United States ex rel. Wuestenhoefer v. Jefferson

• Decision Date: 16 January 2015
• Docket Number: No. 4:10–CV–00012–DMB–DAS.,4:10–CV–00012–DMB–DAS.
• Citation: 105 F.Supp.3d 641
• Parties: UNITED STATES of America ex rel. Kelly Nicole Horton WUESTENHOEFER; and Kelly Nicole Horton Wuestenhoefer, individually, Plaintiff v. A.J. JEFFERSON, et al., Defendants.
• Court: U.S. District Court — Northern District of Mississippi

105 F.Supp.3d 641

UNITED STATES of America ex rel. Kelly Nicole Horton WUESTENHOEFER; and Kelly Nicole Horton Wuestenhoefer, individually, Plaintiff v. A.J. JEFFERSON, et al., Defendants.

No. 4:10–CV–00012–DMB–DAS.

United States District Court,N.D. Mississippi, Greenville Division.

Signed Jan. 16, 2015.

C.W. Walker, III, C.W. Walker, III, Attorney, Greenville, MS, Felecia L. Wilson, U.S. Attorney's Office, Oxford, MS, for Plaintiff.

Bryan Kelly Hardwick, Page Mannino Peresich & McDermott, PLCC, Jackson, MS, Robert Vernon Greenlee, Kitchens Hardwick & Whitfield, PLLC, Brandon, MS, Coleman McCann Mockbee, Alexander F. Guidry, Danny A. Drake, Mockbee Hall & Drake, PA, Jackson, MS, Willie Griffin, Bailey & Griffin, Greenville, MS, for Defendant.

MEMORANDUM OPINION AND ORDER

DEBRA M. BROWN, District Judge.

This False Claims Act and unlawful retaliation action is brought by Kelly Nicole Wuestenhoefer (“Relator”) on behalf of herself and the United States. Doc. # 29. Relator alleges that her former employer, Defendant South Delta Regional Housing Authority (“SDRHA”); Ann Jefferson, SDRHA's former Executive Director; and various other persons and entities, engaged in “wrongful, fraudulent and illegal conduct” with regard to funds of the United States Department of Housing and Urban Development (“HUD”). Id. at 12. Relator further alleges that SDRHA and its employees retaliated against her for her role in uncovering the fraudulent conduct. Finally, Relator alleges that SDRHA's accountant, Lloyd and Associates, LLC, and its owner, Michael Lloyd (collectively, “Lloyd”) wrongfully aided the fraudulent conduct.

Before the Court are a number of pending motions: (1) Lloyd's motion for summary judgment, Doc. # 206; (2) Lloyd's motion for attorney fees, Doc. # 208; (3) SDRHA's motion for summary judgment, Doc. # 245; (4) a motion for summary judgment by Defendant Patricia Logan, Doc. # 247; (5) a motion for summary judgment by Defendant Dinnial Love, Doc. # 249; (6) a motion for summary judgment by Defendant Howard Sanders, Doc. # 251; (7) a motion for summary judgment by Defendant Larry Cordell, Doc. # 253; (8) a motion for summary judgment by Defendant Robert Gray, Doc. # 255; and (9) Lloyd's motion to strike, Doc. # 244.

ISummary Judgment Standard

“Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law.” Norwegian Bulk Transp. A/S v. Int'l Marine Terminals P'ship, 520 F.3d 409, 411 (5th Cir.2008) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). To award summary judgment, “[a] court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor.” Norwegian Bulk Transp. A/S, 520 F.3d at 411–12 (internal quotation marks omitted). To this end, “[t]he moving party bears the burden of establishing that there are no genuine issues of material fact.” Id. at 412.

“If, as here, the nonmoving party bears the burden of proof at trial, the moving party may demonstrate that it is entitled to summary judgment by submitting affidavits or other similar evidence negating the nonmoving party's claim, or by pointing out to the district court the absence of evidence necessary to support the nonmoving party's case.” Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998) (citation omitted). If the moving party makes the necessary demonstration, “the burden shifts to the nonmoving party to show that summary judgment is inappropriate.” Id. In making this showing, “the nonmoving party must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Cotroneo v. Shaw Env't & Infrastructure, Inc., 639 F.3d 186, 191–92 (5th Cir.2011) (citation and internal punctuation omitted). When considering a motion for summary judgment, the Court “resolve[s] factual controversies in favor of the nonmoving party.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994).

IIRelevant Facts

A. HUD's Funding Regulations

The HUD Housing Choice Voucher (“HCV”) program “pays rental subsidies so eligible families can afford decent, safe and sanitary housing.” 24 C.F.R. § 982.1(a). HCV programs “are generally administered by State or local governmental entities called public housing agencies (PHAs).” Id. HUD provides PHAs with the housing assistance funds necessary to run the HCV program (“Housing Assistance Payments” or “HAPs”) and with “funds for PHA administration of the programs.” Id.; Doc. # 206–1 at 7.

HAP funding “may only be used for eligible HAP needs of rent, family self-sufficient escrow payments or utility reimbursements [and] shall not under any circumstances be used for any other purpose, such as to cover administrative expenses....” Doc. # 245–9 at 4 (emphases omitted). In instances where a housing authority “is found to have misappropriated HAP funds by using the funds for any purpose other than valid HAP expenses ... HUD will require the immediate return of the funds of the HAP.” Id.

“[A]dministrative fees may only be used to cover costs incurred to perform ... administrative responsibilities for the [HCV] program in accordance with HUD regulations and requirements.” 24 C.F.R. § 982.152(a)(3). If excess administrative funds (“administrative fee reserves”) exist at the end of a fiscal year, “the PHA may use these funds for other housing purposes permitted by State and local law. However, HUD may prohibit use of the funds for certain purposes.” 24 C.F.R. § 982.155. Since 2004, HUD has restricted the use of administrative fee reserves “to activities related to the provision of rental assistance under the [HCV].” Doc. # 244–3 at 3.

PHAs must “maintain an administrative fee reserve [for the HCV] program.... The PHA must credit to the administrative fee reserve the total of [t]he amount by which program administrative fees paid by HUD for a PHA fiscal year exceed the PHA program administrative expenses for the fiscal year [plus i]nterest earned on the administrative fee reserve.” 24 C.F.R. § 982.155. Furthermore, a PHA “must engage and pay an independent public accountant to conduct audits in accordance with HUD requirements.” 24 C.F.R. § 982.159(a).

HUD requires reports on “Financial Operations and Accounting” for two primary purposes: (1) “to determine if funds expended during the period were used for the program activities authorized by HUD in accordance with approved budgets and program regulations;” and (2) “to monitor HA performance....” Doc. # 245–5 at §§ II–1, II–2.

B. SDRHA

SDRHA is a Mississippi public corporation organized “to provide affordable housing to qualified individuals in” Bolivar, Humphreys, Sunflower, Issaquena, Sharkey, and Washington Counties. Doc. # 206–1 at 1. The County Commissioner from each of the six counties serviced by SDRHA appoints an individual to sit on SDRHA's Board of Commissioners (“the Board”). Id. The six appointed commissioners elect a seventh person to serve on the Board. Id. The Board shoulders the responsibility of “oversee[ing] federal funds.” Doc. # 311 at 12. Although the Board governs SDRHA, an Executive Director hired by the Board administers the corporation's day-to-day operations. Doc. # 206–1 at 1.

During the time period relevant to this suit, SDRHA operated: (1) a Housing Choice Vouchers program run by HUD; (2) a Section 8 New Construction (“NC”) & Substantial Rehabilitation program run by HUD; (3) SDRHA Owned Rental Housing; and (4) a SDRHA-run “Homeownership” program. Doc. # 206–1 at 2. Simultaneously, SDRHA maintained five separate bank accounts: (1) “Section 8 New Construction/Sub Rehab” (“NC Account”); (2) “Housing Choice Voucher” (“HCV Account”); (3) “Business Activities” (“Business Account”); (4) “Component Unit/other” (“Component Account”); and (5) “Disaster Voucher Program” (“DV Account”). Id. at 7. The Business Account operated as SDRHA's “primary authority-wide operating account.”¹ Id.

SDRHA obtained funding from HUD by submitting information to HUD through the Voucher Management System (“VMS”). Doc. # 245–2 at ¶ 5. VMS submissions were submitted monthly. Id. Based upon the information contained in the VMS submissions, HUD would deposit three types of funds into the NC Account: (1) NC HAP funds; (2) HCV HAP funds; and (3) administrative funds. See Doc. # 206–1 at 8; Doc. # 245–2 at ¶ 6. During the time period relevant to this suit, “HUD would base their housing assistance payments ... on the previous year's expenditures. So whatever they would receive in 2008 would be based on what they spent in 2007 with an inflation factor.” Doc. # 206–2 at 20. The administrative fees, in turn, were “based on the number of units leased on the first day of each calendar month.” Id.

Under then-SDRHA procedures, the HCV HAP funds were transferred to the HCV account; the administrative funds were transferred to the Business Account; and the NC HAP funds remained in the NC Account. Doc. # 206–1 at 8. If the administrative funds exceeded the allocable expenses for the NC or HCV programs, then SDRHA created a “payable (due to)” entry for the corresponding program. Id.

Pursuant to SDRHA and HUD's Consolidated Annual Contributions Contract (“ACC”), SDRHA was required to use the funds in compliance “with the requirements of the U.S. Housing Act of 1937 and all HUD regulations and other requirements, including any amendments or changes in the law or HUD requirements.” Doc. # 245–3 at 3. The ACC provided that “[i]f the [housing authority] is not adequately administering any Section 8 program in accordance with HUD requirements, HUD may ... [d]irect the HA to use the funds to improve administration of the Section 8 program or for reimbursement of ineligible expenses.”...