Free Motion to Amend Pleadings - Rule 15 - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS MULTISERVICE JOINT VENTURE LLC, ) ) Plaintiff, ) No. 06-312C ) (Judge Wheeler) v. ) ) THE UNITED STATES, ) ) Defendant. ) ) DEFENDANT'S AMENDED ANSWER AND COUNTERCLAIMS For its answer to the complaint, defendant admits, denies, and alleges as follows: 1. The allegations contained in paragraph 1 constitute conclusions of law and

plaintiff's characterizations of its case, to which no response is required; to the extent they may be deemed allegations of fact, they are denied. 2. The allegations contained in paragraph 2 constitute conclusions of law and

plaintiff's characterizations of its case, to which no response is required; to the extent they may be deemed allegations of fact, they are denied. 3. Denies the allegations contained in paragraph 3 for lack of knowledge or

information sufficient to form a belief as to their truth. 4. 5. 6. Admits. Admits. Admits the allegations contained in paragraph 6 to the extent supported by the

document cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 6. 7. The allegations contained in paragraph 7 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies

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the allegations contained in paragraph 7 for lack of knowledge or information sufficient to form a belief as to their truth. 8. Admits the allegations contained in paragraph 8 to the extent supported by the

document cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 8. 9. Admits the allegation contained in paragraph 9 that, on February 24, 2004, MJV

submitted a $326,629.47 price adjustment proposal in connection with increases in labor and health care costs and that the Navy made partial payment of this amount in response to MJV's proposal; denies the remainder of the allegations contained in paragraph 9. 10. Admits the allegation contained in paragraph 10 that the Navy has not paid MJV

$60,310.98 in increased costs that MJV alleges; denies the remainder of the allegations contained in paragraph 10. 11. The allegations contained in paragraph 11 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies the allegations contained in paragraph 11 for lack of knowledge or information sufficient to form a belief as to their truth. 12. Admits the allegations contained in paragraph 12 to the extent supported by the

documents cited, which are the best evidence of their contents; otherwise denies the allegations contained in paragraph 12. 13. 14. Denies. The allegations contained in the first sentence of paragraph 14 constitute

conclusions of law, to which no response is required; to the extent they may be deemed

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allegations of fact, they are denied; denies the remainder of the allegations contained in paragraph 14. 15. Admits the allegation contained in paragraph 15 that the Navy has refused to

reimburse MJV for the health care coverage referenced; otherwise denies the allegations contained in paragraph 15. 16. Admits the allegations contained in paragraph 16 to the extent supported by the

document cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 16. 17. 18. Denies. Admits the allegations contained in the first three sentences of paragraph 18;

denies the remainder of the allegations contained in paragraph 18. 19. The allegations contained in the first sentence of paragraph 19 constitute

conclusions of law, to which no response is required; to the extent they may be deemed allegations of fact, they are denied; admits the allegation contained in the second sentence of paragraph 19 that the Navy furnished storage space to MJV; denies the remainder of the allegations contained in paragraph 19. 20. 21. Denies. Admits the allegations contained in the first sentence of paragraph 21; denies the

remainder of the allegations contained in paragraph 21. 22. Denies.

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23.

The allegations contained in paragraph 23 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies the allegations contained in paragraph 23. 24. The allegations contained in paragraph 24 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies the allegations contained in paragraph 24. 25. The allegations contained in paragraph 25 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies the allegations contained in paragraph 25. 26. The allegations contained in paragraph 26 constitute conclusions of law, to which

no response is required; to the extent they may be deemed allegations of fact, defendant denies the allegations contained in paragraph 26. 27. Denies that plaintiff is entitled to the relief requested in the "Wherefore"

paragraph that follows paragraph 26 of the complaint or any relief whatsoever. 29. Denies each and every allegation not previously admitted or otherwise qualified.

WHEREFORE, defendant requests that the Court enter judgment in its favor, order that plaintiff's complaint be dismissed, and grant defendant such other and further relief as the Court may deem just and proper. AFFIRMATIVE DEFENSES 30. Plaintiff's claim is barred by illegality as a result of submitting a false claim.

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DEFENDANT'S COUNTERCLAIMS 31. This counterclaim arises pursuant to the False Claims Act, 31 U.S.C. §§ 3729-

3733, the special plea in fraud, 28 U.S.C. § 2514, and the antifraud provision of the Contract Disputes Act, 41 U.S.C. § 604. The Court possesses jurisdiction pursuant to 28 U.S.C. §§ 1503 and 2508. 32. 33. Defendant and counterclaim plaintiff is the United States. Plaintiff and counterclaim defendant is Multiservice Joint Venture, Inc. ("MJV"). Factual Background 34. On or about February 14, 2003, the Department of the Navy ("Navy") awarded

Contract No. N62477-02-D-0558 to MJV to provide custodial and janitorial services at the United States Naval Academy (the "Academy") in Annapolis, Maryland. 35. On or about September 25, 2003, MJV ­ by and through its president, David R.

Tolson ­ submitted a request for equitable adjustment ("REA"), in the form of a letter, to Navy contracting officer Ms. Cindy Dukes for alleged losses due to Hurricane Isabel. In particular, as part of the September 25, 2003 REA, MJV claimed $57,988.67 for various alleged lost supplies and equipment, including $5,400 for 400 cases of multifold paper towels, $9,921 for a Clark floor scrubber, $469 for an Excel power washer, and $269 for a Husky power washer. 36. In MJV's September 25, 2003 REA, MJV claimed to have "provided a list of

actual losses" but further advised the Navy that "this request for relief may increase based on any additional findings." For example, Mr. David R. Tolson wrote that while MJV was "not currently requesting relief for our walk-off mats," 371 such mats "got wet" as a result of the hurricane, and that he would "submit . . . findings to [Ms. Dukes] in the event we conclude that

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the walk-off mats need to replaced." Mr. Tolson indicated that "the total cost for the mats, including tax and delivery charges, is $13,141." 37. On or about October 20, 2003, Ms. Dukes informed MJV that its September 25,

2003 REA was denied. 38. On or about July 16, 2004, David R. Tolson again wrote the Navy in a letter, on

behalf of MJV, addressed to Ms. Irene Hunter, the Naval Facilities Engineering Command ("NAVFAC") Washington Small Business Advocate. In that letter, Mr. Tolson indicated that "[b]y letter dated September 25, 2003, MJV sought reimbursement for equipment and supplies in the amount of $71,158.04." Although Mr. Tolson noted in his letter that the contracting officer had denied MJV's REA, he once again "request[ed] that the Navy reimburse MJV [for] the replacement costs for the supplies damaged during or otherwise discarded following Hurricane Isabel." MJV also requested a reimbursement of approximately $25,000 for the alleged failure of the Navy to permit reperformance of unsatisfactory or nonpeformed janitorial tasks. 39. On or about September 16, 2004, Ms. Margaret J. Gervais, Director for

Acquisition, NAVFAC Washington, responded to Mr. Tolson's July 16, 2004 correspondence. Ms. Gervais explained the Navy's position that it was not liable for MJV's allegedly lost or damaged supplies and equipment. Ms. Gervais also explained that while MJV requested reimbursement for "an estimated $25,000 taken for deductions during the first year of [contract] performance" for unperformed tasks, MJV's "request for reimbursement . . . is denied." Ms. Gervais explained that MJV had been allowed to, but often did not, reperform unsatisfactory or non-performed tasks.

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40.

On December 7, 2004, MJV submitted a "certified claim" to Mr. Danny A.

Stubbs, a Navy Contracting Officer. 41. In that certified claim to the contracting officer, MJV asserted that it was entitled

to, amongst other sums: (1) $22,359.10 for the Navy's failure to allow re-performance; (2) $6,609.66 for 156 discarded entrance mats; and (3) equipment and supplies of unidentified value. 42. 43. Mr. David R. Tolson signed the certified claim on behalf of MJV. On January 5, 2005, Contracting Officer Mr. Dean E. Koepp, Director,

Acquisition Support Branch, NAVFAC Washington, notified MJV that it had "failed to specify the payment of money in a sum certain amount without which [its] submission cannot be considered as a claim." Accordingly, Mr. Koepp notified MJV that his office "will take no action on [MJV's] submission unless or until a sum certain and a certification of that sum . . . are received." 44. On February 2, 2005, Mr. Tolson, on behalf of MJV, responded to Mr. Koepp's

January 5, 2005 letter. In Mr. Tolson's February 2, 2005 letter, Mr. Tolson included a chart of MJV's various specific claims and associated specific amounts, including $22,359.10 for failure to allow re-performance and $6,609.66 for "Hurricane Isabel." According to Mr. Tolson's February 2, 2005 correspondence, MJV's total certified claim was $241,112.32. 45. On April 22, 2005, the Navy issued a contracting officer's final decision, signed

by Mr. Koepp, denying MJV's certified claim in all respects. 46. On April 24, 2006, MJV filed the above-captioned suit against the United States.

In MJV's complaint, MJV seeks $355,970.48, including $22,359.10 for failure to allow

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reperformance and $71,158.04 for losses to equipment and supplies due to Hurricane Isabel. See MJV Complaint at ¶¶ 16-20.

MJV's False Or Fraudulent Claims 47. MJV's September 25, 2003 REA, its July 16, 2004 letter to Ms. Irene Hunter, and

MJV's certified claim all contain false claims or were otherwise fraudulent. 48. MJV has misrepresented the amount and nature of property that MJV lost during

Hurricane Isabell. 49. For example, one of the items MJV claims to have lost is a floor scrubbing

machine (the "Clark scrubber"). However, not only was the Clark scrubber in used condition when MJV began providing janitorial services, it was damaged beyond repair before Hurricane Isabel struck. Moreover, contrary to MJV's claims, after Hurricane Isabel struck the Academy, the Clark scrubber was not discarded. Indeed, the Clark scrubber is currently stored in Bancroft Hall at the Academy. MJV seeks approximately $10,000 for the alleged loss of that scrubber. 50. MJV also claims $469 for an Excel power washer allegedly lost due to Hurricane

Isabel. However, the Excel power washer was not destroyed, but rather was used by MJV to power wash the Academy's track after the hurricane. 51. While MJV claims $269 for the alleged loss of a Husky power washer due to the

hurricane, MJV did not own that power washer; rather, it was the personal property of MJV's project manager, Ms. Elma Gadsen. 52. MJV's claims with respect to lost supplies are also grossly inflated. For example,

while MJV claims it is owed $5,400 for 400 cases of lost multifold paper towels, MJV discarded

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no more than between 100 and 200 such cases as a result of the hurricane. Indeed, at the time of the hurricane, MJV did not even have 400 cases of multifold paper towels stored at the Academy. 53. MJV claims that it is owed $12,542.26 for 371 "walk-off" floor mats (of various

sizes) lost due to the hurricane. However, MJV in fact discarded, at most, between 40 and 50 walk-off mats due to hurricane damage. 54. MJV has never provided the Navy with any proof that MJV lost any mats, nor has

MJV provided the Navy with any purchase orders, receipts, or other evidence to prove the cost of either the mats or any other allegedly lost equipment or supplies. 55. MJV principals have confirmed, in deposition testimony, the knowingly or

recklessly false nature of MJV's claims for lost supplies and equipment. 56. Mr. George W. Tolson, Jr., the general manager of MJV until September 2005,

testified that although he was the supply manager, he did not compute ­ and, indeed, is unable to substantiate ­ the approximately $73,000 in damages MJV seeks for items lost during Hurricane Isabel. 57. Mr. George Tolson, Sr., a partial owner of MJV, testified that he had no specific

knowledge of what was damaged due to the hurricane. 58. Mr. David R. Tolson ­ who signed MJV's certified claim ­ testified that he

performed a calculation of losses based upon information provided by Mr. Joseph Smith. Mr. Smith denies providing Mr. David Tolson with such information and does not know how Mr. David Tolson determined the specific quantities of items that MJV claims were damaged or

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destroyed by Hurricane Isabel. Mr. Smith did not speak with other MJV supervisors or janitorial staff to quantify lost items, nor did David Tolson ask Mr. Smith to do so. 59. MJV also seeks $22,359.10 due to Navy's alleged failure to permit MJV to

reperform certain contract work. MJV Complaint at ¶¶ 16-17. MJV claimed that identical amount in its December 7, 2004 certified CDA claim, allegedly "taken for deductions [by Navy] during the first year of performance." 60. Mr. David Tolson testified that "there were times when the government did

permit reperformance[,]" and that MJV is therefore owed less than the $22,359.10 MJV has claimed. David Tolson was unable to determine "how much less" ­ if anything ­ MJV allegedly is owed because he "ha[s] not done the calculation on that." David Tolson also testified that he could not explain "which are valid claims" ­ with respect to reperformance ­ and which are not. In a subsequent deposition, David Tolson asserted that MJV's actual claim was between "$17,000 and $18,000." MJV neither has submitted a revised certified claim, nor has MJV filed an amended complaint. 61. MJV's reperformance claims are false in that the Navy always gave MJV the

option to reperform unsatisfactory work (or work that was not performed), where it was possible to do so. Count I (False Claims Act ­ 31 U.S.C. § 3729 et seq.) 62. The United States hereby incorporates by reference the allegations set forth in

paragraphs 31 through 61 above. 63. MJV committed at least four violations of the False Claims Act in submitting the

September 25, 2003 REA that claimed sums owed for supposedly lost or damaged equipment or 10

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supplies, including: (1) multifold paper towels; (2) a Clark floor scrubber; (3) an Excel power washer; and (4) a Husky power washer. 64. MJV committed at least two violations of the False Claims Act in submitting its

July 16, 2004 letter claiming: (1) $71,158.04 for "reimbursement for equipment and supplies" that were allegedly "damaged during or otherwise discarded following Hurricane Isabel"; and (2) approximately $25,000 for the Navy's alleged failure to allow reperformance of certain contract tasks. 65. In MJV's certified claim to the contracting officer, consisting of MJV's

December 7, 2004 and February 2, 2005 correspondence to the Navy, MJV committed at least three violations of the False Claims Act in claiming: (1) that "the Navy is required to compensate MJV for the losses in equipment and supplies MJV sustained as a result of Hurricane Isabel" per its September 25, 2003 and July 16, 2004 letters; (2) that the Navy must reimburse MJV for damaged or discarded "entrance mats that were stored in Chauvenet Hall and the mats that were in place in the other academic buildings; and (3) that MJV is entitled to $22,359.10 for the Navy's alleged failure to allow reperformance. 66. MJV therefore is liable pursuant to the False Claims Act, 31 U.S.C. §3729 et seq.,

for at least nine false claims, each of which carries a civil penalty of not less than $5,500 and not more than $11,000 for each claim presented.

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Count II (Forfeiture Of Fraudulent Claims ­ 28 U.S.C. § 2514) 67. The United States incorporates by reference the allegations set forth in paragraphs

31 through 66 above. 68. MJV practiced or attempted to practice fraud against the United States in the proof,

statement, establishment, or allowance of the claims identified in the paragraphs above. In particular, MJV made false claims and practiced fraud against the United States in submitting various claims for money, including a certified a claim, with the intent to cause the Government to pay MJV amounts to which it knows it is not entitled. 69. Therefore, MJV is liable for the forfeiture of its claim, in its entirety, pursuant to

28 U.S.C. § 2514. Count III (Contract Disputes Act ­ 41 U.S.C. § 604) 70. The United States incorporates by reference the allegations set forth in paragraphs

31 through 69 above. 71. MJV is unable to support its claims, as alleged above, due to a misrepresentation

of fact or fraud. 72. Accordingly, MJV is liable to the United States pursuant to the Contract Disputes

Act, 41 U.S.C. § 604, for such unsupported claims, plus the Government's costs attributable to reviewing such claims.

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Prayer For Relief WHEREFORE, defendant the United States requests that the Court enter judgment in its favor, and against MJV as follows: a. b. on Count I (False Claims Act), for such civil penalties as are allowable by law; on Count II (Forfeiture of Fraudulent Claims), for forfeiture of plaintiffs entire claim; c. on Count III (Contract Disputes Act), for damages in the amount of MJV's unsupported claims, plus the Government's cost of reviewing plaintiff's false claims; d. e. for the dismissal of MJV's complaint; and for such other and further relief as the Court may deem appropriate. Respectfully submitted, GREGORY G. KATSAS Assistant Attorney General JEANNE E. DAVIDSON Director s/ Martin F. Hockey, Jr. MARTIN F. HOCKEY, JR. Assistant Director s/ Matthew H. Solomson MATTHEW H. SOLOMSON Trial Attorney, Commercial Litigation Branch Civil Division, U.S. Department of Justice Attn: Classification Unit, 8th Floor 1100 L Street, N.W. Washington, DC 20530 Telephone: 202-305-3274 Dated: August 11, 2008 Attorneys for Defendant 13