United States ex rel. Moore v. Pennrose Props., LLC
| Decision Date | 24 March 2015 |
| Docket Number | Case No. 3:11-cv-121 |
| Parties | UNITED STATES OF AMERICA ex rel., ALAN MOORE AND TERESA BERKSHIRE, Plaintiffs, v. PENNROSE PROPERTIES, LLC AND KAPP CONSTRUCTION CO., INC., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
DECISION AND ENTRY OVERRULING AS MOOT THE MOTION TO DISMISS AND REQUEST FOR A HEARING (DOC. #49) AND THE MOTION TO DISMISS (DOC. #50) FILED BY DEFENDANT KAPP CONSTRUCTION COMPANY, INC., AND SUSTAINING IN PART AND OVERRULING IN PART THE MOTION TO DISMISS FILED BY DEFENDANT PENNROSE PROPERTIES, LLC (DOC. #51); RELATOR'S MOTION FOR LEAVE TO FILE NOTICE OF SUPPLEMENTAL AUTHORITY IN SUPPORT OF HIS OPPOSITION TO DEFENDANT PENNROSE PROPERTIES, LLC'S, MOTION TO DISMISS (DOC. #78) IS OVERRULED AS MOOT; THE FIRST AMENDED COMPLAINT (DOC. #39) IS STRICKEN, AND ALL CLAIMS IN THE COMPLAINT (DOC. #2) ARE DISMISSED WITHOUT PREJUDICE; TERMINATION ENTRY.
Pending before the Court are three Motions to Dismiss (Doc. #49, Doc. #50, and Doc. #51) filed by Defendants Kapp Construction Company, Inc. ("Kapp") and Defendant Pennrose Properties, LLC ("Pennrose") (collectively, "Defendants"). For the reasons set forth below, the Court SUSTAINS Pennrose's Motion to Dismiss (Doc. #51), insofar as it challenges the filing of this action under the first-to-file barunder 31 U.S.C. § 3730(b)(5), and OVERRULES said motion on all other grounds. Kapp's Motions to Dismiss (Doc. #49 and Doc. #50) are OVERRULED AS MOOT.
Relator Alan W. Moore ("Moore") has filed a number of qui tam actions against Defendants under the False Claims Act ("FCA"), 31 U.S.C. § 3730. On June 26, 2009, he and Local 18 of the International Union of Operating Engineers ("Union") filed suit as Relators against Defendants in the United States District Court for the Southern District of Ohio, Eastern Division at Columbus, alleging that Defendants caused the Springfield Metropolitan Housing Authority ("SMHA") to submit false claims under construction contracts to the United States. The case was assigned Case No. 2:09-cv-536 ("536 Case").
While that case was pending, on September 23, 2010, Relators Moore and Teresa Berkshire ("Berkshire") filed another qui tam suit under the FCA against Defendants in the United States District Court for the Southern District of Ohio, Eastern Division at Columbus. In the new case, the Union was named as a defendant. Moore and Berkshire asserted that only they, not the Union, had uncovered the fraud alleged against Defendants. They further alleged that the Union had attempted to stymie their efforts to collect evidence of fraud against Defendants before wrongfully asserting itself as a Relator in the 536 Case. The new case was assigned Case No. 2:10-cv-861 ("861 Case").
On November 22, 2010, Moore and Mark Johnson ("Johnson") filed suit, again in the Eastern Division at Columbus of the United States District Court for the Southern District of Ohio, against Kapp and C&N Industrial Contractors Company, Inc. ("C&N"), alleging that Defendants had committed fraud under contracts funded by the United States in connection with another construction project in Springfield, Ohio. The case was assigned Case No. 2:10-cv-1051 ("1051 Case").
All three cases were assigned to the Honorable Michael H. Watson in Columbus, who transferred the first two cases to the Western Division at Dayton of the United States District Court for the Southern District of Ohio on April 8, 2011. The 1051 case was not transferred, and was closed on June 22, 2011, after the parties stipulated to a dismissal without prejudice.
After the transfers, the 536 Case was assigned Case No. 3:11-cv-00120 ("120 Case") and placed on the docket of Judge Thomas M. Rose. The 861 Case was assigned Case No. 3:11-cv-00121 ("121 Case") and placed on the docket of Judge Walter H. Rice. On June 24, 2011, the 120 Case was transferred onto the docket of Judge Rice. 120 Case at Doc. #30.
On November 7, 2011, the Union and Moore moved the Court for an order dismissing the 120 Case without prejudice. 120 Case at Doc. #35. In support of the motion, they informed the Court that the Government had elected not to intervene in the action, and they did not wish "to proceed jointly to pursue the Defendants" in the action. The Government filed a Notice of Consent to Relators'Stipulation of dismissal on November 8, 2011. 120 Case at Doc. #38. The Court dismissed the 120 Case without prejudice on November 8, 2011. 120 Case at Doc. #39.
On November 1, 2011, the Government informed the Court that it had decided not to intervene in this action, the 121 Case. Doc. #13. Accordingly, the Court unsealed the Complaint and ordered it to be served upon Defendants. Doc. #14. After receiving no indication that the Complaint had been served, the Court sent a letter on April 2, 2012, to Relators' attorney, Dorothy Gamiere, to inquire whether they intended to pursue their claims. Doc. #17. The Court received no response, and sent a follow up letter on May 7, 2012. Doc. #18. When the Court received no further response, it dismissed the case for failure of prosecution on June 15, 2012. Doc. #15.
On March 3, 2013, Relators Moore and Berkshire filed a Motion to Vacate the Court's Dismissal Order, explaining that Ms. Gamiere had grown ill and passed away shortly before the Court had ordered the unsealing of the Complaint, and the Court's letters to her had not been received by the successor attorney, Maria E. Quinn. Doc. #16. The Court sustained the motion, reactivated the case on its docket, and issued orders to Relators to serve the Complaint on Defendants. Doc. #19 and Doc. #20. Defendants were served on March 11, 2014. Doc. #24 and Doc. #25. On June 6, 2014, Relator Moore filed a First Amended Complaint, with several hundred pages of attached exhibits, which elaborated on the FCA claims alleged against Defendants. Doc. #39. The First Amended Complaint did notname Berkshire as a Relator in its caption, and identified her in its allegations only as a "Business Agent" of "a local union" who had worked with Moore in uncovering the alleged fraud. Id. at 3.
On July 6, 2014, Kapp filed a Motion to Unseal All Pleadings in Cases 2:09-cv-536, 3:11-cv-120, 2:10-cv-1051, 2:10-cv-861, and 3:11-cv-121 (hereinafter, "Motion to Unseal") (Doc. #48), a Motion to Dismiss (Doc. #49) challenging the reactivation of the case on the Court's docket after the dismissal for failure to prosecute, and a Motion to Dismiss under Rule 12(b)(1), 12(b)(5), and 12(b)(7) of the Federal Rules of Civil Procedure (Doc. #50). On July 7, 2014, Pennrose also filed a Motion to Dismiss (Doc. #51), and on July 16, 2014, Pennrose filed a Motion to Unseal, joining Kapp's motion and adopting its arguments (Doc. #55).1
In its Decision and Entry of November 17, 2014, the Court sustained in part and overruled in part Defendants' Motion to Unseal. Doc. #66. The Court sustained the motion insofar as it requested that the Court lift the seal on all cases except Case 1051. The motion was overruled with regards to that case because it had never been transferred to this Court. Furthermore, recognizing that Defendants might wish to supplement their pending Motions to Dismiss after reviewing the previously sealed docket entries, the Court provided a briefing schedule for filing Supplemental Memoranda, as well as Response Memoranda by Relator.
On December 23, 2014, and December 29, 2014, Defendants filed Supplemental Memoranda in Support of the Motions to Dismiss. Doc. #70 & Doc. #71. Relator Moore filed Responses in Opposition to Defendants' Motions to Dismiss on March 4, 2015.2 Doc. #75, #76, & #77.
Defendants argue for dismissal of this case on a number of grounds. Pennrose argues that Relator's First Amended Complaint fails to state a claim upon which relief may be granted under Fed. R. Civ. P. 12(b)(6) because it does not meet the heightened pleading standard applicable to FCA claims under Fed. R. Civ. P. 9(b). Doc. #51 at 11-12. Kapp criticizes Relator's failure to join the SMHA as a necessary or indispensable party under Fed. R. Civ. P. 19(a), requiring dismissal under Fed. R. Civ. P. 12(b)(7). Doc. #50 at 7. Both Defendants argue that dismissal for insufficiency of service of process under Rule 12(b)(5) is warranted because they were not served within 120 days of the unsealing of the Complaint, as required by Rule 4(m). Id. at 4; Doc. #51 at 34. Pennrose's Supplemental Memorandum raises a statute of limitations issue. Doc. #71 at13. Both Defendants also make a colorable argument that the Court should not have grantedthe Motion for Relief from Judgment under Rule 60(b). Doc. #49; Doc. #70; Doc. #71.
However, the Court's "[sjubject matter jurisdiction is always a threshold determination," and the issue can be raised by the parties at any time or by the Court sua sponte. Am. Telecom Co. v. Republic of Lebanon, 501 F.3d 534, 537 (6th Cir. 2007); Fed. R. Civ. P. 12(h)(3); Answers in Genesis of Ky., Inc. v. Creation Ministries Int'l, Ltd., 556 F.3d 459, 465 (6th Cir.2009). The Court must, therefore, consider whether Defendants' two jurisdictional arguments, the FCA's public disclosure bar, 31 U.S.C. § 3730(e)(4)(A), and the statute's first-to-file bar, 31 U.S.C. § 3730(b)(5), apply in this case. As explained below, the Court does not agree that the public disclosure bar so applies. However, because the first-to-file bar does apply, Defendants are entitled to dismissal of this case on that basis, obviating the need to consider their non-jurisdictional arguments for dismissal.
A challenge to the subject matter jurisdiction brought under Rule 12(b)(1) of the Federal Rules of Civil Procedure may either be facial or factual. Carrier Corp. v. Outokumpu Oyj, 673 F. 3d 430, 440 (6th Cir. 2012). A facial challenge requires all of the plaintiff's allegations to be accepted as true, "much as with a Rule 12(b...
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