Federico et al v. Lincoln Military Housing, LLC et al
Filing
184
OPINION AND ORDER. Signed by District Judge Robert G. Doumar on 9/25/13. (afar)
FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINL
SEP 25 2013
Norfolk Division
CLERK. U.S. DISTRICT COURT
NORFOLK VA
SHELLEY FEDERICO, ct al„
Plaintiffs,
Civil No. 2:12cvS0
V,
LINCOLN MILITARY HOUSING, LLC, ct al.,
Defendants.
OPINION AND ORDER
This consolidated action involves mold-related contract and tort claims by several military
families against the Lincoln Defendants, which allegedly manage and operate the Tidewater-area
military housing communities in which the tenant-plaintiffs resided, and various vendors who
allegedly provided repair, remediation and cleaning services in connection with the tenant-plaintiffs'
complaints ofmold and water damage in their apartments. The Court has jurisdiction pursuant to 28
U.S.C.§§ 1331. 1332, 1441, and 1446.1 In this action, the plaintiffs seek damages for personal injury
and property damage based on various theories ofliability, including breach ofcontract, violation of
the Virginia Residential Landlord Tenant Act. Va. Code §§ 55-248.2 et seq. C'VRLTA"), negligence
per se based on standards imposed by the VRLTA. negligence per se based on standards imposed by
the Virginia Maintenance Code, common law negligence, and common law fraud.
The matteris now before the Court on the Lincoln Defendants' various motions to dismiss or
for judgment on the pleadings pursuant to Rule 12(b)(1), Rule 12(b)(6), and Rule 12(c) of the
1The Court has previously determined the existence of federal enclave jurisdiction with
respect to the military housing communities involved in this consolidated action. See Fcderico v.
Lincoln Mil. Ilous., 901 F. Supp. 2d 654, 676 (E.D. Va. 2012): see also 28 U.S.C. § 1331. Many of
the individual cases in this consolidated action involve diversity jurisdiction as well. Sec 28 U.S.C.
§ 1332. All ofthe complaints were initially filed in state court and subsequently removed to this
Court by the defendants pursuant to 28 U.S.C. §§ 1441 and 1446.
Federal Rules of Civil Procedure. A preliminary question for a number of the claims is whether
Lincoln Defendants are entitled to derivative governmental immunity. For the reasons set forth
herein, the motions shall be GRANTED in part and DENIED in part, and portions of the
consolidated action identified hereinafter shall be DISMISSED for failure to state a claim upon
which relief can be granted.
I. FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs in this consolidated action are military members and spouses who leased
apartments in military housing communities managed and operated by the Lincoln Defendants.
Altogether, they have brought eight separate lawsuits for personal injury and property damage,
which have been joined together in this consolidated action following removal from state court. The
lead case in this consolidated action, Fcderico 1 (Case No. 2:12cv80), was brought by Shelley
Federico. both individually and jointly with her husband, Joe Federico, aUnited States Marine, who
lived together with their minor child in military housing beginning in October 2010. Asecond case,
Federico II (Case No. 2:12cv596), was brought by Joe Federico individually. Athird case, Chan I
(Case No. 2:12cv580), was brought by Monica Chan, both individually and jointly with her husband,
Christopher Chan, an enlisted member ofthe United States Navy, who lived together with their three
minor children in military housing beginning in October 2010. A fourth case, Chan II (Case No.
2:12cv581), was brought by Christopher Chan individually. A fifth case, Brandsema (Case No.
2:12cv582), was brought by Abbce Brandsema, both individually and jointly with her husband, John
Brandsema, a United States Navy Petty Officer, who lived together with their minor child inmilitary
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housing beginning in September 2010. Asixth case, Ilardinu (Case No. 2:13cv233), was brought by
Nicole Ilarding individually, who lived together with her husband, anenlisted member ofthe United
States Navy, and their three minor children in military housing beginning in June 2009. A seventh
case, Sullisian (Case No. 2:13cv294), was brought by Meagan Sulligan, both individually andjointly
with her husband, George Sulligan, an enlisted member of the United States Army, who lived
together with their three minor children in military housing beginning in May 2010. An eighth case,
Dclorey (Case No. 2:13cv359), wasbrought by Rachael Delorey, both individually and jointlywith
herhusband, Theo Delorey, a United States Navy Hospital Corpsman, and theirtwo minor children
in handicap accessible military housing beginning in June 2010.
Asalleged bythe plaintiffs, defendant Lincoln Properly Company ("LPC") isaninternalional
property acquisition and management company headquartered in Texas that allegedly manages
31,000 military homes nationwide. Defendant Lincoln Military Housing, LLC ("LMH*') is an
affiliated company that allegedly manages and operates more than 4,000 military housing units in the
Tidewater area; under the Department of Defense's Military Housing Privatization Initiative
("MIIPI"), LMH and its subsidiaries allegedly manage and operate the military housing under a
fifty-year lease program. Defendant Mid-Atlantic Military Families, LLC ("Mid-Atlantic") is a
subsidiary of Lincoln Family Communities, LLC ("LFC"), an affiliate or subsidiary of LMH; MidAtlantic is identified as the owner/landlord on the military housing leases with each ofthe plaintiffs.
Defendant Lincoln Property Company Property Management, Inc. ("LPCPM") is an authorized
agent for Mid-Atlantic; it manages the performance of all maintenance activities for the military
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housing occupied bythe plaintiffs. Finally, the two most recently removed complaints, Sulligan and
Delorey. have alleged fraud claims against Stephanie Dozier (known to the Sulligan plaintiffs only
as "Stephanie"), a property manager employed by the Lincoln Defendants. These affiliated
defendants are referred to collectively in this Opinion and Order as the "Lincoln Defendants."
In support of their motion for dismissal pursuant to Rule 12(b)(1), the defendants have
submitted a declaration by Kim McCormick, General Counsel for LPC, inwhich she has addressed
the corporate structure of Mid-Atlantic, and the relationship between the Lincoln Defendants and the
United States Navy. Inthisdeclaration, Ms. McCormick hasstated that Mid-Atlantic was formed in
August 2005 as a public-private venture ("PPV") authorized under the MHPI, with LFC and the
Navy as its sole members. The defendants previously filed, under seal, copies of the applicable
ground lease with respect to the military housing communities at issue in these cases, the operating
agreement under which Mid-Atlantic took ownership ofthe residential units located on the property
conveyed by the ground lease, and the property management agreement under which LPCPM was
retained tomanage the military housing properties. See generally Federico, 901 F. Supp. 2dat 65861 (describing the corporate structure of Mid-Atlantic and the general terms of the ground lease,
operating agreement, and property management agreement).
As alleged by the plaintiffs, defendants Bradley Perkins, Inc. t/a Elite Construction; Belfor
USA Group, Inc. d/b/a Belfor Property Restoration; Carpet World of Virginia, Inc. d/b/a Carpel
World; Environmental Restorations Inc. d/b/a ScrvePro of Chesapeake; and National Restoration,
Inc. d/b/a Peerless Carpet Care and Restoration Services of Virginia Beach are vendors retained by
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the Lincoln Defendants to performmold remediation servicesin response to the plaintiffs' reports of
moisture damage and possible mold in their residences. Several of the complaints also name
unidentified vendors as John Doe defendants. These vendors arc not party to the instant motions.
Each of the eight complaints at issue in this consolidated action involves mold-related
contract and tort claims against the Lincoln Defendants, which allegedly manage and operate the
Tidewater-area military housing communities in which the tenant-plaintiffs resided. The eight
complaints also allege common law negligence and fraud claims against the various vendors who
allegedly provided repair, remediation, and cleaning services inconnection with the tenant-plaintiffs'
complaints of mold and water damage in their apartments. Several, but not all, of the complaints
allege fraud claims against the Lincoln Defendants and various vendors.
The defendants have filed Rule 12(b) motions to dismiss the Federico I and Harding
complaints and Rule 12(c) motions for judgment on the pleadings with respect to the other six
complaints. Each of these motions has been fully briefed by both sides. The Court held oral
argument on these motions on May 8, 2013. The matter is now ripe for a decision.
II. MOTION TO DISMISS STANDARD
With respect to one of the consolidated cases, the defendants have filed a motion to dismiss
pursuantto Rule 12(b)(1) of the Federal Rulesof Civil Procedure. The plaintiffbears the burdenof
establishing the existence of subject matter jurisdiction when challenged under Rule 12(b)(1). See
Richmond. Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765,768 (4th Cir. 1991).
In considering a challenge to its subject matter jurisdiction, a district court may look beyond the
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pleadings without converting the proceeding to a motion for summary judgment. ]± "The moving
party should prevail only ifthe material jurisdictional facts are not in dispute and the moving party is
entitled to prevail as a matter of law." Id.
With respect to all eight of these consolidated cases, the defendants have filed dispositive
motions seeking dismissal of some or all of the plaintiffs' claims for failure to state a claim upon
which relief can be granted. In some of the cases, the defendants have filed motions to dismiss
pursuant to Rule 12(b)(6) ofthe Federal Rules ofCivil Procedure, and inother cases, the defendants
have filed motions for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of
Civil Procedure. The only difference between these two procedural vehicles for the disposition of
claims isone oftiming, not ofsubstance. Whereas Rule 12(b)(6) authorizes a defendant to move to
dismiss a complaint for "failure to state a claim upon which relief can be granted" before filing a
responsive pleading, Rule 12(c) authorizes the defendant to move for judgment on the pleadings on
the very same grounds "[ajfter the pleadings are closed—but early enough not to delay trial."
Compare Fed. R. Civ. P. 12(b)(6) withFed. R. Civ. P. 12(c), (h)(2)(B). In practice, thedistinction is
immaterial, as the applicable standard of review is the same in cither event. See Edwards v. City of
Goldsboro, 178 F.2d 231, 243 (4th Cir. 1999).
In considering motion to dismiss for failure to state a claim upon which relief may be
granted, the plaintiffs complaint is to beconstrued in the "light most favorable to the plaintiff." E.
Shore Mkts.. Inc. v. J.D. Assocs. Ltd. P'ship. 213 F.3d 175, 180 (4th Cir. 2000). The defendant has
the burden of showing that no claim has been stated. See Edwards. 178 F.3d at 244 ("[A] Rule
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12(b)(6) motion should only be granted if, after accepting all well pleaded allegations in the
plaintiffs favor, it appears certain that the plaintiff cannot prove any set of facts in support of his
claim entitling him to relief").
"To survivedismissal, the complaint mustcontain 'enough facts to state a claim to reliefthat
is plausible on its face.'" Bonds v. Leavitt, 629 F.3d 369, 385 (4th Cir. 2011) (quoting Bell All.
Corp. v. Twomblv. 550 U.S. 544, 570 C2007)): seealso Ashcroft v. Iqbal. 556 U.S. 662,678 (2009).
As the Fourth Circuit has explained,
The plausibility standard requires a plaintiff to demonstrate more than "a
sheer possibility that a defendant has acted unlawfully." It requires the
plaintiff to articulate facts, when accepted as true, that "show" the plaintiff
has stated a claim entitling him to relief, i.e., the "plausibility of'entitlement
to relief"
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Twomblv. 550 U.S. at 557).
Nevertheless, when considering a motion to dismiss, the Court's task is limited to decidingwhether
the plaintiff isentitled tooffer evidence in support of his or her claims, not whether the plaintiffwill
eventually prevail. Twomblv. 550 U.S. at 563.
In deciding the motion,the Court mayconsiderthe facts alleged on the face of the complaint,
as well as "documents incorporated into the complaint by reference, and matters of which a court
may takejudicial notice." Tcllabs. Inc. v. Makor Issues & Rights Ltd.. 551 U.S. 308, 322 (2007).
III. ANALYSIS
A. Derivative Governmental Immunity
With respect to the Federico I complaint alone, the defendants have moved to dismiss the
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plaintiffs' tort claims pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction.2 In particular,
the defendants assert a defense of derivative governmental immunity pursuant to the doctrine
enunciated by the Supreme Court of the United States in the case of Yearslev v. W.A. Ross
Construction Company. 309 U.S. 18 (1940), and its progeny. However, as the record nowstands, the
plaintiffs have met their burden to show that such immunity is not a bar to their suit because the
defendants' alleged actions were not the result of a discretionary function.
Ingeneral, the United States Government enjoys sovereign immunity from suit except where
it has waived that immunity. The Federal Tort Claims Act ("FTCA") waived that immunity in
regards to certain tort suits, but, most relevant to the instant case, not when the tort is based on the
performance of a "discretionary function or duty." 28 U.S.C. § 2680(a). The definition of a
"discretionary function" is not a simple matter, sec generally Angle v. United States. 93 1 F. Supp.
1386, 1391-96 (W.D. Mich. 1994), but the Supreme Court has laid out a two-part analysis in
Berkovitz v. United States. 486 U.S. 531 (1988), to determine when it is applicable. First, "conduct
cannot be discretionary unless it involves an elementofjudgment or choice" on behalfof the person
or agency performing it. Berkovitz, 486 U.S. at 536. Second, where there is some element of
judgment orchoice exercised, the exception "protects only governmental actions and decisions based
2There is some authority that derivative governmental immunity is not technically a jurisdictional
matter. See Ackcrson v. Bean Dredging LLC. 589 F.3d 196,207-08 (5th Cir. 2009) ("Based on the
Supreme Court's actions in Yearslev. we hold that concluding Yearslev is applicable does not deny
the court of subject-matter jurisdiction."); In re Oil Spill by the Oil Rig Deepwater Horizon, MDL
No. 2179, 2011 WL 4575696, at *3 n.6 (E.D. La. Sept. 30, 2011) (denying Rule 12(b)(1) motions
because "derivative immunity will not divest a court of subject matter jurisdiction"). Assuming
arguendo that it is a jurisdictional matter, though, plaintiffs have still met their heightened pleading
burden at this stage.
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on considerations of public policy." ]± at 537. If a decision is "grounded in social, economic, and
political policy," it is discretionary, kf
In Angle v. United States, the Air Force made the decision that rather than spending
approximately $51 million to sample all of its housing units, or remove all lead-based paint in its
housing at a cost of $900 million, for which there was no money budgeted, they would instead
address the issue by prohibiting the use of lead-based paint in the future. 931 F. Supp. at 1390,
1396-97. The Air Force's choice to handle the threat of lead-based paint in its housing in a manner
different than that which the plaintiffs in that case desired was determined to be a discretionary
decision made in light of "social, economic, or political policy." Id at 1397.
By contrast, there are other choices by government agents that are ofsuch a nature that they
do not fall within the FTCA'sdiscretionary function exception. Itis"universally acknowledged" that
"the discretionary function exception never protects against liability" for a government employee's
negligent driving despite the fact that safe driving requires some level ofdiscretion. United States v.
Gaubert. 499 U.S. 315, 336. Similarly, even though the choice to operate a lighthouse is
discretionary, the Coast Guard was nonetheless found to beliable under the FTCA for its employee's
negligent failure to discover a failure of the light and to repair the same. Indian Towing Co. v.
United States, 350 U.S. 61, 69 (1955).
Derivative governmental immunity applies to government contractors who perform a
discretionary function within the scope of a valid government contract. Mangold v. Analytic
Services. Inc.. 77 F.3d 1442, 1448 (4th Cir. 1996) (holding that derivative governmental immunity
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applies "to the extent that this case involves a discretionary governmental function which has been
delegated to the private sector"); Butters v. Vance Int'l. Inc.. 225 F.3d 462, 466 (4th Cir. 2000)
(noting that it is "well-settled law that contractors and common law agents acting within the scope of
their employment for the United States have derivative sovereign immunity"). Contractors are
protected to the same extent as the Government when they exercise appropriately delegated
discretionary power. Mangold. 77 F.3d at 1447-48 ("If absolute immunity protects a particular
governmental function, no matter how many times or to what level that function is delegated, it is a
small step to protect that function when delegated to private contractors . . . ."). Thus in the instant
case, the question is whether defendants' alleged actions are protected by the FTCA's discretionary
function exception via derivative governmental immunity.
Plaintiffs have pled sufficient facts to support their claim that the defendants are not entitled
to derivative governmental immunity, and thus that this Court has jurisdiction over the plaintiffs' tort
claims. The defendants' actions do not qualify as discretionary under Berkovitz because they do not
satisfy the second prong of that case's test.
The first prong of the Berkovitz analysis is clearly met. Defendants were not given clear
directions on how to protect against and remediate mold problems. All parties agree that the
defendants' contract to oversee the properties at issue in this case was authorized under the MHPI,
which allows branches of the Armed Forces to establish PPVs to operate and manage military
housing. 10 U.S.C. §§ 2871-2885. To improve housing quality, the branches of the Armed Forces
may lease residential units "suitable for use as military family housing or military unaccompanied
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housing." kl §2874(a). This goal inherently calls for agreat deal of choice and judgment.
The second prong of the Berkovitz analysis, however, is not met. Plaintiffs allege avariety of
breaches ofapplicable state law, as well as that defendants were not compliant with their contractual
obligations. The plaintiffs claim that these alleged violations of law and contract stem not from a
designated policy but from individuals failing to perform their jobs with proper care. In other words,
the defendants' actions allegedly were not grounded in public policy and thus cannot be classified as
discretionary.
In the instant case, defendants' alleged actions do not qualify as discretionary. While the
plaintiffs in Angle alleged that their harms were the product of a negligent decision affecting
thousands ofhousing units, the plaintiffs in this case allege that their injuries stem from a failure to
provide safe housing free ofsignificant mold buildup, unpleasant odors, and extensive water damage
in aspecific housing unit that had been brought to defendants' attention, as well as from negligent or
nonexistent repairs. None of the concerns in Angle about large-scale budget issues or how to keep
thousands offamilies safe from a potential but uncertain danger are present in this case. Rather, itis
simply aquestion of whether defendants were negligent in repairing aparticular housing unit when
the dangers it posed became known. IfLincoln Defendants had chosen to combat mold infestations
with aplan for providing safe housing within the logistical constraints oftheir situation and plaintiffs
alleged that that general plan was insufficient to protect them from harm, then Lincoln Defendants
would be in an analogous position to the Angle defendants. Here, however, the defendants are not
alleged to have negligently weighed competing values incorrectly, but to have failed to react to an
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immediate and manifest danger. Thus the actions at issue here are more akin to the negligence ofa
careless government driver or inept lighthouse operator than to the Air Force's policy decision in
Angle. See Gaubert. 499 U.S. at 336; Indian Towing Co.. 350 U.S. at 69.
For these reasons, the defendants here allegedly were not performing adiscretionary function
within the scope of their contract with the Government and thus are not eligible for derivative
governmental immunity on the record as it now stands. Accordingly, the Court will deny the
defendants' motionto dismiss certain tort claims raised in the Federico I complaint pursuant to Rule
12(b)(1), without prejudice to their asserting a derivative governmental immunity claim again in
later proceedings if a sufficient basis therefor can be shown.
B. The Virginia Residential Landlord Tenant Act
In Count I of the Federico I. Chan I, Brandsema. Sulligan, and Delorey complaints, the
plaintiffs assert a claim for damages for the Lincoln Defendants' violation ofthe VRLTA. The
defendants have moved to dismiss orfor judgment on the pleadings for failure to state aclaim on the
ground that the VRLTA does not authorize the recovery ofmonetary damages for personal injury or
property damage.
Under the VRLTA, a landlord has anexpress obligation to"[maintain the premises insuch
condition as to prevent the accumulation of moisture and the growth of mold, and to promptly
respond to any notices from the tenant" regarding moisture accumulation or visible mold. Va. Code
§ 55-248.13(A)(5). Ifthe landlord fails to meet its obligations under § 55-248.13(A), "the landlord
shall only be liable for the tenant's actual damages proximately caused by the landlord's failure to
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exercise ordinarycare." Id. § 55-248.13(B); sec generally Restatement (Second) of Prop.: Landlord
and Tenant § 10.2 (1977) (outlining the scope of damages available to a tenant for a landlord's
breach of lease); Bus. Bank v. F.W. Woolworth Co.. 421 S.E.2d 425, 427 (Va. 1992) (citing this
section of the Restatement with approval).
Monetary damages for personal injury arc not authorized under the VRLTA. Isbell v.
Commercial Inv. Assocs.. Inc., 644 S.E.2d 72. 77-78 (Va. 2007). The Supreme Court of Virginia
has unequivocally held that "the VRLTA imposed contractual duties on landlords but it did not
impose a tort duty on landlords with regard to responsibility to maintain and repair leased premises
under the enjoyment and control of the lessee." Steward v. Holland Family Props.. LLC. 726S.E.2d
251,255 (Va.2012)."[I]f a landlord fails to materially comply with the health and safety provisions
of the [VRLTA], Sections 55-248.21 and 55-248.40 provide limited relief, allowing a tenant to
terminate the leaseagreement, seek equitablerelief,and obtain damages incidental to that equitable
relief." Sanders v. UDR. Inc.. No. 3T0-CV-459, 2010 WL 3927804, at *5 (E.D. Va. Oct. 4, 2010)
(citing Isbell. 644 S.E.2d at 77-78). This relief includes the recovery of reasonable attorney fees,
"unless the landlord proves by a preponderance of the evidence that the landlord's actions were
reasonable under the circumstances." Va. Code § 55-248.21.
Subsequent to the Isbell decision, the VRLTA was amended, effective July 1, 2008, to
impose certain additional obligations upon a landlord with respect to mold conditions. Under the
amended VRLTA, a landlord is expressly obligated to "perform mold remediation in accordance
with professional standards," to provide temporary accommodations to the tenant while mold
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remediation is performed, and to pay all costs ofthe mold remediation, provided the mold condition
is not caused by negligence ofthe tenant. Va. Code §§ 8.01-226.12(E), 55-248.18:2. The term "mold
remediation in accordance with professional standards" is further defined by statute as:
mold remediation of that portion of thedwelling unitor premises affected by
mold, or any personal property of the tenant affected by mold, performed
consistent with guidance documents published by the United States
Environmental Protection Agency, the United States Department ofHousing
and Urban Development, the American Conference of Governmental
Industrial Hygienists (the Bioaerosols Manual), Standard Reference Guides
of the Institute of Inspection, Cleaning and Restoration for Water Damage
Restoration and Professional Mold Remediation, or any protocol for mold
remediation prepared by anindustrial hygicnist consistent with said guidance
documents.
Va. Code §§ 8.01-226.12(A), 55-248.4.
Accordingly, the motions are granted in part with respect to the recovery of damages for
personal injury under the VRLTA. The motions are denied in part and this consolidated action shall
proceed to the extent that the plaintiffs seek to recover damages available pursuant to Va. Code
§§ 55-248.13, -248.21, and -248.40, reimbursement ofany temporary lodging expenses and any
mold remediation costs incurred by the plaintiffs available pursuant to Va. Code §§ 8.01-226.12 and
55-248.18:2, and reasonable attorney fees incurred by the plaintiffs available pursuant to Va. Code
§55-248.21.
C. Breach of Contract
In Count II of the Federico I. Chan I. Brandsema, Sulligan, and Delorey complaints, the
plaintiffs assert a claim for economic damages for the Lincoln Defendants' breach of the leases
between Mid-Atlantic and each of these plaintiffs. The defendants have moved to dismiss or for
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judgment on the pleadings for failure to state a claim, attempting to re-characterize the plaintiffs'
breach of contract claims instead as claims for the breach of a common law implied warranty of
habitability, which is not recognized under Virginia law. See generally Roche v. Lincoln Prop. Co..
175 Fed. App'x 597, 603 (4th Cir. 2006) ("Virginia docs not recognize an implied warranty of
habitability between a landlord and atenant.") (citing Hutton v. Burke &Herbert Bank &Trust Co.,
46Va. Cir. 146,147 (Va. Cir. Ct. 1998)). The defendants further argue that the plaintiffs have failed
to adequately identify the particular provisions of the lease that have been breached.
First, the Court notes that the plaintiffs here have not asserted a warranty of habitability
claim, thus the Fourth Circuit's decision in Roche is simply inapposite. Theplaintiffs here rely not
upon acommon law implied warranty ofhabitability. but upon the defendants' alleged violation of
obligations imposed by the VRLTA and incorporated by law into the plaintiffs' lease agreements.
"Under Virginia law, a party claiming breach ofcontract must establish three elements to
prevail: (1) alegally enforceable obligation under acontract, (2) abreach ofthat obligation, and (3)
injury or damage to the plaintiff flowing from that breach." Sanders. 2010 WL 3927804, at *3. The
defendants complain that the plaintiffs have not identified any particular lease provisions that have
been breached by the defendants, but, as discussed in the previous section, the plaintiffs have
specifically alleged that the defendants have failed to "[m]aintain the premises in such condition as
to prevent the accumulation of moisture and the growth of mold, and to promptly respond to . . .
notices from the tenant" regarding moisture accumulation or visible mold, see Va. Code § 55248.13(A)(5), and that they have failed to "perform mold remediation in accordance with
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professional standards." to provide temporary accommodations to the tenant while mold remediation
is performed, and to pay all costs of the mold remediation, see Va. Code §§ 8.01-226.12(E), 55248.18:2. As this Court has previously held, "[a] landlord entering into a lease agreement subject to
the VRLTA assumes the legal duties required in the Act as if they were incorporated into the lease
agreement, and a violation of the statute gives rise to a breach of contract action." Sanders. 2010 WL
3927804, at *4. Thus, the plaintiffs have adequately alleged "a legally enforceable obligation under a
contract" and "a breach of that obligation." As for the "injury or damage to the plaintiff flowing
from that breach," the plaintiffs have expressly limited the requested remedies on their breach of
contract claims to economic damages, which are recoverable in contract under Virginia law. See id.
They do not seek personal injury damages in their contract claims.
Accordingly, the motions are denied in part and this consolidated action will proceed with
respect to the plaintiffs' breach of contract claims for economic damages.
D. Negligence Per Se Based on the Virginia Residential Landlord Tenant Act
In Count IV of the Federico I complaint and the second of two counts styled "Count III" in
the Sulligan complaint, the plaintiffs have asserted a claim of negligence per sc based on the
VRLTA. In Steward v. Holland Family Properties. LLC, 726 S.E.2d 251 (Va. 2012), the Supreme
Court of Virginia unequivocally held that "the VRLTA provides no basis for a negligence per se
claim." Id. at 255. Accordingly, the motions are granted in part and the plaintiffs' claims of
negligence per se based on the VRLTA are dismissed.
E. Negligence Per Se Based on the Virginia Maintenance Code
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In CountV of the Federico I, Brandsema. Chan 1complaints, Count III of the Federico 11 and
Chan II complaints, Count IV of the Sulligan and Delorev complaints, and Count II ofthe Harding
complaint, the plaintiffs have asserted aclaim ofnegligence per se based on alleged violations ofthe
Virginia Maintenance Code, which is part ofthe Virginia Uniform Statewide Building Code. The
defendants have moved to dismiss or for judgment on the pleadings for failure to state aclaim onthe
ground that the Steward decision's holding with respect to negligence per se claims based on the
VRLTA is equally applicable to negligence per se claims based on the Virginia Maintenance Code.
To successfully apply the doctrine of negligence per se, a plaintiff must show that (1) the
defendant violated a statue enacted for public safety, (2) the plaintiff is a member of the class of
persons intended to be protected by the statute, (3) the harm the plaintiffexperienced was ofthe type
the statute was designed to protect against, and (4) the statutory violation was the proximate cause of
the plaintiffs injury. Schlimmer v. Poverty Hunt Club. 597 S.E.2d 43, 46 (Va. 2004); see also
O'Neil v. Windshire Copeland Assocs.. L.P.. 197 F. Supp. 2d 507, 509 (E.D. Va. 2002). Whether
there was a violation of the statute and whether the violation was the proximate cause of the injury
are generally issues for the trier of fact. McGuirc v. Hodges, 639 S.E.2d 284, 288 (Va. 2007); see
also O'Neil, 197 F. Supp. 2d at 509.
As this Court has observed, the VRLTA is not a statute enacted for public safety, but rather
for the purpose of simplifying, clarifying, and modernizing the law governing contractual
agreements between residential landlords and tenants. Sanders. 2010 WL 3927804, at *6; see also
Va. Code § 55-248.3. By contrast, the Building Code—of which the Maintenance Code is part and
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parcel—is a "statute enacted to protect health, safety, and welfare," and thus a violation of its
provisions may form the basis ofa negligence per sc claim. Sec MacCov v. Colony House Builders.
Inc., 387 S.E.2d 760, 763 ("[T]he violation of the Building Code, like any statute enacted to protect
health, safety, and welfare, is negligence per se."); sec also Sanders, 2010 WL 3927804, at *6
("Unlike with the VRLTA, violations of the Maintenance Code may, in some circumstances, give
rise to a viable negligence per se claim."); O'Neil. 197 F. Supp. 2d at 509 (citing MacCov and
holding that failure to maintain balcony guardrails at height required by building code constituted
negligence per se); McGuire. 639 S.E.2d at 288-89 (citing MacCov and holding that a homeowner
could be held liable for violation of a municipal building code that resulted in a child's death).
Accordingly, because the Virginia Maintenance Code applies to the alleged failures to
properly maintain the property, the motions arc denied in part and this consolidated action will
proceed with respect to the plaintiffs' negligence per se claims based on the Virginia Maintenance
Code.
F. Common Law Negligence
In Count III of the Federico I. Brandsema, Chan I, and Delorey complaints, Count I of the
Federico II. Chan II, and Harding complaints, and the first of two counts styled "Count III" in the
Sulligan complaint, the plaintiffs have asserted a claim of common law negligence against the
Lincoln Defendants. In particular, the plaintiffs claim that the Lincoln Defendants failed to disclose
known and concealed defects concerning water intrusion and mold contamination prior lo the
plaintiffs taking possession of their apartments, failed to maintain those portions of the residences
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that wereoutside the control of the tenant-plaintiffs (e.g., windows andexterior surfaces, plumbing),
and negligently performed repairs when undertaken.
It is true that, under Virginia common law, "in the absence of fraud or concealment, a
landlord has no duty of care to maintain or repair leased premises when the right of possession and
enjoyment of the premises has passed to the lessee." Steward. 726 S.E.2d at 254. This includes
plumbing fixtures located in the area within the exclusive possession and control of the tenant,
notwithstanding any maintenance obligation the landlord might assume by contract. Sec HunterSmith Co. v. Gibson. 89 S.E. 886, 886-87 (Va. 1916); Dudley v. Lewis Shoe Co., 73 S.E. 433,434-
35 (Va. 1912). But it does not include the exterior surfaces or plumbing fixtures that remain in the
possession and control of the landlord. See Adams Grain & Provision Co. v. Chesapeake & Ohio Rv.
Co., 88 S.E. 171, 172 (Va. 1916). The plaintiffs here have expressly limited their claim of negligent
maintenance to areas allegedly outside of their exclusive possession and control, and construing the
factual allegations of the complaints in the light most favorable to the plaintiffs, the plaintiffs have
staled a viable claim of common law negligence with respect to the defendants' alleged failure to
maintain those portions of the residences that remain allegedly outside the exclusive possession and
control of the tenant-plaintiffs.
Under Virginia law, it is also true that "[a] landlord who makes repairs to leased property has
a common law duty not to make those repairs in a negligent manner and is liable for injuries
sustained as a result oi' negligent repair." Steward, 726 S.E.2d at 257. Each of the complaints
contains detailed allegations that the defendants or their agents undertook to perform a variety of
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repairs or other remedial actions with respect to the plaintiffs' complaints about moisture intrusion
and possible mold contamination, and that the defendants ortheir agents failed to exercise ordinary
care in doing so. CL Sales v. Kecoughtan 1lousing Co.. 690 S.E.2d 91, 93-94 (Va. 2010) (holding
that a landlord lading to fix a preexisting mold condition alter undertaking to do so can serve asthe
basis for a negligent repairs claim).
The defendants suggest that the plaintiffs have failed to adequately allege that their alleged
negligence proximately caused the plaintiffs' personal injuries, citing Roche v. Lincoln Property Co.,
278 F. Supp. 2d 744 (E.D. Va. 2003). But that case involved the disposition ofa motion in limine
raising a Daubert challenge to a medical expert slated to testify at trial that mold in the plaintiffs"
apartment was the proximate cause oftheir respiratory and other medical problems. Roche is simply
inapposite at this, the pleading stage.
Accordingly, the motions are denied in part and this consolidated action will proceed with
respect to the plaintiffs' common law negligence claims.
H. Fraud
In Count VI of the Chan Icomplaint, Count IV of the Chan II complaint, and Count Vof the
Sulligan and Delorey complaints, the plaintiffs have asserted claims ofactual and constructive fraud
against the Lincoln Defendants.
Under Virginia law, "[a] plaintiff asserting a claim of actual fraud must demonstrate (1) a
false representation by the defendant, (2) ofa material feet, (3) made intentionally and knowingly,
(4) with intent to mislead. (5) reliance by the misled party, and (6) resulting injury to the party
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misled." Carlucci v. Han. 907 F. Supp. 2d 709. 740 (E.D. Va. 2012). "The elements of constructive
fraud arc identical to that of a claim for actual fraud, except for the intent clement. For constructive
fraud, a representation need only be made innocently or negligently, rather than intentionally and
knowingly." Design & Prod.. Inc. v. Am. Exhibitions. Inc., 820 F. Supp. 2d 727, 742 (E.D. Va.
2011). The Fourth Circuit has held that "a complaint which fails to specifically allege the time,
place, and nature of the fraud is subject to dismissal." Lasercomb Am.. Inc. v. Reynolds. 911 F.2d
970, 980 (4th Cir. 1990).
The defendants contend that the complaints fail to adequately identify those who made the
alleged misrepresentations on their behalf. But in each of these complaints, the plaintiffs have
provided the specific dates when and places where the statements were made, and sufficient
information about the speakers for the defendants to identify them. References to the "property
manager" named "Stephanie" and references to "maintenance personnel," all of whom are alleged to
be employees of the defendants, are sufficient, when coupled with the location and time, for the
defendants to identify their own employees.
In Chan I and Chan II, the plaintiffs allege two fraudulent statements on July 13, 2011. and
July 21, 2011, by maintenance personnel that nothing could be done to repair a water leak
originating from a frozen HVAC unit and that the water leak would stop when the HVAC unit
finished defrosting. However, "the statement that serves as the foundation for an action in fraud,
either actual or constructive, must be a misrepresentation of an existing fact and not the expression
of an opinion." Sales. 690 S.E.2d at 94. "The expression of an opinion, however strong and positive
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the language may be, is no fraud. . . . Statements which arc vague and indefinite in their nature and
terms, or are merely loose, conjectural or exaggerated, go for nothing, though they may not be true,
for a [person] is not justified in placing reliance upon them." McMillon v. Drvvit Svs.. Inc.. 552
S.E.2d 364, 369 (Va. 2001) (quoting Saxbv v. S. Land Co.. 63 S.E. 423, 424 (1909)) (alteration in
original). To the extent that the plaintiffs intend to allege that the maintenance person's statement
that the water leak would cease permanently when the HVAC unit finished defrosting, the statement
is clearly an expression of opinion as to the future performance of the HVAC unit, rather than a
misrepresentation of existing fact. Furthermore, based on the allegations of the complaint—even
when viewed in the light most favorable to the plaintiffs—it is also clear that the plaintiffs did not
reasonably rely on either of these statements, as the water leak was known to the plaintiffs and
whether the 11 VAC unit could be repaired to prevent it from freezing in the future was immaterial to
the known water intrusion.
In Sulligan, the plaintiffs allege that maintenance personnel, after repairing a chronically
leaky faucet, told the plaintiffs that a persistent "mildew" odor in the bathroom was from "glue"
around the toilet base that smells when wet, or from the plaintiffs' dogs urinating on the bathroom
floor. Based on the allegations of the complaint, viewed in the light most favorable to the plaintiffs,
it is nevertheless clear that the plaintiffs did not reasonably rely on either of these statements, as the
"mildewy" odor persisted despite the faucet repair, and the plaintiffs knew that their dogs did not
urinate on the bathroom floor because they kept the door closed because of their small children. The
plaintiffs also allege that the property manager, known to the Sulligan plaintiffs as "Stephanie," told
-22-
one of the plaintiffs upon completion of mold remediation efforts that "you don't have anything to
worry about, your home is safe," but as the plaintiffs acknowledge, she was wearing a protective
mask, and the very next day, a mold inspection revealed the continued presence of visible and
airborne mold contamination. Again, based on the allegations of the complaint, viewed in the light
most favorable to the plaintiffs, it is clear that the plaintiffs did not reasonably rely on the property
manager's statement.
In Delorey. the plaintiffs allege that they were told by maintenance personnel shortly after
moving in that certain floor stains were "probably from an earlier refrigerator or dishwasher leak."
This statement, qualified with the word "probably," is clearly conjecture and opinion, rather than a
misrepresentation of existing fact. A subsequent statement that a different stain had been "cleaned
up" and thus was "nothing to worry about," is likewise a clear expression ofopinion. Based on these
allegations, viewed in the light most favorable to the plaintiffs, it is clear that the Delorey plaintiffs
have established neither that the alleged statements were representations ofan existing fact, nor the
requisite reasonable reliance upon the alleged statements.
Accordingly, the motions arc granted in part and the plaintiffs' fraud claims dismissed.
IV. CONCLUSION
For the foregoing reasons, the Court orders the following:
1. The defendants' various motions to dismiss and for judgment on the pleadings are
GRANTED in part and DENIED in part.
2. To the extent the Federico I motion (Case No. 2:12cv80, ECF No. 6) seeks to dismiss
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Counts III, IV, and V of the Federico 1complaint (Case No. 2:12cv80, ECF No. 1 attach. 1) for lack
of subject matter jurisdiction, the motion is DENIED without prejudice to raising the defense of
derivative governmental immunity again in later proceedings.
3. To the extent the Federico 1, Chan 1, Brandsema, Sulligan. and Delorey motions (Case No.
2:12cv80, ECF Nos. 6, 79, 83; Case No. 2:13cv294, ECF No. 6; Case No. 2:13cv359, ECF No. 5)
seek to dismiss the plaintiffs' VRLTA claims, the motions arc GRANTED and Count I of the
Federico 1. Chan I. Brandsema, Sulligan. and Delorey complaints (Case No. 2:12cv80, ECF Nos. 1
attach. l;CaseNo.2:12cv580,ECFNo. 1 attach. 1; Case No. 2:12cv582, ECF No. 1 attach. l;Case
No. 2:13cv294, ECF No. 1 attach. 1; Case No. 2:13cv359, ECF No. 11) are DISMISSED to the
extent they seek damages for personal injury, and the motions arc DENIED with respectto recovery
of damages available pursuant to Va. Code §§ 55-248.13, -248.21, and -248.40, reimbursement of
any temporary lodging expenses and any mold remediation costs incurred by the plaintiffs available
pursuant to Va. Code §§ 8.01-226.12 and 55-248.18:2, and reasonable attorney fees incurred by the
plaintiffs under their VRLTA claims, pursuant to Va. Code § 55-248.21, unless the defendants can
show that their alleged actions were reasonable under the circumstances.
4. To the extent the Federico 1.Chan 1, Brandsema. Sulligan, and Delorey motions (Case No.
2:12cv80, ECF Nos. 6, 79, 83; Case No. 2:13cv294, ECF No. 6; Case No. 2:13cv359, ECF No. 5)
seek to dismiss the plaintiffs' breach of contract claims, the motions are DENIED.
5. To the extent the Federico I and Sulligan motions (Case No. 2:12cv80, ECF No. 6; Case
No. 2:13cv294, ECF No. 6) seek to dismiss the plaintiffs* negligence per se claims based on the
-24-
VRLTA, the motions are GRANTED and Count IV of the Federico I complaint (Case No.
2:12cv80, ECF No. 1 attach. 1) and the second of two counts styled "Count III" in the Sulligan
complaint (Case No. 2:13cv294, ECF No. 1 attach. 1) are DISMISSED.
6. To the extent the Federico I, Federico II. Chan I. Chan II. Brandsema, Harding. Sulligan.
and Delorey motions (Case No. 2:12cv80, ECF Nos. 6,79, 81, 83; Case No. 2:12cv596, ECF No. 5;
Case No. 2:13cv233, ECF No. 8; Case No. 2:13cv294, ECF No. 6; Case No. 2:13cv359, ECF No. 5)
seek to dismiss the plaintiffs' negligence per sc claims based on the Virginia Maintenance Code, the
motions arc DENIED.
7. To the extent the Federico I, Federico II, Chan 1, Chan 11. Brandsema. I larding. Sull.gan.
and Delorey motions (Case No. 2:12cv80, ECF Nos. 6,79, 81, 83; Case No. 2:12cv596, ECF No. 5;
Case No. 2:13cv233, ECF No. 8; Case No. 2:13cv294, ECF No. 6; Case No. 2:13cv359, ECF No. 5)
seek to dismiss the plaintiffs' common law negligence claims, the motions are DENIED.
8. To the extent the Chan I, Chan II. Sulligan, and Delorey motions (Case No. 2:12cv80, ECF
No. 79, 81; Case No. 2:13cv294, ECF No. 6; Case No. 2:13cv359, ECF No. 5) seek to dismiss the
plaintiffs' fraud claims, the motions are GRANTED and Count VI of the Chan I complaint (Case
No.2:12cv580,ECFNo. 1 attach. 1). Count IV of the Chan II complaint (Case No. 2:12cv581, ECF
No. 1 attach. 1), and Count V of the Sulligan and Dclorcv complaints (Case No. 2:13cv294, ECF
No. 1 attach. 1; Case No. 2:13cv359, ECF No. 11) arc DISMISSED.
9. Due to the large number of counts at issue, a chart summarizing the disposition of the
various counts at issue on this motion has been attached to this Opinion and Order. Attachment 1. It
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is for demonstrative purposes only and should not be understood to replaceor alter anything in this
Opinion and Order.
10. This consolidated action shall proceed with respect to all remaining claims. A Rule 26(f)
Pretrial Order will follow in due course.
11. The Court reiterates that the burden of proof remains with the plaintiffs, except where it
has been placed on the defendants. Although plaintiffs have alleged sufficient facts for some of their
claims to survive the defendants' motion to dismiss, the Court expresses no opinion as to which
allegations will be proven in any later proceedings.
IT IS SO ORDERED.
Robert G. Do
Senior Unite
ict Judge
UNITED STATES DISTRICT JUDGE
September^, 2013
Norfolk, Virginia
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Attachment 1
Summary of Disposition of Defendants' Rule 12(b) and 12(c) Motions
LD = Lincoln Defendants; NPS = negligence per se; PI = personal injury;
VMC = Virginia Maintenance Code; VRLTA = Virginia Residential Landlord Tenant Act
Federico I (2:12cv80)
I
VRLTA (dismissed as lo PI damages)
II
Breach of Contract
III Negligence —LD/Vendor
Brandsema (2:12cv582)
I VRLTA (dismissed as to PI damages)
II
Breach of Contract
IV'NPS - VRLTA (dismissed)
III Negligence- LD
IV Negligence - Vendor
V
V
NPS-VMC
NPS-VMC
Federico II (2:12cv596)
Harding (2:13cv233)
I Negligence-LD
II Negligence - Vendor
I
Negligence - LD/Vendor
II
NPS-VMC
III NPS-VMC
III Fraud—Vender (previously dismissed)
ChanJ(2:12cv580)
I VRL'fA (dismissed as to PI damages)
Sulligan (2:13c\-294)
I
VRLTA (dismissed as lo PI damages)
II
II
Breach of Contract
Breach of Contract
III Negligence- LD
IV Negligence - Vendor
III Negligence - LD
III NPS VRLTA (dismissed)
V
IV NPS-VMC
NPS-VMC
VI Fraud—LD (dismissed)
V
Fraud—L-D/Dezier (dismissed)
Chanll(2:12cv581)
Delorey (2:13cv359)
I Negligence - LD
II Negligence - Vendor
I
VRLTA (dismissed as to PI damages)
II
Breach of Contract
III NPS-VMC
III Negligence - LD/Vendor
IV Fraud—L45 (dismissed)
IV NPS-VMC
V Fraud—LD/Dozier (dismissed)
Mis-numbered in complaint as a second
"Count III"
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