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CSILO v. JC Remodeling, Inc., 18-1199P (2020)

Court: Court of Appeals for the First Circuit Number: 18-1199P Visitors: 8
Filed: Jun. 15, 2020
Latest Update: Jun. 15, 2020
Summary: United States Court of Appeals For the First Circuit No. 18-1199 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. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Pedro A. Delgado-Hernández, U.S. District Judge] Before Torruella, Dyk,* and Thompson, Circuit Judges. Víctor M. Rivera-Ríos for appellant CSILO. Carlos J. Sagardía-Abre
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            United States Court of Appeals
                        For the First Circuit


No. 18-1199

                   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.


             APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF PUERTO RICO

     [Hon. Pedro A. Delgado-Hernández, U.S. District Judge]


                                Before

                    Torruella, Dyk,* and Thompson,
                           Circuit Judges.


     Víctor M. Rivera-Ríos for appellant CSILO.
     Carlos J. Sagardía-Abreu and María Celeste Colberg-Guerra,
were on brief, for appellees.


                            June 15, 2020




     *    Of the Federal Circuit, sitting by designation.
           THOMPSON, Circuit Judge.      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.

                            BACKGROUND

           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




                               - 2 -
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


                                   - 3 -
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 "induced

CSILO into entering into said Contract.               CSILO was deceived by

this fraudulent statement.           When JCR installed the waterproof

product in 2013, it not only installed it negligently, but it

intentionally substituted the product with another product of

inferior      quality.       CSILO   had   no    knowledge   of   the   product

substitution, until after 2013."           It followed that, according to



              1
            This case, Concilio de Salud Integral de Loíza, Inc.
v. J.C. Remodeling, Inc., et al., Civ. No. FCCI2013-00222, was
pending as of the federal court trial.


                                      - 4 -
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 summons 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




              2
            "In a qui tam action, a private plaintiff, known as a
relator, brings suit on behalf of the Government to recover a
remedy for a harm done to the Government." U.S. ex rel. Feldman
v. van Gorp, 
697 F.3d 78
, 84 n.3 (2d Cir. 2012) (citing Black's
Law Dictionary 1282 (8th ed. 2004) (defining "qui tam action" as
"[a]n action brought under a statute that allows a private person
to sue for a penalty, part of which the government or some
specified public institution will receive")).           "Qui tam
plaintiffs, even if not personally injured by a defendant's
conduct, possess constitutional standing to assert claims on
behalf of the Government as its effective assignees."
Id. 3 We
refer to appellees JCR and Mr. José García-Suárez,

owner of JCR, collectively as JCR.
          4 When the government declines to intervene, the relator

-- here, CSILO -- can recover between 25% and 30% of the final
award, with the remainder going to the government. See 31 U.S.C.
§ 3730(d)(2).


                                       - 5 -
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


             5
            Under the FCA, liability can result in "a civil penalty
of not less than $5,000 and not more than $10,000 . . . plus 3
times the amount of damages which the Government sustains because
of the act of that person." 31 U.S.C. § 3729(a)(1).
          6 At the conference, the district court adopted the

parties' Joint Pretrial Conference Report as the court's order
under Fed. R. Civ. P. 16(e) to govern subsequent proceedings. It
is this order that we will refer to as the Pretrial Order.


                                   - 6 -
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



           7"[A] defendant who submits a false claim . . . is
liable for civil penalties regardless of whether the government
shows that the submission of that claim caused the government
damages." U.S. ex rel. Davis v. District of Columbia, 
679 F.3d 832
, 839 (D.C. Cir. 2012) (second alteration in original) (quoting


                               - 7 -
that result and believing it is still entitled to damages,8 CSILO

now appeals.

                           DISCUSSION

          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



United States v. Sci. Applications Int'l Corp., 
626 F.3d 1257
,
1277-78 (D.C. Cir. 2010)).
          8 In its Motion to Amend the Pretrial Order, CSILO

explained that it was seeking only "Fraud Damages," "damages based
on the original Written Agreement" and the contract price of
$135,000, as opposed to "Consequential Damages," as CSILO called
it, that would have covered the amount CSILO expended on a new
2017 bid to fix the roof. CSILO explained, without citation or
further detail, the decision to forego "Consequential Damages," as
follows:   "[The United States Government's] attorneys clarified
that because this Complaint is a Qui Tam cause of action, the only
real party is [the government] and not CSILO. The only damages
that could be brought to the Court's attention are the direct
damages that [the government] suffered based on the fraudulent
acts of the person who violated the FCA.       Therefore, CSILO's
damages should not be considered under the FCA because CSILO is a
third party relator who received the ARRA funds."       Given our
affirmance of the district court's decision, we need not opine
upon the correctness of the government's advice.


                              - 8 -
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) (internal quotation marks


                               - 9 -
omitted) (quoting Correa v. Hosp. S.F., 
69 F.3d 1184
, 1195 (1st

Cir. 1995) (quoting Fed. R. Civ. P. 16(e))).            "Therefore, '[a]n

appellate court should not lightly relieve a litigant from the

condign consequences of its failure to list a theory . . . at that

critical stage of the proceedings,' and 'issues not included in

the final pretrial order are generally waived.'"
Id. (quoting Correa,
  69   F.3d   at   1195)   (citing   Ramirez   Pomales   v.   Becton

Dickinson & Co., 
839 F.2d 1
, 3 (1st Cir. 1988)); see also Bradford

Trust Co. of Bos. v. Merrill Lynch, Pierce, Fenner, and Smith,

Inc., 
805 F.2d 49
, 52 (2d Cir. 1986) ("Motions to reopen or to

modify a pre-trial order are addressed to the sound discretion of

the trial judge."); Wallin v. Fuller, 
476 F.2d 1204
, 1208-09 (5th

Cir. 1973) ("Under the Rule 16 'manifest injustice' standard, the

question whether to permit amendment of the pretrial order in the

course of the trial is generally a matter within the discretion of

the trial judge, and an appellate court will intervene only if the

trial judge has acted arbitrarily."); Sherman v. United States,

462 F.2d 577
, 579 (5th Cir. 1972).

           "[T]he standard for modifying a final pretrial order is

as high as it is to ensure everyone involved has sufficient

incentive to fulfill the order's dual purposes of encouraging self-

editing and providing reasonably fair disclosure to the court and

opposing parties alike of their real trial intentions."               Monfore

v. Phillips, 
778 F.3d 849
, 851 (10th Cir. 2015); see also Brook


                                   - 10 -
Vill. N. Assocs. v. Gen. Elec. Co., 
686 F.2d 66
, 71 (1st Cir.

1982).   That said, a court may greenlight the modification of a

pretrial order when there will be little to no "surprise" or

prejudice to the opposing party and when it is "warranted to

prevent substantial injustice" to the moving party.   Meaux Surface

Prot., Inc. v. Fogleman, 
607 F.3d 161
, 167 (5th Cir. 2010); see

Davey v. Lockheed Martin Corp., 
301 F.3d 1204
(10th Cir. 2002);

Carroll v. Pfeffer, 
262 F.3d 847
, 850 (8th Cir. 2001), cert.

denied, 
536 U.S. 907
(2002). On the flipside, if the party seeking

to modify had knowledge of the reason for modification prior to

the pretrial conference, or if the modification would prejudice

the opposing party, then it may not be allowed.   See, e.g., Harper

v. Albert, 
400 F.3d 1052
, 1063 (7th Cir. 2005); Canal Ins. Co. v.

First Gen. Ins. Co., 
889 F.2d 604
(5th Cir. 1989); Burnette v.

Dresser Indus., Inc., 
849 F.2d 1277
(10th Cir. 1988).    "The party

moving to amend the order [here, CSILO] bears the burden to prove

the manifest injustice that would otherwise occur."      Wright v.

City of St. Francis, KS, 
95 F. App'x 915
, 926 (10th Cir. 2004)

(quoting 
Davey, 301 F.3d at 1208
).     And that burden is "a higher

standard than is otherwise imposed." Farr Man & Co. v. M/V Rozita,

903 F.2d 871
, 876 n.4 (1st Cir. 1990).

          In the damages context, courts have permitted changes to

pretrial orders where such an amendment would result in no surprise

and it was supported by the evidence already in the record.    See,


                              - 11 -
e.g., McAlister-Jones v. Foote, 
720 F. App'x 971
, 974-75 (11th

Cir. 2017) (affirming district court's allowance of plaintiff's

amendment to the pretrial order to include a claim for future lost

wages,    finding   that   the    defendant     would   not   have   suffered

substantial harm because he should have been aware of plaintiff's

claim for future lost wages); Bennett v. Emerson Elec. Co., 64 F.

App'x 708, 718-19 (10th Cir. 2003) (affirming the district court's

allowance of plaintiff's amendment to the original pretrial order

the day before trial to seek additional damages, finding that the

additional damages amount had been part of the discovery exchanged

between the parties, had been alleged in plaintiff's expert report,

and addressed in the expert's deposition).

            In contrast, where an amendment to a pretrial order

related to damages raised issues too close to trial and without

support in the already-existing record, courts have declined to

allow such amendments.        See, e.g., Genesis Health Clubs, Inc. v.

LED Solar & Light Co., 
639 F. App'x 550
, 557 (10th Cir. 2016)

(finding no abuse of discretion where the district court denied

plaintiff's request to pursue a damages theory after the close of

discovery where such theory was not included in the pretrial order

and such a late inclusion would have prejudiced the defendant);

Quick Techs., Inc., v. Sage Grp. PLC, 
313 F.3d 338
, 345-46 (5th

Cir.     2002)   (affirming      the     district   court's   rejection    of

plaintiff's new proposed pretrial order submitted "shortly before


                                       - 12 -
trial" that added a damages claim for corrective advertising);

Knapp v. Whitaker, 
757 F.2d 827
, 849 (7th Cir. 1985) (affirming

the district court's refusal to permit an amendment to the pretrial

order to include punitive damages where "[t]he pretrial order made

no   mention   of    punitive    damages   and   [plaintiff]   offer[ed]   no

reasonable explanation for his undue delay in filing such a

claim[, and] . . . the untimely filed punitive damage claim would

have   clearly      prejudiced   the   defendants   who   invested   a   year

preparing their defense to the allegations pleaded, without any

notice of a punitive damage claim"); Rock Island Imp. Co. v.

Helmerich & Payne, Inc., 
698 F.2d 1075
, 1081-82 (10th Cir. 1983);

Jacobson v. Rose, 
592 F.2d 515
, 519 n.5 (9th Cir. 1978); Scopia

Mortg. Corp. v. Greentree Mortg. Co., L.P., 
184 F.R.D. 526
(D.N.J.

1998) (denying leave to amend joint final pretrial order to include

new expert opinion testimony on damages where discovery had been

closed for one and one-half years, the parties had raised damages

previously, the movant's expert had no knowledge of the case, and

the nonmovant's expert had never opined on damages); Wright, 95 F.

App'x at 927 (affirming the district court's refusal to allow

family members to amend pretrial order to assert claims for damages

against police officers in their individual capacities, relying on

the family's representations "both at the pretrial conference and

in the pretrial order itself," that it was pursuing only "official

capacity claims").


                                    - 13 -
             So, we ask, is CSILO's request to amend the Pretrial

Order a minor request, supported by the record and one that would

not prejudice JCR, 
McAlister-Jones, 720 F. App'x at 974-75
, and

absent which CSILO would suffer "manifest injustice," Rodríguez-

García, 610 F.3d at 774
, such that the district court abused its

discretion in denying the request? Or was the district court right

to deny the request, finding that modifying the Pretrial Order,

three years in and on the eve of trial and after the close of

discovery, would have prejudiced JCR?      Genesis Health 
Clubs, 639 F. App'x at 557
.    CSILO argues the former, contending that because

it is due (three times) the full contract price, and the contract

price appeared in the record multiple times and was uncontroverted

by JCR, an amendment to the Pretrial Order would not have surprised

or prejudiced JCR.       JCR, of course, disagrees that CSILO is

entitled to the full contract price and contends that the request

was based entirely on a false premise, and such a late-stage

amendment would have severely prejudiced JCR, and therefore the

district court did not abuse its discretion.      To settle this, we

turn to the substantive law undergirding this case, and the damages

it allows.

             CSILO brought its case under the False Claims Act, which

"prohibits a person from 'knowingly present[ing], or caus[ing] to

be presented, [to an officer or employee of the United States

Government,] a false or fraudulent claim for payment or approval.'"


                                - 14 -
U.S. ex rel. Feldman v. van Gorp, 
697 F.3d 78
, 86–87 (2d Cir. 2012)

(alteration in original) (quoting 31 U.S.C. § 3729(a)(1)(A)). "The

Act does not specify how damages are to be calculated."
Id. at 87.
The government needs to have only suffered the damage "because

of" the violation of the Act.       31 U.S.C. § 3729(a)(1); see also

The False Claims Act: Fraud Against the Government § 6:3.            The

legislative history to the FCA explains why it offers no specific

formula for damages:

              No single rule can be, or should be, stated
              for the determination of damages under the Act
              . . . [T]he courts should remain free to
              fashion measures of damages on a case-by-case
              basis. The Committee intends that the courts
              should be guided only by the principles that
              the United States' damages should be liberally
              measured to effectuate the remedial purposes
              of the Act, and that the United States should
              be afforded a full and complete recovery of
              all its damages.

S. Rep. No. 96-615, at 4 (1980) (reporting on S.1981, predecessor

to S.1562). "In most FCA cases, damages are measured as they would

be   in   a   run-of-the-mine   breach-of-contract   case   --   using   a

'benefit-of-the-bargain' calculation in which a determination is

made of the difference between the value that the government

received and the amount that it paid."        
Feldman, 697 F.3d at 87
(quoting United States v. Foster Wheeler Corp., 
447 F.2d 100
, 102

(2d Cir. 1971)).       Generally, "[t]he Government's actual damages

are equal to the difference between the market value of the [goods]

it received and retained and the market value that the [goods]


                                  - 15 -
would have had if they had been of the specified quality."           United

States v. Bornstein, 
423 U.S. 303
, 316 n.13 (1976) (collecting

cases   from   the   Second,   Fourth,   Fifth,    and   Eighth   Circuits);

Commercial Contractors, Inc. v. United States, 
154 F.3d 1357
, 1372

(Fed. Cir. 1998) (following Bornstein); United States v. Killough,

848 F.2d 1523
, 1532 (11th Cir. 1988) ("[T]he measure of damages

[in FCA cases] is generally determined to be the difference between

what the government actually paid on the fraudulent claim and what

it would have paid had there been fair, open and competitive

bidding." (citing Brown v. United States, 
524 F.2d 693
, 706 (Ct.

Cl. 1975); United States v. Woodbury, 
359 F.2d 370
, 379 (9th Cir.

1966)); see also United States v. Sci. Applications Int'l Corp.,

626 F.3d 1257
, 1278 (D.C. Cir. 2010) ("In a case where the

defendant agreed to provide goods or services to the government,

the proper measure of damages is the difference between the value

of the goods or services actually provided by the contractor and

the value the goods or services would have had to the government

had they been delivered as promised.").

           As far as CSILO has been able to show us and from what

we have been able to find, FCA cases where the entire contract

price is awarded as damages relate to contracts that provided "no

tangible benefit to the government and [where] the intangible

benefit is impossible to calculate."              U.S. ex rel. Longhi v.

Lithium Power Techs., Inc., 
575 F.3d 458
, 473 (5th Cir. 2009); see


                                  - 16 -
also 
Feldman, 697 F.3d at 88
.               To elaborate:       in Longhi, the

Department of Defense ("DoD"), under the Small Business Innovation

Research ("SBIR") program, was to "provide research assistance to

small    businesses      in   order   to    maintain    and     strengthen    the

competitive free enterprise system and the national 
economy." 575 F.3d at 462
.      To that end, "the DoD identifie[d] specific research

projects that it [wa]s interested in funding and allow[ed] small

businesses to seek SBIR grants for these projects."
Id. The defendants
in that case "submitted . . . proposals . . . to the

Ballistic Missile Defense Office ("BMDO") . . . and . . . the Air

Force" to receive funding "that could lead to the development of

very thin rechargeable batteries."
Id. The DoD
reviewed the grant

applications,
id. at 463,
   and    entered   into     contracts    with

defendants, which

            did not produce a tangible benefit to the BMDO
            or the Air Force. These were not, for example,
            standard procurement contracts where the
            government ordered a specific product or good.
            The end product did not belong to the BMDO or
            the Air Force. Instead, the purpose of the
            SBIR grant program was to enable small
            businesses to reach [a phase] where they could
            commercially market their products.
Id. at 473.
      The court ultimately found that "[t]he BMDO and the

Air     Force's    intangible    benefit       of   providing    an   'eligible

deserving' business with the grants was lost as a result of the

Defendants' fraud," and accordingly, "where there is no tangible

benefit to the government and the intangible benefit is impossible


                                      - 17 -
to calculate, it is appropriate to value damages in the amount the

government actually paid to the Defendants," -- that is, the full

contract price.
Id. In Feldman,
the government entity also reviewed the

applications for government funding and awarded funds 
accordingly. 697 F.3d at 84
.    There, the court affirmed the damages award of

the full contract price where the National Institutes of Health

("NIH") had awarded a grant and was paying for a program "that was

not at all as specified . . . the government did not receive less

than it bargained for; it did not get the [research] program it

bargained for at all."
Id. at 88-91.
  Through the grant, the NIH

had attempted to "promote 'child and adult clinical and research

neuropsychology with a strong emphasis upon research training with

HIV/AIDS,'"
id. at 88,
but the recipients-defendants' program's

deficiencies demonstrated that none of that had happened.
Id. at 91.
  The court reaffirmed that "nothing in the record indicate[d]

that [NIH] could now secure such a program at any lesser cost,"

"conclud[ing] that the appropriate measure of damages in [the]

case [wa]s the full amount the government paid based on materially

false statements."
Id. In both
Longhi and Feldman, the government had doled out

grant monies directly to third-parties for specified, "intangible"

research projects, but the awardees had failed to effectuate that

research.    
Longhi, 575 F.3d at 473
; 
Feldman, 697 F.3d at 88
.     As


                                 - 18 -
such, the government was out of a fixed sum of money with nothing

at all in return and therefore the courts found that recompense of

the full contract price was all that could make the government

whole.    As the court in Feldman explained:

            This approach rests on the notion that the
            government receives nothing of measurable
            value when the third-party to whom the
            benefits of a governmental grant flow uses the
            grant for activities other than those for
            which funding was approved. In other words,
            when a third-party successfully uses a false
            claim regarding how a grant will be used in
            order to obtain the grant, the government has
            entirely lost its opportunity to award the
            grant money to a recipient who would have used
            the money as the government 
intended. 697 F.3d at 88
.    The facts that CSILO presents are a far cry from

those in Longhi and Feldman.     Here, CSILO received ARRA funds from

the government before it entered into a relationship with JCR.

Once it decided to use those funds to fix its facility's roof, it

sought bid proposals from third-parties.         It ultimately awarded

the bid to JCR, relying on JCR's false representations (the 15-

year warranty), and paid JCR with its ARRA funds.            JCR then fixed

the roof -- the "activit[y] . . . for which funding was approved,"

Feldman, 697 F.3d at 88
, albeit in a shoddy manner requiring

subsequent repairs (the CSILO roof was still leaking as of the

federal trial).     This does not follow the pattern in Longhi and

Feldman   where   government   entities   DoD   and   NIH,    respectively,

directly meted out funds for research to recipients that never




                                 - 19 -
made   good   on   their   grant   application    promises    in   any   way

whatsoever.    
Longhi, 575 F.3d at 473
; 
Feldman, 697 F.3d at 88
.

Nor is it clear that the government received something "valueless,"

U.S. ex rel. Compton v. Midwest Specialties, Inc., 
142 F.3d 296
,

304 (6th Cir. 1998), in this case:           research that was never

consummated is different from a defectively patched roof on a

government-funded     facility,     especially    where      the   latter's

condition may, nonetheless, have been improved over its initial

state and further remediated by a method not yet explored.               But

without the benefit of evidence of damages in the record, we do

not know what value, if any, to ascribe to the work already done

on CSILO's roof, and it is far from clear that CSILO should be

entitled to recover the full price it paid out particularly where

some work was in fact done.        Compare
id. (awarding full
contract

price damages where the goods delivered by defendant to the U.S.

Army "were completely valueless, not only because most of them

could not withstand 5,000 pounds of force, but also because none

of them came with the quality assurance of a product that had been

subjected to periodic production testing") with U.S. ex rel. Wall

v. Circle C Constr., LLC, 
868 F.3d 466
, 470-71 (6th Cir. 2017)

(rejecting    "the    government's     argument     that     [defendant's]

electrical work was worthless," and therefore declining to award

the full contract price).      We therefore find that CSILO has not

persuaded us that it would have been entitled to the full contract


                                   - 20 -
price paid to JCR, and so CSILO's request to amend the Pretrial

Order was not necessarily as simple as it made it out to be.9

                    BRINGING IT ALL TOGETHER

          Considering the high bar set to amend a pretrial order,

Monfore, 778 F.3d at 851
; Brook Vill. N. 
Assocs., 686 F.2d at 71
,

and the lack of record evidence as to the damages CSILO would have

been entitled to under the FCA, 
Feldman, 697 F.3d at 88
, we find

that the district court did not abuse its discretion when it

decided, over three years into litigation, with discovery closed

and trial less than a month away, that CSILO's request to amend

the Pretrial Order would not have caused it "manifest injustice,"

Rodríguez-
García, 610 F.3d at 774
, and would have instead caused

prejudice and hardship to JCR, Genesis Health 
Clubs, 639 F. App'x at 557
, and therefore denied it.   And so we affirm.10   Each side

shall bear its own costs.


          9 Even had CSILO established that it was entitled to the
full contract price, it is still possible that the district court
would have been within its discretion to deny CSILO's request to
amend the Pretrial Order. But we need not opine on that issue
here.
          10 CSILO also appeals the district court's denial of its

Motion to Reconsider the district court's denial of CSILO's Motion
to Amend the Pretrial Order. We reject this as well, as "a motion
for reconsideration may only be granted if the original judgment
evidenced a manifest error of law, if there is newly discovered
evidence, or in certain other narrow situations." Global Naps,
Inc. v. Verizon New Eng., Inc., 
489 F.3d 13
, 25 (1st Cir. 2007).
We "will not overturn the court's determination 'unless a
miscarriage of justice is in prospect or the record otherwise
reveals a manifest abuse of discretion.'" Meléndez v. Autogermana,
Inc., 
622 F.3d 46
, 55 (1st Cir. 2010) (quoting Rivera v. Riley,


                             - 21 -

209 F.3d 24
, 27 (1st Cir. 2000)); see also Rodríguez v.
Municipality of San Juan, 
659 F.3d 168
, 175 (1st Cir. 2011); Ruiz
Rivera v. Pfizer Pharm., LLC, 
521 F.3d 76
, 81 (1st Cir. 2008).
Here, we do not find that the district court's original decision
to deny CSILO's Motion to Amend the Pretrial Order "evidenced a
manifest error of law," or that CSILO has been able to point us to
any "newly discovered evidence" that should disrupt the district
court's original judgment. If anything, the facts of this case
show that nothing changed from the beginning of this drama in 2014
to the time when CSILO filed its first motion and subsequent motion
for reconsideration. We therefore spy no abuse of discretion in
the district court's denial of CSILO's Motion for Reconsideration.


                              - 22 -

Source:  CourtListener

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