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61 » VISIT US ONLINE @ DSNEWS.COM NATIONAL FEDERAL COURT CHALLENGES MILITARY TIME SPENT IN RULING By: C. Brent Wardrop and Matthew F. Totten, Weissman, Nowack, Curry & Wilco Most of us in the default servicing world are generally familiar with the Servicemembers Civil Relief Act (SCRA).Like a bankruptcy check, it is one of the required checks upon which a property can be foreclosed. A servicemember's active duty status can quickly be verified by visiting the SCRA website and entering a party's social security number, date of birth, last name, and "active duty status date."1 Reviewing a simple search result for SCRA eligibility seems straight- forward enough; but what actually constitutes a servicemember's eligibility for protection under the SCRA is not so easily determined. e SCRA2 applies to obligations on real property owned by a servicemember that: Origi- nated before the period of the servicemember's military service and for which he or she is still obligated; and is secured by a mortgage, trust deed, or other security instrument.3 In judicial foreclosure states, actions filed during, or within one year after, a servicemember's period of mili- tary service may by the judge's own motion and must upon application by a servicemember, stay the proceedings or adjust the parties' obligations.4 In non-judicial states, a sale, foreclosure, or seizure of property subject to a security instru- ment is invalid if made during, or within one year after, the period of the servicemember's military service (with a few exceptions that will not be discussed here).5 Conducting a foreclosure against a servicemember protected by the SCRA can have drastic consequences. Not only might the foreclosure be invalid, but the person conducting such a foreclosure–or even attempts to do so–will be guilty of a misdemeanor punishable by fines and/or imprisonment up to one year.6 To avoid such stiff penalties, default servicing personnel must be able to satisfy two criteria : Identify the service members and define their period of military service. A service member is defined as someone who is a member of the Army, Navy, Air Force, Marine Corps, and Coast Guard; the commissioned corps of the National Oceanic and Atmospheric Administra- tion; and the commissioned corps of the Public Health Service.7 Military service, as defined un- der the SCRA, encompasses active duty, which is full-time duty in the active military service of the United States. It includes full-time training duty, annual training duty, and attendance at a legally recognized service school.8 It does not include full-time National Guard duty.9 Importantly, the term military service also includes any period during which a servicemem- ber is absent from duty on account of sickness, wounds, leave, or other lawful cause.10 Recent case law suggests that the seemingly straight- forward SCRA search might not tell the whole story about an injured servicemember's SCRA eligibility. e military's Temporary Disability Retired List (TDRL) is critical in exploring that issue. e TDRL is described by the Military Personnel Manual as a "pending list" for members who "through due process of medical procedures, have been found unfit to perform the duties of their office, grade, rank, or rating."11 Ser- vicemembers who would qualify for disability retirement but for the fact that their condition is not permanent and stable may be placed on the TDRL.12 While on the TDRL, a servicemember is required to undergo a physical examination at least once every 18 months to determine whether there has been a change in the disability, with an unexcused failure to undergo examination result- ing in the termination of disability pay.13 If a servicemember is ultimately found to be fit and elects to return to active duty, he returns to the same rank or the next higher one.14 Ad- ditionally, reinstatements to active service are to be conducted "on a fair and equitable basis, with regard being given to the probable opportunities for advancement and promotion" that the service- member might have had while on the TDRL.15 e question of whether a TDRL service- member is on military service and falls with the SCRA protections was recently discussed in the August 2014 Cronin v. U.S. case. e court was deciding an appeal of the 2011 holding, which found that time spent on the TDRL constituted a protected absence under 50 App. U.S.C.A. § 511(2)(C).16 e Court of Appeals for the Federal Circuit, in a 2-1 split, held that place- ment on the TDRL was not protected by § 511(2) (C) of the SCRA.17 Notably, the majority held that the language of the provision protecting a servicemember "who is absent from duty" should be read narrowly in light of the 2003 expansion of the original 1940 Soldiers' and Sailors' Civil Relief Act.18 In contrast, the dissenting circuit judge found that, facially, Congress intended four sub-def- initions to constitute protected military service under the Act, intentionally drawing a distinction between active duty and time absent due to sick- ness, wounds, leave, or other lawful causes. e dissent noted the significant continuing ties to the military while a servicemember is on the TDRL, as well as the difficulty in categorizing the "limbo status" of the TDRL.19 After citing two Supreme Court holdings regarding the liberal construction afforded the predecessor 1940 Act;20 noting that the stated purpose of the 2003 Act mirrors the 1940 Act's purpose; and that the case law which the majority cited does not address "whether time on the list should be considered 'military service' for purposes of the Relief Act, of which 'active service' is only one aspect",21 the dissenting circuit judge found that a servicemember placed on the TDRL, although not technically on "active duty," continues to be engaged in "military service" for purposes of the SCRA. What is the takeaway? Based on Cronin, it appears that present SCRA certificate checks are sufficient since TDRL time does not constitute military service for purposes of the SCRA. Nevertheless, in the changing default servicing landscape, default servicing personnel should at least be aware of the Cronin dissent's points in case a service member raises them during or after an otherwise valid foreclosure. 1 U.S. Department of Defense, FAQ on SCRA Certificates. See http://www.defense.gov/faq/pis/pc09sldr. html. 2 e SCRA applies to a multitude of areas for servicemembers. is article focuses on the Act's applicability to foreclosures.3 50 App. U.S.C. § 532(a). 4 50 App. U.S.C. § 532(b). 5 50 App. U.S.C. § 532(c).6 50 App. U.S.C. § 532(d).7 50 App. U.S.C. § 511(1); 10 U.S.C. § 101(a)(4)-(5). 8 10 U.S.C. § 101(d). 9 Id.10 50 App. U.S.C. § 511(2)(C).11 MILSPERSMAN §1850-030. Available on the website of the Navy Personnel Command at http://www.public.navy.mil/bupers-npc/ reference/milpersman/Pages/default.aspx. 12 10 U.S.C. § 1202.13 10 U.S.C. § 1210(a).14 10 U.S.C. § 1211(a-b).15 10 U.S.C. § 1211(f).16 Cronin v. U.S., 98 Fed Cl. 268 (2011).17 Cronin v. U.S., 765 F.3d 1331 (2014).18 Id. at 1337.19 Id. at 1342-44.20 See LeMaistre v. Leffers, 333 U.S. 1,6 (1948) ("[T]he Act must be read with an eye friendly to those who dropped their affairs to answer their country's call."; Boone v. Lightner, 319 U.S. 561, 575 (1943) ("e Soldiers' and Sailors' Civil Act is always to be liberally construed to protect those who have been obliged to drop their own affairs to take up the burdens of the nation."). 21 Cronin v. U.S., 765 F.3d 1331, 1343-44 (2014). Conducting a foreclosure against a servicemember protected by the SCRA can have drastic consequences. Not only might the foreclosure be invalid, but the person conducting such a foreclosure–or even attempts to do so–will be guilty of a misdemeanor punishable by fines and/or imprisonment up to one year.

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