U.S. ex re. Mistick PBT v. Housing Auth. Pittsburgh, 97-3248

• Citation: 186 F.3d 376
• Decision Date: 18 October 1999
• Docket Number: No. 97-3248,97-3248
• Parties: (3rd Cir. 1999) UNITED STATES OF AMERICA ex rel. MISTICK PBT and MISTICK PBT, v. HOUSING AUTHORITY OF THE CITY OF PITTSBURGH; L.D. ASTORINO & ASSOCIATES, LTD. (formerly known as L.D. ASTORINO ARCHITECTS, INC.); ASTORINO BRANCH ENVIRONMENTAL INC.; ASTORINO BRANCH ENGINEERS; ERNEST E. MILLER, individually; DAVID B. WASHINGTON, individually; LOUIS D. ASTORINO, individually; DENNIS L. ASTORINO, individually; PATRICK I. BRANCH, individually; BERNARD J. QUINN, individually, Mistick PBT, Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 376

186 F.3d 376 (3rd Cir. 1999)

UNITED STATES OF AMERICA ex rel. MISTICK PBT and MISTICK PBT, v. HOUSING AUTHORITY OF THE CITY OF PITTSBURGH; L.D. ASTORINO & ASSOCIATES, LTD. (formerly known as L.D. ASTORINO ARCHITECTS, INC.); ASTORINO BRANCH ENVIRONMENTAL INC.; ASTORINO BRANCH ENGINEERS; ERNEST E. MILLER, individually; DAVID B. WASHINGTON, individually; LOUIS D. ASTORINO, individually; DENNIS L. ASTORINO, individually; PATRICK I. BRANCH, individually; BERNARD J. QUINN, individually, Mistick PBT, Appellant

No. 97-3248

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued June 9, 1998

Decided July 30, 1999

As Amended October 18, 1999

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. No. 95-cv-01876) (District Judge: Hon. Alan N. Bloch) David J. Hickton, Esq. (Argued), James P. Thomas, Esq., Burns, White & Hickton, 2400 Fifth Avenue Place, 120 Fifth Avenue, Pittsburgh, PA 15222, Attorneys for Appellees,

L.D. Astorino, Astorino Branch Env., Astorino Branch Eng., Louis D. Astorino, Dennis L. Astorino, Patrick I. Branch and Bernard J. Quinn Louis C. Long(Argued), Meyer, Darragh, Buckler, Bebenek & Eck, 2000 Frick Building, Pittsburgh, PA 15219, Attorney for Appellees.

Housing Authority of the City of Pittsburgh, Ernest Miller and David Washington John E. Beard, III, Esq. (argued), Peter N. Flocos, Esq., Kirkpatrick & Lockhart LLP, 1500 Oliver Building, Pittsburgh, PA 15222, Attorneys for Appellant

Before: BECKER, Chief Judge, ALITO and ALDISERT, Circuit Judges

OPINION OF THE COURT

ALITO, Circuit Judge:

This appeal arises from a qui tam action based on the False Claims Act, 31 U.S.C. SS 3729 et seq. (1994). The District Court dismissed the complaint for lack of subject matter jurisdiction under 31 U.S.C. S 3730(e)(4)(A), which provides that no court has jurisdiction over a False Claims Act qui tam action that is based on certain public disclosures unless the action is brought by an "original source." We agree with the District Court that subject matter jurisdiction was lacking, and we therefore affirm.

I.

A. The qui tam action at issue here was filed by Mistick PBT, a Pittsburgh area construction company. Named as defendants were the Housing Authority of the City of Pittsburgh ("HACP") and L.D. Astorino & Associates, Ltd. an architectural firm, as well as individual employees of the HACP and Astorino & Associates. The complaint asserted that the defendants made false claims to the United States Department of Housing and Urban Development (HUD) for the cost of lead-based paint abatement work at the HACP's Bedford and Addison housing projects. Astorino was the architectural firm that developed the specifications for the lead-based paint abatement work, as well as the larger renovation projects of which this work formed a part, and Mistick was the general contractor for all of this work.

Since August 1986, HUD regulations have required lead- based paint abatement work to be performed at HUD- associated housing. See 24 C.F.R. SS 35.20 - 35.24 (1998). Such abatement may be achieved either by removing the paint or covering it with an "encapsulant" that covers and prevents exposure of the lead-based paint. See 24 C.F.R. S 35.24.

Astorino's original specifications for the lead abatement work at issue were submitted in approximately April or June of 1989 and provided for encapsulation using a product called "Glid Wall" that was manufactured by the Glidden Paint Company. According to Mistick's complaint, Mistick bid and later performed its work at the two projects on the basis of Astorino's specifications, including the Glid Wall specification. Mistick submitted its bids in June and July of 1989, and after those bids were accepted and contracts were executed, Mistick began work on the Addison project by December 1989 and on the Bedford project by January 1990.

Although Astorino's specifications called for the use of "Glid Wall" as an encapsulant, Glidden had begun recommending against the use of this product for this purpose some time earlier. A Glidden Product Updates Bulletin dated April 1988 stated:

[GLIDDEN] WILL NOT RECOMMEND OR SELL ANY PAINT PRODUCT OR SHEET MATERIAL, SUCH AS GLID-WALL SYSTEM OR VINYL WALL COVERING, FOR USE OVER LEAD CONTAINING MATERIALS WHERE THE PURPOSE OF THE APPLICATION IS TO SEAL OR OTHERWISE RENDER THE AFFECTED AREA NON-HAZARDOUS.

JA 79.¹

In June 1988, a firm of "protective coatings (paint) consultants" wrote to an Astorino employee that "Glidden Company has no desire to warrant [the Glid-Wall System] as a lead abatement product, and therein lay their admonition regarding its use for that purpose." JA 82. According to the affidavit of D. Thomas Mistick, a principal of Mistick PBT, representatives of Astorino, the HACP, and Mistick attended a meeting on January 5, 1990, at which a Glidden representative reiterated the warning contained in the April 1988 Products Update Bulletin. JA 547. In addition, it appears that, on January 23, 1990, Glidden sent Astorino a letter advising that "the Glidwall System can not be consider (sic) a method for lead abatement." JA 450.

In May 1990, Astorino revised its specifications for the Bedford and Addison projects and provided for the use of a lead encapsulant called Zomat instead of Glid-Wall. This change was preceded by a series of letters from Astorino to the HACP. On February 14, 1990, Dennis Astorino, a vice- president of the architectural firm, wrote to Ernest Miller, the HACP's director of development, and attached a letter from Astorino's certified industrial hygienist stating that his company was "still of the opinion that the Glidwall System is the most cost effective method of physical compliance with the HUD criteria," although "an increased element of risk would be associated with the use of the Glid-Wall System since the manufacturer, Glidden, indicates the Glid-Wall System is not to be considered as a method for lead abatement." JA 449. Dennis Astorino's cover letter requested a prompt decision by the HACP regarding the method of abatement it wished to use -- either encapsulation using Glid-Wall or some other product or the removal of the lead paint. Id.

On April 23, Dennis Astorino again wrote to Miller and summarized the events that had resulted in the original specification of Glid-Wall. Among other things, the letter stated that Astorino's consultants had advised the firm that "Glid-Wall was the encapsulating system of choice" but that Glidden "no longer recommend[ed] their product as a lead base paint encapsulate and, in fact, [was] actively advising against it's (sic) use." JA 435. The letter added: "We understand this was do (sic) to potential corporate liability concerns." Id. The letter concluded by stating that the field of alternative encapsulants had been narrowed to Zomat. JA 436.

On April 24, Dennis Astorino wrote another letter to Miller in which he again stated that Glidden "no longer guarantees [Glid-Wall] for use as a lead base paint encapsulate" and again expressed the view that Zomat was then "the best solution to the problem of encapsulization." JA 434. After observing that Zomat could not have been called for in the original specifications because it had only recently been marketed as an encapsulant, the letter requested additional funding of approximately $750,000 for the Bedford project alone. Id.

Seeking to have HUD fund these cost increases, the HACP sent several letters to HUD in 1990 and 1992. On April 27, 1990, David Washington, the HACP's executive director, wrote to John Pisano, the manager of HUD's Pittsburgh office, and stated that the HACP needed additional funding for the Bedford project because Glidden "no longer recommends" Glid-Wall as a lead encapsulant. This letter had several attachments, including the February 14, April 23, and April 27 letters from Astorino to the Authority. JA 418-19.

On January 1, 1992, Miller wrote to Paul LaMarca, Acting Director of the Public Housing Division of HUD's Pittsburgh office, and requested additional funding from HUD for the Bedford project. Miller cited the fact that Glidden no longer recommended Glid-Wall as an encapsulant and that new regulations required "additional worker protection methods." JA 457.

On July 1, 1992, in response to LaMarca's request for more information, Washington wrote to LaMarca and stated that "Glidwall became unacceptable as a LBP [lead-based paint] encapsulant because the Company informed the Architect by letter (1/23/90) that `the Glidwall System can not be consider (sic) a method for lead abatement,' in spite of the fact that the system met HUD requirements in effect at the time and that the Baltimore Housing Authority was using it for this purpose." JA 464-65. Apparently referring to the situation at the time of the original specifications, the letter added:

To our knowledge, there was no information available to suggest that the Glidwall System was not approved by Glidden for its intended use as a LBP encapsulant.

JA 465.

On July 24, 1992, HUD informed the HACP that it was approving $253,622.11 in additional funds for lead encapsulation on the Bedford project. JA 469.²

B. Meanwhile, in July 1991, Mistick had filed suit against the HACP in the Court of Common Pleas of Allegheny County, claiming that the HACP was liable to Mistick under their contract for delay damages resulting from the change in the lead-abatement specifications for the Bedford and Addison projects. The HACP then filed a third-party complaint for indemnification and contribution against Astorino, and Mistick subsequently moved to amend its complaint to add a direct claim of fraud against Astorino. In this proposed amended complaint, Mistick alleged that (1) Astorino knew at the time it developed the original specifications for the Bedford and Addison projects that Glidden did not recommend Glid-Wall as a lead-based paint encapsulant, (2) Astorino nonetheless specified Glid- Wall for...