PRG Real Estate SCRA Settlement: 152 Default Judgments, 127 Tenants

What happened

On March 14, 2019 the United States sued PRG Real Estate Management, Inc. and six partnerships and LLCs that owned apartment complexes it managed, in the Norfolk Division of the Eastern District of Virginia. The complaint describes PRG as a Pennsylvania corporation based in Philadelphia that manages residential real estate in Florida, Kansas, Kentucky, Missouri, North Carolina, South Carolina, Pennsylvania and Virginia. The Virginia complexes in the case were Linkhorn Bay and the Courtyards of Chanticleer in Virginia Beach, Hilton Village Townhomes and Heritage Trace in Newport News, and Ashton Creek and Hyde Park in Chester. The settlement agreement, dated March 15, 2019, also binds an entity the complaint did not name: New Townhouse Park Associates, LLC, owner of Staples Mill Townhomes in Richmond. DOJ's release called it the largest SCRA settlement the Department had obtained against a landlord or property management company.

Navy legal assistance attorneys in Norfolk alerted the Justice Department on December 12, 2016, and DOJ told PRG on January 9, 2017 that it was investigating. The complaint says the defendants sued tenants for eviction and money damages in Virginia general district courts, which require Form DC-418, an affidavit on which the landlord checks one of three boxes: the tenant is in military service, is not, or the affiant is unable to determine. Their rental applications collected Social Security numbers, employers and supervisors, yet until at least November 2016 they had no written policy requiring a Defense Manpower Data Center search or a file review before that form was signed.

From January 1, 2006 to May 30, 2017, the complaint counts at least 152 default judgments against 127 protected servicemembers: 25 obtained with affidavits saying the tenant was not in military service when the tenant was, 123 with affidavits stating the landlord was unable to determine status, three with no affidavit at all, and one on a form with no box checked. It adds that PRG settled with two servicemembers over inaccurate affidavits in April 2016 and afterward kept obtaining default judgments against protected servicemembers without accurately disclosing their military status to the court.

A second count concerned leases. Until about 2011 a Military Transfer clause charged servicemembers who left on orders liquidated damages of up to one month's rent. Its replacement, a Military Personnel Clause, told a servicemember's dependent to apply to a court before terminating and made the servicemember certify that retirement or the end of an enlistment would not fall inside the lease term, waiving all rights to terminate if they misrepresented those facts. The complaint says that from October 13, 2010 to June 29, 2018 the defendants imposed early termination charges, withheld security deposits and enforced such terms against at least ten servicemembers and their dependents. In the agreement the PRG entities expressly deny any liability.

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 .

When landlords violate the SCRA, it causes disruption in the lives of servicemembers and their families. Our men and women in uniform deserve all the protections the SCRA provides them against civil lawsuits while they are defending our nation.

The incredible sacrifices our servicemembers make when they deploy and move frequently should never create financial or legal hardships for them.

Who was covered

The 127 servicemembers the United States determined had default judgments entered against them between January 1, 2006 and May 30, 2017 in violation of Section 3931, and ten servicemembers it determined were charged early termination fees between October 13, 2010 and June 29, 2018 after ending leases under Section 3955 (settlement agreement paragraphs 29 and 30). DOJ's release lists the complexes in Virginia Beach, Newport News and Chester where they had rented.

What the settlement paid

• A total of $1,498,000 for the default judgments, written in both words and numerals in settlement agreement paragraph 29: $11,500 for the first unlawful judgment against each servicemember and an additional $1,500 for each later one. DOJ's case page and release describe this figure as up to $1,490,000; this record follows the agreement. When setting each amount the United States credits any money a servicemember already received for the same judgment (paragraph 38), so the amount actually paid can come in below that total.
• $34,920.39 for the ten lease cases, set at three times the termination fee each servicemember-tenant was charged (paragraph 30).
• PRG had to retain an independent settlement administrator at its own cost within 60 days. The administrator must write to each identified servicemember by mail and email within 60 days, use skip tracing as the United States requests, and mail a check within 21 days of receiving a signed declaration and release (paragraphs 31 to 35).
• Within 60 days the PRG entities had to move to set aside each identified default judgment and ask the three major credit bureaus to delete the related trade lines. They may not pursue amounts under those judgments and must indemnify servicemembers against third-party collection (paragraphs 40 and 41). A $62,029 civil penalty was due within 30 days (paragraph 42), and the agreement's term was five years (paragraph 57).

Why this case matters

Most of these judgments did not rest on a sworn claim that the tenant was a civilian. By the complaint's count, 123 of the 152 rested on the landlord saying it was unable to determine military status, while, according to the complaint, its own files sometimes held rental applications listing a branch of the armed forces as the tenant's employer. Section 3931(b)(1)(B) provides that answer for a plaintiff who is unable to determine whether the defendant is serving. The agreement required a DMDC search and a file review before any affidavit was signed, and the affidavit had to be executed no more than two business days before the first return date (paragraph 19). If a Virginia landlord won a default judgment against you on an unable-to-determine affidavit while you were serving, that box is where to start.