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Military Law

A Section of the Virginia State Bar.

Military Law Newsletter - Spring 2014

Military Law News

Unenforceability of Certain Pre-Dispute Waivers of Rights Under the Servicemembers Civil Relief Act

By Dwain Alexander

Our armed forces exist to defend the nation and to assert our national interests abroad.  National defense begins with the individual servicemember who executes the tasks necessary to secure the objectives resulting in success.  Individual servicemember readiness goes beyond military training and equipment.  While the purely military elements of readiness are vital to success and survival, the servicemember is not a machine that can be programed, fueled, launched, and repaired.  Servicemember readiness must include the legal, financial, medical, and familial issues that are part of the human element.  Denial or inattention to the human elements of readiness can impact the servicemember negatively, affecting focus, morale, dedication, and in the end - success and survival. 

Maintaining mission readiness for our National defense comes at a cost to everyone.  The servicemember risks his or her life and faces the uncertainty of the diverse defense needs of the Nation.  The servicemember’s family deals with frequent moves, fear and anxiety over dangerous duties, deployments, and the possibility of prolonged absences.  Individuals and businesses manage the cost associated with the risk that the servicemember may be unable to comply with the terms of a contract or obligation due to military duty.  To facilitate this war fighting capability and balance the associated interests, needs and costs, Congress enacted laws providing the men and women who comprise our Armed Forces with the flexibility in their private lives to enable them to provide military service without being penalized and distracted by their inability to comply with some civil legal requirements.1

One such law is the servicemembers Civil Relief Act (SCRA).2 Some of the protections provided by the SCRA are: reduction of interest rates3, termination of certain contracts4, stays of civil proceedings5, reopening of default judgments6, tolling of the statute of limitations7, and court intervention prior to action to foreclose or repossess property.8  In providing these rights to servicemembers and their families, the SCRA strikes a balance between individual rights and the needs of the nation.  

Section 517of the SCRA allows the servicemember to waive any and all rights under the Act.  This waiver provision in the SCRA has been prospectively used by businesses and individuals to avoid the risks and costs associated with providing goods and services to the men and women of the military.  The avoidance of these risks and costs removes the balance imposed by the SCRA and shifts the burden for mission readiness to the individual servicemember.  Each individual servicemember is part of a unit and that unit is an integral part of the command’s overall mission.  The new cook preparing meals for 500 sailors on a ship is critical to the command’s mission.  If she is distracted due to legal issues and makes a mistake she can give 500 people food poisoning.  

Risk avoidance in the form of pre-dispute waivers by businesses and individuals defeats the purpose of the SCRA. One example of the pre-dispute use of the waiver is found in landlord tenant contracts where the SCRA is actually a paragraph in the lease itself.  This type of Waiver is unlawful.9 The SCRA authorizes servicemembers to terminate a lease upon the receipt of orders to deploy or to permanently change duty station (PCS).10  In this transaction between the landlord and servicemember, the servicemember receives all of the information on the waiver and related law from the individual representing the business or property.  The servicemember who signs an unlawful waiver with a landlord and then receives orders to deploy or PCS may not know the law or challenge waiver.  This servicemember will follow the landlord’s direction that he waived his rights under the SCRA and comply with the written contract.  This servicemember will be subject to additional costs and penalties that could: prohibit him from terminating the lease, expose him to financial risk from the vacant property, add transportation costs, substantially increase living expenses, and/or prevent him from sending his family home to a more secure and supportive environment.  The emotional stress placed on the servicemember and his or her family from this housing situation can be devastating. 

A valid, lawful and enforceable waiver of a servicemembers rights under the SCRA must pass tests imposed by both federal and common law. 

A valid waiver must meet the standards set forth under the SCRA.  The SCRA sets forth several requirements for a valid waiver.  First, if the waiver concerns a contract or lease and applies to a protection provided by the SCRA, it must be in at least 12 point type.11  Second, if the waiver, pertains to the modification, termination, or cancellation of a contract, lease, or an obligation secured by a security interest, or the repossession, foreclosure, sale, or taking possession of property that is security for any obligation, or was purchased or received under a contract, or lease, the waiver must be in writing and executed as an instrument separate from the obligation to which it applies.12  Third, the waiver is only effective if it was made pursuant to a written agreement executed during or after the servicemember's period of military service.13 

Virginia law has established clear standards for the creation of a valid waiver.  Over a century ago, the Virginia Supreme Court in Wilson, stated “no person can be bound by a waiver of his rights unless such waiver is distinctly made, with full knowledge of the rights which he intends to waive and the fact that he knows his rights and intends to waive them must plainly appear.”14  In 2010, the Court reaffirmed its position on the law of waiver in Hernich.15  The Henrich court cited a 1991 decision from Weidman declaring that the essential elements of a waiver are knowledge of the facts basic to the exercise of the right and intention to relinquish that right.16  The knowledge element necessary to make a knowing waiver is usually missing in the use of a pre-dispute or prospective waiver.  At the inception of the contract, the servicemember has neither knowledge of the specific events that may in his case give rise to the right he is being asked to waive, nor knowledge of the facts surrounding the event that would be considered in a decision to waive his rights.  These circumstances make a valid waiver impossible, since there cannot be full knowledge of the implications or need for the rights which the servicemember might be induced to waive.

Beyond the statutory requirements of the SCRA and common law, the pre-dispute use of the waiver arguably violates public policy.  The federal policy of providing protections for the military date back to the Civil War when Congress enacted laws suspending the statute of limitations where the servicemember’s involvement in the war disrupted the administration of justice.17   During the First World War Congress passed laws directing courts to use equity powers to protect servicemember’s rights when involved in a civil action.18  In 1940 Congress created the Soldiers and Sailors Civil Relief Act (SSCRA) providing expanded rights, benefits, and protections for the servicemember.19  As the SSCRA, now SCRA, has been modified and amended, its purpose has remained substantially unchanged.20 

The powerful statement of purpose and policy contained in the SCRA supports mission readiness and empowers our servicemember’s ability to focus on national defense.  Congressional power to pass such legislation impacting and abridging private rights is found it its authority to raise and support armys and to declare war.21  The SCRA is a statement of Congressional intent and public policy to provide protections for the military in certain civil legal matters allowing servicemembers to focus on the national defense.  Each provision of the act should be liberally construed to protect those who agree to risk everything and answer the call of the nation.22

With these considerations, a waiver of one, any, or all of a servicemember’s rights under the SCRA must be given great consideration and review. 

A waiver consistent with the law and purpose of the SCRA would be made at a time when the servicemember has the ability to consider the full impact of the facts that gave rise to the rights to be waived.  The pre-dispute use of the waiver removes the servicemember’s ability to make an informed decision.  The Supreme Court has held that, “where a private right is granted in the public interest to effectuate a legislative policy, waiver of a right so charged or colored with the public interest will not be allowed where it would thwart the legislative policy which it was designed to effectuate.”23  The pre-dispute use of the waiver provisions of Section 517 thwart the purpose and policy Congress intended in implementing the SCRA and should not be allowed.

            The fact that in some instances the imposition of the SCRA on a business or individual may impose a harsh result must be balanced against the overall design and policy of the Act.  The Supreme Court made a similar analysis in Midstate Horticultural when it said: “Accordingly, in respect to many matters concerning which variation in accordance with the exigencies of particular circumstances might be permissible, if only the parties' private interests or equities were involved, rigid adherence to the statutory scheme and standards is required. This "obviously may work hardship in some cases, but it embodies the policy which has been adopted by Congress in the regulation of interstate commerce in order to prevent unjust discrimination."24  Midstate involved the application of the Section 16 of Interstate Commerce Act (ICA) as it applied to carrier rates.25  This section was an integral part of the ICA and the comprehensive scheme of regulation it imposed.  Like the ICA, the SCRA is implemented and affected through its provisions, with the object not merely of regulating the interrelations of business, individuals and Servicemembers, but of securing the general public interest in mission ready, focused, and motivated men and women to defend our nation. 

Many young sailors and soldiers do not have the financial resources or legal understanding to argue the law.  They cannot discern that  a pre-dispute waiver may be unlawful and unenforceable.  The law on the pre-dispute use of the waiver must be clear.  The use of pre-dispute waivers has the potential to eviscerate the central purpose of the SCRA – maintaining the Servicemember’s focus on the nation’s defense.  If the SCRA waiver provision is employed and deployed prospectively to avoid costs and risks of doing business, mortgage lenders, banks, credit unions, sub-prime lenders, auto dealerships, furniture merchants, service contract companies, and others could be exempt from the duties imposed by the SCRA on society and all of the protections established in the SCRA could be lost.  This must be changed.  Section 517 of the SCRA should be expressly amended to prohibit pre-dispute application of the waiver.

SAMPLES OF WAIVERS FOUND IN VIRGINIA

The waivers used in Virginia take many forms.  Some do not meet the requirements for the SCRA.  Others meet the SCRA requirements, but fail the substantive requirements of Virginia law and conflict with congressional public policy declarations.  Another problem is that the waiver is explained to the servicemember by the businesses’ agent who may not have a full understanding of the SCRA or Virginia law and has an interest in obtaining the waiver.  This source of advice and explanation may cause confusion resulting in an unintended waiver.

The Virginia Association of Realtors has SCRA waiver language incorporated into the body of its lease.  This language reserves in the landlord a right to, at a future date, require a waiver of the SCRA from the servicemember tenant.  This language fails the requirements of both federal and Virginia law.  The initial notice of the waiver in the body of the lease is not in 12 point type or a separate document.  The fact that the landlord has the “contractual right” to demand the waiver removes the voluntary nature of the election. 
Other forms of waiver exist in Virginia.  Many of the waivers begin with disarming and misleading statements.  Below are a few samples:

1) The Balance of Needs waiver

“In order to balance the needs of the Landlord and Tenant and allow tenants that are servicemembers in the military service … to meet their military service obligations and further in order to comply with the requirements of the U.S. Servicemembers Civil Relief Act (SCRA) and the Virginia Residential Landlord Tenant Act (VRLTA) Landlord and each tenant have executed this addendum.  The document then establishes the active duty status of the individual, a duty to notify the landlord in case of temporary duty orders or permanent change of station orders, and then last it acknowledges that this is a waiver of SCRA and non-waiver of the VRLTA and proceeds to waive all rights under the SCRA.

2) The Respect and Appreciate but feel taken advantage of waiver

“We respect and appreciate the military service of all of our tenants who are members of the United States Armed Forces.  However, we have found that some tenants take unfair advantage of the rights afforded to them as members of the military, particularly the provisions of the Servicemembers Civil Relief Act (the SCRA) that allow a servicemember to receive a stay of legal proceedings in cases where the servicemember does not appear in court.

3) The Keep Me Advised waiver

“For purposes of the Servicemembers Civil Relief Act (SCRA) it is important for the landlord to be advised of the military status of the Resident.  Further, the SCRA permits the waiver of certain rights under the “SCRA” and this agreement contains such a waiver.”

1 50 U.S.C. App. §502

2 50 U.S.C. App. §501 - 597

3 50 U.S.C. App. §527

4 50 U.S.C. App. §535, 535a

5 50 U.S.C. App. §521, 522, 523, 524, 531, 532, 533, 537, 561, 591, 593

6 50 U.S.C. App. §521

7 50 U.S.C. App. §526

8 50 U.S.C. App. §531, 532, 533, 537

9 50 USC App. §517

1050 USC App. §535

11 50 USC App. §517(c)

12 50 USC App. §517(b)

13 50 USC App. §517(a)

14 Wilson v. Carpenter, 91 Va. 183, 21 S.E. 243 (1895)

15 Henrich v. Whitaker, 280 Va. 507(2010)

16 Weidman v. Babcock, 241 Va. 40 (1991)

17 Act of June 11, 1864, ch. 118, 13 Stat. 123

18 Act of Mar. 8, 1918, ch. 20, 40 Stat. 440 

19 Act of Oct. 17, 1940, ch. 888, 54 Stat. 1178 

20 50 U.S.C. App. §502

21 Dameron v. Brodhead, 345 U.S. 322 (1953); U.S. Const., Art. 1, § 8, cl. 11 and cl. 12

22 Le Maistre v. Leffers, 333 U.S. 1(1948).

23 Midstate Horticultural Co. v. Pennsylvania RR. Co., 320 U.S. 356, 361 (1943)

24 Midstate Horticultural Co. v. Pennsylvania RR. Co., 320 U.S. 356, 361; (1943)

25 49 U.S.C.S. 16  [Revised -- Oct. 1, 1978 & Jan. 2, 1983]