U.S. ex rel. Bettis v. Odebrecht Contr. of Cal.

• Citation: 297 F.Supp.2d 272
• Decision Date: 28 January 2004
• Docket Number: No. CIV.A.99-2879(ESH).,CIV.A.99-2879(ESH).
• Parties: UNITED STATES of America ex rel Alva BETTIS, Plaintiff, v. ODEBRECHT CONTRACTORS OF CALIFORNIA, INC. et al., Defendants.
• Court: U.S. District Court — District of Columbia

Page 272

297 F.Supp.2d 272

UNITED STATES of America ex rel Alva BETTIS, Plaintiff, v. ODEBRECHT CONTRACTORS OF CALIFORNIA, INC. et al., Defendants.

No. CIV.A.99-2879(ESH).

United States District Court, District of Columbia.

January 28, 2004.

Herbert Vincent McKnight, Jr., Altomease Rucker Kennedy, Ashcraft & Gerel, Washington, DC, for Plaintiff.

Niki Kuckes, Ryan E. Bull, Samuel J. Waldon, Baker Botts, LLP, Washington, DC, for Defendants.

Rudolph Contreras, U.S. Attorney's Office, Washington, DC, for Movant.

MEMORANDUM OPINION

HUVELLE, District Judge.

Before the Court are cross motions for summary judgment regarding plaintiff/relator Alva Bettis' ("Relator") Fourth Amended Complaint, a qui tam action seeking damages and civil penalties under the False Claims Act, 31 U.S.C. § 3729 ("FCA").¹ Defendant Odebrecht Contractors of California, Inc. ("OCC") moves for summary judgment as to all counts, while relator seeks summary judgment as to the first count only.

BACKGROUND

I. Procedural History

Relator's allegations stem from a government contract involving a multi-million dollar construction project that spanned a six-year period. The Army Corp of Engineers ("COE") issued invitations for bid on March 1, 1993, for the construction of the Seven Oaks Dam and Appurtenance in San Bernardino County, California. Defendant CBPO of America ("CBPO"), a construction company, was ultimately awarded the Seven Oaks contract. CBPO also committed the resources of its affiliates, Odebrecht S.A. of Brazil and Odebrecht Contractors of California ("OCC") to this project. (Fourth Am. Compl. ["Compl."] ¶ 20.)²

COE also contracted with Black and Veatch Consultants ("B & V") to monitor the dam's progress. Beginning in April 1995 relator was employed by CCL Construction Consultants, Inc. as a project scheduler to assist B & V in fulfilling a contract with COE for the Seven Oaks Dam project. (Def.'s Statement of Material Facts on Which There is No Dispute ["Def.'s Stmt."] ¶ 10.) Mr. Bettis was terminated from the project in 1998 by B & V. (Def.'s S.J. Mot. Tab 9 [King Decl.] ¶ 11.)

In 1999 relator commenced this suit under seal, claiming that defendants had violated the FCA. After the government declined to intervene on October 30, 2000,³ this Court ordered, on November 1, 2000, that the complaint be unsealed and served on defendants. Relator filed a Third Amended Complaint in June 2002. In this complaint relator claimed that defendants violated the FCA by submitting an intentionally low bid, intending to seek modifications at a later date (Count I); submitting false claims for payment in months when they had received failing grades on required monthly schedules (Count II); engaging in a pattern of submitting requests for payments based on intentionally wrong measurements (Count III); seeking modifications based on false statements concerning the nature and extent of the conditions in the field and the need for the work (Count IV); submitting false statements while performing several construction projects (Count V); improperly charging the government for the cost of delays that defendants had caused (Count VI); and retaliating against relator by influencing his employer's decision to discharge him in violation of 31 U.S.C. § 3730(h) (Count VII).

In response, defendant moved to dismiss, and on October 24, 2002, this Court issued a Memorandum Opinion and Order dismissing Counts II and VII of the Third Amended Complaint with prejudice and Counts I and V without prejudice, but denying defendant's motion as to Counts III, IV and VI. (See Memorandum Opinion ["Mem. Op."], Civ. Action No. 99-2879 (D.D.C. Oct. 24, 2002).) Thereafter, on January 23, 2003, relator filed a Fourth Amended Complaint in which he re-alleged Counts III, IV, and VI and amended Counts I and V. The Complaint now alleges that defendant violated the FCA by intentionally submitting a low bid, intending to seek false modifications in the future, and then submitting false modifications (Count I); intentionally submitting false survey data in support of progress payments (Count III); making false claims in connection with its excavation of the right abutment of the dam (Counts IV and VI); and making false claims in connection with its construction of the Intake Structure Access Road (Count V).

Upon completion of discovery, the parties moved for summary judgment. Plaintiff seeks judgment as to liability only under Count I. Defendant has moved for summary judgment as to all counts arguing that the evidence is insufficient as a matter of law to justify a finding of liability under the FCA, because plaintiff has failed to adduce any evidence that: (1) OCC fraudulently induced COE to enter into the contract or that OCC thereafter sought to increase the contract price through false modifications or adjustments (Count I);⁴ (2) OCC's monthly progress payment applications constituted false claims based on inaccurate survey data regarding the height of the face of the dam (Count III); or (3) the claims submitted for work relating to the right abutment or the Intake Structure Access Road were false (Counts IV, V and VI). In his opposition, plaintiff addresses defendant's arguments as to Counts I and III only. With respect to Count I, plaintiff concedes that certain contract modifications and concomitant increases in the contract price were due to design changes or COE's requests for additional work; he nonetheless argues that OCC knew from the outset that it could not perform the contract at its bid price; that it made knowing misrepresentations to COE to induce it to award the contract to OCC; that it fraudulently planned to seek monies from the government above and beyond the bid price; and that defendant received additional monies based on false claims for adjustments. (Pl.'s Opp. to Def.'s S.J. Mot. at 2-3 & n. 1.) With respect to Count III, plaintiff contends that defendant knowingly presented nonsurvey numbers to support pay estimates that were submitted to COE and thereby "knowingly presented figures to COE that were dishonestly inflated or which manifest a reckless disregard for the truth." (Id. at 30.)

Before addressing these arguments in detail, it is, however, necessary to begin by giving an overview of the facts that underlie this lawsuit, as well as the applicable law. Thereafter, the Court will turn to the cross motions as to Count I and then to defendant's motion as to Count III.⁵

II. Factual Background

On March 1, 1993, COE solicited bid invitations for the construction of the Seven Oaks Dam project. This project included construction of an embankment dam that was to be 550 feet high; a cofferdam that was to be fifty feet high; excavation of a spillway approximately 550 feet wide and 1,400 feet long; completion of the outlet works and intake tower; installation of gates in the outlet tunnel; construction of approximately three miles of permanent access roads and two access bridges; and revegetation and hydroseeding of the work areas. (Compl.¶ 13.) Contractors were invited to submit bids for a fixed-price contract, with the price determined on a per-unit basis. In preparing the solicitation, COE divided the construction of the dam into 150 separate tasks, referred to as bid items. COE estimated the types and quantities of materials and labor needed to complete each bid item. (Def.'s Stmt. ¶ 1.) Each bidder was required to calculate a unit cost for each bid item, which was to include all direct and indirect costs and any profit. (Id.) The final price of each bid was calculated by multiplying the bidder's unit price by the quantity for each bid item. (Id. ¶ 2.) By submitting a bid, each bidder became legally obligated to complete the work, based on the project's specifications, for the unit prices set forth in its bid. (Id. ¶ 1.) The final bid price was, however, an estimate, which would vary depending on the actual quantities of material and labor required by the conditions in the field, since the actual cost of construction is calculated using actual quantities, not COE estimates. Thus, the ultimate cost of the project would differ from the bid price if COE's quantity estimates did not prove to be accurate, but a bidder was bound by its unit prices and assumed the risk if these prices turned out to be too low. (Id. ¶¶ 1-2.)

After conducting pre-bid analyses, OCC submitted a $167,777,000 bid. (Id. ¶ 4.) The sealed bids were opened on July 7, 1993, and OCC's bid was the lowest, coming in almost $30 million below the secondlowest bid, which had been submitted by a joint venture involving Tutor-Saliba Corp., Perini Corp., and others ("Tutor-Saliba"), and more than $35 million below COE's cost estimate of $203,771,540. (Id. ¶ 5.)

Immediately thereafter Tutor-Saliba commenced a series of bid protests seeking to prevent OCC from being awarded the contract on the grounds that defendant's bid was unreasonably low. (Id. ¶ 7.)⁶ Following the resolution of Tutor-Saliba's bid protest, COE awarded the contract to OCC on March 29, 1994. (Id. ¶ 8.) On April 20, 1994, COE issued to OCC a notice to proceed ("NTP") with construction. OCC began construction on the dam shortly thereafter.⁷ (Def.'s Opp. Tab 4 [Price Decl.] ¶ 3.)

Construction of the dam consisted primarily of excavating materials from specified borrow areas via mechanical means or, when necessary, blasting; transporting the excavated materials to the dam site; processing materials to the required size and consistency if necessary; and placing materials in the appropriate zones of the dam.⁸ The contract provided for monthly progress payments, which were to be based on estimates of satisfactory work accomplished. (Def.'s S.J. Mot. Tab 17.) Because much of the work involved placing fill material into the dam's embankment, progress was estimated in part by using regular surveys of the height of the dam. (Def.'s S.J. Mot. Tab 18 [Long Decl.] ¶¶ 7-10.)

During the course of construction, defendant requested and...