Chesapeake Coveside (Hideaway at Greenbrier) SCRA Case: $225,000

What happened

On August 8, 2022 the United States sued the owners of two Virginia apartment complexes in federal court in Norfolk: Chesapeake Coveside Lane Apartments Property Owner, LLC, owner since April 4, 2012 of Hideaway at Greenbrier Luxury Apartment Homes in Chesapeake, and Chase Arbor Apartments Property Owner, LLC, owner since June 6, 2013 of Chase Arbor Apartments in Virginia Beach. Both are Delaware companies. A proposed consent order, still subject to court approval, was announced with the suit.

It began with a single eviction. In 2018 a Department of the Navy legal assistance attorney told the Justice Department that the Hideaway owner had obtained a default eviction judgment against an SCRA-protected servicemember using an affidavit that falsely said the servicemember was not in military service. DOJ's investigation then covered default judgments obtained by the Hideaway owner and by Chase Arbor's owner, an affiliated company that used the same law firm to file eviction and money claims in Virginia state courts.

The complaint alleges that from April 4, 2012 the owners obtained numerous default judgments against protected servicemembers in three ways: affidavits falsely stating the tenant was not in military service, affidavits stating the affiant was unable to determine status, and no affidavit at all. It says the tenant files held names, Social Security numbers, dates of birth and employment information, enough to verify status, and that the owners knew or should have known the affidavits were inaccurate. The consent order describes the alleged pattern as running from at least October 3, 2012 through at least June 15, 2018 (paragraph 1).

The owners deny every allegation and maintain that they hired legal counsel to keep their default judgments in compliance with the law (paragraph 2). The court entered the order on September 14, 2022 for three years (paragraph 63). It releases the United States' Section 3931 claims against both owners for October 3, 2012 through entry, and extends that release to their property managers and asset managers (paragraph 53).

The law behind this: 50 U.S.C. § 3931

Protection of servicemembers against default judgments: read the statute , or read § 3931 in plain English, with its enforcement record .

Eviction judgments seriously jeopardize servicemembers’ ability to find and obtain affordable housing and negatively impact the financial readiness of our armed forces.

A servicemember’s military career is adversely affected by a judgment, which affects the military’s readiness.

Who was covered

Servicemembers the United States identifies as potentially aggrieved by default judgments the two owners obtained. The order provides for an initial list within three days of entry, a supplemental list within 180 days, and notice of anyone either side finds later, with the owners given 30 days each time to offer evidence before the United States makes a final determination (consent order paragraphs 32 to 44). Neither the complaint nor the order says how many people that is.

What the settlement paid

• A $162,971 Settlement Fund in an interest-bearing escrow account (consent order paragraph 19). Within 180 days of entry the United States makes a preliminary finding of which persons, if any, are aggrieved and what each should be paid, and the owners have 30 days to submit anything they believe refutes those findings (paragraphs 20 to 22). Total checks may not exceed the fund (paragraph 26), and money still undistributed three years after entry goes to the Treasury (paragraph 30).
• Payment is due within 15 business days of receiving a signed release. The owners may not offset rent or other amounts tied to the tenancy, and may not refuse to pay because of an earlier waiver, release or settlement agreement (paragraphs 24 and 28).
• Within 90 days of receiving each list, the owners must move to set aside every identified default judgment, tell the United States if a court declines, and request that the three major credit bureaus and any other bureau they report to delete the trade lines tied to those judgments (paragraph 35). They may not pursue amounts due under those judgments and must reimburse a servicemember for any recovery after entry by anyone the debt was assigned to (paragraph 45).
• $62,029 payable to the Treasury within 30 days, paid under 50 U.S.C. § 4041(b)(3) (paragraph 48), which DOJ's case page and release call a civil penalty.

Why this case matters

Hiring a law firm did not move the duty off the landlord. The owners said they had hired counsel to ensure compliance, and the order still made them direct that counsel to search the Defense Manpower Data Center by Social Security number or date of birth, run a separate search for each known name variant, attach the latest status report, and sign the affidavit no more than two business days before asking for a default judgment (paragraph 9). If either complex took a default eviction judgment against you while you were serving, the order's lists and set-aside motions are the mechanism meant to reach it. The $62,029 payment matches the civil penalty in the 2019 PRG settlement from the same district.