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United States ex rel. Guth v. Roedel Parsons Koch Blache Balhoff & McCollister

United States District Court, E.D. Louisiana

December 18, 2014

UNITED STATES OF AMERICA ex rel. GREGORY GUTH
v.
ROEDEL PARSONS KOCH BLACHE BALHOFF & McCOLLISTER, Section: R(3)

ORDER AND REASONS

SARAG S. VANCE, District Judge.

Before the Court is defendant Roedel Parsons' motion to dismiss plaintiff Gregory Guth's Complaint and First Amended Complaint.[1] For the following reasons, the Court GRANTS Roedel Parsons' motion to dismiss.

I. BACKGROUND

This is a qui tam action brought by Gregory Guth ("Relator") on behalf of the United States Government under 31 U.S.C. § 3729, et seq. The claim arises out of a dispute between Relator and the State of Louisiana (through Louisiana State University ("LSU")), and its counsel, Roedel Parsons Koch Blache Balhoff & McCollister.

After Hurricane Katrina, the United States Department of Housing and Development made available federal funds to the City of New Orleans through the Community Development Block Grants program.[2] The City designated a portion of these funds for the expropriation of property and other expenses related to the design and construction of a veterans association medical center in New Orleans and a teaching hospital for LSU.[3] On April 30, 2007, the City entered into a Cooperative Endeavor Agreement with LSU, which authorized LSU to expropriate property for the hospitals.[4] LSU hired Roedel Parsons as counsel to handle the expropriations and other acquisitions of property for the project.[5] At the time, Relator owned property and a business within the relevant area subject to expropriation.[6]

In his original complaint, Relator asserted claims against both LSU and Roedel Parsons. Since the original filing, Relator voluntarily dismissed LSU from this case.[7] The following discussion will focus on the claims asserted against Roedel Parsons as the sole remaining defendant in this action.

Relator's Complaint and First Amended Complaint allege that Roedel Parsons violated the False Claims Act by taking and acting upon indefensible legal positions in order to generate additional fees for which it could bill the government, and by engaging in double-billing practices.[8] According to Relator, both practices constitute false claims under the FCA.

First, Relator alleges that despite legal requirements that mandate negotiations with property owners before the government files an expropriation suit, Roedel Parsons refused to engage in good faith pre-suit negotiations with property owners in order to generate additional fees from expropriation litigation and to shift expropriation costs from LSU to the City, which would bear every judgment.[9] According to Relator, Roedel Parsons took the position that a property owner could be reimbursed for only the greater of the value of his property or the value of his business, but not both.[10] Relator argues this "had no legal basis or support in law or fact."[11] Relator further alleges that when property owners counterclaimed for more money in expropriation proceedings, Roedel Parsons forced them to go to trial. Accordingly, Relator alleges that these facts mean that "legal bill(s), timesheet(s), memoranda, and/or other document(s) submitted for work and/or payment necessitated by this legal position... constituted a false claim."[12]

Second, Relator alleges that Roedel Parsons engaged in double-billing for legal work in connection with the expropriation matters by unnecessarily assigning and sending multiple attorneys to prepare for, travel to and from, and attend court hearings.[13] Again, Relator argues that Roedel Parsons' submission of "bill(s), timesheet(s), memoranda, and/or other document(s) submitted for payment and/or reimbursement" constituted a false claim in violation of the FCA.[14] Third, Relator asserts that Roedel Parsons' alleged double billings resulted in double payments to Roedel Parsons, which created obligations on the firm to refund the double payments, either as payments to which Roedel Parsons was not entitled, or as Community Development Block Grant income, which was required to be returned, all in violation of 31 U.S.C. § 3729(a)(1)(G).[15]

Fourth, Relator alleges that, by engaging in the foregoing conduct, Roedel Parsons engaged in a conspiracy to defraud the government in violation of the False Claims Act.[16]

Roedel Parsons filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and Federal Rule of Civil Procedure 9(b)'s heightened pleading standard for fraud.[17] Roedel Parsons contends that Relator fails to allege that it made any false communication or false statement.[18] Roedel Parsons also argues that Relator's complaint fails to meet the Rule 9(b) pleading standard for allegations of fraud because it fails to indicate what was communicated, when it was communicated, where it was communicated, or how it was communicated.[19]

II. LEGAL STANDARD

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead sufficient facts "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. 554, 570 (2007)). A claim is facially plausible when the plaintiff pleads facts that allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 2009). The Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.

A legally sufficient complaint must establish more than a "sheer possibility" that the plaintiff's claim is true. Id. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Twombly, 550 U.S. at 555. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiff's claim. Lormand, 565 F.3d at 256. If there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, Jones v. Block, 549 U.S. 199, 215 (2007); Carbe v. Lappin, 492 F.3d 325, 328 & n.9 (5th Cir. 2007), the claim must be dismissed.

Claims under the False Claims Act must also meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009). Rule 9(b) requires a party alleging fraud or mistake to "state with particularity the circumstances constituting fraud or mistake." This standard supplements the pleading requirements of Federal Rule of Civil Procedure 8(a), and together the two rules necessitate that a plaintiff supply "simple, concise, and direct" allegations of the circumstances amounting to fraud. Grubbs, 565 F.3d at 186. These ...


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