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United States v. Armet Armored Vehicles, Inc.

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

December 12, 2014

UNITED STATES OF AMERICA and FRANK SKINNER, Plaintiffs/Relators,
v.
ARMET ARMORED VEHICLES, INC., and WILLIAM R. WHYTE, Defendants.

MEMORANDUM OPINION

JACKSON L. KISER, District Judge.

On October 16, 2012, Plaintiff Frank Skinner ("Plaintiff") filed this action against Defendants Armet Armored Vehicles, Inc. ("Armet"), and William R. Whyte ("Whyte") (collectively "Defendants") pursuant to the qui tam provisions the False Claims Act, 31 U.S.C. § 3729 et seq. The United States elected not to intervene in the action. (See Notice of Election by U.S. to Decline Intervention, Aug. 14, 2013 [ECF No. 18].) Plaintiff served both Defendants with a summons and a copy of the Complaint on May 22, 2014, and Defendants moved to dismiss the Complaint. I granted that motion in part, and Defendants now move to dismiss Plaintiff's Amended Complaint [ECF No. 60]. For the reasons set forth below, that motion will be granted in part and denied in part.

I. STANDARD OF REVIEW

To survive a Rule 12(b)(6) 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. In determining facial plausibility, I must accept all factual allegations in the complaint as true. Id . The Complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief" and sufficient "[f]actual allegations... to raise a right to relief above the speculative level...." Twombly, 550 U.S. at 555 (internal quotation marks omitted). Therefore, the Complaint must "allege facts sufficient to state all the elements of [the] claim." Bass v. E.I. Dupont de Nemours & Co., 324 F.3d 761, 765 (4th Cir. 2003). Although "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, " a pleading that merely offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555.

II. DISCUSSION

The facts are adequately set forth in my opinion on Defendants' first Motion to Dismiss. (See Mem. Op. pgs. 2-6, Aug. 26, 2014 [ECF No. 58].)[1] Where new facts alleged in the Amended Complaint are relevant to the current Motion to Dismiss, they are set forth below. As before, the facts in the Amended Complaint are accepted as true for the purposes of this motion. See Iqbal, 556 U.S. at 678.

The federal False Claims Act ("FCA") imposes civil liability on any person who "knowingly presents, or causes to be presented [to the United States government], a false or fraudulent claim for payment or approval, " or "knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a) (2014). As the Fourth Circuit explained in Harrison v. Westinghouse Savannah River Co ., the term "false or fraudulent claim" includes those instances "when the contract or extension of government benefit was obtained originally through false statements or fraudulent conduct." 176 F.3d 776, 787 (4th Cir. 1999). "That is, the fraud may have been in the inducement." U.S. ex rel. Wilson v. Kellogg, Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008).

In order to prove a fraudulent inducement claim under the FCA, a plaintiff must demonstrate: (1) that "there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to pay out money or to forfeit moneys due (i.e., that involved a claim')." Harrison, 176 F.3d at 788. In fraudulent inducement cases, FCA liability attaches to "each claim submitted to the government under a contract" that was obtained by fraud. Id . As the Supreme Court stated, the initial fraud "[does] not spend itself with the execution of the contract." U.S. ex rel. Marcus v. Hess, 317 U.S. 537, 543 (1943). Its "taint" enters into every subsequent transaction "which was the basic cause for payment of every dollar paid by the [government]...." Id.

In the present case, Plaintiff has alleged the following:

• The Government, in its solicitation, set forth the required ballistic protection standards that would be applicable to the vehicles it wished to purchase (Am. Compl. ¶ 150 [ECF No. 60]);
• Whyte designed the Kestrel/Gurkha vehicles and was therefore aware of its ballistic protection capabilities (id. ¶ 151);
• Whyte "knew that the Kestrel/Gurkha vehicle did not meet the Solicitation's requirements" (id. ¶ 152);
• Defendants "represented to the U.S. Government that Armet's Kestrel/Gurkha armored gun truck would meet" the standards set forth in ...

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