U.S. ex rel. Miller v. Bill Harbert Intern. Const.

• Decision Date: 03 August 2007
• Docket Number: Civil Action No. 95-1231 (RCL).
• Parties: UNITED STATES of America, ex rel. Richard F. MILLER, Plaintiffs, v. BILL HARBERT INTERNATIONAL CONSTRUCTION, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

505 F.Supp.2d 20

UNITED STATES of America, ex rel. Richard F. MILLER, Plaintiffs, v. BILL HARBERT INTERNATIONAL CONSTRUCTION, INC., et al., Defendants.

Civil Action No. 95-1231 (RCL).

United States District Court, District of Columbia.

August 3, 2007.

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Robert B. Bell, Gregory B. Reece, Howard M. Shapiro, Jennifer M. O'Connor, Jonathan Goldman Cedarbaum, Matthew B. Baumgartner, Michael J. Gottlieb, Monya Monique Bunch, Wilmer Cutler Pickering Hale & Dorr, Kevin Michael Henry, Sidley Austin, LLP, Carolyn Gail Mark, Michael F. Hertz, U.S. Department of Justice, Keith V. Morgan, U.S. Attorney's Office, Washington, DC, for Plaintiffs.

Charles Anthony Zdebski, June Ann Sauntry, Troutman Sanders LLP, Barry Coburn, Trout Cacheris, PLLC, Charles Samuel Leeper, Jeffrey J. Lopez, Michael Reilly Miner, Elizabeth Ewert, Michael J. McManus, Drinker, Biddle & Reath, Phillip Craig Zane, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, David Schertler, Schertler & Onorato, L.L.P., Andrew Lawrence Hurst, Stephen Printiss Murphy, Reed Smith LLP, Washington, DC, Brian P. Watt, Bryan B. Lavine, James J. Mills, Timothy J. Kozik, Troutman Sanders LLP, Charles C. Murphy, Jr., Vaughan & Murphy, Atlanta, GA, for Defendants.

MEMORANDUM OPINION & ORDER

LAMBERTH, District Judge.

Before the Court are a number of matters related to the form of judgment to be entered in this case. Based upon the papers submitted by the parties, the applicable law, and the entire record herein, which now includes the verdict of the jury following trial of the False Claims Act claims in this case, the Court holds that the government may not pursue its equitable claims since they would result in a double recovery, and holds that relator Richard Miller is entitled to judgment on the pleadings on all of defendant HII's counterclaims.

I. Motion for Entry of Judgment: Common Law Equity Claims

The government seeks judgment on its common law claims of unjust enrichment and payment under mistake of fact, and HII and HC have opposed, arguing that the government is not entitled to a judgment on those claims that would be duplicative of the judgment in the FCA case. See Response of HII and HC to Mot. for Entry of Judgment [871]. For its part, the government claims that it "does not seek a double recovery for both its False Claims Act claims as well as its common law claims," but is nonetheless "entitled to a finding of liability on its common law claims." Mot. for Entry of Judgment [863] at 13. The government acknowledges that "[o]nce the False Claims Act judgment is satisfied, then the United States' common law claims would be deemed extinguished." Id. at 14.

The claims for unjust enrichment and payment under mistake of fact are essentially duplicative of each other and seek the same relief that has been awarded under the jury's verdict in the FCA case. See Ellipso, Inc. v. Mann, 460 F.Supp.2d 99, 104-105 (D.D.C.2006) (setting forth elements of unjust enrichment); United States v. Bouchey, 860 F.Supp. 890, 894 (D.D.C.1994) (same); United States v. Mead, 426 F.2d 118, 124 (9th Cir.1970) (setting forth elements of payment under mistake of fact); LTV Education Systems, Inc. v. Bell, 862 F.2d 1168, 1175 (5th Cir. 1989) (same).

It is true that the government in an FCA case generally may plead theories in the alternative, even if different claims seek relief for the same injury, so long as there is ultimately only one recovery. See United States v. United Technologies Corp., 255 F.Supp.2d 779, 785 (S.D.Ohio 2003) (common law and FCA claims may proceed together because, while government "will not be allowed to recover twice, [it] may defer its election of remedy until trial on the merits"). But where, as here, judgment issues in favor of the government in an FCA case, the equitable claims cannot be pursued, since an adequate remedy has been had at law, and since any further recovery would be duplicative and thus unwarranted. See United States ex rel. Augustine v. Century Health Servs., 136 F.Supp.2d 876, 895-896 (M.D.Tenn. 2000) (where FCA liability was established, unjust enrichment and payment-by-mistake claims dismissed as duplicative); Brooks v. Department of Agriculture, 841 F.Supp. 833, 840 (N.D.Ill.1994) (where FCA liability established, unjust enrichment claim dismissed as duplicative); United States v. Rogan, 459 F.Supp.2d 692, 728 (N.D.Ill.2006) (setting aside claims for fraud and mistake of fact where government had already recovered damages under FCA, "to avoid double redress for a single wrong").

The government has received a verdict in its favor on the FCA claims, and judgment is being entered. The Court will not proceed with the academic exercise of considering liability on the equitable claims, since any recovery under them Would be duplicative.

II. Motion for Judgment on Pleadings: Counterclaims

Relator Richard Miller has filed a Motion for Judgment on the Pleadings [861] on HII's counterclaims against him, which were asserted in HII's Answer.¹ [408] The first counterclaim is for breach of fiduciary duty, while the other two seek contribution and indemnification for the government's equitable claims.

Under Rule 12(c) of the Federal Rules of Civil Procedure, "[a]fter the pleadings are closed but within such time frame as not to delay the trial, any party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). Such motion shall be granted "if the movant shows, at the close of pleadings, that no issue of material fact remains to be resolved, and that he or she is entitled to judgment as a matter of law." Johnson v. District of Columbia, 2006 WL 2521241 at *2 (D.D.C2006) (Kessler, J.) (citing Terry v. Reno, 101 F.3d 1412, 1423 (D.C.Cir.1996); Haynesworth v. Miller, 820 F.2d 1245, 1249 n. 11 (D.C.Cir.1987); Summers v. Howard University, 127 F.Supp.2d 27, 29 (D.D.C.2000) (Harris, J.)). The analysis for Rule 12(c) motions is "virtually identical to that which governs motions to dismiss pursuant to Rule 12(b)(6)." Johnson, 2006 WL 2521241 at *2 (internal quotation omitted).

A. Fiduciary Duty Counterclaim

As to the fiduciary duty claim, HII alleges that Miller was an officer at J.A. Jones Construction Co. from 1986 to 1991, and then became an officer at J.A. Jones, Inc., the former's corporate parent. Counterclaim ¶ 7; Answer [408] at 18. J.A. Jones Construction was a joint venture partner with certain of the Harbert companies in bidding and performing on Contract 20A and Contract 07, and in bidding on Contract 29. Id. at ¶ 18. HII was an investor in the Harbert companies. Id. HII alleges that Miller became aware of evidence of the bid rigging conspiracy at issue in this case, hints that he had a role in perpetrating or at least concealing the fraud, and asserts that he violated a fiduciary duty to HII by failing to report the fraud to HII or the government at an earlier time.

1. Fiduciary Duty Counterclaim: Viability Under False Claims Act

Miller argues that the claim for breach of fiduciary duty is foreclosed under the False Claims Act. A number of cases have barred particular counterclaims in FCA cases. In what appears to be the first case to so hold, the court rested its consideration on policy grounds, reasoning that:

To permit the counterclaim pleaded would set a precedent that would be a strong deterrent to the institution of genuine informer's actions. We may assume that some informers would get their information of the fraud on the government by being implicated in the perpetration of the fraud. Fear of a counterclaim, based on the charge that the informer himself was solely involved and the defendants relied upon his judgment and integrity, would in the average case discourage the institution of qui tam actions. The reason Congress gave a genuine informer a share in the recovery was to encourage qui tam actions in the interest of the government. It seems to me that a sensible application of the qui tam statute should bar the plea of a counterclaim against the informer.

United States ex rel. Rodriquez v. Weekly Publications, 74 F.Supp. 763, 769 (S.D.N.Y.1947).

In Rodriquez, the counterclaim was premised on the allegation that the qui tam relator himself was responsible for the fraud and had led the defendant astray, so it was in the nature of an action for indemnification. Later cases that followed Rodriquez elaborated more fully on its logic, and the principal such case is Mortgages, Inc v. U.S. District Court for the District of Nevada (Las Vegas), 934 F.2d 209 (9th Cir.1990), where FCA defendants were barred from bringing third-party complaints against the qui tam relators. The third-party complaints essentially sought contribution and indemnification for the FCA violations based on the relators' alleged role in their commission.

The Ninth Circuit began its analysis by pointing out that the FCA does not mention a right to contribution or indemnification, and nothing about its history or purpose suggests that Congress intended to provide one. "The FCA is in no way intended to ameliorate the liability of wrongdoers by providing defendants with a remedy against a qui tam plaintiff with `unclean hands.'" Id. at 213. Nor was such a right to be found in federal common law, as it would serve only private interests and, by punishing relators and thus discouraging them from bringing suit, would actually imperil the federal interests which the FCA seeks to vindicate. Id. The congressional intention to not allow counterclaims was supported by the fact that Congress did choose to include explicit provisions for reducing the award of a wrongdoing relator and otherwise acknowledging his misdeeds, but with the benefit redounding to the government, not to the other wrongdoers. See, e.g., 31 U.S.C. § 3730(d)(3). If Congress had intended to allow wrongdoers to shift costs to relators, it would have done so explicitly. This is especially true because any right to contribution from a...