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United States v. D.L. Kaufman Inc.

April 19, 1999

UNITED STATES, PLAINTIFF-APPELLANT,
v.
D.L. KAUFMAN, INC. AND DANIEL L. KAUFMAN, DEFENDANTS-APPELLEES.



Before Mayer, Chief Judge, Friedman, Senior Circuit Judge, and Schall, Circuit Judge.

The opinion of the court was delivered by: Friedman, Senior Circuit Judge.

Appealed from: U.S. District Court for the Central District of California Judge Mariana R. Pfaelzer

This is a government appeal from a district court order transferring a case to the Court of Federal Claims. We have jurisdiction to review such an interlocutory order only if it was based upon 28 U.S.C. § 1631. The latter section requires, as a condition for transfer, that the court "finds that there is a want of jurisdiction." Since the record does not clearly show whether either of these conditions was met, we partially remand the case to the district court for clarification of the bases of its decision.

I.

This case arises from several contracts between the appellee D.L. Kaufman, Inc., (Kaufman, Inc.), a company wholly owned by the appellee Daniel L. Kaufman, and the Postal Service for remodeling post offices in Southern California. On reviewing the invoices Kaufman, Inc. submitted for payments under the contracts, the Postal Service concluded that the company had filed false certificates and obtained payment for work not completed. The Postal Service then began to withhold payment of invoices for work the company had done, as a set-off against any judgment in a future False Claims Act suit.

In August of 1996, the company challenged some of the withholdings before the Postal Service Board of Contract Appeals. Then, in early 1997, it filed suit in the Court of Federal Claims under the Contract Disputes Act challenging other withholdings, "so that [the contract] claims and the Government's expected F[alse ]C[laims ]A[ct] suit could be heard in the same court."

In August 1997, the United States filed the present suit in the United States District Court for the Central District of California against Kaufman, Inc. and Mr. Kaufman. The complaint contained two claims under the False Claims Act, 31 U.S.C. § 3729 et seq., (for false claims and false statements) and three common law claims (payment by mistake, unjust enrichment, and common law fraud).

The defendants moved to transfer the case to the Court of Federal Claims because "th[e] [district] [c]court lacks jurisdiction over certain of the claims asserted in this action [the claims for payment by mistake and unjust enrichment], and the only forum with jurisdiction over all the claims which are the subject of this action is the Court of Federal Claims, such that judicial economy will be served by the transfer." In a supporting memorandum, the defendants cited 28 U.S.C. § 1631 as the basis for transfer. Although the Court of Federal Claims would not have jurisdiction over the False Claims Act suit against Mr. Kaufman, he agreed to be bound by the judgment against the corporation.

The district court denied the transfer motion without explanation, and the defendants requested clarification. In the interim, on the government's motion, the Court of Federal Claims had transferred some of the contract claims to the Postal Service Board and stayed the rest of the contract suit "pending resolution of the F[alse] C[laims] A[ct] claims in the district court."

When the motion for clarification was heard, the district court was not aware of the stay. Viewing the motion as one for reconsideration of the earlier denial of transfer, the court expressed concern over the parallel litigation and the possibility of conflicting rulings on the same issues in the two suits. The court stayed the case, subject to "changes in circumstances that justify lifting . . . the stay."

The government moved to vacate the stay in light of the Court of Federal Claims' stay, arguing that the parallel stays "will delay or prevent the resolution of both cases." At the hearing on the motion to vacate, the district court, after asking whether the government "let me go through the whole proceeding [knowing] that the matter had been stayed in the [Court of Federal] Claims," stated that it had not "been treated fairly" and was "not going to have any more to do with this." The court requested the defendants to renew their motion to transfer and stated "if you renew the motion to transfer, I am going to grant it." They did so, making substantially the same arguments as before, and without a hearing, the court granted the motion in part. The order stated only that:

1. The plaintiff's claims against the defendant D.L. Kaufman, Inc. are transferred to the U.S. Court of Federal Claims; and

2. The plaintiff's claims against defendant Daniel L. Kaufman are stayed.

On the government's request, the court stayed the transfer order, and the ...


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