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«Filed 09/25/13 Page 1 of 27 PageID# 2880 FILED IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINL SEP 25 2013 Norfolk Division ...»

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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.

-8Case 2:12-cv-00080-RGD-DEM Document 184 Filed 09/25/13 Page 9 of 27 PageID# 2888 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.

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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

- 14Case 2:12-cv-00080-RGD-DEM Document 184 Filed 09/25/13 Page 15 of 27 PageID# 2894 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 § 55A)(5), and that they have failed to "perform mold remediation in accordance with

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