UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 03-2064



CHRISTOPHER ROCHE; JUANITA ROCHE,

                                            Plaintiffs - Appellants,

           versus


LINCOLN PROPERTY COMPANY; SWIB INVESTMENT
COMPANY,

                                            Defendants - Appellees,

           and


INVESCO INSTITUTIONAL,

                                                         Defendant.



          On Remand from the United States Supreme Court.
                        (S. Ct. No. 04-712)


Argued:   May 5, 2004                       Decided:   April 7, 2006


Before WIDENER and GREGORY, Circuit Judges, and C. Arlen BEAM,
Senior Circuit Judge of the United States Court of Appeals for the
Eighth Circuit, sitting by designation.


Affirmed by unpublished opinion. Judge Gregory wrote the opinion,
in which Judge Widener and Senior Judge Beam joined.


Jerry M. Phillips, PHILLIPS, BECKWITH & HALL, Fairfax, Virginia,
for Appellants. Connie Nora Bertram, VENABLE, L.L.P., Washington,
D.C., for Lincoln Property Company; Richard Alan Dean, TUCKER,
ELLIS & WEST, L.L.P., for SWIB Investment Company.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).




                               2
GREGORY, Circuit Judge:

        The plaintiffs, Christopher and Juanita Roche, citizens of

Virginia, commenced this action in state court against Lincoln

Property         Company   (“Lincoln”),        a    Texas    corporation,   Invesco

Institutional (“Invesco”), a Delaware corporation, and the State of

Wisconsin Investment Board (“SWIB”).1                   In their complaint, the

plaintiffs alleged that they developed serious respiratory ailments

and incurred significant property damage as a result of exposure to

toxic mold in their apartment, which was owned by SWIB and managed

by Lincoln.        Accordingly, the plaintiffs sought damages in excess

of $10 million under, inter alia, theories of negligence, breach of

contract, fraud, implied warranty of habitability, and conversion.

The defendants removed this action to federal district court on the

basis of diversity of citizenship.                 Following the district court’s

entry       of   summary   judgment   in       favor    of   the   defendants,   the

plaintiffs filed a motion to remand the case to state court on the

grounds that there was not complete diversity of citizenship

between the parties.          The district court denied the plaintiffs’

motion to remand and the plaintiffs appealed.

     In May 2004, we reversed the district court’s denial of the

plaintiffs’ motion to remand and instructed the district court to

remand the case to state court.                Roche v. Lincoln Prop. Co., 

(4th Cir. 2004), rev’d, 

(2005).                      In so


        1
         Invesco is no longer a party to this action.

                                           3
doing, we only reached the first of the plaintiffs’ two arguments

against   diversity     of   citizenship,      that   the    Texas    parent   of

defendant Lincoln was not the real party in interest and therefore

that    Lincoln   was    not   truly       diverse    from   the     plaintiffs.

Specifically, we concluded that because defendant Lincoln had not

disproved the existence of a Virginia subsidiary, it had not met

its burden of establishing complete diversity from the plaintiffs.

The defendants appealed this decision to the Supreme Court.                    The

Supreme Court reversed our decision and remanded, concluding that

“[i]t is not incumbent on the named defendants to negate the

existence of a potential defendant whose presence in the action

would destroy diversity.”       

.

       As noted above, our initial decision to remand was based

solely on our conclusion that the plaintiffs and defendant Lincoln

were both citizens of Virginia.             Thus, we did not address the

plaintiffs’ alternative argument against diversity, that defendant

SWIB is an arm of the State of Wisconsin and therefore not a

“citizen of a state” for the purposes of diversity jurisdiction.

Accordingly, on remand, we must first address the threshold issue

of whether defendant SWIB is an arm of the state or, rather, an

independent agency.      If we conclude that defendant SWIB is an arm

of the state, then SWIB is not a citizen for the purposes of

diversity jurisdiction and we must again remand this case to the

state court for a lack of complete diversity.            However, if SWIB is


                                       4
not an arm of the State of Wisconsin, then complete diversity

exists, and we must go on to assess whether the district court

erred in granting the defendants’ motion in limine and subsequently

granting summary judgment to the defendants.



                                I.

            We decline to restate the underlying facts of this

dispute, which are adequately stated in the prior opinions in this

case.     See Roche v. Lincoln Prop. Co., 

(4th Cir.

2004), rev’d, 

(2005).   Accordingly, we now turn to

the various issues raised by the plaintiffs on appeal.



                                A.

        The plaintiffs first assert that defendant SWIB is not a

citizen of the State of Wisconsin under 28 U.S.C. § 1332, and

therefore that the district court should have remanded this action

for a lack of diversity jurisdiction.     “We review questions of

subject matter jurisdiction de novo, including those relating to

the propriety of removal.”    Md. Stadium Auth. v. Ellerbe Becket

Inc., 

, 260 (4th Cir. 2005) (internal quotation marks

and citation omitted).

        Section 1441 of Title 28 provides that “any civil action

brought in a State court of which the district courts of the United

States have original jurisdiction, may be removed by the defendant


                                 5
or the defendants, to the district court of the United States for

the district and division embracing the place where the action is

pending.”   28 U.S.C. § 1441(a).   The defendants based removal on 28

U.S.C. § 1332, which provides for subject matter jurisdiction of

all cases between citizens of different states, when the amount in

controversy exceeds $75,000.

     In Moor v. Alameda County, 

(1973), the Supreme

Court held that states are not “citizens” for purposes of diversity

jurisdiction.   

state entities and political

subdivisions are not “citizens” if they are an “arm or alter ego of

the State.”   

we recently recognized in Maryland

Stadium Authority, in order for a suit to be between “citizens of

different states” under § 1332, “each distinct interest should be

represented by persons, all of whom are entitled to sue, or may be

sued, in the federal courts.”      Md. Stadium 

(internal quotation marks and citation omitted).        Thus, if any

party to a suit is not a citizen of a state, a federal court does

not have jurisdiction under § 1332.     

even if

all of the other parties are citizens of different states.    See 

Authority, the court recognized that to

determine whether a state entity or political subdivision is an arm

of the state and therefore not a citizen under § 1332, a court must

look “to the standards announced in cases addressing whether

governmental entities are entitled to Eleventh Amendment immunity


                                    6
as an arm of the state.”    Md. Stadium 

-61.

In that context, we typically apply the four-factor test adopted by

this court in Ram Ditta v. Maryland National Capital Park &

Planning Commission, 

(4th Cir. 1987). Accordingly, as

the court did in Maryland Stadium Authority, we apply the same

four-factor test from Ram Ditta to determine whether SWIB is an arm

of the State of Wisconsin and therefore not a “citizen” for the

purpose of diversity jurisdiction.

      The first Ram Ditta factor requires the court to determine

whether a judgment against the entity would be paid out of the

state’s treasury.   Ram 

.   Although a finding

that a judgment would be paid out of the state’s treasury weighs

heavily in favor of a conclusion that the entity is an arm of the

state, we must go on to assess the three additional factors: (2)

the degree of autonomy that the entity enjoys; (3) whether the

entity is involved in primarily state or local concerns; and (4)

the manner in which state law treats the entity.    See 

      Applying the above factors to defendant SWIB, we conclude that

this entity is not an arm the State of Wisconsin and therefore is

a citizen within the meaning of § 1332.     First, as the district

court correctly noted, a judgment against SWIB would not affect the

Wisconsin treasury.   By act of the Wisconsin legislature, SWIB is

an “independent agency of the state” whose purpose is to manage


                                 7
money and property for the state, its agencies and trust funds, in

addition    to    local   government   entities   and   state   and   local

employees.       Wis. Stat. § 25.15(1).    Accordingly, SWIB currently

manages over forty separate investment funds, including funds

consisting of money from various state agencies, funds consisting

of money from municipalities, and funds consisting of money from

current and retired state employees.          The Wisconsin Retirement

System--Fixed Income Trust is the specific SWIB fund that owns the

apartment complex where the plaintiffs resided.          Importantly, the

expenses associated with the management of the Fixed Income Trust,

including any liabilities resulting therefrom, are assessed solely

against the Trust, and not the state treasury.          J.A. 1828-29; Bahr

v. State of Wis. Inv. Bd., 

, 158 (Wisc. Ct. App.

1994).     Therefore a judgment in this case against SWIB would be

assessed by SWIB against the Fixed Income Trust, and would not

affect the state treasury.       Thus, consideration of the first Ram

Ditta factor weighs heavily against the plaintiffs’ argument that

SWIB is an arm of the state.

     Turning to the related second and fourth factors, we conclude

that SWIB enjoys considerable autonomy from the State of Wisconsin.

As noted above, the legislature expressly recognized that SWIB is

an “independent agency” of the State, with the responsibility to

(1) sue and be sued in its own name; (2) manage its assets; (3) pay

its liabilities; (4) promulgate rules and regulations; and (5)


                                       8
formulate its investment policies. See Wis. Stat. §§ 25.15, 25.17.

Thus, consideration of the second and fourth factors also weighs in

favor of a finding that SWIB is not an arm of the state.

     The evidence is in equipoise with respect to the third factor,

whether SWIB is involved in primarily state or local concerns.

Although SWIB manages money for various state agencies and thus can

be fairly described as having statewide concerns, it is also true

that it has many local concerns, as evidenced by its management of

municipal property funds and various retirement funds on behalf of

individual employees of local governments.           See Wis. Stat. §

25.15(1).

     In sum, after fully considering the Ram Ditta factors, we

conclude that SWIB is not an arm of the State of Wisconsin and

therefore is a citizen within the meaning of 28 U.S.C. § 1332.          The

district court, therefore, correctly concluded that it had subject

matter jurisdiction to adjudicate this action and properly denied

the plaintiffs’ post-judgment motion to remand to state court.

Accordingly, we must go on to assess the other issues raised by the

plaintiffs.



                                     B.

     Assuming that the district court’s exercise of subject matter

jurisdiction   was   proper,   the   plaintiffs   next   argue   that   the

district court abused its discretion in granting the defendants’


                                     9
motion to bar the testimony of their medical expert, Dr. Richard

Bernstein.    To the extent that Dr. Bernstein’s testimony was

admissible, the plaintiffs further contend that the district court

erred in granting the defendant’s motion for summary judgment on

the negligence claim.

     In his expert report, Dr. Bernstein asserted that based on his

review of plaintiffs’ medical test results, the relevant medical

literature,   and   the   report   of        the   industrial   hygienist,   the

plaintiffs’ exposure to toxic mold in their apartment caused their

respiratory ailments.      Exercising its gatekeeper function under

Daubert v. Merrell Dow Pharmaceuticals, Inc., 

(1993),

the district court found Dr. Bernstein’s testimony to be unreliable

and granted the defendants’ motion to exclude it.

     Since decisions on the admissibility of expert testimony are

committed to the sound discretion of the trial court, we review

those   decisions   for   abuse    of    discretion.       United   States   v.

Barnette, 

, 816 (4th Cir. 2000).             We will find an abuse

of discretion only where the district court’s “conclusion is guided

by erroneous legal principles, or rests upon a clearly erroneous

factual finding,” or if, after considering all of the evidence, the

reviewing court possesses a “definite and firm conviction that the

court below committed a clear error of judgment in the conclusion

it reached upon a weighing of the relevant factors.”              Westberry v.

Gislavid Gummi AB, 

, 261 (4th Cir. 1999).               “Under the


                                        10
abuse of discretion standard, this Court may not substitute its

judgment for that of the district court; rather, we must determine

whether the court’s exercise of discretion, considering the law and

the facts, was arbitrary or capricious.”            United States v. Mason,

, 1289 (4th Cir. 1995).

     The district court thoroughly analyzed the facts and legal

principles respecting Dr. Bernstein’s proffered testimony in a

well-reasoned thirty-five page opinion.            As such, we are unable to

say that the court’s decision to bar Dr. Bernstein from testifying

was arbitrary or capricious.     As required by Daubert, the district

court    analyzed   the   reasoning    and    methodology      underlying   Dr.

Bernstein’s opinion, which was based on differential diagnosis, to

determine whether it was reliable.2          In concluding that it was not,

the court relied on the fact that Dr. Bernstein had been unable to

determine    that   the   particular       types   of   mold   found   in   the

plaintiffs’ apartment were the specific cause of their upper



     2
      As the court recognized in Westberry, differential diagnosis
“is a standard scientific technique of identifying the cause of a
medical problem by eliminating the likely causes until the most
probable one is isolated.      A reliable differential diagnosis
typically, though not invariably, is performed after physical
examinations, the taking of medical histories, and the review of
clinical tests, including laboratory tests, and generally is
accomplished by determining the possible causes for the patient's
symptoms and then eliminating each of these potential causes until
reaching one that cannot be ruled out or determining which of those
that cannot be excluded is the most 

(internal quotation marks and citations omitted).



                                      11
respiratory ailments.   Further, the district court noted that Dr.

Bernstein had failed to exclude any of the other non-mold allergens

to which the Roches were sensitive.   The district court concluded

as follows:

     While   methodology   of   differential    diagnosis   is
     scientifically valid, in this instance, Dr. Bernstein has
     failed to faithfully apply the methodology to facts.
     First, Dr. Bernstein does not rule in Aspergillus,
     Cladosporium, and Penicillium as to Mr. Roche because he
     was not allergic to these molds. Second, although Mrs.
     Roche was allergic to Aspergillus, Cladosporium, and
     Penicillium, Dr. Bernstein’s reliance on the literature
     addressing general causation is misplaced because the
     medical literature provides no scientific support for
     specific causation. Third, Dr. Bernstein did not test
     the Roches for sensitivity to Stachybotrys, and he
     dismisses the Stachybotrys test the Roches had previously
     undergone as inconclusive. Fourth, the literature upon
     which he relies provides no support for his leap from
     general causation to specific causation given the
     specific molds, the specific levels of exposure, and the
     Roches’ medical history.    Fifth, he fails properly to
     rule out other allergens and to provide any opinion, at
     his deposition, with the requisite degree of medical
     certainty.


J.A. 1911-12.   Upon full and deliberate review of the record on

this issue, along with our consideration of the arguments of

counsel, we conclude that the district court did not abuse its

discretion in prohibiting Dr. Bernstein from testifying.

     Without Dr. Bernstein’s testimony, the plaintiffs could not

establish that the mold in their apartment was the proximate cause

of their alleged respiratory ailments.    Accordingly, we conclude

that the district court properly held that the defendants were



                                12
entitled to summary judgment on the plaintiffs’ claim for personal

injuries resulting from the defendants’ negligence.3



                                            C.

       Next, the plaintiffs assert that the district court erred in

granting the defendants summary judgment on their implied warranty

of habitability claim. In their original complaint, the plaintiffs

asserted that the defendants had breached a common law implied

warranty of habitability.           Concluding that an implied warranty of

habitability between a landlord and tenant is not cognizable under

Virginia law, the district court initially dismissed this claim

under       Federal    Rule   of   Civil    Procedure   12(b)(6).       J.A.   166.

Notwithstanding this ruling, the plaintiffs later reasserted a

breach of implied warranty claim as part of their Second Amended

Complaint.          In so doing, the plaintiffs contended that “[t]his

common law duty is an implied warranty under Virginia case law . .

. .”       J.A. 197.   The plaintiffs vaguely asserted that this implied

warranty       of   habitability     also    arose,   in   part,   by   virtue   of

unspecified portions of the Virginia Residential Landlord Tenant

Act (“VRLTA”).         J.A. 198.


       3
      The district court also concluded that the defendants were
entitled to summary judgment on plaintiffs’ claim for damages to
their personal property as a result of the defendants’ negligence.
J.A. 1931-32. Although the plaintiffs do not formally appeal this
ruling, we conclude that the district court properly determined
that the plaintiffs had failed to offer any evidence that their
chattels were actually damaged by mold exposure.

                                            13
     In granting the defendants’ motion for summary judgment on

this claim, the district court reiterated its previous finding that

Virginia does not recognize an implied warranty of habitability.

Although the district court recognized that the VRLTA provided a

cause of action for specific violations of that statute, the court

concluded that the plaintiffs had not pleaded a separate cause of

action under the VRLTA.       See J.A. 1935-36.

     As the district court correctly noted, Virginia does not

recognize an implied warranty of habitability between a landlord

and a tenant.    Hutton v. Burke & Herbert Bank & Trust Co., 46 Va.

Cir. 146, 147 (Va. Cir. Ct. 1998) (citing Powell v. John E. Hughes

Orphanage, 354, 

, 644 (Va. 1927)).          On appeal from the

district    court’s      judgment,   the   plaintiffs    now    attempt   to

recharacterize their implied warranty of habitability claim as an

express warranty claim under the VRLTA.          A careful review of the

plaintiffs’     Second    Amended    Complaint   demonstrates     that    the

plaintiffs never raised a separate claim for a violation of the

VRLTA.4    Instead, the plaintiffs passingly referenced the VRLTA as

an alternative legal basis for their implied warranty claim, while

reiterating that their implied warranty claim arose by virtue of


     4
      Section VRLTA provides that “[a]ny person adversely affected
by an act or omission prohibited under this chapter may institute
an action for injunction and damages against the person responsible
for such an act or omission . . . .” Va. Code Ann. § 55-248.40.
The VRLTA mandates that landlords, among other things, comply with
applicable building codes and maintain their properties in a safe
condition. See 

“Virginia case law.”        J.A. 197.        Thus, because the implied

warranty of habitability is not cognizable under Virginia law, and

because the plaintiffs failed to assert a separate claim under the

VRLTA--except for the first time on appeal--we conclude that the

district court correctly granted the defendants’ motion for summary

judgment.



                                     D.

       We also affirm the district court’s grant of summary judgment

to the defendants on the plaintiffs’ conversion claim.                 In the

Second Amended Complaint, the plaintiffs alleged that defendant

Lincoln had converted their personal property by (1) exposing it to

toxic mold; (2) dispossessing them of the property and withholding

it without their consent; and (3) destroying or losing it.               With

respect to the second and third theories, the plaintiffs contend

that   the   unlawful   conversion   arose   as    a   result   of   Lincoln’s

involvement in the microbial remediation (mold removal) process.

       The facts relating to the remediation are as follows.            After

the plaintiffs discovered mold in certain areas of their apartment,

they retained an environmental testing company to test for the

presence of mold.        The test results indicated that mold was

present.     As a result, the testing company recommended that the

plaintiffs temporarily vacate the apartment until the mold could be

eradicated by microbial remediation.              The plaintiffs notified


                                     15
defendant Lincoln of the test results, and Lincoln temporarily

relocated the plaintiffs to another apartment unit.                         Shortly

thereafter, Lincoln notified Invesco to inform it of the mold

situation and the plaintiffs demands.5                   Subsequently, Invesco

retained BARCO Enterprises (“BARCO”) to conduct the remediation of

the plaintiffs’ apartment.           By letter, the plaintiffs consented to

BARCO’s removal of their personal property from the apartment for

the purposes of conducting remediation.                However, the plaintiffs

demanded that any remediation attempt would have to result in the

complete eradication of the three toxic microbes that had been

found in the apartment.

     Approximately one month later, BARCO inventoried, separated,

wrapped, and removed all of the items of personal property from the

plaintiffs’ apartment.         After this process was completed, BARCO

sent the plaintiffs a printed inventory of the property in storage.

The plaintiffs contend that this inventory was incomplete because

it   did     not   list    several    of    the    plaintiffs’      most    valuable

possessions, including their money, jewelry, documents, and guns.

After    a   series   of   communications         regarding   the   goals    of   the

remediation process, Invesco’s counsel sent a letter to plaintiffs’

counsel informing him that the plaintiffs had not advised BARCO or

Invesco concerning the final disposition of their property, which



     5
      As noted above, Invesco, who manages SWIB’s investment in the
apartment complex, is no longer a party to this action.

                                           16
was still located at BARCO’s storage facility.                 In responding to

this inquiry, plaintiffs’ counsel admonished that “action taken to

harm   or   destroy     any   of    the   property     would   be   considered    a

conversion and an intentional act for which we will seek redress”

and demanded that Invesco reimburse the plaintiffs for the value of

the “missing” property, which they contend amounts to $160,000. As

of this appeal, the plaintiffs’ property remains in storage at

BARCO’s storage facility.            From all indications, the plaintiffs

have made no attempt to claim the property.

       The district court granted the defendants’ motion for summary

judgment on the plaintiff’s conversion claim, concluding that (1)

BARCO, and not Lincoln, had removed the plaintiffs’ property from

the apartment; (2) the plaintiffs had consented to the removal by

BARCO; (3) the plaintiffs had later abandoned that property; and

(4) even if the plaintiffs had not consented to the removal and not

abandoned the property, Lincoln could still not be held liable for

the intentional tort of a third party (BARCO).              With respect to the

plaintiffs’ first conversion theory, that Lincoln had converted the

property by exposing it to mold, the court correctly found that the

plaintiffs had presented no evidence of mold damage.                      See J.A.

1937-38.

       For the purposes of this appeal, the plaintiffs have abandoned

the first theory but persist that “Lincoln’s taking dominion of the

valuables    of   the   Roche      family,     never   accounting   for   them   or


                                          17
returning them, constituted conversion.” Appellant’s Br. at 30-33.

In asserting this conversion claim against defendant Lincoln, the

plaintiffs point to a single unauthenticated page of handwritten

notes, which they contend demonstrate that Lincoln was responsible

for removing the property during remediation.6                 Accordingly, the

plaintiffs argue that Lincoln, and not BARCO, was the “bailee” of

their personal property.

      The    plaintiffs’   bailment     theory    fails   because     defendant

Lincoln never exercised physical control over the plaintiffs’

personal property with an intent to exercise that control. See K-B

Corp. v. Gallagher, 

, 185 (Va. 1977). Even accepting

the   page   of   handwritten   notes      as   true,   they    do   nothing   to

counteract the overwhelming evidence in the record--including the

plaintiffs’ own testimony--indicating that BARCO, and not Lincoln,

ultimately removed, itemized, and stored the plaintiffs’ personal

property.     J.A. 528-29, 543-47, 688-89, 708-35.               Thus, even if

Lincoln initially promised to ameliorate the mold problem by

removing, cleaning, and storing the property, as the notes suggest,

it does not necessarily follow that the property management company

undertook that task.        Instead, the evidence demonstrates that



      6
      These handwritten notes, which purportedly were transcribed
by an employee of defendant Lincoln after he or she had discussed
the situation with the plaintiffs, state that Lincoln is to remove,
clean, and store certain items from the plaintiffs’ apartment,
prepare an itemized list of property, and terminate the plaintiffs’
lease. J.A. 918.

                                      18
BARCO, at Invesco’s request, removed the plaintiffs’ property to

conduct the microbial remediation.        Although the plaintiffs might

have had a viable conversion claim against this third party for

losing (or stealing) several of their valuables, they did not name

BARCO as a defendant.        Thus, because defendant Lincoln never

exercised   dominion   and   control    over   the   plaintiffs’   personal

property, the district court properly granted summary judgment on

the conversion claim.



                                   E.

     Finally, the plaintiffs contend that the district court erred

in dismissing their claim for punitive damages. In support of this

claim, the plaintiffs asserted that defendants Lincoln and SWIB:

(1) knew that there were health hazards associated with exposure to

toxic molds; and (2) concealed these mold-related health hazards

from their tenants.     The district court concluded that even if

these factual allegations were true, they did not meet the high

threshold of egregious conduct necessary for an award of punitive

damages under Virginia law.     J.A. 173-74.

     It is well-settled that a finding of compensatory damages is

a prerequisite for an award of punitive liability.                 Zedd v.

Jenkins, 

(Va. 1953); Newspaper Publ’g Corp. v. Burke,

(Va. 1976). In other words, if the defendant cannot

be held liable for the underlying wrong, a plaintiff’s derivative


                                   19
claim for punitive damages is barred.     As we have affirmed the

district court’s dismissal of the plaintiffs’ negligence claims for

a failure of proximate cause, the plaintiffs’ claim for punitive

damages fails as a matter of law.



                               II.

     For the foregoing reasons, we affirm the district court’s

denial of the plaintiffs’ motion to remand; the district court’s

grant of the defendants’ motion in limine; and the district court’s

grant of the defendants’ motion for summary judgment.



                                                          AFFIRMED




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