In the Dubey case, the Court seems particularly concerned with a $5,000 limit on a large unit, particularly when the occupant notified Public Storage of the items she needed to store. As operators, you need to think about whether it’s appropriate to have ascending value limits based on unit size, perhaps limiting $2,500 value to smaller than 100 square feet, $5,000 for 200 or less square feet, and a different value limit for larger units.
The other lesson you can take away from this case is the Court was disturbed that Public Storage had no remorse and did nothing to help Dubey retrieve her sentimental items once it learned of its mistake. In addition, Public Storage never seemed to admit, at the time relevant, that there was a wrongful sale. The company also showed no policy or procedure to describe how it made sure it was selling the right unit.
If you find you committed a wrongful sale, sticking your head in the sand is the wrong action. Showing appropriate contrition, assisting the tenant in recovering any sold property, and excluding items with no saleable value such as pictures, diplomas, etc., may not have averted a wrongful-sale verdict in the Dubey case, but it certainly could have taken the wind out of the sails in upholding punitive damages.
If you feel uncomfortable about how you’re performing lien sales, proceed with caution. If you don’t understand your state statute, you feel your process is sloppy, or you let emotions get in the way of common sense during the sale, take note: The Dubey case is now the third largest verdict in a year against a self-storage operator for wrongful sale.
Understand there’s little your attorney can do to protect you if you commit a wrongful sale. That’s why you should have wrongful sale and disposal insurance. Given the large recent verdicts, $25,000 or $50,000 for this type of coverage may not be adequate anymore, even if you have a value limit in your rental agreement. You can see how easily a court, if it’s looking to do so, can get around the value limit by disregarding it or awarding compensatory or punitive damages as well as attorneys fees.
Wrongful-sale verdicts are skyrocketing in value. Protect yourself and your business. You cannot afford to have a million-dollar verdict against you.
This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney.
Jeffrey J. Greenberger is a partner with the law firm of Katz, Greenberger & Norton LLP in Cincinnati and is licensed to practice in Kentucky and Ohio. Mr. Greenberger primarily represents the owners and operators of commercial real estate, including self-storage owners and operators. To reach him, call 513.721.5151; visit www.selfstoragelegal.com.