United States District Court, District of Columbia
UNITED STATES OF AMERICA, ex rel, BRIDGETTE CARMICHAEL, Plaintiff,
RAYMOND GREGORY, Defendant.
RICHARD J.LEON UNITED STATES DISTRICT JUDGE
United States and their relator, Bridgette Carmichael, allege
that Raymond Gregory knowingly submitted false statements to
the D.C. Housing Authority ("DCHA") in order to
obtain federal funds made available by the U.S. Department of
Housing and Urban Development ("HUD") through the
Section 8 Housing Choice Vender Program (the
"Program"). Despite having been served with the
complaint and summons more than twenty months ago, Gregory
has never appeared in this action. Before the Court is the
United States' and Relator's Motion for Default
Judgment and to Set Relator's Share (the
"Motion") [Dkt. #17]. Upon consideration of the
Motion, pleadings, relevant law, and the entire record
herein, the Court will GRANT the Motion and enter default
judgment in favor of the United States in a total amount of
$587, 999.00, consisting of $246, 999.00 in treble damages
and $341, 000.00 in civil penalties. The Court will set
relator's share at 15 percent of any sums collected by
the United States pursuant to the default judgment.
October 2008 through September 2013, Raymond Gregory rented a
residential property in the District of Columbia to Bridgette
Carmichael and her family. United States' Compl. in
Intervention ¶¶ 7-8 ("Gov't Compl.")
[Dkt. #12]. Carmichael is a low-income resident of the
District and an eligible tenant under the Program. Gov't
Compl. ¶ 28. At the outset of the rental, Gregory and
Carmichael agreed that rent for the property would be $1,
800.00 per month, and executed an initial lease to that
effect. Gov't Compl. ¶ 30.
executing the initial lease, Gregory and Carmichael applied
to DCHA to have their lease approved under the HUD Program.
Gov't Compl. ¶ 31; see also Mot., Ex. 1
(Request for Tenancy Approval) [Dkt. #17-1].' DCHA
determined that $1, 800.00 per month was not the
appropriate fair-market rate and set the rent at $1603.00 per
month. Gov't Compl. ¶ 32. DCHA also set the initial
federal housing assistance payment at $898.00 per month,
leaving Carmichael responsible for $705.00 per month.
Gov't Compl. ¶ 33. In late October 2008, Gregory
visited DCHA's offices and executed the requisite
paperwork. This included a HUD-form Housing Assistance
Payment Contract (the "HAP Contract"), which
reflected the DCHA approved monthly rental rate of $1, 603.00
and the federal housing assistance payment of $898.00.
Gov't Compl. ¶¶ 34-35; see also Mot.,
Ex. 3 (HAP Contract) [Dkt. #17-3]. Carmichael and Gregory
also executed a letter agreement containing these terms and
specifying Carmichael's contribution of $705.00.
Gov't Compl. ¶ 36; see also Mot., Ex. 2
(letter agreement) [Dkt. #17-2]. In addition, ' DCHA
administers the Program on behalf of HUD in the D.C. area and
is reimbursed by HUD for housing payments authorized under
the Program. Gov't Compl. ¶ 20. Carmichael, Gregory,
and DCIIA executed a Lease Information Form agreement which
contained these terms, and, among other things, informed
Gregory that he could not charge Carmichael any additional
sums or rent increases without DCHA approval. Gov't
Compl. ¶¶ 37-38; see also Mot., Ex. 4
(Lease Information Form) [Dkt. #17-4]. Finally, Gregory
executed a direct deposit agreement with DCHA in which he
agreed to accept housing assistance payments as electronic
deposits and certified that he would remain in compliance
with all terms and conditions of the Program as a condition
of receiving those payments. Gov't Compl. ¶ 39;
see also Mot., Ex. 5 (Authorization Agreement For
Direct Deposit) [Dkt. #17-5].
executing these agreements, Gregory required Carmichael to
pay more than the total monthly amount approved by DCIIA.
From October 2008 through July 2012, Gregory set the rent at
$1, 700.00 per month, nearly $ 100 more than allowed by the
HAP Contract. Gov't Compl. ¶¶ 41-42. From
August 2012 through September 2013, Gregory set the rent at
$1, 653.00 per month, or $50.00 more than allowed by the HAP
Contract. Gov't Compl. ¶ 46. For each period,
Gregory executed a revised lease with Carmichael stating the
total monthly rent. Gov't Compl. ¶¶ 41, 46;
see also Mot., Exs. 6 (2008 lease) and 9 (2012
lease) [Dkts. ##17-6, 17-9]. In December 2011, Gregory sought
approval from DCIIA to increase the monthly rent to $1803.00
per month. Gov't Compl. ¶ 45; see also
Mot., Ex. 7 (Rent Increase Request Form) [Dkt. #17-7]. The
agency denied his request and determined that the monthly
rent would remain $1603.00. Gov't Compl. ¶ 45;
see also Mot., Ex. 8 (letter denying request) [Dkt.
#17-8]. All told, during the period Gregory rented the
property to Carmichael, he received sixty-two payments of
federal funds through the Program, totaling $82, 333.00.
Gov't Compl. ¶¶48-51; see also Mot.,
Ex. 10 (list of individual payments) [Dkt. #17-10].
filed this action in October 2014, asserting claims for
violations of the False Claims Act ("FCA"), 31
U.S.C. § 3729, et seq., and for unjust
enrichment. See Compl. [Dkt. #1]. The United States
sought and received from the Court several extensions of time
to conduct its own investigation of the facts and consider
whether it would intervene. In late September 2015, the
United States noticed its election to intervene, and in early
October the Court unsealed relevant portions of the record
and directed the parties to serve Gregory. See Order
(Oct. 2, 2015) [Dkt. #10]. Gregory was served on January 26,
2016, but has never appeared in the case. On May 18, 2016,
the Clerk of Court declared Gregory in default, and in
February 2017, the United States and Carmichael filed the
instant Motion for default judgment.
Rule of Civil Procedure 55 establishes a two-step process for
obtaining default judgment. First, a plaintiff must request
that the Clerk of the Court enter a default against the party
who has "failed to plead or otherwise defend"
against an action. Fed.R.Civ.P. 55(a). Once default has been
entered, the plaintiff may move for default judgment.
Fed.R.Civ.P. 55(b). Default establishes the defaulting
party's liability for the well-pleaded allegations of the
complaint. See Fanning v. Wellman Dynamics Corp.,
113 F.Supp.3d 172, 174 (D.D.C. 2015). It does not, however,
establish the amount of damages owed. Id. Unless the
amount of damages is certain, the court is required to make
an independent determination of the sum to be awarded.
Id. That determination may be based on detailed
affidavits or documentary evidence. See Flynn v. Mastro
Masonry Contractors, 237 F.Supp.2d 66, 69 (D.D.C. 2002).
A hearing is not required. See id.; Embassy of
Fed. Republic of Nigeria v. Ugwuonye, 945 F.Supp.2d 81,
85 (D.D.C. 2013). Although generally disfavored, default
judgment is appropriate "when the adversary process has
been halted" by an unresponsive party. Jackson v.
Beech, 636 F.2d 831, 836 (D.C. Cir. 1980).
the well-pleaded facts in the United States' complaint
are sufficient to establish liability for violations of the
FCA. A presentment claim under the FCA must allege "that
'(1) the defendant submitted a claim to the government,
(2) the claim was false, and (3) the defendant knew the claim
was false.'" United States ex rel Tran v.
Computer Scis. Corp., 53 F.Supp.3d 104, 121-22 (D.D.C.
2014) (quoting United States ex rel. Head v. Kane
Co., 798 F.Supp.2d 186, 196 (D.D.C. 2011)) (alteration
omitted). First, the complaint alleges that Gregory submitted
requests to DCHA for payment of federal funds provided by
HUD. Such requests are cognizable as claims under the FCA.
See, e.g., Doe v. Gormley, Civ. A. No. 15-2183, 2016
WL 4400301, at *5 (D. Md. Aug. 17, 2016) (collecting cases
where "courts have specifically held that collecting
illegal side-rent, in the context of housing voucher
programs, violates the FCA").
the complaint alleges that the claims submitted by Gregory
were false. By submitting requests for payment, Gregory
impliedly certified his compliance with HUD Program rules
concerning the amount of rent he was permitted to charge
Carmichael. See United States v. SAIC, 626 F.3d
1257, 1269 (D.C. Cir. 2010) (holding monthly invoice
qualified as a false claim under the FCA); United States
ex rel. Wade v. DBS Investments, LLC, Civ. A. No.
11-20155, 2012 WL 3759015, at *3 (S.D. Fla. Aug. 29, 2012)
("[A] landlord commits fraud when that landlord endorses
or presents for payment housing assistance payment checks
while knowingly receiving additional payments in excess of
that approved [.]"). Nor is there any doubt that the
amount of rent he charged is a "material" term of
the Program. Cf. Universal Health Servs., Inc. v. United
States ex rel. Julio Escobar, 136 S.Ct. 1989, 1996
(2016) (holding implied false certifications "must be
material to the Government's payment decision in order to
be actionable under the False Claims Act"). The Program
exists "[f]or the purpose of aiding low-income families
in obtaining a decent place to live, " 42 U.S.C. §
1437f(a), and that purpose is clearly undermined when a
program participant overcharges a beneficiary of the program.
the complaint provides an adequate basis for inferring that
Gregory knew the claims he submitted were false. The terms
"knowing" or "knowingly" under the FCA
"mean that a person, with respect to information-(i) has
actual knowledge of the information; (ii) acts in deliberate
ignorance of the truth or falsity of the information; or
(iii) acts in reckless disregard of the truth or falsity of
the information." 31 U.S.C. § 3729(b)(1)(A). They
"require no proof of specific intent to defraud."
Id. § 3729(b)(1)(B). In addition to pleading
scienter generally, the complaint alleges and the record
shows that Gregory was told by DCHA what he was permitted to
charge, and that Gregory sought unsuccessfully to have DCHA
change the authorized rent (thereby confirming his knowledge
of the authorized amount). Moreover, the complaint alleges
and the record shows that Gregory executed at least two
revised leases with Carmichael. These allegations are
sufficient to plead scienter and to establish Gregory's
issue that remains is damages. "The FCA 'imposes two
types of liability.'" SAIC, 626 F.3d at
1277 (quoting United States ex rel. Bettis v. Odebrecht
Contractors of Cal, Inc., 393 F.3d 1321, 1326 (D.C. Cir.
2005)). "First, a defendant who submits a false claim or
makes a false statement to get a false claim paid is liable
for civil penalties regardless of whether the government
shows that the submission of that claim caused the government
damages." Id. "Second, the defendant is
liable for '3 times the amount of damages which the
Government sustains because of the act of [the
defendant].'" Id. at 1277-78 (quoting 31
U.S.C. § 3729(a)) (alteration in original). Where, as
here, "the defendant fraudulently sought payments for
participating in programs designed to benefit third-parties
rather than the government itself, " the damages
sustained by the United States are the full value of
"all payments made." Id. at 1279 (citing
United States v. TDC Mgmt. Corp., 288 F.3d 421, 428
(D.C. Cir. 2002)).
United States assert that in this case, the total value of
the treble damages and penalties owed by Gregory is $587,
999.00. After making an independent evaluation, the Court
agrees. The complaint alleges and the record shows that
Gregory requested and received $82, 333.00 in federal funds
from DCHA in connection with his rental to Carmichael.
Gov't Compl. ¶ 48; Mot., Ex. 10 (list of individual
payments). Treble that figure is $246, 999.00. In addition,
the complaint alleges and the record shows that Gregory
submitted a total of sixty-two false claims. Gov't Compl.
¶49; Mot., Ex. 10. The minimum civil penalty for each
false claim is $5, 500.00. See 31 U.S.C. §
3729(a)(1)(G) (civil penalties); 28 ...