Johnson v. Dist. of Columbia

• Decision Date: 11 August 2016
• Docket Number: No. 15–CV–59.,15–CV–59.
• Citation: 144 A.3d 1120
• Parties: Darrell JOHNSON, et al., Appellants, v. DISTRICT OF COLUMBIA, Appellee.
• Court: D.C. Court of Appeals

144 A.3d 1120

Darrell JOHNSON, et al., Appellants,
v.
DISTRICT OF COLUMBIA, Appellee.

No. 15–CV–59.

District of Columbia Court of Appeals.

Argued Feb. 17, 2016.
Decided Aug. 11, 2016.

144 A.3d 1122

Juan C. Estevez, of the bar of the State of Virginia, pro hac vice, by special leave of court, with whom Kyle L. Epting, Arlington, VA, was on the brief, for appellants.

Carl J. Schifferle, Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, and Loren L. AliKhan, Deputy Solicitor General, were on the brief, for appellee.

Before FISHERand BECKWITH, Associate Judges, and FERREN, Senior Judge.

FERREN, Senior Judge:

On June 21, 2013, the District of Columbia filed a "false claims" action against the Washington East of the River Academy of Entrepreneurship, Arts, Life Skills, Technology and Health for "Youth on the Rise" (WEALTHY), a nonprofit corporation. Also named as defendants were WEALTHY's principals, Diana Robinson, Darrell Johnson, and Johnson's company, National Tax Pro, LLC (National Tax Pro). The complaint claimed (1) violations of the District of Columbia False Claims Act, D.C.Code § 2–381.02(a)(2) (2013), and (2) unjust enrichment—both derived from allegedly paying excess compensation to Robinson and Johnson (including his company) from a $400,000 grant by the District to WEALTHY for provision of youth services during fiscal year 2009.

The District moved for summary judgment, which was granted on June 30, 2014, against, Robinson, Johnson, and National Tax Pro, followed by a final judgment entered on August 12. Without elaboration, the trial court held them liable, jointly and severally, for treble damages of $931,200 for violations of the False Claims Act. The court also found Robinson liable for $91,100, and Johnson and National Tax Pro liable for $31,973, for unjust enrichment. The District then moved for a default judgment against WEALTHY, which was granted on December 18, 2014, holding WEALTHY liable, jointly and severally with the other defendants, for $931,200 under the False Claims Act while adding that "the District may collect no more than a total of $931,200 from all the Defendants in this action."

Only Johnson and National Tax Pro have filed an appeal. We affirm the False

144 A.3d 1123

Claims Act judgment but remand the case for recalculation of treble damages. We vacate the duplicative judgment for unjust enrichment.

I. The Grant Agreement

Diana Robinson was the executive director of WEALTHY and the president of its three-member board of directors. Darrell Johnson served as the treasurer and a non-voting member of the board. Johnson was also WEALTHY's accountant, doing business as National Tax Pro.¹ WEALTHY's "Work Plan" provided the following description of the summer youth program to be administered under the grant:

"[WEALTHY] is a Rites of Passage program of substance abuse prevention, teen pregnancy prevention, juvenile crime prevention and HIV/AIDS prevention education. This program of prevention and education will concentrate on Ward Eight youth between the ages of 14 and 18 [sic: 21], using evidence-based best practices of a developed curriculum by which this population will be recruited and trained in a continuum of care that reduces the number of Ward Eight youth and adolescents entering into the juvenile justice system. Activities included in the program include a 200 voice mass choir, a 50 member marching percussion band, a 50 member step team, a 50 member dance troupe, a drama ensemble, classes in martial arts, computer technology, visual, graphic and media arts, a Parenting Academy, and, a Young Executive Leadership Institute."

The Council's $400,000 grant was actually given to the Children and Youth Investment Trust Corporation (the Trust), a non-profit organization governed by a board appointed by the Mayor and the Council,² for distribution to WEALTHY. In order to obtain the grant, WEALTHY was required to submit to the Trust a detailed budget setting forth how the funds would be spent. Johnson and Robinson created a budget and "budget narrative," which the Trust approved, for $388,000. (The Trust withheld 3% or $12,000 of the $400,000 grant for administrative costs.) The budget and its narrative envisioned compensation for personnel (with fringe benefits) totaling $289,764 for twelve salaried individuals plus a financial "consultant," collectively amounting to six working full time, plus additional "consultants" to direct children's activities. For all these positions, the following amounts were budgeted for "Salaries & Wages" and "Consultants & Professional Fees":

Salaries & Wages
Management	$ 90,400
1) Project director: 60% time for 12 mos. @ $84,000 = $50,400
2) Project manager: 100% time for 12 mos. @ $40,000 = $40,000
Teacher/Instructors	$ 50,000
3 & 4) Two educators 50% time for 12 mos. @ $25,000 each
Professionals	$ 25,000
5 & 6) Two instructor counselors 50% time for 12 mos. @ $12,500 each
Aides/Assistants	$ 25,000
7, 8, 9 & 10) Four aides 25% time for 12 mos. @ $6, 250 each
Clerical	$ 15,000
11 & 12) Two administrative aides 50% time for 12 mos. @ $7,500
SUBTOTAL	$205,400
Fringe Benefits @ 16% of total salaries	$ 32,864

Consultants & Professional Fees
Services to children: choral, music, dance instruction	$ 10,000
Services to children: life skills, intervention lectures/activities	$ 17,500
Financial Mgmt, payroll services and reporting @ $3,000 per mo.3	$ 24,000
SUBTOTAL	$ 51,500
TOTAL	$289,764

144 A.3d 1124

The grant agreement between the Trust and WEALTHY, entered on November 19, 2008, covered the twelve-month period from October 1, 2008, to September 30, 2009.⁴ Pursuant to that agreement, WEALTHY was to provide specified programming. Any modification of the resulting Work Plan required submission to the Trust, and its approval. Moreover, WEALTHY could "only use the Grant Amount as described in the budget approved by the Trust.... Any deviation from budget line-items in excess of 10% or $2,000, whichever is greater," had to be "submitted in writing to the Trust for approval." The agreement further required WEALTHY to submit monthly expenditure reports on a specified form listing "all expenditures for the calendar month," including costs incurred even if WEALTHY had not yet made payment.

II. The Issue

The question presented is whether appellants violated the District's False Claims Act by knowingly making or using false and material records or statements (WEALTHY's monthly expenditure reports) to claim and take...