U.S. v. Hangar One, Inc., 75-3654

• Decision Date: 09 November 1977
• Docket Number: No. 75-3654,75-3654
• Citation: 563 F.2d 1155
• Parties: 24 Cont.Cas.Fed. (CCH) 81,861, 2 Fed. R. Evid. Serv. 790 UNITED STATES of America, Plaintiff-Appellant, v. HANGAR ONE, INC. (formerly known as Southern Airways Company), Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1155

563 F.2d 1155

24 Cont.Cas.Fed. (CCH) 81,861, 2 Fed. R.

Evid. Serv. 790

UNITED STATES of America, Plaintiff-Appellant, v. HANGAR ONE, INC. (formerly known as Southern Airways

Company), Defendant-Appellee.

No. 75-3654.

United States Court of Appeals, Fifth Circuit.

Nov. 9, 1977.

Wayman G. Sherrer, U. S. Atty., L. Scott Atkins, Asst. U. S. Atty., Birmingham, Ala., Morton Hollander, Chief, App. Sec., Leonard Schaitman, Rex E. Lee, Asst. Attys. Gen., Thomas G. Wilson, Atty., Dept. of Justice, Civ. Div., Washington, D. C., for plaintiff-appellant.

Harry R. Teel, Macbeth Wagnon, Jr., Allen Poppleton, Robert B. Donworth, Jr., Birmingham, Ala., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before TUTTLE, MORGAN and HILL, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

The original panel opinion dated September 29, 1977, is hereby withdrawn and this opinion is substituted in lieu thereof.

The appellant, the United States, brought this action for violation of the False Claims Act, 31 U.S.C.A. §§ 231-235 (1976), alleging that defendant, Hangar One, Inc., knowingly submitted defective materials to the government. After entry of summary judgment in favor of the defendant, the government brought this appeal. This court finds that summary judgment was inappropriate, and, accordingly, we reverse.

A detailed account of the facts appears in the lengthy opinion submitted by the trial court. United States v. Hangar One, Inc., 406 F.Supp. 60 (N.D.Ala.1975). A brief summary will suffice for our purposes. Defendant contracted with the government to supply artillery shells during the Vietnam war. The agreement established an inspection procedure whereby defendant was obligated to inspect the shells before delivery to the government. Although defendant had primary inspection responsibility, the government placed in defendant's plant quality assurance representatives, who were to monitor defendant's inspectors.

The amended complaint alleges that the inspections were fraudulently conducted. Specifically, plaintiff alleged that at certain times, while the government representatives were absent, defendant's inspectors either completely failed to inspect or took shells which had already been rejected as defective and returned them to the production line for shipment to the government. As a result of these activities, the United States, between August, 1968, and December, 1969, allegedly received approximately 18,000 defective shells.

Following denial of its motion to dismiss, defendant moved for reconsideration, accompanying this motion with affidavits denying the fraud. Plaintiff was given an opportunity to file opposing affidavits and the motion was treated as one for summary judgment. Defendant's motion was granted, resulting in this appeal.

Summary judgment is proper where "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In order to make this determination, the trial court must view evidence in the light most favorable to the party opposing the motion. BAW Manufacturing Co. v. Slaks Fifth Avenue, 547 F.2d 928 (5th Cir. 1977). The trial court determined that plaintiff's affidavits were not sufficient to raise a genuine issue of material fact and entered judgment for the defendant. The issue is whether this determination was correct. We hold that it was not.

"( A)ffidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e). Improper application of this standard caused the trial court to give insufficient weight to plaintiff's affidavits. It is clear that the requirement of an affirmative showing applies to the competency of the affiant and not to the admissibility of the evidence, yet the trial court discounted the plaintiff's affidavits, stating:

the Marchant affidavit does not state facts which "affirmatively show" that evidence respecting those instances would be relevant and material with respect to any issue involving the acceptance of shell(s) on or after August 27, 1968, the date that the first acceptance was made of any shell(s) complained of herein. Because of the deficiency, the Marchant affidavit does not meet the requirements of FRCP 56(e) . . . .

406 F.Supp. at 127.

Contrary to the decision of the trial court, it is sufficient if the statements contained in the affidavit are in fact admissible; the affidavit need not contain any affirmative showing of admissibility. Fed.R.Civ.P. 56(e). Thus, the threshold issue of admissibility must be resolved before determining whether or not unresolved questions of fact exist. Plaintiff's affiants stated that they had personally engaged in acts of fraud against the United States; however, most, if not all of these acts occurred in connection with shipments other than the ones which are the subject of this litigation. The trial court determined that this evidence would not be admissible, concluding:

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