U.S. ex rel. Fago v. M & T Mortg. Corp.

• Decision Date: 02 October 2007
• Docket Number: Civil Action No. 03-1406 (GK).
• Citation: 518 F.Supp.2d 108
• Parties: UNITED STATES of America, ex rel. Anne M. FAGO, Relator, Bringing this Action on Behalf of the United States of America, Plaintiff, v. M & T MORTGAGE CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

518 F.Supp.2d 108

UNITED STATES of America, ex rel. Anne M. FAGO, Relator Bringing this Action on Behalf of the United States of America, Plaintiff, v. M & T MORTGAGE CORPORATION, Defendant.

Civil Action No. 03-1406 (GK).

United States District Court, District of Columbia.

October 2, 2007.

Adam Augustine Carter, The Employment Law Group, PC, Lisa Lynn Barclay, Zuckerman Spaeder, LLP, Washington, DC, Cyril V. Smith, Zuckerman Spaeder LLP, Baltimore, MD, for Plaintiff.

Christopher Kip Schwartz, Thompson Hine LLP, Washington, DC, for Defendant.

Laurie J. Weinstein, United States Attorney's Office, Roscoe Howard, Jr., Troutman Sanders LLP, Washington, DC, for Movant.

MEMORANDUM OPINION

GLADYS KESSLER, District Judge.

Plaintiff Anne M. Fago brings this qui tam suit under the False Claims Act, 31 U.S.C. §§ 3729 et seq., on behalf of the United States against Defendant M & T Mortgage Corporation ("MTMC"). This matter is before the Court on the following motions: (1) Defendant's Motion for Summary Judgment [Dkt. No. 51]; (2) Defendant's Supplemental Motion for Summary Judgment [Dkt. No. 104]; and (3) Plaintiff's Motion to Strike Declarations and Interrogatory Answers Submitted with Defendant MTMC's Supplemental Motion for Summary Judgment [Dkt. No. 107]. Upon consideration of the Motions, Oppositions, Replies, Surreply, and the entire record herein, and for the reasons stated below, Defendant's Motion for Summary Judgment is granted in part and denied in part; Plaintiff's Motion to Strike is granted; and Defendant's Supplemental Motion for Summary Judgment is granted in part and denied in part.

I. BACKGROUND

A. Facts¹

MTMC is a subsidiary of M & T Bank and is engaged in the home mortgage lending business. Plaintiff Ann Fago went to work for MTMC's Post Closing Department in Buffalo, New York in July 2001. One function of the Post Closing Department is to audit mortgage loan files or "binders" for completeness when they are received following mortgage loan closings. In the normal course of business, once a mortgage loan binder is complete and in order, it would be submitted by MTMC to the United States Department of Housing and Urban Development ("HUD") to be insured or "endorsed" by the Government. Once HUD approves a loan for endorsement, MTMC may obtain reimbursement from HUD should a borrower default and MTMC suffers a loss or is required to pursue foreclosure.

Plaintiff alleges that the mortgage loan binders often included missing, incomplete, or unsigned documents. HUD required loan binders to be submitted within sixty days of closing to avoid a more burdensome administrative process for seeking HUD insurance. Due to the sixty-day requirement, and the increased volume of loan applications in 2002 flowing from historically low interest rates, Plaintiff alleges that she and others in the Post Closing Department forged signatures on certain documents found in the loan binders prior to their submission to HUD. Plaintiff alleges that her supervisor, Camille Bettcker, and a co-worker, Suzanne Palmer,² also engaged in forging signatures. Palmer, and another MTMC employee, Christine Meier, have subsequently admitted that they falsified signatures on certain documents in the loan binders.

The Plaintiff's expert forensic handwriting analyst, John Hargett, has determined that a total of fifty-three loan binders submitted to HUD contain "non-genuine" signatures.³ MTMC contends that many of these signatures were on documents that were not considered critical under HUD guidelines and could not have had an impact on HUD's decision to insure those loans. There is conflicting evidence in the record regarding what impact these "non-genuine" signatures on "non-critical" documents in the loan binder would have had on HUD's decision to endorse the loan.

When submitting an application for insurance, HUD requires a lender to certify to the best of its knowledge that all required documents are in the loan binder and that they have all been properly prepared. The parties disagree about whether HUD could choose to deny an application for insurance if it knew that this certification was false.

B. Procedural History

Plaintiff filed her Amended Complaint on May 14, 2004.⁴ Count I of the Amended Complaint alleges violations of the False Claims Act ("FCA") in that (1) MTMC knowingly presented false claims for payment to the Government in violation of 31 U.S.C. § 3729(a)(1); (2) MTMC knowingly made or used false records or statements so the Government would pay false claims in violation of 31 U.S.C. § 3729(a)(2); and (3) MTMC engaged in a conspiracy to defraud the Government by having false claims paid in violation of 31 U.S.C. § 3729(a)(3). Count II seeks a declaratory judgment that MTMC's alleged forgery of documents violated 31 U.S.C. § 3729(a)(2). Count III seeks appropriate injunctive relief.

On August 22, 2005, Plaintiff filed a Motion to Compel the production of documents and other information regarding loan binders that MTMC had submitted to HUD, but that had not been produced in discovery. [Dkt. No. 37]. Magistrate Judge John M. Facciola granted the Motion to Compel in part on March 31, 2006. United States ex rel. Fago v. M & T Mortgage Corp., 235 F.R.D. 11 (D.D.C. 2006). On July 31, 2006, the Court ordered additional discovery about the new loan binders that were subject to Magistrate Judge Facciola's Order. [Dkt. No. 71]. Plaintiffs expert John Hargett had initially identified fifteen loan binders that contained allegedly "non-genuine" signatures. After MTMC produced these additional loan binders in compliance with Magistrate Judge Facciola's Order, Mr. Hargett identified an additional thirty-eight loan files containing documents with "non-genuine" signatures. Thus, the number of loan files Plaintiff was alleging to contain "non-genuine" signatures totaled fifty-three.

On December 30, 2005, MTMC filed its Motion for Summary Judgment [Dkt. No. 51] regarding the initial fifteen loan files that Mr. Hargett believed to contain "non-genuine" signatures. On March 2, 2006, Plaintiff filed a Motion to Strike [Dkt. No. 56] four declarations submitted by MTMC with its Reply in support of its Motion for Summary Judgment. Plaintiff argued that three of the declarations were written by witnesses who had not been disclosed by MTMC as required by Fed.R.Civ.P. (26)(a)(1). She also argued that a declaration submitted by Gerald Richards, MTMC's handwriting expert, expressed opinions he had formed after the close of discovery and the submission of Fed. R.Civ.P. 26 statements.

On April 11, 2006, the Court granted in part and denied in part Plaintiffs Motion to Strike, and struck the four declarations submitted by MTMC pursuant to Fed. R.Civ.P. 26 and 37. United States ex rel. Fago v. M & T Mortgage Corp., 2006 WL 949899 (D.D.C. Apr.11, 2006).

That same day, MTMC filed its Supplemental Motion for Summary Judgment [Dkt. No. 104] regarding the thirty-eight newly identified loan files. On May 2, 2007, Plaintiff filed a Motion to Strike [Dkt. No. 107] declarations and interrogatory answers submitted by MTMC in support of its Supplemental Motion for Summary Judgment.

II. STANDARD OF REVIEW

Summary judgment will be granted when the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits or declarations, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). A fact is "material" if it might affect the outcome of the action under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party seeking summary judgment bears the initial burden of demonstrating an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once the moving party makes its initial showing, however, the nonmoving party must demonstrate "specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Accordingly, the nonmoving party must provide evidence that would permit a reasonable jury to find in his or her favor. Liberty Lobby, 477 U.S. at 255-56, 106 S.Ct. 2505. "If the evidence is merely. colorable, or is not significantly probative, summary judgment may be granted." Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted). In reviewing the evidence, "the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

III. ANALYSIS

A. Plaintiffs Motion to Strike

As an initial matter, the Court turns to Plaintiffs Motion to Strike declarations and supplemental interrogatory responses that MTMC relies on in support of its Supplemental Motion for Summary Judgment. Plaintiff raises a number of arguments as to why these materials should be struck.

1. Mayhill, Daly, and Gerace Declarations

First, Plaintiff argues that the declarations of fact witnesses Sheri Mayhill Jan Daly, and Louis Gerace should be struck. The three declarations are from title company records custodians and attach documents purportedly showing that loan documents containing allegedly non-genuine signatures had not been altered after they had been sent by the title companies to MTMC. Plaintiff argues that, despite extensive discovery in this case, the three witnesses were never identified by MTMC pursuant to Fed.R.Civ.P. 26(a)(1). Therefore, Plaintiff was not afforded an opportunity to depose these witnesses.

MTMC responds that there was no obligation to disclose information pursuant to Rule 26(a)(1) in this case. MTMC also argues that Mayhill, Daly, and Gerace are rebuttal witnesses to Plaintiffs allegations that certain loan documents included forged signatures and that there is...