United States v. Woodbury

• Decision Date: 11 March 1966
• Docket Number: 19768.,No. 19767,19767
• Parties: UNITED STATES of America, Appellant, v. Lucille B. WOODBURY, Executrix of the Estate of Ray B. Woodbury, deceased, Appellee. Lucille B. WOODBURY, Executrix of the Estate of Ray B. Woodbury, deceased, Appellant, v. UNITED STATES of America, Appellee. UNITED STATES of America, Appellant, v. Ray B. WOODBURY, Aleutian Homes and Kodiak Construction Company, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

359 F.2d 370 (1966)

UNITED STATES of America, Appellant, v. Lucille B. WOODBURY, Executrix of the Estate of Ray B. Woodbury, deceased, Appellee.

Lucille B. WOODBURY, Executrix of the Estate of Ray B. Woodbury, deceased, Appellant, v. UNITED STATES of America, Appellee.

UNITED STATES of America, Appellant, v. Ray B. WOODBURY, Aleutian Homes and Kodiak Construction Company, Appellee.

Nos. 19767, 19768.

United States Court of Appeals Ninth Circuit.

March 11, 1966.

COPYRIGHT MATERIAL OMITTED

Sidney I. Lezak, U. S. Atty., Roger G. Rose, Jack G. Collins, Asst. U. S. Attys., Portland, Or., for appellant.

Norman J. Wiener, of King, Miller, Anderson, Nash & Yerke, Portland, Or., for appellees.

Before JERTBERG, DUNIWAY and ELY, Circuit Judges.

DUNIWAY, Circuit Judge:

In these cases there are four appeals and two motions before us. This is the second appeal in the action that is now our No. 19,767. It began on September 30, 1957 as an action filed by Ray B. Woodbury against the United States under the Federal Tort Claims Act in the United States District Court for the District of Oregon. On June 2, 1958, the United States filed a counterclaim for breach of contract (guaranty). On April 20, 1959, the United States filed in the same court a separate action against Woodbury, Aleutian Homes, Inc. (Aleutian), Kodiak Construction Co. (Kodiak), Donald M. Lehman and Alex B. Carlton under the False Claims Act (31 U.S.C. §§ 231-33). This is now our No. 19,768. On October 19, 1959, the court dismissed No. 19,768 as against Woodbury, "without prejudice," on the ground that the claims asserted against him were compulsory counterclaims in No. 19,767 under Rule 13(a), F.R.Civ.P. On October 2, 1959, the United States had filed in both actions a motion to consolidate them, and, in No. 19,767, a motion to amend its counterclaim to state the same claims as were alleged in No. 19,768. This was after the court had indicated its view that the claims fell within Rule 13(a) but before the dismissal of Woodbury in No. 19,768. On October 19, 1959, the court granted leave to amend.¹ The amended counterclaim was filed on October 23, 1959. The court took no action on the motion to consolidate.

In No. 19,767, following the entry of a very elaborate pre-trial order and upon motion of the United States, the Court entered a judgment dismissing all of Woodbury's claims for want of jurisdiction. See Woodbury v. United States, D. Ore., 1961, 192 F.Supp. 924. We affirmed on appeal, Woodbury v. United States, 9 Cir.1963, 313 F.2d 291. This left pending in No. 19,767 only the counterclaims of the United States.

On April 13, 1961, the United States again moved that its counterclaims in No. 19,767 be consolidated with No. 19,768. The motion was denied. Next, the United States moved to vacate the order of dismissal as to Woodbury in No. 19,768. This was also denied. Nothing more happened until 1963, when the United States moved to dismiss its counterclaim for breach of contract and this motion was granted on April 26, 1963. Thus all that remained in either case were the claims of the United States under the False Claim Act — against Woodbury in No. 19,767 and against other defendants in No. 19,768. On the same day the court consolidated the two actions for trial. Before the cases were tried, the United States settled its claims against Carlton and Lehman in No. 19,768 and the action was dismissed as to them.

The defendants Aleutian and Kodiak defaulted. A trial followed, and on May 28, 1964, the court filed, in lieu of formal findings, a Supplemental Opinion in which it concluded that judgment should go in favor of Woodbury in No. 19,767. It also decided that, while the government had not proved actual damages, it was entitled to judgment in No. 19,768 against Aleutian and Kodiak for a total of $20,000, based upon its finding that each had filed ten false claims. Woodbury v. United States, D. Oregon, 1964, 232 F.Supp. 49.

Judgment was entered in favor of Woodbury in No. 19,767 and the United States appealed. Woodbury filed a cross-appeal "from the findings of the District Court that plaintiff made false claims to the government within the meaning of the False Claims Act." Woodbury died on September 6, 1964. His widow, as his executrix, moved in the trial court that she be substituted as plaintiff. This motion was granted by the trial court on November 6, 1964. She then moved to dismiss the counterclaims on the ground that the action had abated. This was denied "without prejudice," because the court believed that this court had jurisdiction.

Brief findings of fact and a judgment against Aleutian and Kodiak were filed in No. 19,768. The United States appealed. Two weeks later, the United States moved for "clarification" on the ground that the judgment made no disposition of the case as against Woodbury, the earlier dismissal having been without prejudice. The motion was denied and the United States appealed from the order of denial. Next, the United States moved to substitute the executrix as a party defendant. The motion was denied without prejudice, again because the court believed that jurisdiction was lodged in the Court of Appeals.

Here, the United States moved that the executrix be substituted as an appellee in each action. The executrix opposed the motion to substitute in No. 19,768 on the ground that Woodbury was not a party to that action. In No. 19,767 she did not oppose substitution, which we granted, but did move to dismiss the appeal on the ground that the claims of the United States had abated. We deferred action on the motion to substitute in No. 19,768 and the motion to dismiss in No. 19,767 until the hearing on the merits.²

1. Abatement — the motion to dismiss in No. 19,767.

The statute upon which the claims of the United States rest is set out, in pertinent part, in the margin.³ It provides that the guilty party "shall forfeit and pay * * * the sum of $2,000, and, in addition, double the amount of damages which the United States may have sustained * * * and such forfeiture and damages shall be sued for in the same suit." It is arguable that as to the $2,000 forfeiture the action abates upon the defendant's death, but that as to the damages it does not. But we think that decisions of the Supreme Court require us to hold that the action does not abate, even as to the forfeiture.⁴

The leading case is United States ex rel. Marcus v. Hess, 1943, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443. There the Court held that a defendant who had been convicted and fined under then 18 U.S.C. §§ 80, 83 for making false claims was not subjected to double jeopardy when sued under the False Claim Act. The government's recovery was $203,000 as double damages and $112,000 in forfeitures for making 56 false claims. In so deciding, the Court said:

"It is enough for present purposes if we conclude that the instant proceedings are remedial and impose a civil sanction. The statutes on which this suit rests make elaborate provision both for a criminal punishment and a civil remedy. Violators of § 5438 may `be imprisoned at hard labor for not less than one nor more than five years, or fined not less than one thousand nor more than five thousand dollars.\' We cannot say that the remedy now before us requiring payment of a lump sum and double damages will do more than afford the government complete indemnity for the injuries done it. Helvering v. Mitchell, supra, 303 U.S. 391 401 58 S.Ct. 630, 82 L.Ed. 917. * * *

"It is argued that the $2,000 `forfeit and pay\' provision is `criminal\' rather than `civil\' even if the double damage feature is not. The words `forfeit and pay\' relate alike to the $2,000 sum and the double damages. The use of the word `forfeit\' in conjunction with the word `pay\' does not force the conclusion that the provision is criminal. No one doubts that Congress could have accomplished the same result by authorizing `double\' or `quadruple\' or `punitive\' damages or a lump sum payment for attorney\'s fees, or by definition of the elements of `actual damages.\' Special consequences cannot be drawn from the use of the word `forfeit\'. While this might under other circumstances be an appropriate word to suggest a fine upon the failure to pay which an individual might be imprisoned, no such punishment is provided here upon default in payment. The words `forfeit and pay\' are wholly consistent with a civil action for damages. Atchison, T. & S. F. Ry. Co. v. Nichols, 264 U.S. 348, 350-352 44 S. Ct. 353, 354, 68 L.Ed. 720; cf. Hepner v. United States, 213 U.S. 103, 104-111 29 S.Ct. 474, 475, 478, 53 L.Ed. 720." (317 U.S. at 549, 551, 63 S.Ct. at 387)

The case is not squarely in point, but it has proved persuasive. It was followed in Rex Trailer Co., Inc. v. United States, 1956, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149, a case in which no actual damages were proved and the recovery was limited to five $2,000 forfeitures. In Rex Trailer Co. a different statute, the Surplus Property Act, 50 U.S.C.App. 1635 (1946), now 40 U.S.C. § 489, was involved, but its provisions are comparable.

Rex Trailer Co. was the basis for a per curiam affirmance in Koller v. United States, 1959, 359 U.S. 309, 79 S.Ct. 755, 3 L.Ed.2d 828, a case involving the same statute as Rex Trailer Co. The question there was whether the action was one for "any civil fine, penalty, or forfeiture" within the meaning of the five year statute of limitations, 28 U.S.C. § 2462. The Court of Appeals for the Third Circuit held that it was not (United States v. Doman, 1958, 255 F.2d 865) and the decision was affirmed in Koller. If the action is not one for a fine, penalty or forfeiture for purposes of the statute of limitations, how can it be for abatement purposes?

Other circuits have concluded, relying on the foregoing cases and on 28 U.S.C. § 2404,⁵ that such an action as this does not abate. United States v. Posner, 3 Cir., 1959, 269 F.2d 742 (damages only); United States v. Grannis...