STUTTGART, Germany — A U.S. federal court has denied an Army motion to dismiss a lawsuit by reservists who say they were wrongly denied housing allowances and then improperly were subjected to criminal investigation, marking the latest chapter in a long-running battle between soldiers and the service.

The U.S. Court of Federal Claims in a ruling last week said the case must move forward but that, for now, the proper venue to settle the dispute is the Army Board for the Correction of Military Records.

The board provides “an opportunity to grant plaintiffs the relief they are seeking — to correct their military personnel records and award payments resulting from such corrections if warranted,” Senior Judge Mary Ellen Coster Williams wrote in an Aug. 29 decision.

The court’s decision was welcomed by the reservists, whose battle with the Army began three years ago.

The reservists said they lawfully received dual housing allowances — one for their homes of record and one for off-base housing they were ordered to live in while on assignment in Europe. They received both allowances to make up for not being able to work in civilian jobs that pay their rents and mortgages.

The dual allowance payments ended abruptly as scores of soldiers were accused of receiving payments fraudulently.

The federal ruling is “a big victory because it means that my clients will either be getting relief from the Army Board for Corrections of Military Records or, at the very least, they will get their day in court to have a federal judge rule on the merits of the issue,” said Patrick Hughes, an attorney with Patriots Law Group.

For the reservists, there was initial concern about the ABCMR taking control of the case because the board would “likely seek advisory opinions from the same people who have already misinterpreted the Army’s legal requirements to date,” the complaint stated.

However, because the court has retained overall jurisdiction, if the reservists are dissatisfied with any part or the Army board’s decision, they can still take the issue up in court, Hughes said.

“Also, following the ABCMR’s review, we’ll seek to have the matter expanded to cover all of those reservists who were impacted by this issue,” Hughes said. “So we are not done in court, by any stretch.”

The Army repeatedly has declined to comment on the case, citing ongoing litigation.

The Army hasn’t said how many people have been targeted, but the federal complaint says as many as 350 could be affected.

“While we have been waiting on the court’s decision here, many more reservists have contacted us about wanting to join this lawsuit,” said Hughes, a former Air Force lawyer.

Hughes said he believes many reservists have accepted the Army’s decision to deny them their entitlements as “an unfortunate cost of doing business” or because they fear reprisals.

“While my clients have the same worries, they’re unwilling to give in on something that has caused them and all the others affected a tremendous financial hardship,” Hughes said.

Retired Army Col. Richard Gulley, who left the reserves more than two years ago, said the Army continues to target him in connection with the housing allowance dispute.

Gulley, a former deputy chief of staff at U.S. Africa Command who retired in 2017, was under criminal investigation in connection with accusations that he wrongly received two housing allowances.

The Army never prosecuted, but the ramifications linger as the service seeks more than $100,000 in past housing payments.

Gulley said his retirement pay, which he expected to begin receiving in August, is being withheld because the Army put a Grade Determination Review Board memorandum in his records. The review has yet to be completed.

“This is harassment,” Gulley said.

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