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United States ex rel. Cooley v. Carolina Wrecking, Inc.

United States District Court, D. South Carolina, Charleston Division

April 23, 2019

United States of America, ex rel. Willie Cooley and Frank Rawlinson, Plaintiffs,
Carolina Wrecking, Inc., Charles Dowey, individually, and Fencon, Inc., Defendants.


          Richard Mark Gergel United States District Court Judge

         Before the Court is Defendant Fencon, Inc.'s motion to dismiss the third and fourth causes of action alleged in the Second Amended Complaint. (Dkt. No. 64.) For the reasons set forth below, Fencon, Inc.'s motion to dismiss is granted in part and denied in part.

         I. Background

         Willie Cooley and Frank Rawlinson ("Plaintiff-Relators") are former employees-a tractor-trailer driver and equipment operator, respectively-of Defendant Carolina Wrecking, Inc. ("Carolina Wrecking"), a demolition contractor. Plaintiff-Relators bring this qui tarn action pursuant to the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., alleging that contractor Fencon, Inc. ("Fencon"), subcontractor Carolina Wrecking, and Carolina Wrecking's majority owner, Charles Dowey, defrauded the United States government (the "Government") by failing to pay employees the "prevailing wages" mandated by the McNamara-O'Hara Service Contract Act, 41 U.S.C. §§ 351-358 ("SCA") and/or the Davis-Bacon Act, 40 U.S.C. § 3141 et seq., but nonetheless submitting statements that sought payment and certified statutory compliance. (Dkt. No. 62 ¶¶ 5-7.) Plaintiff-Relators worked pursuant to an approximately five-year contract issued on or about August 18, 2010 by the Government to Fencon for demolition and construction work at the Joint Base Charleston. (Id. ¶¶ 19-20.) In September 2011, the agreement was modified with an amendment to "Incorporate the new Wage Determination 2005-2473, Rev. (06/13/2011)" (the "Contract"). (Id. ¶ 28.) Wage Determination 2005-2473, Rev. (06/13/2011) is issued by the Department of Labor to set the minimum allowable hourly rate per employee classification pursuant to the SCA. (Id. ¶ 29.)

         Fencon previously moved to dismiss all four causes of action in the First Amended Complaint (Dkt. No. 43), which Plaintiff-Relators moved to amend (Dkt. No. 47). The Court granted in part and denied in part Fencon's motion to dismiss. (Dkt. No. 61.) As to the first cause of action for presentation of false claims and the second cause of action for material false statements, the Court denied Fencon's motion to dismiss. As to the third cause of action for conspiracy to defraud the United States and fourth and alternative cause of action for "QuantumMeruit/Unjust Enrichment," the Court granted Fencon's motion to dismiss and Plaintiff-Relators' motion to amend.[1] Plaintiff-Relators filed the Second Amended Complaint, and Fencon now moves to dismiss the third and fourth causes of action alleged therein.

         II. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if the complaint fails "to state a claim upon which relief can be granted." A motion to dismiss tests the legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses. . . . Our inquiry then is limited to whether the allegations constitute a short and plain statement of the claim showing that the pleader is entitled to relief." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (internal quotation marks and citation omitted). On a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P 'ship, 213 F.3d 175, 180 (4th Cir. 2000). Although the Court must accept the facts in a light most favorable to the Plaintiff-Relators, the Court "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id. Generally, to survive a motion to dismiss, the complaint must provide enough facts to '"state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed. R. Civ. Pro. 8(a)(2).

         Claims brought "under the FCA must also meet the more stringent particularity requirement of Federal Rule of Civil Procedure 9(b)." McLain v. KBR, Inc., 612 Fed.Appx. 187, 187-88 (Mem) (4th Cir. 2015). Rule 9(b) particularity requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). The FCA "attaches liability, not to the underlying fraudulent activity or to the government's wrongful payment, but to the 'claim for payment.'" Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir. 1999). Meaning, "to trigger liability under the Act, a claim actually must have been submitted to the federal government for reimbursement, resulting in a call upon the government fisc." United States ex rel. Nathan v. Takeda Pharms. N. A., Inc., 101 F.3d 451, 454 (4th Cir. 2013) (internal quotation marks omitted); see also Harrison, 116 F.3d at 785 ("A false statement is actionable under the Act only if it constitutes a false or fraudulent claim."). Accordingly, a "court should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendant has been made aware of the particular circumstances for which she will have to prepare a defense at trial, and (2) that plaintiff has substantial pre-discovery evidence of those facts." Harrison, 176 F.3d at 784.

         III. Discussion

         A. Third Cause of Action for Conspiracy to Defraud the United States

         To state a cause of action under 31 U.S.C. § 3729(a)(1)(C), Plaintiff-Relators must plead that Fencon "conspire[d] to commit a violation of [§§ 3729(a)(1)(A) or (B)]" with Defendants. 31 U.S.C. § 3729(a)(1)(C). Plaintiff-Relators "must allege with particularity facts (1) to support the formation of an unlawful agreement between the conspirators to get a false claim paid, and (2) at least one overt act in furtherance of the conspiracy." United States ex rel. Ahumada v. Nat'l Ctr. for Emp't of the Disabled, No. 1:06-cv-713, 2013 WL 2322836, at *4 (E.D. Va. May 22, 2013), affdsub nom. United States ex rel. Ahumada v. NISH, 756 F.3d 268 (4th Cir. 2014).

         The Second Amended Complaint alleges, in relevant part:

The Defendants had an agreement to violate the FCA: on or after the August 18, 2010 Contract, both Defendants agreed to present false claims to the government as described above, via their contractor-subcontractor relationship. Alternatively, the Contract itself was the agreement to violate the FCA, as it caused Defendants to carry out its scheme alleged above in submitting false claims.
Defends conspired to commit a violation of 31 U.S.C. ยงยง 3729(a)(1)(A) and (B); Defendants, by or through its agents, officers, or employees, knowingly agreed, with the specific intent, to join into a conspiracy to defraud the United States ...

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