United States ex rel. Maharaj v. Zimmerman

• Citation: 427 F.Supp.3d 625
• Decision Date: 12 December 2019
• Docket Number: Civil Action No. ELH-18-2998
• Parties: UNITED STATES, et al., EX REL. Susan V. M. MAHARAJ, Plaintiffs v. The ESTATE OF Charles Howard ZIMMERMAN, et al., Defendants.
• Court: U.S. District Court — District of Maryland

427 F.Supp.3d 625

UNITED STATES, et al., EX REL. Susan V. M. MAHARAJ, Plaintiffs
v.
The ESTATE OF Charles Howard ZIMMERMAN, et al., Defendants.

Civil Action No. ELH-18-2998

United States District Court, D. Maryland.

Filed December 12, 2019

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Jacob Ira Weddle, Gordon and Simmons LLC, Frederick, MD, for Plaintiffs.

John Leonard Thompson, Jr., Law Office of John Leonard Thompson Jr., Walkersville, MD, for Defendants.

MEMORANDUM OPINION

Ellen L. Hollander, United States District Judge

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This qui tam action concerns a six-acre parcel of land located in Frederick County, Maryland (the "Land" or the "Disputed Parcel"). Dr. Susan V. M. Maharaj, the Relator, filed suit on behalf of the United States of America and the State of Maryland against the Estate of Charles Howard Zimmerman, Robert Clayton Stevens, and George C. Stevens, pursuant to the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq. , and Maryland's analogous statute ("MFCA"), Md. Code, §§ 8-101 et seq. of the General Provisions Article ("G.P."). ECF 1 (the "Complaint").¹

The Land separates the Relator's farm from a farm formerly owned by Charles Howard Zimmeran, who died in 2011. It is now the property of Robert and George Stevens. The Relator alleges that defendants did not own the Land, but registered it in the Conservation Reserve Enhancement Program ("CREP"), a federal program in which property owners are paid to dedicate agricultural lands for preservation.² In so doing, defendants allegedly defrauded the Farm Service Agency ("FSA") of the United States Department of Agriculture ("USDA") and its Maryland counterpart, the Maryland Farm Service Agency. According to the Relator, the defendants received "tens of thousands of dollars" from the United States and/or Maryland between 2000 and 2015 by enrolling the Land into the CREP.

The Relator filed her Complaint under seal, along with eighteen exhibits, pursuant to the initial sealing provisions of the FCA and the MFCA, in order to provide time for the United States and Maryland to decide whether they wished to intervene. See 31 U.S.C. § 3730(b)(2) ; G.P. § 8-104(a)(3)(ii). Both the United States and the State of Maryland declined to intervene. See ECF 2; ECF 18. The Seal was lifted (ECF 3), and the Relator has continued to pursue the case.

The Complaint contains four counts. Count I asserts that defendants presented false claims to obtain payment from the United States, in violation of 31 U.S.C. § 3729(a)(1)(A). In Count II, the Relator alleges a violation of 31 U.S.C. § 3729(a)(1)(B), claiming the knowing presentation of false records to obtain payment. Count III asserts that defendants used false records to avoid an obligation to pay the United States, in violation of 31 U.S.C. § 3729(a)(I)(G). And, Count IV alleges that defendants made false statement to obtain payment from Maryland, in violation of G.P. §§ 8-101 et seq.

Defendants have moved to dismiss, pursuant to

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Fed. R. Civ. P. 12(b)(1), 12(b)(5), and 12(b)(6). ECF 12 (the "Defendants' Motion"). The Defendants' Motion is supported by one exhibit. ECF 12-1. The Relator opposes Defendants' Motion (ECF 13), and defendants have replied (ECF 14), supported by one exhibit. ECF 14-1. In addition, Maryland has moved to dismiss, without prejudice. ECF 18 (the "State Motion"). Defendants filed a response to the State Motion (ECF 19), and the State replied. ECF 20. However, the Relator did not respond to the State Motion.

No hearing is necessary to resolve the issues. See Local Rule 105.6. For the reasons that follow, I shall grant the State Motion (ECF 18) and grant in part and deny in part the Defendants' Motion (ECF 12).

I. Factual and Procedural Background³

A. Factual Background

1. The Underlying Properties

The Disputed Parcel separates two farms in Frederick County, Maryland. ECF 1, ¶ 11. The "Laughlin Farm" lies to the east. Id. ¶ 12. The Relator and her husband, Dr. Erich E. Blatter, purchased the Laughlin Farm in 2001 from Dr. Henry Laughlin and Marion P. Laughlin, who had held the property since 1963. Id. ¶¶ 12, 16. The Relator refers to it as the "Blatter/Maharaj Farm." Id. ¶ 14.

To the east lies the "Zimmerman Farm." Id. ¶ 13. Beginning in the 1950s, Charles Zimmerman and his wife, Mildred, rented the Zimmerman Farm, which was then a dairy farm, from Ada Devries and Hilda D. Davies. Id. ¶ 15. The Zimmermans purchased the property from Hilda D. Davies on or about September 28, 1965. Id. ¶ 17. However, according to the Relator, the Zimmerman's did not acquire title to the Disputed Parcel. Id. The Zimmermans owned the Zimmerman Farm until Mr. Zimmerman's death in 2011. Id. ¶ 26. The Zimmerman Farm is presently owned by Robert and George Stevens. Id. ¶¶ 28-29.⁴

The parties fiercely contest the ownership of the Land, which has been the subject of extensive litigation in the Maryland courts. Plaintiff asserts that "none of the parties to this action is the record owner" of the Disputed Parcel. Id. ¶ 14.

2. Allegations Relating to The Estate of Charles Zimmerman

The Zimmermans ceased dairy operations in 1999. Id. ¶ 18. Shortly thereafter, Mr. Zimmerman applied to place 37.3 acres of property in the CREP, knowing that he did not own all of the property. Id. ¶¶ 10, 19-21. The CREP is a land conservation program administered by FSA. Id. ¶ 10 n.1. Farmers participating in the CREP agree to remove environmentally sensitive land from production in exchange for annual payment and other federal and state benefits. Id. According to the Relator, the 37.3 acres that Mr. Zimmerman

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sought to enroll in the CREP included the Disputed Parcel. See id. ¶¶ 11, 22.

To that end, Mr. Zimmerman submitted a Conservation Program Worksheet ("CREP Worksheet") on November 27, 2000. Id. ¶ 19; see ECF 1-3 ("CREP Worksheet"). The same day, the Zimmermans executed a CREP Contract ("CREP Contract"). ECF 1, ¶ 20; see ECF 1-4 ("11/27/2000 CREP Contract"). In the CREP Contract, the Zimmermans represented that Mr. Zimmerman was the " ‘100’ percent owner, rather than operator, of the 37.3 acres for enrollment, which included the Disputed Land." ECF 1, ¶ 21; see id. ¶ 23. In support of the CREP Contract, the Zimmermans provided the Maryland Farm Service Agency with a deed to the Zimmerman Farm. Id. ¶ 21.

The CREP Contract began on January 1, 2001, and was renewed annually. Id. ¶¶ 20, 24. When Ms. Zimmerman passed away in 2007, Mr. Zimmerman revised the CREP Contract, naming himself as the sole contract participant. Id. ¶ 26; see ECF 1-5 ("7/11/2007 CREP Contract").

However, according to the Relator, the Zimmermans "were ineligible to place the Disputed Parcel in a CRP Contract." ECF 1, ¶ 22. In order to enter into a CREP Contract, the participant "must be an owner or operator of the eligible land," but Mr. Zimmerman was neither the owner nor the operator of the Disputed Parcel. Id. (citing 7 C.F.R. § 1410.5 ). He did not hold the title to the Disputed Parcel. Id. ¶ 17. And, he was not an operator of the Disputed Parcel, because he ceased farming the prior year, and he did not submit any paperwork averring to be an operator of the Land. Id. ¶ 23.

Mr. Zimmeran allegedly knew that he did not own the Disputed Parcel. Id. ¶ 34. He told family and neighbors that the Disputed Parcel was part of the Laughlin Farm. Id. ¶ 35. And, in the 1980s, Mr. Zimmerman allegedly had an argument with Dr. Laughlin about their property boundaries. Id. ¶ 36. Dr. Laughlin's son mediated the dispute, which culminated in Mr. Zimmerman and Dr. Laughlin signing a written agreement acknowledging that their property boundaries were contested, but agreeing that both parties could use the Disputed Parcel rent-free. Id. Further, the Relator alleges that in the spring of 2002, Mr. Zimmerman admitted to her that she owned the Disputed Parcel. Id. ¶ 44. And, in September 2010, he confirmed his lack of ownership over the Disputed Parcel because he had Zimmerman Farm surveyed, and the surveyors characterized the Disputed Parcel as an "Area of Unknown Ownership." Id. ; see ECF 1-11 ("Easement Survey").

The Relator alleges that she has exercised ownership over the Disputed Parcel since purchasing the Laughlin Farm in 2001. ECF 1, ¶ 39. She treated the Land as her property, including mowing and clearing brush and building a stone walkway and patio. Id. ¶¶ 42, 43. And, when individuals wanted to use the Disputed Parcel for recreation, they asked Dr. Maharaj for permission, not the Zimmermans. Id. ¶¶ 40, 41. Mr. Zimmerman never objected to Dr. Maharaj or third parties using the Disputed Parcel. Id. ¶¶ 40, 43.

Mr. Zimmerman passed away on January 29, 2011. Id. ¶ 26. Robert, acting as the personal representative of the Estate of Charles Howard Zimmerman (the "Estate"), revised the CREP Contract on August 1, 2011, to name the Estate as the CREP participant. Id. ; see ECF 1-6 ("1/29/2011 CREP Contract"). But, when Robert filed an inventory of the Estate's assets in May 2011, he did not list the Disputed Parcel as Estate property. ECF 1, ¶ 27.

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