Filed: Sep. 29, 2015
Latest Update: Mar. 02, 2020
Summary: Case: 15-30043 Document: 00513212319 Page: 1 Date Filed: 09/29/2015 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED No. 15-30043 September 29, 2015 Summary Calendar Lyle W. Cayce Clerk United States of America, ex rel, GREGORY D. GUTH, Plaintiff - Appellant v. ROEDEL PARSONS KOCH BLACHE BALHOFF & MCCOLLISTER, Defendant - Appellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:13-CV-06000
Summary: Case: 15-30043 Document: 00513212319 Page: 1 Date Filed: 09/29/2015 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED No. 15-30043 September 29, 2015 Summary Calendar Lyle W. Cayce Clerk United States of America, ex rel, GREGORY D. GUTH, Plaintiff - Appellant v. ROEDEL PARSONS KOCH BLACHE BALHOFF & MCCOLLISTER, Defendant - Appellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:13-CV-06000 ..
More
Case: 15-30043 Document: 00513212319 Page: 1 Date Filed: 09/29/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 15-30043 September 29, 2015
Summary Calendar
Lyle W. Cayce
Clerk
United States of America, ex rel, GREGORY D. GUTH,
Plaintiff - Appellant
v.
ROEDEL PARSONS KOCH BLACHE BALHOFF & MCCOLLISTER,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:13-CV-06000
Before KING, OWEN, and HIGGINSON, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Gregory D. Guth brought a qui tam action against
Roedel, Parsons, Koch, Blache, Balhoff & McCollister for alleged fraudulent
billing practices arising from Roedel Parsons’s representation of Louisiana
State University in an expropriation proceeding against Guth. On appeal,
Guth challenges the district court’s judgment dismissing the action for failing
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-30043 Document: 00513212319 Page: 2 Date Filed: 09/29/2015
No. 15-30043
to state a claim. For the following reasons, we AFFIRM the judgment of the
district court.
I. Factual and Procedural Background
After Hurricane Katrina, the United States Department of Housing and
Urban Development (HUD) made federal funds available to the City of New
Orleans in the form of Community Development Block Grants (CDBG). The
City set aside a portion of the CDBG funds to construct a United States
Department of Veterans Affairs medical center and a teaching hospital for
Louisiana State University (LSU). The City and the State of Louisiana entered
into a Cooperative Endeavor Agreement, assigning LSU the power and funds
to acquire or expropriate property for the medical facilities. LSU then hired
Roedel Parsons to acquire or expropriate the necessary property.
During negotiations to acquire property from commercial property
owners, Roedel Parsons had appraisals completed for both the real estate and
any businesses on the property. Roedel Parsons then compensated owners for
the greater of the two appraised amounts, maintaining that the compensation
satisfied the requirements of the Louisiana Constitution. For Guth’s property,
the real estate was appraised for $173,000 and the business for $95,000. An
expropriation suit was brought against Guth, and Guth was paid $173,000 for
his property. As part of the suit, Guth counterclaimed for the loss of his
business, and Roedel Parsons rejected Guth’s offer to settle the counterclaim
for the business’s appraisal amount. The original expropriation suit remains
pending on appeal in state court.
In this related action, Gregory Guth brought a qui tam action under the
False Claims Act (FCA) on behalf of the United States against Roedel Parsons
for allegedly fraudulent billings for legal work completed during the
2
Case: 15-30043 Document: 00513212319 Page: 3 Date Filed: 09/29/2015
No. 15-30043
expropriation proceedings. 1 In his amended complaint, 2 Guth alleged that
Roedel Parsons violated four FCA provisions: (1) the presentment provision,
(2) the false statement provision, (3) the “reverse” false claim provision, and (4)
the FCA conspiracy provision. On December 18, 2014, the district court
granted Roedel Parsons’s motion to dismiss for failure to state a claim under
Rule 12(b)(6), and on January 2, 2015, dismissed Guth’s complaint and
amended complaint with prejudice. Guth timely appealed.
II. Standard of Review
We review de novo a district court’s granting of a motion to dismiss for
failure to state a claim. United States ex rel. Grubbs v. Kanneganti, 565 F.3d
180, 185 (5th Cir. 2009). Under Rule 8(a), a pleading must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2). “To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “[W]e
accept all well-pleaded factual allegations as true and interpret the complaint
in the light most favorable to the plaintiff.” United States ex rel. Spicer v.
Westbrook,
751 F.3d 354, 365 (5th Cir. 2014). However, we do not have to
accept legal conclusions as true.
Iqbal, 556 U.S. at 678. While a complaint
“does not need detailed factual allegations,”
Twombly, 550 U.S. at 555,
“‘[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements’ do not establish facial plausibility,”
Spicer, 751 F.3d at
1 A FCA qui tam action may be brought by the government or by a private person in
the name of the government. 31 U.S.C. § 3730(a)–(b). The United States declined to intervene
in the qui tam action. Guth also named the Board of Supervisors of LSU as a defendant; it
was dismissed as a defendant on July 8, 2014.
2 We refer to Guth’s “amended complaint” because Guth’s First Amended Complaint
incorporated by reference all of Guth’s Original Complaint.
3
Case: 15-30043 Document: 00513212319 Page: 4 Date Filed: 09/29/2015
No. 15-30043
365 (quoting Iqbal, 556 U.S. at 678). Facial plausibility exists when sufficient
facts in the complaint “allow[] the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678.
FCA claims must also meet the supplemental pleading standards of Rule
9(b). Spicer, 751 F.3d at 365; see also
Grubbs, 565 F.3d at 186 (“Rule 9(b)
supplements but does not supplant Rule 8(a)’s notice pleading.”). Rule 9(b)
requires the party to “state with particularity the circumstances constituting
fraud or mistake.” Fed. R. Civ. P. 9(b). This court has succinctly described
Rule 9(b) as requiring the plaintiff to “set forth the who, what, when, where,
and how of the alleged fraud.”
Spicer, 751 F.3d at 365 (quoting United States
ex rel. Steury v. Cardinal Health, Inc.,
625 F.3d 262, 266 (5th Cir. 2010))
(internal quotation marks omitted). However, the plaintiff “cannot rely on
speculation or conclusional allegations” to fulfill Rule 9(b)’s particularity
requirement. United States ex rel. Rafizadeh v. Cont’l Common, Inc.,
553 F.3d
869, 873 (5th Cir. 2008).
III. Discussion
On appeal, Guth presents a number of issues for review. The majority
of these issues relate to the same alleged error: that the district court erred in
dismissing Guth’s FCA claims based on alleged overbilling and double billing
by Roedel Parsons. Guth further argues that the district court erred by: (1)
dismissing Guth’s FCA claims based on statutory violations for failing to plead
a false certification of payment, (2) dismissing Guth’s “reverse” false claim, and
(3) applying an incorrect standard to Guth’s FCA conspiracy claim. We address
each of these arguments in turn.
A.
First, Guth contends that the district court improperly dismissed his
FCA claims based on alleged fraudulent overbilling by Roedel Parsons for legal
work relating to the expropriation proceeding against Guth. Guth does not
4
Case: 15-30043 Document: 00513212319 Page: 5 Date Filed: 09/29/2015
No. 15-30043
allege that the legal bills were fraudulent because they misrepresented the
actual work performed by Roedel Parsons. Rather, Guth alleges that Roedel
Parsons took a legal position on expropriation compensation—that paying the
greater of either the real estate or business value compensated the property
owner “to the full extent of his loss” 3—that “had no legal basis or support in
law or fact” in order to increase Roedel Parsons’s legal billings from the
expropriation process. Thus, Guth’s amended complaint alleges that “each,
every, any and all such legal bill(s), timesheet(s), memoranda and/or other
document(s)” submitted by Roedel Parsons based on this legal position
constituted a false claim. Guth also alleges that Roedel Parsons failed to
negotiate in good faith and refused to settle in order to further increase its legal
fees. Together, Guth argues that these actions allowed Roedel Parsons to
fraudulently overbill the government for unnecessary legal work. The district
court held that Guth failed to satisfy the pleading standards of Rule 8(a) and
Rule 9(b).
Under 31 U.S.C. § 3729(a)(1)(A), liability attaches if a person “knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or
approval.” Under 31 U.S.C. § 3729(a)(1)(B), liability attaches when a person
“knowingly makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim.” Generally, four elements
must be pleaded to state a cause of action under the FCA: “(1) a false statement
or fraudulent course of conduct; (2) that was made or carried out with the
3 Under the Louisiana Constitution, “the owner shall be compensated to the full extent
of his loss” from an expropriation. La. Const. art. I, § 4(B)(5).
5
Case: 15-30043 Document: 00513212319 Page: 6 Date Filed: 09/29/2015
No. 15-30043
requisite scienter; (3) that was material; and (4) that caused the government
to pay out money.” Spicer, 751 F.3d at 365.
In his amended complaint, Guth provided only the following limited facts
to support his contention that Roedel Parsons fraudulently overbilled: (1) state
and federal laws and regulations mandate that negotiation be attempted
before beginning expropriation proceedings; (2) LSU hired Roedel Parsons to
acquire and expropriate property, Roedel Parsons had the real estate and
business appraised “as part of its sham negotiations process,” and Roedel
Parsons initiated an expropriation 4; (3) Guth was paid the higher of the two
appraisals; and (4) Roedel Parsons rejected Guth’s proposed settlement of
Guth’s counterclaims in the expropriation suit and has continued to refuse to
settle. Guth also provides his legal arguments as to why Roedel Parsons’s legal
position is contrary to the Louisiana Constitution. 5
Accepted as true, these facts appear to describe a relatively common,
albeit contentious, legal proceeding: two parties disagreeing over the
appropriate compensation for an expropriation and then resorting to litigation
to settle their disagreement. See, e.g., State Dept. of Transp. & Dev. v. Dietrich,
555 So. 2d 1355, 1356–58 (La. 1990) (detailing the parties’ disagreement over
the appropriate compensation for an expropriation under the Louisiana
Constitution). These facts alone are not enough for “the court to draw the
reasonable inference” that Roedel Parsons overbilled for unnecessary legal
work.
Iqbal, 556 U.S. at 678. Guth attacked the strength of Roedel Parsons’s
legal position, but advancing a purportedly weak legal argument does not
4Guth claims that the expropriation was “premature” but fails to provide any facts to
support this conclusory allegation.
5 Those legal arguments were included in a memorandum attached to the original
complaint. See Wilson v. Birnberg, 667 F.3d 591, 595 (5th Cir. 2012) (“A court’s analysis
generally should focus exclusively on what appears in the complaint and its proper
attachments.”).
6
Case: 15-30043 Document: 00513212319 Page: 7 Date Filed: 09/29/2015
No. 15-30043
constitute, by itself, a false statement or fraudulent course of conduct. In
particular, Guth has not pleaded any facts that raise a “reasonable inference”
that Roedel Parsons took its legal position, negotiated, or refused to settle
merely to increase its legal fees. Guth’s statements that these actions were
“contrary to law,” and “constituted fraud,” are mere legal conclusions that do
not have to be accepted as true, Iqbal, 556 U.S. at 678, and Guth’s contention
that the actions were undertaken “to maximize legal billings,” without more,
is merely a conclusory statement without any factual support. See
id. at 686
(“But the Federal Rules do not require courts to credit a complaint’s conclusory
statements without reference to its factual context.”).
Guth also argues that the district court improperly dismissed his FCA
claims based on alleged double billing for legal services by Roedel Parsons.
Particularly, Guth alleges that multiple attorneys prepared for, traveled to and
from, and attended court hearings during the litigation. Guth does not allege
that the attorneys fraudulently billed for time not actually worked or for time
worked by others; rather, Guth contends that merely having multiple
attorneys involved in the expropriation suit was “unnecessary” and therefore
a basis for a FCA claim.
Merely stating that multiple attorneys prepared for and attended
hearings does not “allow[] the court to draw the reasonable inference” that the
work was unnecessary. Iqbal, 556 U.S. at 678. As the district court correctly
recognized, it is “not uncommon” for more than one attorney to appear on
behalf of a client, especially on complex matters such as expropriation suits.
Guth also provides several invoices submitted by Roedel Parsons. 6 However,
6 Those invoices, originally attached to Guth’s opposition to Roedel Parsons’s motion
to dismiss, were expressly incorporated by reference in Guth’s amended complaint as proof
that Roedel Parsons was submitting bills to the government. See Brand Coupon Network,
L.L.C. v. Catalina Mktg. Grp., 748 F.3d 631, 635 (5th Cir. 2014) (“The court may also consider
7
Case: 15-30043 Document: 00513212319 Page: 8 Date Filed: 09/29/2015
No. 15-30043
the invoices only provide more evidence that multiple attorneys worked on the
matter. “Standing alone, raw bills—even with numbers, dates, and amounts—
are not fraud without an underlying scheme to submit the bills for
unperformed or unnecessary work.” Grubbs, 565 F.3d at 190. Nowhere in the
amended complaint or its attachments has Guth provided any factual
assertions that support his conclusory statements that the additional
attorneys were unnecessary. 7 Even accepting all factual allegations as true
and interpreting the complaint in a light most favorable to the plaintiff,
Spicer,
751 F.3d at 365, Guth has failed to allege sufficient facts to plead a facially
plausible claim that Roedel Parsons overbilled or double billed the government
for unnecessary legal work. Because Guth has failed to state a plausible claim
for relief under Rule 8(a), we do not address the supplemental Rule 9(b)
standards.
B.
Guth argues that the district court erred in holding that his “false claims
predicated on legal violations” failed because Guth did not allege that any
statute or regulation required a certificate of compliance or that Roedel
Parsons falsely certified compliance. Guth argues that his amended complaint
pleaded a plausible claim because it generally alleged that Roedel Parsons
“violated the federal regulations of HUD and the CDBG program” and the Code
of Professional Conduct when it submitted the allegedly fraudulent legal
documents attached to either a motion to dismiss or an opposition to that motion when the
documents are referred to in the pleadings and are central to a plaintiff’s claims.”).
7 In his amended complaint, Guth alleges that Roedel Parsons attorneys conspired by
generating false billings for “unnecessary, unreasonable and duplicative work” based “on
information and belief from the practice of law for over 30 years, and from 4 years [of]
experience working against Roedel Parsons on this case.” However, “even where allegations
are based on information and belief, the complaint must set forth a factual basis for such
belief.” United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899,
903 (5th Cir. 1997).
8
Case: 15-30043 Document: 00513212319 Page: 9 Date Filed: 09/29/2015
No. 15-30043
billings to the government. Under a false certification theory, a defendant can
be liable under the FCA for a legal violation if the government requires a
certification of compliance with a statute or regulation and the claimant falsely
certifies compliance. Gonzalez v. Fresenius Med. Care N. Am., 689 F.3d 470,
475 (5th Cir. 2012). However, “[c]laims for services rendered in violation of a
statute do not necessarily constitute false or fraudulent claims under the FCA.”
Thompson, 125 F.3d at 902. The only specific regulation cited by Guth is OMB
Circular A-87, but nowhere in Guth’s amended complaint does he assert that
the regulation requires a certification of compliance or that Roedel Parsons
falsely certified compliance. Thus, insofar as Guth intended his FCA claims to
rest upon violations of statutes or regulations, he has failed to plead the
“linchpin of [such] an FCA claim.”
Spicer, 751 F.3d at 365. The district court
therefore did not err in dismissing Guth’s FCA claims predicated on legal
violations.
C.
Guth also contends that the district court wrongly dismissed his
“reverse” false claim. Under 31 U.S.C. § 3729(a)(1)(G), liability attaches when
a person
knowingly makes, uses, or causes to be made or used, a false record
or statement material to an obligation to pay or transmit money or
property to the Government, or knowingly conceals or knowingly
and improperly avoids or decreases an obligation to pay or
transmit money or property to the Government.
Guth alleges that by double billing the government, each double
payment created an obligation to refund the government. 8 As previously
discussed, Guth has not pleaded sufficient facts to allow the court “to draw the
8 On appeal, Guth also argues that Roedel Parsons may be subject to liability for
statutory sanctions for allegedly violating the law. However, this claim was not raised before
the district court, and Guth “cannot raise it for the first time on appeal.” United States ex
rel. Marcy v Rowan Cos., 520 F.3d 384, 392 n.3 (5th Cir. 2008).
9
Case: 15-30043 Document: 00513212319 Page: 10 Date Filed: 09/29/2015
No. 15-30043
reasonable inference” that Roedel Parsons double billed for unnecessary legal
work, Iqbal, 556 U.S. at 678, and therefore this court cannot reasonably infer
that an obligation to refund the government has arisen. However, even if we
assume Guth sufficiently pleaded facts showing unnecessary double billings by
Roedel Parsons, we find no error in the district court’s reasoning for dismissing
Guth’s reverse false claim for failing to plead a plausible claim under
§ 3729(a)(1)(G). See United States ex rel. Marcy v. Rowan Cos.,
520 F.3d 384,
391 (5th Cir. 2008).
D.
Finally, Guth asserts that the district court employed the wrong
standard in dismissing his FCA conspiracy claims. 31 U.S.C. § 3729(a)(1)(C)
subjects to civil liability any person who “conspires to commit a violation” of a
number of FCA provisions, including the presentment, false statement, and
reverse false claim provisions. Here, Guth asserts that the district court
applied a summary judgment standard because the district court cited United
States ex rel. Farmer v. City of Houston, 523 F.3d 333, 343 (5th Cir. 2008), for
the elements required to show a FCA conspiracy claim.
The district court cited Farmer not for the standard to prove a FCA
conspiracy claim, but to lay out the elements that Guth had to plead with
particularity in order “to state a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 570. This very court has cited Farmer for the elements
that must be pleaded for a FCA conspiracy claim to survive a 12(b)(6) motion.
Grubbs, 565 F.3d at 193 (quoting
Farmer, 523 F.3d at 343). After laying out
the elements of a FCA conspiracy claim, the district court properly articulated
and applied the supplemental pleading standard under Rule 9(b) to find that
Guth failed to state a claim under the FCA conspiracy provision. See
id.
(noting that the Rule 9(b) standard applies to the FCA conspiracy provision).
10
Case: 15-30043 Document: 00513212319 Page: 11 Date Filed: 09/29/2015
No. 15-30043
We find no merit to the claim that the district court applied the wrong standard
in dismissing the § 3729(a)(1)(C) claim.
IV. Conclusion
For the forgoing reasons, we AFFIRM the judgment of the district court.
11
