United States ex rel. Simmons v. Smith, Civ. A. No. 85-0698-H.

• Decision Date: 14 August 1985
• Docket Number: Civ. A. No. 85-0698-H.
• Citation: 629 F. Supp. 124
• Parties: UNITED STATES ex rel SIMMONS, et al, Plaintiffs, v. John H. SMITH, et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

629 F. Supp. 124

UNITED STATES ex rel SIMMONS, et al, Plaintiffs, v. John H. SMITH, et al., Defendants.

Civ. A. No. 85-0698-H.

United States District Court, S.D. Alabama.

August 12, 1985.

As Amended August 14, 1985.

Ishmael Jaffree, Joseph E. Carr, IV, Ann E. Taylor, Mobile, Ala., for plaintiffs.

Michael Figures, Thomas H. Figures, Mobile, Ala., for all defendants except Mayor John Smith.

Norman Gale, Jr., Melissa Posey, Mobile, Ala., for defendant Mayor John Smith.

ORDER

HAND, Chief Judge.

This cause is before the Court on defendant John H. Smith's motion to dismiss the complaint for failure to state a claim. This qui tam action is brought under the Federal False Claims Act, 31 U.S.C. § 3729, which allows the United States to recover civil penalties and damages from persons making false claims against the Government. Defendant asserts that the complaint fails to state a claim because no claim was "made against the United States" as that phrase has been defined by the courts. The gist of defendant's argument is that if any fraudulent claims were made, they were made against the Prichard Housing Authority and not against the United States, nor were said claims made to induce the United States to make the original grant to the Prichard Housing Authority. In essence, according to the defendant, there is no allegation in the complaint to the effect that the Treasury of the United States has been harmed.

I.

In determining "the sufficiency of the complaint ... a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In considering the correctness of dismissal for failure to state a claim, allegations in the complaint are to be taken as true. United States v. Mississippi, 380 U.S. 128, 143, 85 S.Ct. 808, 816, 13 L.Ed.2d 717 (1965). Matters outside the pleadings are not considered on a motion to dismiss. Rule 12, Fed.R.Civ.P., see Mehlar Corp. v. City of St. Louis, Mo., 530 F.Supp. 85 (E.D.Mo. 1981).

II.

Title 31, Section 3729 of the United States Code provides in relevant part as follows:

"A person ... is liable to the United States Government ... because of the act of that person ... if the person — (1) knowingly presents, or causes to be presented, to an officer or employee of the Government or a member of an armed force a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved; (3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid; ...."

Other than a conclusary allegation, the plaintiffs do not allege that any fraudulent or false claims were made to the United States Government in order to obtain payment of the grants over to the Prichard Housing Authority. What plaintiffs did allege was that the grants, the Government having deemed the Housing Authority qualified, were misapplied by Prichard Housing Authority employees.

In United States v. Azzarelli Construction Company, 647 F.2d 757 (7th Cir.1981), a qui tam action was brought by the United States Government to recover funds allegedly obtained by collusive bidding on a state highway construction project. The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision that the qui tam action was due to be dismissed for failure to state a claim. The reasoning of the circuit court was that the plaintiff in Azzarelli alleged that the defendants presented collusive bids to the State of Illinois to secure contracts for the construction of two public highways in Illinois. The construction of the highways was pursuant to a cooperative agreement for financing and constructing the highways under the Federal-Aid Highway Act. The Federal Highway Administration provided seventy percent of the funds for the projects. The federal contribution for the projects was a fixed sum that was available for expenditure by the state and was not geared to bids by the contractors. Thus the district court held that no claim was made against the United States Government on which a qui tam action could be sustained.

In the present cause of action, the plaintiff alleges that fraudulent payments were made to employees of the Prichard Housing Authority, who were functionally acting as staff persons for Mayor John H. Smith. There are no allegations in the complaint to the effect that sums paid by Government departments in grants to the Prichard Housing Authority were based on timesheets or expense sheets presented to the Prichard Housing Authority by the defendants.

Thus the present cause of action may not be sustained as a qui tam action, as the alleged acts of the defendants did not affect the total amount contributed to the Prichard Housing Authority. The injury, if any, was borne by the Prichard Housing Authority and not the United States Government. In order to maintain a qui tam action the United States must be injured, and the "lack of any requirement of specific evidence of damages does not dispense with the need to establish an injury." Azzarelli at 762. Because the plaintiffs in the present cause of action have not shown a claim by the defendants against the United States Government and an injury to the United States Government, they cannot maintain a qui tam action.

Plaintiffs in their brief opposing the ...