Federico v. Lincoln Military Hous.

• Decision Date: 18 October 2012
• Docket Number: Civil No. 2:12cv80.
• Citation: Federico v. Lincoln Military Hous., 901 F. Supp. 2d 654 (E.D. Va. 2012)
• Parties: Shelley FEDERICO, et al., Plaintiffs, v. LINCOLN MILITARY HOUSING, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

901 F.Supp.2d 654

Shelley FEDERICO, et al., Plaintiffs,

v.LINCOLN MILITARY HOUSING, et al., Defendants.

Civil No. 2:12cv80.

United States District Court,

E.D. Virginia,

Norfolk Division.

Oct. 18, 2012.

David Sanburg Bailey, Jennifer Alettia French, Tammy L. Belinsky, The Environmental Law Group PLLC, Richmond, VA, Tammy L. Belinsky, The Environmental Law Group PLLC, Copper Hill, VA, Craig Stewart Gill, Jr., Bennett & Zydron, PC, Virginia Beach, VA, Stephen C. Swain, Shuttleworth Ruloff Swain Haddad & Morecock, PC, Virginia Beach, VA, for Plaintiffs.

Connie Nora Bertram, Daniel Jerome Davis Cooley LLP, Brendan Jeremiah Crimmins, David Charles Frederick, Kellogg Huber Hansen Todd Evans & Figel, PLLC, Washington, DC, for Defendants.

OPINION AND ORDER

ROBERT O. DOUMAR, Senior District Judge.

In the instant action, Plaintiffs Shelley and Joe Federico (“Plaintiffs”) seek to sue Defendants Lincoln Military Housing LLC (“LMH”), Mid–Atlantic Military Family Communities LLC (“Mid–Atlantic”), LPC Property Management, Inc. (“LPC”) (collectively “Defendants”), and John Doe for alleged personal injury and property damages. Plaintiffs case was removed from state court to this Court, and this matter is currently before the Court on Plaintiffs Motion to Remand to state court pursuant to 28 U.S.C. § 1447. For the reasons set forth below the Court DENIES Plaintiffs' Motion to Remand. A general decision requires an analysis of the statutes and case law involved as prerequisite to a ruling.

I. Factual BackgroundA. Complaint—Factual Summary

According to the Complaint filed by the Federicos in the Circuit Court for the City of Norfolk, Plaintiffs are husband and wife who lived in military housing located in Norwich Manor, Norfolk, Virginia. Compl. ¶ 2. Joe Federico is a Gunnery Sergeant in the U.S. Marine Corps, who was relocated to Norfolk, Virginia on September 28, 2012, accompanied by his wife Shelley Federico and their minor child, Jaden Federico. Id. ¶ 12. Plaintiffs allege their military housing assignment was controlled by LMH, which occupied office space at the Naval Station Norfolk Welcome Center and assigned them housing at 1138 Kings Lynn Drive, Norfolk, Virginia. Id. ¶¶ 13–14. Plaintiffs moved into this approximately fifty-year-old home on October 15, 2010. Id. ¶ 14. While living in their assigned housing, Plaintiffs allege that they were exposed to excessive moisture and mold conditions, known as “damp indoor space,” and as a result suffered contamination of their joint personal property, and personal illness to Shelly Federico. Id. ¶ 2. Plaintiffs further allege that they were forced to leave their home as a result of the contamination of their housing and the negligent and improper handling of the damp indoor space conditions by Defendants. Id.

In their Complaint, Plaintiffs assert two types of claims: breach of contract and tort. Plaintiffs bring a negligence claim and two negligence per se claims against Defendants for allegedly failing to keep their premises free from toxic mold growths and moisture conditions in accordance with Defendants' duties under Virginia law. Id. ¶¶ 102–134. Plaintiffs also pursue claims against Defendants for breach of contract and violations of the Virginia Residential Landlord and Tenant Act, which was incorporated into the lease agreement, for Defendants' alleged failure to maintain Plaintiffs' home in safe and habitable conditions. Id. ¶¶ 80–101. Plaintiffs seek property damages in the amount of $250,000, personal injuries in the amount of $3,500,000, and punitive damages in the amount of $500,000. Id. 35.

B. Complaint—Parties and Military Privatization Initiative

As alleged in the Complaint, Defendant LMH is a Delaware Limited Liability Company not registered to do business in Virginia. Id. ¶ 3. LMH is an affiliate company of Lincoln Property Company Property Management (“LPC”), an international property acquisition and management company incorporated in Texas and registered to do business in Virginia. Id. LPC allegedly manages 31,000 military homes nationwide. Id. Plaintiffs allege that LMH owns the subject military housing in addition to over 4,000 other military housing units in the Tidewater Virginia area. Id. Under the Department of Defense's Military Housing Privatization Initiative (“MHPI”), discussed further below, LMH and its subsidiaries allegedly own, manage, and operate the military housing under a fifty-year lease-type program. Id. In their Notice of Removal, Defendants state that LMH has no connection to the events alleged and that LMH will be moving to dismiss upon removal. Notice of Removal ¶ 2.

As alleged in the Complaint, Defendant Mid–Atlantic is a Delaware Limited Liability Company registered to do business in Virginia. Compl. ¶ 4. It is a subsidiary of Lincoln Family Communities, LLC (“LFC”) and is identified as the owner/landlord on the leasing agreements for Plaintiffs' military housing. Id. Defendant Lincoln Property Company Property Management, Inc., is a Virginia corporation and is the authorized agent for Mid–Atlantic. Id. ¶ 5. It manages the performance of all maintenance activities for Plaintiffs' military housing. Id.

To clarify these different companies and relationships, in their Notice of Removal, Defendants characterize Mid–Atlantic's relationship with the Navy as a public-private venture (“PPV”) authorized by Congress through the Defense Authorization Act, P.L. 104–106 110 Stat. 186 (1996). Notice of Removal ¶ 10. This act established the Military Housing Privatization Initiative in order to improve the quality of service members' housing. See10 U.S.C. §§ 2871–85. The MHPI is comprehensive legislation which allows the Secretary of Defense to enter into PPVs with private developers to operate and manage military housing. Id. § 2875.

Under § 2873, the Secretary may make direct loans to the eligible entity and shall establish such terms and conditions to protect the interests of the United States, including the period and frequency for repayment, and the obligations of the obligors on such loans upon default. Under § 2874, the Secretary may enter into contracts for the lease of housing units suitable for military housing, shall ensure the housing units leased are for military housing, and the lease terms may be for any period the Secretary determines is appropriate and may provide for the owner of the leased property to operate and maintain the property. Under § 2875, the form of investment in a public-private venture may take the form of an acquisition of a limited partnership interest by the United States, a purchase of stock or other equity instruments by the United States, a purchase of bonds or other debt instruments by the United States, or any combination of these forms of investment § 2875 also limits the value of the cash amount of an investment, or the value of land or facilities conveyed as part of an investment in the entity.

§ 2878 allows the Secretary to convey or lease property or facilities to eligible entities for the purposes of using the proceeds of such conveyance or lease to carry out the activities under this subchapter 10 U.S.C. §§ 2871 et seq.§ 2883(a) establishes two funds with the Treasury: the Department of Defense Family Housing Improvement Fund and the Department of Defense Military Unaccompanied Housing Improvement Fund. Proceeds from the conveyance or lease of property or facilities and income derived from the activities of this statute are credited to these two funds. § 2883(c). The secretary may use the amounts in these funds to carry out the activities required in connection with the planning, execution, and administration of contracts entered into under the statute. § 2883(d).

In addition to these requirements, the statute also contains reporting and oversight and accountability requirements under §§ 2884 and 2885. Under § 2884(a), the Secretary must transmit a report to the appropriate committees of Congress describing each contract, the contract terms, the authorities utilized in entering into the contract, including the intended method of participation and a justification of that intended method of participation, a statement of the scored cost of the contract, a statement of the United States funds required for the contract in order to finance it, an economic assessment of the life cycle costs of the contract, and whether the contract includes a guarantee if a private party is involved. § 2884(b) requires that in addition to this report, the Secretary of Defense must submit an annual report on the expenditures and receipts of the preceding fiscal year covering each of the Funds established under § 2883, a methodology for evaluating the extent and effectiveness of the authorities of this statute during the preceding fiscal year, recommendations necessary for improving the extent and effectiveness of such authorities in the future, an estimate for the basic allowance for housing that will be paid, a description of the Secretary's plans for housing privatization activities, and a report on best practices for the execution of housing privatization initiatives, including effective means to track and verify proper performance, schedule, and cash flow, means of overseeing the actions of bondholders to properly monitor construction progress and construction draws, effective structuring of transactions to ensure the United States Government has adequate abilities to oversee project owner performance, and such topics that are identified as pertinent by the Department of Defense, among others.

Finally, § 2885 requires the Secretary to prescribe regulations to effectively oversee and manage military housing privatization projects. § 2885 requires the regulations to include the following requirements: the installation asset manager shall conduct monthly site visits and provide quarterly reports to the assistant secretary for installations and environment on the progress of the construction and renovation of...