U.S. ex rel. Yannacopoulos v. General Dynamics

• Decision Date: 16 July 2009
• Docket Number: No. 03 C 3012.,03 C 3012.
• Citation: U.S. ex rel. Yannacopoulos v. General Dynamics, 636 F.Supp.2d 739 (N.D. Ill. 2009)
• Court: U.S. District Court — Northern District of Illinois
• Parties: UNITED STATES of America, ex rel. Dimitri YANNACOPOULOS, Relator, v. GENERAL DYNAMICS and Lockheed Martin Corporation, Defendants.

636 F.Supp.2d 739

UNITED STATES of America, ex rel. Dimitri YANNACOPOULOS, Relator, v. GENERAL DYNAMICS and Lockheed Martin Corporation, Defendants.

No. 03 C 3012.

United States District Court, N.D. Illinois, Eastern Division.

July 16, 2009.

COPYRIGHT MATERIAL OMITTED

Bradley Scott Weiss, Law Office of Bradley Scott Weiss, Evanston, IL, Jonathan C. Haile, United States Attorney's Office, Thomas R. Meites, Jamie S. Franklin, Meites, Mulder, Mollica & Glink, Jeffrey Irvine Cummings, Judson Hirsch Miner, Nancy L. Maldonado, Miner Barnhill & Galland, Shona B. Glink, Meites, Mulder, Mollica & Glink, Chicago, IL, Ann Louise Lugbill, Law Office of Ann Louise Lugbill, Cincinnati, OH, David Sadoff, United States Department of Justice, Washington, DC, for Relator.

Linda L. Listrom, Daniel J. Winters, Matthew Thomas Albaugh, Susan Cohen Levy, Jenner & Block, LLC, Joshua Thomas Buchman, Amy Graham Doehring, Joseph G. Fisher, Peter M. Schutzel, David Marx, McDermott, Will & Emery LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT W. GETTLEMAN, District Judge.

In a seven count second amended qui tam complaint,¹ Relator Dimitri Yannacopoulos alleges that defendants General Dynamics and Lockheed Martin violated the False Claims Act, 31 U.S.C. § 3729 ("FCA"), by submitting false claims in connection with the sale of F-16 fighter aircraft to Greece. Count I alleges that General Dynamics knowingly submitted false records, statements, and claims to the Defense Security Assistance Agency ("DSAA"), collecting at least $24 million in excess funds in connection with the F-16 airframe. Count II alleges that General Dynamics collected over $52 million of fraudulently obtained funds in connection with debt-level maintenance. Count III alleges that General Dynamics submitted false claims in the excess of $47 million in connection with co-production (the "HDDIC claim"). Count IV and V are brought against both General Dynamics and Lockheed Martin, who purchased General Dynamic's Fort Worth division at the end of February 1993 and assumed the Greek contract. Count IV alleges that defendants submitted $54 million in false claims for integrated electronic measures counter work, and Count V alleges false statements and claims in excess of $45 million and $6 million in connection with the sale of spare parts (the "Spares Claim"). Count VI alleges that General Dynamics failed to disclose to the United States government that it had deleted a price adjustment schedule between the date of the letter of intent and the final contract. Finally, Count VII alleges that Lockheed Martin modified the contract to avoid paying a refund it owed to the government.

The court has already denied a motion to dismiss, United States ex rel. Dimitri Yannacopolous v. General Dynamics, 315 F.Supp.2d 939 (N.D.Ill.2004), and later granted General Dynamics' motion for summary judgment on certain claims raised in the complaint but not set out as separate counts. Specifically, the court granted summary judgment on: (1) all claims attempting to hold defendants liable based on the theory that defendants impliedly certified compliance with all DSAA guidelines not specifically referenced in the actual contract or invoices (the "Implied Certification Claims"); and (2) plaintiff's claim that defendants eliminated an Economic Price Adjustment Clause (the "EPA Clause") from the final contract without informing DSAA, in violation of defendants' express certification that it would inform DSAA of any contract changes "upon effect" (the "Express Certification Claim"). Relator moved to reconsider, which the court granted as to the Express Certification Claim only.

General Dynamics has now renewed its motion for summary judgment on the Express Certification Claim, which the court has treated as a motion to reconsider, and both defendants have filed separate motions for summary judgment on all remaining claims brought against them. For the reasons set forth below, the motions for summary judgment are granted. The motion to reconsider is granted.

BACKGROUND

This case involves a contract executed in January 1987 between Greece and General Dynamics for the sale of 40 F-16 aircraft ("Contract 5/86"). Defendant Lockheed Martin acquired General Dynamics' Fort Worth division and assumed all of General Dynamics' rights and obligations under Contract 5/86 in March 1993. Contract 5/86 was a direct commercial contract, meaning that Greece contracted directly with General Dynamics, and the United States was not a party. Greece did, however, use foreign military financing ("FMF") loans provided by the United States' government to finance the purchase, which required DSAA to review the contract and approve the use of FMF funds.

In March 1985 General Dynamics and Greece executed a letter of intent ("LOI") setting forth the basic terms of their agreement as of that date. The LOI was effective as of October 1985 and attached to it was a "draft contract" reflecting the status of the negotiations on various contract terms, articles and annexes.

DSAA required General Dynamics to submit a "Contractor Certification and Agreement with the Defense Security Assistance Agent" ("Certification") which set forth General Dynamics' agreement with DSAA as to conditions of payment. General Dynamics submitted its first Certification in February 1986 when it and Greece sent DSAA the LOI that ultimately resulted in Contract 5/86. General Dynamics sent a largely identical Certification in February 1987 when Contract 5/86 was finalized and signed. DSAA drafted the Certifications, each containing thirteen enumerated paragraphs setting forth the terms of the agreement with DSAA. Paragraph ten of the Certification provided that General Dynamics Certifies that the entire agreement which effects the contractual relationship between the contractor and the purchasing government relating to this Purchase Agreement consists of: Letter of Intent, dated 6 March 1985, including Annexes and documents listed therein and that there are no other amendments, modifications, side letters, or supplementary agreements relating to this Purchase Agreement. Agrees that any future changes with the terms of the Purchase Agreement will be reported to the DSAA upon effect.

Under the initial contract documents Greece agreed to make a $24 million down payment followed by quarterly milestone payments pursuant to a fixed schedule set forth in Annex A6 to Contract 5/86. The quarterly payments were due on the scheduled date provided defendants had completed the prescribed milestone events associated with each payment. Defendants' right to receive the milestone payments was not limited by their actual cost of performance, nor were defendants required to substantiate their incurred costs, or provide any cost information at all. Instead, they submitted a "Certification of Work-In-Progress" representing that they had completed the necessary milestone events.

Defendants submitted each invoice for payment to the Greek government. On each invoice defendants represented that the invoice was in accordance with Contract 5/86 (or the LOI) and defendants' certification with DSAA. Greek authorities reviewed each invoice to confirm that payment was proper. Greek representatives approved the invoices for payment, signed the Certification of Work-In-Progress and sent the invoices to the U.S. government with requests that they be paid.

The parties performed under the LOI and draft contract while they negotiated the terms of the final contract. The draft contract contained a clause that would require that the final contract price be reduced by the value of the imputed interest General Dynamics obtained by receiving so much of the price up front before incurring costs equal to payments received. That clause (the "EPA Clause") was contained in Article 11 of the draft contract. Negotiations of the final terms of the contract continued for 22 months. Among the many provisions continually discussed were the delivery dates and the EPA Clause. General Dynamics wanted elimination of the EPA Clause as a quid pro quo for an accelerated delivery schedule requested by Greece.

The parties executed the final version of Contract 5/86 on January 12, 1987. Greece submitted the contract and General Dynamics' Certification to DSAA in February 1987. The final version did not contain the EPA Clause, but did include the accelerated delivery schedule.

DISCUSSION

A movant is entitled to summary judgment under Fed.R.Civ.P. 56 when the moving papers and affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once a moving party has met its burden, the non-moving party must go beyond the pleadings and set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Becker v. Tenenbaum-Hill Associates, Inc., 914 F.2d 107, 110 (7th Cir.1990). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing summary judgment. Fisher v. Transco Services-Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir.1992).

A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The non-moving party, however, "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "There mere existence of a scintilla of evidence in support of the [non-moving party's] position will be insufficient; there must be evidence on which the jury could reasonable find for [the non-moving party]." Anderson, 477 U.S. at...