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United States ex rel. Prince v. Virginia Resources Authority

United States District Court, W.D. Virginia, Harrisonburg Division

April 15, 2014

UNITED STATES OF AMERICA, ex. rel. Mark W. Prince, Plaintiffs,
v.
VIRGINIA RESOURCES AUTHORITY, et al., Defendants.

MEMORANDUM OPINION

MICHAEL F. URBANSKI, District Judge.

This qui tam action is presently before the court on defendant Virginia Resources Authority's ("VRA") Motion to Dismiss for Failure to State a Claim and for Lack of Jurisdiction. Dkt. No. 16. A hearing was held on February 6, 2014. At the hearing, the court granted VRA leave to file within fourteen (14) days any response to the Memorandum of Law filed by the relator, Mark W. Prince ("Prince"), on the morning of the hearing. The court further granted VRA leave to supplement its pleadings, within fourteen (14) days, to elaborate on the similarities between the allegations in this action and those made by Prince in numerous prior state court lawsuits. VRA filed its supplemental briefing on February 21, 2014. Dkt. No. 30. On March 16, 2014, Prince filed a response to VRA's supplemental briefing, and then filed additional evidence on March 23, 2014. Dkt. Nos. 31 & 32. On April 4, 2014, the court entered an oral Order directing the parties to refrain from any further filings. Dkt. No. 33. The matter is thus ripe for adjudication. For the reasons stated herein, the court will GRANT VRA's motion to dismiss and DISMISS the remainder of the case for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b).

I.

Prince alleges, on behalf of the United States, that VRA and others violated the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733 et seq., by knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval related to federal subsidies and tax exempt status for certain bonds through the Build America Bonds ("BAB") program. See 31 U.S.C. § 3729(a)(1)(A) (creating liability for any person who "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval"). Prince asserts that the bonds were issued in violation of Article VII of the Virginia Constitution and that the defendants falsely claimed that the bonds were legally issued in the course of participating in the BAB program. See Am. Compl. ¶¶ 54-55, 111, 115, Dkt. No. 11.[1]

VRA advances three arguments in support of its motion to dismiss. First, it argues that this court lacks jurisdiction under the Rooker-Feldman doctrine because of the numerous prior lawsuits filed by Prince in state court. Specifically, VRA argues that these state court rulings establish that the defendants, including VRA, did not issue the bonds illegally. Second, it argues that Prince's claims are barred by claim and/or issue preclusion for the same reason. Third, VRA claims that it both possesses sovereign immunity and is not a "person" subject to suit under the FCA because it is an arm of the Commonwealth of Virginia.

II.

As set forth below, this case does not fall within Rooker-Feldman's narrow jurisdictional bar. Instead, this matter is governed by Virginia preclusion law. Because the critical legal issue - the legality of the bonds issued by VRA and others - has already been decided in previous litigation between Prince and VRA, Prince's claims are barred by issue preclusion, also known as collateral estoppel. As such, the court need not address whether VRA is an arm of the Commonwealth.

A. Rooker-Feldman is inapplicable.

"Under the Rooker-Feldman doctrine, a party losing in state court is barred from seeking what in substance would be appellate review of the state judgment in a United States district court.'" Smalley v. Shapiro & Burson, LLP, 526 F.Appx. 231, 235 (4th Cir. 2013) (unpublished) (quoting Johnson v. De Grandy , 512 U.S. 997, 1005-06 (1994)).[2] In other words, the doctrine "bar[s] the federal courts from exercising jurisdiction in cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.'" Stratton v. Mecklenburg Cnty. Dep't of Soc. Servs., 521 F.Appx. 278, 288-89 (4th Cir.2013) (unpublished) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp. , 544 U.S. 280, 283 (2005)). The basis of the doctrine is 29 U.S.C. § 1257, in which Congress vests the Supreme Court with exclusive jurisdiction to review state court decisions on issues of federal law.[3] The Rooker-Feldman doctrine is a "corollary" to this rule, as it prohibits lower federal courts from exercising such appellate jurisdiction over state court actions. Adkins v. Rumsfeld , 464 F.3d 456, 463 (4th Cir. 2006) (citing Lance v. Dennis , 546 U.S. 459, 463 (2006)).

It is plain that Prince's suit in this case is not effectively an appeal of the state court judgments cited by VRA. By alleging that VRA violated the FCA, Prince is not seeking "to overturn [an] injurious state-court judgment." Skinner v. Switzer , 131 S.Ct. 1289, 1297 (2011); Saudi Basic , 544 U.S. at 291-92. His FCA claim is not based on the earlier state court rulings, but on the alleged actions of the defendants. While it is true that there are overlapping issues of fact and law between these state court suits and this one, that it is insufficient to invoke the jurisdictional limitation of the Rooker-Feldman doctrine.

It has been repeatedly and emphatically emphasized by higher courts that Rooker-Feldman is a narrow doctrine. See Skinner , 131 S.Ct. at 1297 (describing the Court's prior holding in Saudi Basic as "emphasizing the narrow ground' occupied by the doctrine"); see also Saudi Basic , 544 U.S. at 284 (reversing the Third Circuit where it "misperceived the narrow ground occupied by Rooker-Feldman"); Adkins , 464 F.3d at 463 (citing Lance , 546 U.S. at 463) (noting that the Supreme Court "has recently underscored that Rooker-Feldman is a narrow doctrine.'"). Rooker-Feldman "does not otherwise override or supplant preclusion doctrine or augment the circumscribed doctrines that allow federal courts to stay or dismiss proceedings in deference to state-court actions." Saudi Basic , 544 U.S. at 284. The significant overlap between the factual and legal questions presented in this action and Prince's previous state-court lawsuits presents is an issue of preclusion (discussed below) - not of jurisdiction.

[T]he Rooker-Feldman doctrine does not stop a district court from exercising subject-matter jurisdiction simply because a party attempts to litigate in federal court a matter previously litigated in state court. If a federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party, then there is jurisdiction and state law determines whether the defendant prevails under principles of preclusion.

Davani v. Virginia Dep't of Transp. , 434 F.3d 712, 718 (4th Cir. 2006) (emphasis original) (internal alterations omitted) (quoting Saudi Basic , 544 U.S. at 293). Prince's FCA claim that VRA violated 31 U.S.C. § 3729(a)(1)(A) is just such an independent claim.

VRA argues that it significant that Prince did not file this federal action until there was "a known unsatisfactory outcome" in state court. Suppl. Mem. of Law, Dkt. No 30, at 4. The timing of the filing, however, is immaterial, because where "a federal plaintiff presents an independent claim, it is not an impediment to the exercise of federal jurisdiction that the same or a related question was earlier aired between the parties in state court." Skinner v. Switzer , 131 S.Ct. 1289, 1297 (2011) (internal quotation marks and alterations omitted) ...


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