attract real lawsuits against us, by which I mean cases for a lot of money that are not brought in small claims court. That’s simply not true.

It is true that no angry tenant is going to sue you for overcharging them $5 for a late fee, but what if that tenant sued in a class action representing every tenant you ever charged that $5 to since you opened your doors for business? Now you’re talking real money.

That was what happened back in 2001. A series of class action lawsuits had begun to work their way across the country aimed at attacking late fee practices in a variety of industries and we knew that self-storage was in their sights. AZSA went to the Arizona legislature and worked for a law respecting late fees. The key to that victory was that we created a “safe harbor” late fee formula that if followed would be deemed to be legally correct and thus protected from class action attack.

Now, thanks to that [expletive deleted] TV show, the public has become increasingly aware of the role of self storage auctions. I have warned that there is going to be serious negative fallout from that attention. Recently, one such bit of fallout surfaced, a law firm in New York put up a website trolling for disgruntled former tenants whose property was sold at auction. Their aim is to file a class action lawsuit challenging the self storage lien law and practices in New York.

As of this writing, no suit has as yet been filed. But if such a suit materializes and is successful, you can be certain that self storage across the nation is going to feel the impact. If there is a bright spot anywhere in this it is that the variability of tenant situations is going to make it somewhat difficult for them to identify a homogeneous class of “victims.” That won’t stop them, though. There is enough money to be made in class action lawsuits to provide a lot of motivation.

And there’s the rub; these are attorneys looking to make money. It’s easy to resent that, but we often forget that attorneys are out to make money just like everyone else. They are – like it or not – part of the “private sector,” and there is no shortage of talk these days about the economic role of the private sector. Obviously, that’s a two-edged sword. We need to be aware that these attorneys are not doing anything wrong. To the contrary, what they are doing is capitalizing on whatever you do wrong.

So if there is any moral to this story, it is this: the need to dot the i’s and cross the t’s in your foreclosure practices has never been greater, and it’s going to become yet more important in the near future.

[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.]

Richard Marmor, Esq. is a self-storage consultant, facility owner and former facility operator in the Phoenix area. He is also the founding President and current member of the Board of Directors of the Arizona Self-Storage Association, serving as Chair of the Legal and Legislative Committee.

Source: Behind Closed Doors, AZSA Newsletter Archives