United States v. Cnty. of San Diego

UNITED STATES OF AMERICA, ex rel Michael Durkin, Plaintiff, v. COUNTY OF SAN DIEGO, Defendant.

Case No.: 15cv2674-MMA (WVG)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

August 2, 2017

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

[Doc. No. 20]

Plaintiff Michael Durkin filed this action under the qui tam provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., on behalf of the United States of America and against Defendant County of San Diego. See Doc. Nos. 1, 17. The United States declined to intervene in this action. See Doc. No. 7. Defendant now moves to dismiss the First Amended Complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. See Doc. No. 20. The Court found the matter suitable for determination on the papers and without oral argument pursuant to Civil Local Rule 7.1.d.1. For the reasons set forth below, the Court GRANTS Defendant's motion.

BACKGROUND¹

By way of background, Plaintiff² alleges that in 2014, he was involved in a lawsuit in which the owners of two properties located near the McClellan-Palomar Airport sued the County of San Diego for inverse condemnation. The FAC states that Plaintiff was the manager of the two entities that owned those properties. In the course of that litigation, Plaintiff alleges he uncovered the information underlying this action. In the instant case, Plaintiff asserts twelve claims against Defendant County of San Diego under the FCA, and requests damages and civil penalties. Plaintiff alleges Defendant made false statements to the Federal Aviation Administration ("FAA") in applying for grants for the maintenance and development of the Palomar-McClellan Airport located in Carlsbad, County of San Diego, California.

Plaintiff alleges the FAA makes funding "available to improve American airports," and provides funds to recipients in order to "among other things, ensure the safety of airports, the surrounding areas, and the people in or around the airports." See Doc. No. 17, FAC, ¶ 9. In order to obtain federal funds through the FAA, Plaintiff alleges applicants must "make statements and promises, and give assurances regarding, inter alia, how the land surrounding the airport is being controlled by the applicant so as to protect airport operations from hazards on the ground, and people and property on the ground from hazards inherent to airport operations." See FAC, ¶ 9. Further, the FAC states that "[u]pon approving a grant, the FAA requires the applicant to include in the grant agreement [similar] statements . . . regarding how the airport and surrounding areas will be operated, maintained, improved, or acquired" for safety purposes. See FAC, ¶ 10. Then, Plaintiff alleges, "a grantee is required to file claims for payment to the FAA in the form of invoices," which "impliedly or expressly recertify all the promises, assurances,and statements previously made in the grant applications and agreements." See FAC, ¶ 11.

In particular, Plaintiff alleges Defendant applied for, was approved for, and obtained funding for use in relation to the McClellan-Palomar Airport. Plaintiff contends that, in 1995, Defendant knew that certain undeveloped properties were in the Runway Protection Zone ("RPZ"), and obtained federal funds from the FAA in order to acquire those properties. Plaintiff alleges that instead of clearing the RPZ, Defendant "decided the properties were too expensive, gave other projects priority, and reallocated the funds." See FAC, ¶ 14. The FAC asserts that the County knew that it was required under "federal regulations" to "acquire sufficient interest in the RPZ to prevent incompatible land uses." See FAC, ¶ 14. Plaintiff alleges Defendant never did so, "resulting in the development of an office building in the RPZ," which "constitutes a place of public assembly in violation of FAA standards, circulars and requirements which the County promised it would comply with." See FAC, ¶ 14. Plaintiff alleges this safety hazard continues to the present time, despite Defendant's assertions otherwise in its grant applications.

Specifically, Plaintiff alleges Defendant, on multiple occasions between 2005 and 2015, made misrepresentations to the FAA in applying for, entering into agreements for, or making claims for federal funds. Plaintiff alleges that, in each grant application, "the County certified, represented, and assured that it would be guided in the acquisition of real property by 49 CFR Part 24, subpart B, and that it had complied and would comply with Advisory Circular³ 150/5300-13, Changes 1 through 5." See FAC, ¶¶ 19, 31, 53, 65, 77, 89, 100, 111, 122, 134, 146, 158. Also, Plaintiff alleges that in some of the applications, Defendant stated that "it had taken the step of causing the adoption of the 'Palomar Airport Comprehensive Land Use Plan.'" See FAC, ¶¶ 19, 65, 77, 89, 134,146, 158. Moreover, in some grant agreements, Plaintiff alleges Defendant promised "to acquire an interest in Runway Protection Zone Properties not then under it's [sic] control, and to use interest acquired to prevent erection or creation of places of public assembly, meaning office and industrial buildings, and to clear or discontinue any such uses as already existed." See FAC, ¶¶ 23, 35, 57, 126. In those same agreements, Plaintiff alleges Defendant promised to "abide by the Uniform Relocation Assistance and Real Property Acquisition Policies Act, 42 U.S.C. 4601, et seq." See FAC, ¶¶ 23, 35, 57, 126. In all cases, Plaintiff contends that Defendant's assertions were false, and were made in order to induce the FAA to grant it funds, and that Defendant "never intended to perform" on its promises, and "took no steps whatsoever to perform its' promises and assurances." See FAC, ¶¶ 27, 39, 49, 60, 72, 84, 96, 107, 118, 129, 141, 153, 165.

LEGAL STANDARD

A. Federal Rules of Civil Procedure 8 and 12(b)(6)

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief. . . ." Fed. R. Civ. P. 8(a)(2). However, plaintiffs must also plead "enough facts to state a claim to relief that is plausible on its face." Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plausibility standard thus demands more than "a formulaic recitation of the elements of a cause of action," or "naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations omitted). Instead, the complaint "must contain allegations of underlying facts sufficient to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The court need not take legal conclusions as true merely because they are cast in the formof factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). Similarly, "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). "A court may, however, consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment." Id.; see also Fed. R. Evid. 201; see also Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled on other grounds by Galbraith v. Cnty. Of Santa Clara, 307 F.3d 1119, 1125-26 (9th Cir. 2002).

Where dismissal is appropriate, a court should grant leave to amend unless the plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).

B. Federal Rule of Civil Procedure 9(b)⁴

Under Rule 9(b), when the complaint includes allegations of fraud, a party must "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). "In other words, the complaint must set forth what is false or misleading about a statement, and why it is false." Rubke v. Capitol Bancorp Ltd, 551 F.3d 1156, 1161 (9th Cir. 2009) (internal quotation marks omitted). The plaintiff's allegations of fraud must be "specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Further, the plaintiff must describe "the who, what, when, where, and how" of the fraudulent misconduct charged. Id. at 1106-07. In other words, the plaintiff must specify the time, place, and content of the alleged fraudulent or mistaken misconduct. See id. However, "malice, intent,knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b). Failure to satisfy this heightened pleading requirement can result in dismissal of the claims. Vess, 317 F.3d at 1107.

DISCUSSION

A. Requests for Judicial Notice and Incorporation by Reference

As an initial matter, both parties request the Court incorporate by reference some documents into the FAC, as well as request judicial notice of certain documents or facts. In deciding a motion to dismiss under Rule 12(b)(6), a court is generally limited to the four corners of the complaint. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). However, a court may consider ...