When a Georgia woman went to Walker Mountain Storage to retrieve things from her self-storage locker last week, she was appalled to find it completely empty. The facility accidentally auctioned off the woman’s possessions, and the manager is currently trying to buy her items back.
Calls to Walker Mountain Storage were answered by a manager who provided The Storage Facilitator with a particularly ironic statement: “Lien laws? What are lien laws? I don’t have any idea what you’re talking about.”
According to police, this accidental auction at Walker Mountain was due to a “computer error.” This is not the first time a facility has accidentally auctioned off the wrong unit, and state courts are increasingly more inclined to levy harsh penalties on facilities who let this happen.
Dubey v. Public Storage
After an Illinois Public Storage auctioned off the wrong unit in 2008, yoga instructor Vartika Dubey sued the company for breach of contract, conversion of goods, and a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Although Dubey checked the box that said the value of her property “does not contain more than $5,000 worth of goods,” ostensibly limiting Public Storage’s liability to $5,000, Dubey claimed in her complaint that she had stored over $150,000 worth of goods.
Dubey testified that she did not have time to read everything on the rental agreement, as onsite property manager Lindsey Jarock took less than five minutes to explain the details of the agreement. Moreover, Dubey said she never paid attention to her exact locker number and was not stressed to do so by Jarock during the signing process.
As things unfolded, there was a paperwork mix-up, and Public Storage managers confused Dubey’s unit with that of a delinquent tenant, resulting in a lien sale. It is important to note that Dubey paid her rent on time via credit card every month.
An Illinois jury rewarded Dubey with $5,000 for breach of contract, $5,000 for conversion, and $745,000 in punitive damages for conversion.
In regard to the third count of Dubey’s complaint, the violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, the court once again ruled against Public Storage. Dubey received $69,145 in compensatory damages, $207,435 in punitive damages, and $185,849 in attorney fees and costs. All told, Dubey was awarded $1,217,429.
Although these verdicts were initially upheld in appeals court, two judges later remanded that the compensatory and punitive damages be reduced. That being said, Dubey still received a substantial payout.
Takeaway: Liability limits on rental agreements will usually protect the storage facility owner during instances of theft. However, when it comes to breach of contract, negligence, and conversion of goods, the courts are increasingly more likely to inflict severe punitive damages. This is why it’s important to make sure the tenant understands the rental agreement. Using videos and translators during the tenant’s signing can be helpful.
Cook v. Public Storage
A Milwaukee Public Storage leased a locker to Zachary Luckett, who lived with his parents James and Quincle Cook at the time. According to the rental agreement, Luckett was the lessee, but the Cooks were allowed to access his unit.
The manager incorrectly recorded Luckett’s address and then later failed to update the rental agreement after Luckett’s mom provided an alternate address.
Public Storage sent a notice of default and a notice of lien and sale, both of which were returned as undeliverable. After they auctioned Luckett’s unit, Public Storage was hit with a lawsuit in 2008.
In the opinion of the Wisconsin court, the provision in the rental agreement stating that “the lessee shall only store property that belongs to the lessee” was ambiguous due to another provision that granted Luckett’s parents access to the locker.
Public Storage was forced to pay $100,000 in punitive damages, as the court ruled that the sale of Luckett’s goods was “not commercially reasonable.” Cook, who brought the suit to court, received another $18,375 in damages and $282,154 in attorney fees and costs.
In total, the Cooks took home $400,529 as a result of the wrongful lien sale.
Takeaway: It is important that you only allow one name and signature on a rental agreement. You should also install methods of verifying tenants’ addresses and updating antiquated data. Having these methods in place will help you convince a court that you made reasonable efforts to reach delinquent tenants.
Milwicz v. Public Storage
Back in 2004, Tom Milwicz rented a storage unit at a Shurgard Storage, which was subsequently acquired by Public Storage. They sold his goods without any notice via email, telephone, or U.S. mail, and Milwicz sued for $250,000, alleging negligence and conversion of goods.
Milwicz cited his wife and daughter throughout his claim, and the court ruled that because Public Storage had no knowledge that anyone other Tom Milwicz was using the unit, the case was thrown out.
Milwicz appealed in Los Angeles county and the ruling was reversed. Although Milwicz did not recover the entire $250,000, he was still able to sue for gross negligence and recoup all of his costs.
Takeaway: Again, it is vital to only allow one name and signature on a rental agreement. You should also purchase wrongful sale and disposal insurance, as it no longer seems sufficient to rely on rental agreement provisions to limit the value of your tenants’ contents. Self-storage attorney Jeff Greenberger is a huge proponent of wrongful sale and disposal insurance. “There’s little your attorney can do to protect you if you commit a wrongful sale,” Greenberger has said.
In Greenberger’s newest venture, Late2Lien, he provides self-storage operators with “default notice compliance and automation software” that streamlines the lien notice process. As of today, Late2Lien only runs on SiteLink and Sentinel’s WinSen platforms–however, Greenberger said it will run on other platforms soon as well.