U.S. v. Hawley
| Decision Date | 27 June 2008 |
| Docket Number | No. C 06-4087-MWB.,C 06-4087-MWB. |
| Citation | 566 F.Supp.2d 918 |
| Parties | UNITED STATES of America, Plaintiff, v. Russell T. HAWLEY and Hawley Insurance, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Lawrence D. Kudej, U.S. Attorney's Office, Northern District of Iowa, Cedar Rapids, IA, Martha A. Fagg, U.S. Attorney's Office, Sioux City, IA, for Plaintiff.
Bruce Brian Green, Philip J. Willson, Willson & Pechacek, PLC, Council Bluffs, IA, for Defendants.
ON REMAINING CLAIMS AND REAFFIRMING SUMMARY JUDGMENT ON COUNT ONE
TABLE OF CONTENTS
I. INTRODUCTION ..................................................... 920
II. LEGAL ANALYSIS ................................................... 922
A. Authority To Enter Summary Judgment Sua Sponte ................ 922
B. The Remaining FCA Claims ...................................... 923
1. The Allison Engine decision ................................ 923
2. The impact of Allison Engine in this case .................. 926
a. The § 3729(a)(2) claim ............................. 926
b. The § 3729(a)(3) claim ............................. 927
C. Reconsideration Of Summary Judgment On The First FCA Claim .... 928
1. Authority to reconsider summary judgment ................... 928
2. Grounds for reconsideration and analysis ................... 929
D. The Common-Law Fraud Claim .................................... 930
III. CONCLUSION .................................................. 932
This civil action by the executive branch of the United States government (hereinafter "the government") pursuant to the False Claims Act and Iowa common law comes before the court sua sponte for entry of summary judgment on the government's remaining claims. A few days before trial, the court determined from its trial preparations that the government's remaining claims were not submissible. Therefore, the court canceled the trial and advised the parties that this more detailed ruling granting summary judgment would follow. This ruling also addresses the government's request, in its trial brief, for reconsideration of the court's previous grant of summary judgment in the defendants' favor on one of the government's FCA claims.
In this civil action by the government against defendants Russell T. Hawley and Hawley Insurance, Inc., (collectively "Hawley"), the government alleges that Hawley engaged in improper conduct that allowed ineligible farmers to obtain and make claims against multi-peril crop insurance (MPCI) policies that were sold by Hawley, issued by North Central Crop Insurance (NCCI), and reinsured by the Federal Crop Insurance Corporation (FCIC), for certain crop land in South Dakota. The factual background to this action is set forth in some detail in the court's April 3, 2008, ruling on the parties' cross-motions for summary judgment. See United States v. Hawley, 544 F.Supp.2d 787, 791-94 (N.D.Iowa 2008) (Hawley I).
For present purposes, suffice it to say that the government alleges that Hawley knew that Ed Marshall owned the crop land in question, that Mark Hoffman had rented the land from Ed Marshall, and that Donald Kluver was actually farming the land in 2000. Nevertheless, Hawley submitted to NCCI a crop insurance application for the 2000 crop year in the names of Sydney and Stanley Winquist for an interest in crops on the crop land. The Winquists later made claims against the MPCI policy on which the FCIC ultimately reimbursed NCCI for crop insurance indemnities and paid premium subsidies for the 2000 crop year totaling $145,540. The Winquists and Kluver were later prosecuted for conspiring to make fraudulent crop insurance claims relating to the crop land for crop year 2000. Kluver entered into a plea agreement and the Winquists entered into pretrial diversion agreements.
Similarly, the government alleges that, just before the application deadline for the 2001 crop year, Hawley submitted to NCCI an application for crop insurance for the crop land in the name of, and purportedly signed by, Ed Marshall. The application had been hand-delivered to Hawley by Mark Hoffman, so Hawley had not seen Marshall sign the application. The FCIC eventually made payments for indemnity payments for crop losses claimed by Marshall and paid premium subsidies on the crop land for the 2001 crop year totaling $159,960. Ed Marshall signed a civil settlement agreement with the United States Attorney's Office for the Northern District of Iowa in which he admitted that he had not signed a timely application for crop insurance nor had he instructed anyone to sign such an application on his behalf and pursuant to which he repaid part of the overpayment alleged.
The government originally brought claims pursuant to 31 U.S.C. § 3729(a)(1), (a)(2), and (a)(3) of the False Claims Act (FCA), and common-law claims of fraud and payment under mistake of fact. However, the court granted summary judgment in favor of the defendants on Count One, the FCA claim pursuant to 31 U.S.C. § 3729(a)(1) alleging "presentation of a false claim," and as to Count Five, the common law claim for "payment under mistake of fact," but otherwise denied the defendants' motion for summary judgment. See id. Therefore, this matter was scheduled for trial to begin on June 30, 2008, on the following claims: Count Two, the "false record or statement" claim, in which the government asserts a claim pursuant to 31 U.S.C. § 3729(a)(2) of the FCA alleging that the defendants knowingly made, used, or caused to be made or used false records or statements in order to get false or fraudulent claims paid or approved by the United States; Count Three, the "conspiracy" claim, in which the government asserts a claim pursuant to 31 U.S.C. § 3729(a)(3) of the FCA alleging that the defendants conspired with others to get false or fraudulent claims allowed or paid by the United States in that the defendants entered into an agreement to submit and process false and fraudulent information in order for ineligible individuals to receive indemnities that would ultimately be reimbursed by the United States through the Federal Crop Insurance Corporation (FCIC); and Count Four, the "common-law fraud" claim, in which the government alleges that the defendants engaged in common-law fraud by making or using false records and statements or by concealing the true facts surrounding the individuals actually owning the farmland on which MPCI policies were issued and claims were made, knowing that the misrepresentations or concealments were material and knowing and intending that the United States would rely upon them thereby causing the United States damages.
The court entered an extensive ruling on the parties' motions in limine on June 23, 2008. See United States v. Hawley, 562 F.Supp.2d 1017 (N.D. Iowa 2008) (slip op.) (Hawley II) (docket no. 47). In a footnote in that decision, the court observed that the Supreme Court had recently issued a decision in Allison Engine Co., Inc. v. United States ex rel. Sanders, ___ U.S. ___, 128 S.Ct. 2123, 170 L.Ed.2d 1030 (2008) (Allison Engine), on FCA claims under all three subsections of § 3729(a), but that this court did not find that the Supreme Court's decision changed the disposition of the parties' cross-motions for summary judgment on the FCA claims in this case, although it might change particulars of the jury instructions on and the requirements for proof of the remaining FCA claims in this case. Hawley II, 562 F.Supp.2d at 1022, n. 1.
Notwithstanding that observation, in the course of preparation of jury instructions, after further review of the Allison Engine decision; review of Iowa law applicable to common-law fraud claims; review of the parties' trial briefs addressing, inter alia, the impact of the Allison Engine decision on this case; and review of the record, stipulations, and arguments previously submitted in support of the parties' cross-motions for summary judgment, the court came to the conclusion that the government's remaining claims in this case are not submissible. Therefore, by order (docket no. 50) dated June 25, 2008, the court canceled the trial set to begin on June 30, 2008, and advised the parties that this more detailed ruling granting summary judgment on all of the government's remaining claims would follow at the earliest opportunity. This ruling will also address the government's request, in its Trial Brief (docket no. 44), that the court reconsider its previous grant of summary judgment on the government's FCA claim pursuant to § 3729(a)(1) in Count One.
The court must first address its authority to enter summary judgment sua sponte. As this court recently observed,
"Sua sponte orders of summary judgment will be upheld `only when the "party against whom judgment will be entered was given sufficient advance notice and an adequate opportunity to demonstrate why summary judgment should not be granted."'" Figg v. Russell, 433 F.3d 593, 597 (8th Cir.2006) (quoting Shur-Value Stamps, Inc. v. Phillips Petroleum Co., 50 F.3d 592, 595 (8th Cir. 1995), in turn quoting Interco Inc. v. Nat'l Sur. Corp., 900 F.2d 1264, 1269 (8th Cir.1990)); Stone Motor Co. v. General Motors Corp., 400 F.3d 603, 607 (8th Cir.2005) () (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); Hubbard v. Parker, 994 F.2d 529, 531 (8th Cir. 1993). Although the court may grant summary judgment sua sponte, it is improper for a court to do so where the issue on which summary judgment is granted was not properly raised or discussed in the...
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USA v. Hawley
...issued an order cancelling trial and granting summary judgment in favor of Hawley on the three remaining claims. United States v. Hawley, 566 F.Supp.2d 918 (N.D.Iowa 2008). The court concluded that in light of the Supreme Court's decision in Allison Engine Co. v. United States ex rel. Sande......