United States ex rel. Concilio De Salud Integral De Loíza, Inc. v. J.C. Remodeling, Inc., No. 18-1199
| Decision Date | 15 June 2020 |
| Docket Number | No. 18-1199 |
| Citation | 962 F.3d 34 |
| Parties | UNITED STATES of America, EX REL. CONCILIO DE SALUD INTEGRAL DE LOÍZA, INC. ("CSILO"), Plaintiffs, Appellants, v. J.C. REMODELING, INC. and José García-Suárez, Defendants, Appellees. |
| Court | U.S. Court of Appeals — First Circuit |
Víctor M. Rivera-Ríos for appellant CSILO.
Carlos J. Sagardía-Abreu and María Celeste Colberg-Guerra, were on brief, for appellees.
Before Torruella, Dyk,* and Thompson, Circuit Judges.
A jury verdict and civil penalty in its favor notwithstanding, Appellant Concilio De Salud Integral De Loíza, Inc. ("CSILO") appeals the district court's decision to deny its request voiced three years into litigation, after the close of discovery, and on the eve of trial, to amend the Pretrial Order to include a discussion of damages it believes it was due under the False Claims Act. Spotting no abuse of discretion, we affirm.
CSILO is a non-profit organization in Loíza, Puerto Rico established in 1972 to provide a wide range of primary healthcare services for the uninsured through the use of federal funds. Among the funds it has received over the years are those, as relevant here, from the American Recovery and Reinvestment Act ("ARRA"), which were given to CSILO "to adequately upgrade and successfully maintain the building structure for the benefit of the patients and staff." "After grants pursuant to ARRA were extended to CSILO [in 2009], it was agreed by the Board and the Executive Director that necessary repairs were needed along the roof of the Health Center's main structure, which was suffering damages due to water infiltration." CSILO then initiated a bidding process, at the end of which J.C. Remodeling ("JCR") was awarded the roof waterproofing project. On May 21, 2010, CSILO and JCR entered into a formal contract titled "CONTRATO DE OBRA ENTRE EL DUEÑO Y EL CONTRATISTA" ("the Construction Contract").
At the time, JCR was the exclusive distributor in Puerto Rico for the roof waterproofing product called Wetsuit®, and what was most appealing to CSILO about JCR's offering was its 15-year warranty on that product. Under the Construction Contract, CSILO agreed to pay JCR $135,000 for "JCR['s] waterproofing the roof of CSILO's facilities." Important to the case that went to the jury (but not so much for our purposes, so we'll be brief), is that "Article 9.2 of the Construction Contract established that JCR would guaranty the installation and sealing of the roof for the next 15 years." To CSILO, that meant that "[i]f any deficiencies would occur after performance was finished by JCR, the roofing company was bound for the following 15 years to correct it, which would include additional installation of the [Wetsuit®] system, if necessary." And bear in mind that Article 9.1 of the contract required JCR to "ensure[ ] that all equipment that [would] be installed [would] be new unless otherwise specified and so approved also in writing."
JCR completed its waterproofing work during the summer of 2010. But "by June 2011, the CSILO facilities began to suffer damages from newly discovered water [in]filtration." CSILO complained, verbally and in writing, of these leaks to JCR numerous times, but was met with no response. Over the course of "the next 2 to 3 years, CSILO kept communicating to JCR" about the leaks, and JCR's warranty to "provide the required services in order to fix said problem." These attempts unavailing, CSILO resorted to "fil[ing] a civil suit against JCR on April 2013 at the First Instance Court of Puerto Rico."1 That suit prompted JCR into action, whereupon in July 2013 it returned to attempt to fix the roof. To assess the leaks, JCR used a product called Chovatek, different from Wetsuit®, relying, it claims, on verbal approval from CSILO's engineer, Celso Gonzalez, to proceed with use of that product.
CSILO ultimately realized that it had received a sieve of a 15-year warranty on Wetsuit® when JCR attempted to fix the leaky roof with the non-Wetsuit® product. CSILO was "convinced that JCR intentionally misrepresented their services to be rendered to CSILO," and that these misrepresentations It followed that, according to CSILO, "[b]ecause of said misrepresentation, JCR defrauded CSILO and illegally appropriated federal funding originating from the ARRA," thereby violating the False Claims Act ("FCA"), 31 U.S.C. § 3729, et seq. And that's how this case ended up in federal court.
CSILO filed a qui tam action2 under the FCA on November 13, 2014 against JCR.3 The United States Government, as it is entitled under 31 U.S.C. § 3730(b)(2) - (c), declined to intervene on November 30, 2015.4 Thereafter summonses were issued to JCR. On January 26, 2017, CSILO filed its First Amended Complaint, alleging the facts described above, and, important for our purposes, requested damages "in an amount equal to three times the amount of damages that the United States ha[d] sustained because of [JCR's] actions, plus a civil penalty of not less than $5,500 and not more than $11,000 for each violation of 31 U.S.C. [§] 3729."5 JCR denied all allegations.
As parties do over the course of a lawsuit, CSILO and JCR exchanged various documents. In response to JCR's document request for "[s]ubmitted invoices, authorizations, and/or payment approvals by CSILO and copies of payment checks," CSILO provided just those. They also exchanged Initial Disclosures on June 26, 2016 and formulated the Joint Pretrial Conference Report on November 27, 2017. In its Initial Disclosures CSILO stated that "computation of damages was not available as of [that] date," and the Joint Pretrial Conference Report contained no mention of anything specific to requested damages, such as a description, computation, or relevant evidence.
Over three years down the line and exactly one month before trial, on December 22, 2017, the district court held its Pretrial Conference, during which the district judge asked CSILO whether it would present any evidence on damages at trial, given that such relief was not included in the proposed Joint Pretrial Conference Report.6 It was then that CSILO moved the court for leave to amend the Pretrial Order to include a discussion of damages. JCR objected, claiming delay and prejudice, especially in light of the impending trial. The court requested further briefing on the matter, and upon receipt, it denied CSILO's request, stating:
[JCR] points out that [CSILO] did not include a computation of damages in its Initial Disclosures; and did not produce any evidence and/or computation of damages during discovery. Moreover, it omitted from the Pretrial Report any specific request for discrete fraud damages as well as a discussion on the subject. [CSILO] has provided no compelling reason to justify the omissions. Discovery is no longer available here, to [JCR]'s detriment. Accordingly, the motion is DENIED.
U.S. ex rel. Concilio De Salud Integral De Loíza, Inc. v. J.C.
Remodeling, Inc., et al., No. 14-1821 (PAD), Dkt. 92, Order at 2 (citations omitted). CSILO sought reconsideration of the denial; that too was denied.
After a seven-day trial in late January 2018, at which CSILO was barred from submitting evidence on damages, the jury found that JCR had in fact violated the False Claims Act, and the court therefore entered judgment against JCR and imposed on it a $5,500 civil penalty, as required by statute.7 Dissatisfied with that result and believing it is still entitled to damages,8 CSILO now appeals.
CSILO argues on appeal that the district court abused its discretion when it rejected its request to amend the Pretrial Order to include a discussion of damages and avoid the resultant "manifest injustice." CSILO also appeals the district court's denial of its motion to reconsider that denial. CSILO argues that JCR would not have been prejudiced or surprised by the damages amendment because JCR was always aware of the full contract price, which formed the nucleus of its damages claim: CSILO's federal complaint requested damages equal to $405,000 (three times the contract price of $135,000), and the contract itself as well as the contract price was necessarily discussed multiple times during trial. Therefore according to CSILO, JCR's claim of prejudice and surprise is disingenuous because JCR never -- either pretrial or during trial -- objected to the admission of the contract and its price tag at any point. And so CSILO now requests that this court either find JCR liable for $405,000 or "remand the case back to the Jury for a bifurcated trial focused solely on" damages.
JCR responds that CSILO misses the point: CSILO assumes that the contract price automatically constitutes the baseline damages due under the FCA, even though the FCA does no such thing. Ultimately, JCR argues that because the parties could not rely on the contract price for damages, without the benefit of discovery on damages, CSILO's requested amendment to the Pretrial Order on the eve of trial and three years after the filing of the Complaint would have severely prejudiced and burdened JCR, and therefore the district court was right to deny CSILO's request.
We review the district court's denial of CSILO's request to amend the Pretrial Order for abuse of discretion. See Alberty-Vélez v. Corporación De Puerto Rico Para La Difusión Pública, 242 F.3d 418, 423 (1st Cir. 2001) ; Koch v. Koch Indus., Inc., 203 F.3d 1202, 1222 (10th Cir. 2000). "A final pretrial order is intended to control the subsequent course of the action, and can be modified only to prevent manifest injustice." Rodríguez-García v. Miranda-Marín, 610 F.3d 756, 774 (1st Cir. 2010) (...
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