CSILO v. JC Remodeling, Inc. ( 2020 )

United States Court of Appeals
For the First Circuit
No. 18-1199
UNITED STATES OF AMERICA, EX REL.
CONCILIO DE SALUD INTEGRAL DE LOÍZA, INC. ("CSILO"),
Plaintiffs, Appellants,
v.
J.C. REMODELING, INC. AND JOSÉ GARCÍA-SUÁREZ,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Pedro A. Delgado-Hernández, U.S. District Judge]
Before
Torruella, Dyk,* and Thompson,
Circuit Judges.
Víctor M. Rivera-Ríos for appellant CSILO.
Carlos J. Sagardía-Abreu and María Celeste Colberg-Guerra,
were on brief, for appellees.
June 15, 2020
* Of the Federal Circuit, sitting by designation.
THOMPSON, Circuit Judge. A jury verdict and civil
penalty in its favor notwithstanding, Appellant Concilio De Salud
Integral De Loíza, Inc. ("CSILO") appeals the district court's
decision to deny its request voiced three years into litigation,
after the close of discovery, and on the eve of trial, to amend
the Pretrial Order to include a discussion of damages it believes
it was due under the False Claims Act. Spotting no abuse of
discretion, we affirm.
BACKGROUND
CSILO is a non-profit organization in Loíza, Puerto Rico
established in 1972 to provide a wide range of primary healthcare
services for the uninsured through the use of federal funds. Among
the funds it has received over the years are those, as relevant
here, from the American Recovery and Reinvestment Act ("ARRA"),
which were given to CSILO "to adequately upgrade and successfully
maintain the building structure for the benefit of the patients
and staff." "After grants pursuant to ARRA were extended to CSILO
[in 2009], it was agreed by the Board and the Executive Director
that necessary repairs were needed along the roof of the Health
Center's main structure, which was suffering damages due to water
infiltration." CSILO then initiated a bidding process, at the end
of which J.C. Remodeling ("JCR") was awarded the roof waterproofing
project. On May 21, 2010, CSILO and JCR entered into a formal
- 2 -
contract titled "CONTRATO DE OBRA ENTRE EL DUEÑO Y EL CONTRATISTA"
("the Construction Contract").
At the time, JCR was the exclusive distributor in Puerto
Rico for the roof waterproofing product called Wetsuit®, and what
was most appealing to CSILO about JCR's offering was its 15-year
warranty on that product. Under the Construction Contract, CSILO
agreed to pay JCR $135,000 for "JCR['s] waterproofing the roof of
CSILO's facilities." Important to the case that went to the jury
(but not so much for our purposes, so we'll be brief), is that
"Article 9.2 of the Construction Contract established that JCR
would guaranty the installation and sealing of the roof for the
next 15 years." To CSILO, that meant that "[i]f any deficiencies
would occur after performance was finished by JCR, the roofing
company was bound for the following 15 years to correct it, which
would include additional installation of the [Wetsuit®] system, if
necessary." And bear in mind that Article 9.1 of the contract
required JCR to "ensure[] that all equipment that [would] be
installed [would] be new unless otherwise specified and so approved
also in writing."
JCR completed its waterproofing work during the summer
of 2010. But "by June 2011, the CSILO facilities began to suffer
damages from newly discovered water [in]filtration." CSILO
complained, verbally and in writing, of these leaks to JCR numerous
times, but was met with no response. Over the course of "the next
- 3 -
2 to 3 years, CSILO kept communicating to JCR" about the leaks,
and JCR's warranty to "provide the required services in order to
fix said problem." These attempts unavailing, CSILO resorted to
"fil[ing] a civil suit against JCR on April 2013 at the First
Instance Court of Puerto Rico."1 That suit prompted JCR into
action, whereupon in July 2013 it returned to attempt to fix the
roof. To assess the leaks, JCR used a product called Chovatek,
different from Wetsuit®, relying, it claims, on verbal approval
from CSILO's engineer, Celso Gonzalez, to proceed with use of that
product.
CSILO ultimately realized that it had received a sieve
of a 15-year warranty on Wetsuit® when JCR attempted to fix the
leaky roof with the non-Wetsuit® product. CSILO was "convinced
that JCR intentionally misrepresented their services to be
rendered to CSILO," and that these misrepresentations "induced
CSILO into entering into said Contract. CSILO was deceived by
this fraudulent statement. When JCR installed the waterproof
product in 2013, it not only installed it negligently, but it
intentionally substituted the product with another product of
inferior quality. CSILO had no knowledge of the product
substitution, until after 2013." It followed that, according to
1
This case, Concilio de Salud Integral de Loíza, Inc.
v. J.C. Remodeling, Inc., et al., Civ. No. FCCI2013-00222, was
pending as of the federal court trial.
- 4 -
CSILO, "[b]ecause of said misrepresentation, JCR defrauded CSILO
and illegally appropriated federal funding originating from the
ARRA," thereby violating the False Claims Act ("FCA"), 31 U.S.C.
§ 3729, et seq. And that's how this case ended up in federal
court.
CSILO filed a qui tam action2 under the FCA on November
13, 2014 against JCR.3 The United States Government, as it is
entitled under 31 U.S.C. § 3730(b)(2)-(c), declined to intervene
on November 30, 2015.4 Thereafter summons were issued to JCR. On
January 26, 2017, CSILO filed its First Amended Complaint, alleging
the facts described above, and, important for our purposes,
requested damages "in an amount equal to three times the amount of
damages that the United States ha[d] sustained because of [JCR's]
actions, plus a civil penalty of not less than $5,500 and not more
2
"In a qui tam action, a private plaintiff, known as a
relator, brings suit on behalf of the Government to recover a
remedy for a harm done to the Government." U.S. ex rel. Feldman
v. van Gorp, 697 F.3d 78, 84 n.3 (2d Cir. 2012) (citing Black's
Law Dictionary 1282 (8th ed. 2004) (defining "qui tam action" as
"[a]n action brought under a statute that allows a private person
to sue for a penalty, part of which the government or some
specified public institution will receive")). "Qui tam
plaintiffs, even if not personally injured by a defendant's
conduct, possess constitutional standing to assert claims on
behalf of the Government as its effective assignees." Id.
3 We refer to appellees JCR and Mr. José García-Suárez,
owner of JCR, collectively as JCR.
4 When the government declines to intervene, the relator
-- here, CSILO -- can recover between 25% and 30% of the final
award, with the remainder going to the government. See 31 U.S.C.
§ 3730(d)(2).
- 5 -
than $11,000 for each violation of 31 U.S.C. [§] 3729."5 JCR
denied all allegations.
As parties do over the course of a lawsuit, CSILO and
JCR exchanged various documents. In response to JCR's document
request for "[s]ubmitted invoices, authorizations, and/or payment
approvals by CSILO and copies of payment checks," CSILO provided
just those. They also exchanged Initial Disclosures on June 26,
2016 and formulated the Joint Pretrial Conference Report on
November 27, 2017. In its Initial Disclosures CSILO stated that
"computation of damages was not available as of [that] date," and
the Joint Pretrial Conference Report contained no mention of
anything specific to requested damages, such as a description,
computation, or relevant evidence.
Over three years down the line and exactly one month
before trial, on December 22, 2017, the district court held its
Pretrial Conference, during which the district judge asked CSILO
whether it would present any evidence on damages at trial, given
that such relief was not included in the proposed Joint Pretrial
Conference Report.6 It was then that CSILO moved the court for
5
Under the FCA, liability can result in "a civil penalty
of not less than $5,000 and not more than $10,000 . . . plus 3
times the amount of damages which the Government sustains because
of the act of that person." 31 U.S.C. § 3729(a)(1).
6 At the conference, the district court adopted the
parties' Joint Pretrial Conference Report as the court's order
under Fed. R. Civ. P. 16(e) to govern subsequent proceedings. It
is this order that we will refer to as the Pretrial Order.
- 6 -
leave to amend the Pretrial Order to include a discussion of
damages. JCR objected, claiming delay and prejudice, especially
in light of the impending trial. The court requested further
briefing on the matter, and upon receipt, it denied CSILO's
request, stating:
[JCR] points out that [CSILO] did not include
a computation of damages in its Initial
Disclosures; and did not produce any evidence
and/or computation of damages during
discovery. Moreover, it omitted from the
Pretrial Report any specific request for
discrete fraud damages as well as a discussion
on the subject. [CSILO] has provided no
compelling reason to justify the omissions.
Discovery is no longer available here, to
[JCR]'s detriment. Accordingly, the motion is
DENIED.
U.S. ex rel. Concilio De Salud Integral De Loíza, Inc. v. J.C.
Remodeling, Inc., et al., No. 14-1821 (PAD), Dkt. 92, Order at 2
(citations omitted). CSILO sought reconsideration of the denial;
that too was denied.
After a seven-day trial in late January 2018, at which
CSILO was barred from submitting evidence on damages, the jury
found that JCR had in fact violated the False Claims Act, and the
court therefore entered judgment against JCR and imposed on it a
$5,500 civil penalty, as required by statute.7 Dissatisfied with
7"[A] defendant who submits a false claim . . . is
liable for civil penalties regardless of whether the government
shows that the submission of that claim caused the government
damages." U.S. ex rel. Davis v. District of Columbia, 679 F.3d
832, 839 (D.C. Cir. 2012) (second alteration in original) (quoting
- 7 -
that result and believing it is still entitled to damages,8 CSILO
now appeals.
DISCUSSION
CSILO argues on appeal that the district court abused
its discretion when it rejected its request to amend the Pretrial
Order to include a discussion of damages and avoid the resultant
"manifest injustice." CSILO also appeals the district court's
denial of its motion to reconsider that denial. CSILO argues that
JCR would not have been prejudiced or surprised by the damages
amendment because JCR was always aware of the full contract price,
which formed the nucleus of its damages claim: CSILO's federal
complaint requested damages equal to $405,000 (three times the
contract price of $135,000), and the contract itself as well as
United States v. Sci. Applications Int'l Corp., 626 F.3d 1257,
1277-78 (D.C. Cir. 2010)).
8 In its Motion to Amend the Pretrial Order, CSILO
explained that it was seeking only "Fraud Damages," "damages based
on the original Written Agreement" and the contract price of
$135,000, as opposed to "Consequential Damages," as CSILO called
it, that would have covered the amount CSILO expended on a new
2017 bid to fix the roof. CSILO explained, without citation or
further detail, the decision to forego "Consequential Damages," as
follows: "[The United States Government's] attorneys clarified
that because this Complaint is a Qui Tam cause of action, the only
real party is [the government] and not CSILO. The only damages
that could be brought to the Court's attention are the direct
damages that [the government] suffered based on the fraudulent
acts of the person who violated the FCA. Therefore, CSILO's
damages should not be considered under the FCA because CSILO is a
third party relator who received the ARRA funds." Given our
affirmance of the district court's decision, we need not opine
upon the correctness of the government's advice.
- 8 -
the contract price was necessarily discussed multiple times during
trial. Therefore according to CSILO, JCR's claim of prejudice and
surprise is disingenuous because JCR never -- either pretrial or
during trial -- objected to the admission of the contract and its
price tag at any point. And so CSILO now requests that this court
either find JCR liable for $405,000 or "remand the case back to
the Jury for a bifurcated trial focused solely on" damages.
JCR responds that CSILO misses the point: CSILO assumes
that the contract price automatically constitutes the baseline
damages due under the FCA, even though the FCA does no such thing.
Ultimately, JCR argues that because the parties could not rely on
the contract price for damages, without the benefit of discovery
on damages, CSILO's requested amendment to the Pretrial Order on
the eve of trial and three years after the filing of the Complaint
would have severely prejudiced and burdened JCR, and therefore the
district court was right to deny CSILO's request.
We review the district court's denial of CSILO's request
to amend the Pretrial Order for abuse of discretion. See Alberty-
Vélez v. Corporación De Puerto Rico Para La Difusión Pública, 242
F.3d 418, 423 (1st Cir. 2001); Koch v. Koch Indus., Inc., 203 F.3d
1202, 1222 (10th Cir. 2000). "A final pretrial order is intended
to control the subsequent course of the action, and can be modified
only to prevent manifest injustice." Rodríguez-García v. Miranda-
Marín, 610 F.3d 756, 774 (1st Cir. 2010) (internal quotation marks
- 9 -
omitted) (quoting Correa v. Hosp. S.F., 69 F.3d 1184, 1195 (1st
Cir. 1995) (quoting Fed. R. Civ. P. 16(e))). "Therefore, '[a]n
appellate court should not lightly relieve a litigant from the
condign consequences of its failure to list a theory . . . at that
critical stage of the proceedings,' and 'issues not included in
the final pretrial order are generally waived.'" Id. (quoting
Correa, 69 F.3d at 1195) (citing Ramirez Pomales v. Becton
Dickinson & Co., 839 F.2d 1, 3 (1st Cir. 1988)); see also Bradford
Trust Co. of Bos. v. Merrill Lynch, Pierce, Fenner, and Smith,
Inc., 805 F.2d 49, 52 (2d Cir. 1986) ("Motions to reopen or to
modify a pre-trial order are addressed to the sound discretion of
the trial judge."); Wallin v. Fuller, 476 F.2d 1204, 1208-09 (5th
Cir. 1973) ("Under the Rule 16 'manifest injustice' standard, the
question whether to permit amendment of the pretrial order in the
course of the trial is generally a matter within the discretion of
the trial judge, and an appellate court will intervene only if the
trial judge has acted arbitrarily."); Sherman v. United States,
462 F.2d 577, 579 (5th Cir. 1972).
"[T]he standard for modifying a final pretrial order is
as high as it is to ensure everyone involved has sufficient
incentive to fulfill the order's dual purposes of encouraging self-
editing and providing reasonably fair disclosure to the court and
opposing parties alike of their real trial intentions." Monfore
v. Phillips, 778 F.3d 849, 851 (10th Cir. 2015); see also Brook
- 10 -
Vill. N. Assocs. v. Gen. Elec. Co., 686 F.2d 66, 71 (1st Cir.
1982). That said, a court may greenlight the modification of a
pretrial order when there will be little to no "surprise" or
prejudice to the opposing party and when it is "warranted to
prevent substantial injustice" to the moving party. Meaux Surface
Prot., Inc. v. Fogleman, 607 F.3d 161, 167 (5th Cir. 2010); see
Davey v. Lockheed Martin Corp., 301 F.3d 1204 (10th Cir. 2002);
Carroll v. Pfeffer, 262 F.3d 847, 850 (8th Cir. 2001), cert.
denied, 536 U.S. 907 (2002). On the flipside, if the party seeking
to modify had knowledge of the reason for modification prior to
the pretrial conference, or if the modification would prejudice
the opposing party, then it may not be allowed. See, e.g., Harper
v. Albert, 400 F.3d 1052, 1063 (7th Cir. 2005); Canal Ins. Co. v.
First Gen. Ins. Co., 889 F.2d 604 (5th Cir. 1989); Burnette v.
Dresser Indus., Inc., 849 F.2d 1277 (10th Cir. 1988). "The party
moving to amend the order [here, CSILO] bears the burden to prove
the manifest injustice that would otherwise occur." Wright v.
City of St. Francis, KS, 95 F. App'x 915, 926 (10th Cir. 2004)
(quoting Davey, 301 F.3d at 1208). And that burden is "a higher
standard than is otherwise imposed." Farr Man & Co. v. M/V Rozita,
903 F.2d 871, 876 n.4 (1st Cir. 1990).
In the damages context, courts have permitted changes to
pretrial orders where such an amendment would result in no surprise
and it was supported by the evidence already in the record. See,
- 11 -
e.g., McAlister-Jones v. Foote, 720 F. App'x 971, 974-75 (11th
Cir. 2017) (affirming district court's allowance of plaintiff's
amendment to the pretrial order to include a claim for future lost
wages, finding that the defendant would not have suffered
substantial harm because he should have been aware of plaintiff's
claim for future lost wages); Bennett v. Emerson Elec. Co., 64 F.
App'x 708, 718-19 (10th Cir. 2003) (affirming the district court's
allowance of plaintiff's amendment to the original pretrial order
the day before trial to seek additional damages, finding that the
additional damages amount had been part of the discovery exchanged
between the parties, had been alleged in plaintiff's expert report,
and addressed in the expert's deposition).
In contrast, where an amendment to a pretrial order
related to damages raised issues too close to trial and without
support in the already-existing record, courts have declined to
allow such amendments. See, e.g., Genesis Health Clubs, Inc. v.
LED Solar & Light Co., 639 F. App'x 550, 557 (10th Cir. 2016)
(finding no abuse of discretion where the district court denied
plaintiff's request to pursue a damages theory after the close of
discovery where such theory was not included in the pretrial order
and such a late inclusion would have prejudiced the defendant);
Quick Techs., Inc., v. Sage Grp. PLC, 313 F.3d 338, 345-46 (5th
Cir. 2002) (affirming the district court's rejection of
plaintiff's new proposed pretrial order submitted "shortly before
- 12 -
trial" that added a damages claim for corrective advertising);
Knapp v. Whitaker, 757 F.2d 827, 849 (7th Cir. 1985) (affirming
the district court's refusal to permit an amendment to the pretrial
order to include punitive damages where "[t]he pretrial order made
no mention of punitive damages and [plaintiff] offer[ed] no
reasonable explanation for his undue delay in filing such a
claim[, and] . . . the untimely filed punitive damage claim would
have clearly prejudiced the defendants who invested a year
preparing their defense to the allegations pleaded, without any
notice of a punitive damage claim"); Rock Island Imp. Co. v.
Helmerich & Payne, Inc., 698 F.2d 1075, 1081-82 (10th Cir. 1983);
Jacobson v. Rose, 592 F.2d 515, 519 n.5 (9th Cir. 1978); Scopia
Mortg. Corp. v. Greentree Mortg. Co., L.P., 184 F.R.D. 526 (D.N.J.
1998) (denying leave to amend joint final pretrial order to include
new expert opinion testimony on damages where discovery had been
closed for one and one-half years, the parties had raised damages
previously, the movant's expert had no knowledge of the case, and
the nonmovant's expert had never opined on damages); Wright, 95 F.
App'x at 927 (affirming the district court's refusal to allow
family members to amend pretrial order to assert claims for damages
against police officers in their individual capacities, relying on
the family's representations "both at the pretrial conference and
in the pretrial order itself," that it was pursuing only "official
capacity claims").
- 13 -
So, we ask, is CSILO's request to amend the Pretrial
Order a minor request, supported by the record and one that would
not prejudice JCR, McAlister-Jones, 720 F. App'x at 974-75, and
absent which CSILO would suffer "manifest injustice," Rodríguez-
García, 610 F.3d at 774, such that the district court abused its
discretion in denying the request? Or was the district court right
to deny the request, finding that modifying the Pretrial Order,
three years in and on the eve of trial and after the close of
discovery, would have prejudiced JCR? Genesis Health Clubs, 639
F. App'x at 557. CSILO argues the former, contending that because
it is due (three times) the full contract price, and the contract
price appeared in the record multiple times and was uncontroverted
by JCR, an amendment to the Pretrial Order would not have surprised
or prejudiced JCR. JCR, of course, disagrees that CSILO is
entitled to the full contract price and contends that the request
was based entirely on a false premise, and such a late-stage
amendment would have severely prejudiced JCR, and therefore the
district court did not abuse its discretion. To settle this, we
turn to the substantive law undergirding this case, and the damages
it allows.
CSILO brought its case under the False Claims Act, which
"prohibits a person from 'knowingly present[ing], or caus[ing] to
be presented, [to an officer or employee of the United States
Government,] a false or fraudulent claim for payment or approval.'"
- 14 -
U.S. ex rel. Feldman v. van Gorp, 697 F.3d 78, 86–87 (2d Cir. 2012)
(alteration in original) (quoting 31 U.S.C. § 3729(a)(1)(A)). "The
Act does not specify how damages are to be calculated." Id. at
87. The government needs to have only suffered the damage "because
of" the violation of the Act. 31 U.S.C. § 3729(a)(1); see also
The False Claims Act: Fraud Against the Government § 6:3. The
legislative history to the FCA explains why it offers no specific
formula for damages:
No single rule can be, or should be, stated
for the determination of damages under the Act
. . . [T]he courts should remain free to
fashion measures of damages on a case-by-case
basis. The Committee intends that the courts
should be guided only by the principles that
the United States' damages should be liberally
measured to effectuate the remedial purposes
of the Act, and that the United States should
be afforded a full and complete recovery of
all its damages.
S. Rep. No. 96-615, at 4 (1980) (reporting on S.1981, predecessor
to S.1562). "In most FCA cases, damages are measured as they would
be in a run-of-the-mine breach-of-contract case -- using a
'benefit-of-the-bargain' calculation in which a determination is
made of the difference between the value that the government
received and the amount that it paid." Feldman, 697 F.3d at 87
(quoting United States v. Foster Wheeler Corp., 447 F.2d 100, 102
(2d Cir. 1971)). Generally, "[t]he Government's actual damages
are equal to the difference between the market value of the [goods]
it received and retained and the market value that the [goods]
- 15 -
would have had if they had been of the specified quality." United
States v. Bornstein, 423 U.S. 303, 316 n.13 (1976) (collecting
cases from the Second, Fourth, Fifth, and Eighth Circuits);
Commercial Contractors, Inc. v. United States, 154 F.3d 1357, 1372
(Fed. Cir. 1998) (following Bornstein); United States v. Killough,
848 F.2d 1523, 1532 (11th Cir. 1988) ("[T]he measure of damages
[in FCA cases] is generally determined to be the difference between
what the government actually paid on the fraudulent claim and what
it would have paid had there been fair, open and competitive
bidding." (citing Brown v. United States, 524 F.2d 693, 706 (Ct.
Cl. 1975); United States v. Woodbury, 359 F.2d 370, 379 (9th Cir.
1966)); see also United States v. Sci. Applications Int'l Corp.,
626 F.3d 1257, 1278 (D.C. Cir. 2010) ("In a case where the
defendant agreed to provide goods or services to the government,
the proper measure of damages is the difference between the value
of the goods or services actually provided by the contractor and
the value the goods or services would have had to the government
had they been delivered as promised.").
As far as CSILO has been able to show us and from what
we have been able to find, FCA cases where the entire contract
price is awarded as damages relate to contracts that provided "no
tangible benefit to the government and [where] the intangible
benefit is impossible to calculate." U.S. ex rel. Longhi v.
Lithium Power Techs., Inc., 575 F.3d 458, 473 (5th Cir. 2009); see
- 16 -
also Feldman, 697 F.3d at 88. To elaborate: in Longhi, the
Department of Defense ("DoD"), under the Small Business Innovation
Research ("SBIR") program, was to "provide research assistance to
small businesses in order to maintain and strengthen the
competitive free enterprise system and the national economy." 575
F.3d at 462. To that end, "the DoD identifie[d] specific research
projects that it [wa]s interested in funding and allow[ed] small
businesses to seek SBIR grants for these projects." Id. The
defendants in that case "submitted . . . proposals . . . to the
Ballistic Missile Defense Office ("BMDO") . . . and . . . the Air
Force" to receive funding "that could lead to the development of
very thin rechargeable batteries." Id. The DoD reviewed the grant
applications, id. at 463, and entered into contracts with
defendants, which
did not produce a tangible benefit to the BMDO
or the Air Force. These were not, for example,
standard procurement contracts where the
government ordered a specific product or good.
The end product did not belong to the BMDO or
the Air Force. Instead, the purpose of the
SBIR grant program was to enable small
businesses to reach [a phase] where they could
commercially market their products.
Id. at 473. The court ultimately found that "[t]he BMDO and the
Air Force's intangible benefit of providing an 'eligible
deserving' business with the grants was lost as a result of the
Defendants' fraud," and accordingly, "where there is no tangible
benefit to the government and the intangible benefit is impossible
- 17 -
to calculate, it is appropriate to value damages in the amount the
government actually paid to the Defendants," -- that is, the full
contract price. Id.
In Feldman, the government entity also reviewed the
applications for government funding and awarded funds accordingly.
697 F.3d at 84. There, the court affirmed the damages award of
the full contract price where the National Institutes of Health
("NIH") had awarded a grant and was paying for a program "that was
not at all as specified . . . the government did not receive less
than it bargained for; it did not get the [research] program it
bargained for at all." Id. at 88-91. Through the grant, the NIH
had attempted to "promote 'child and adult clinical and research
neuropsychology with a strong emphasis upon research training with
HIV/AIDS,'" id. at 88, but the recipients-defendants' program's
deficiencies demonstrated that none of that had happened. Id. at
91. The court reaffirmed that "nothing in the record indicate[d]
that [NIH] could now secure such a program at any lesser cost,"
"conclud[ing] that the appropriate measure of damages in [the]
case [wa]s the full amount the government paid based on materially
false statements." Id.
In both Longhi and Feldman, the government had doled out
grant monies directly to third-parties for specified, "intangible"
research projects, but the awardees had failed to effectuate that
research. Longhi, 575 F.3d at 473; Feldman, 697 F.3d at 88. As
- 18 -
such, the government was out of a fixed sum of money with nothing
at all in return and therefore the courts found that recompense of
the full contract price was all that could make the government
whole. As the court in Feldman explained:
This approach rests on the notion that the
government receives nothing of measurable
value when the third-party to whom the
benefits of a governmental grant flow uses the
grant for activities other than those for
which funding was approved. In other words,
when a third-party successfully uses a false
claim regarding how a grant will be used in
order to obtain the grant, the government has
entirely lost its opportunity to award the
grant money to a recipient who would have used
the money as the government intended.
697 F.3d at 88. The facts that CSILO presents are a far cry from
those in Longhi and Feldman. Here, CSILO received ARRA funds from
the government before it entered into a relationship with JCR.
Once it decided to use those funds to fix its facility's roof, it
sought bid proposals from third-parties. It ultimately awarded
the bid to JCR, relying on JCR's false representations (the 15-
year warranty), and paid JCR with its ARRA funds. JCR then fixed
the roof -- the "activit[y] . . . for which funding was approved,"
Feldman, 697 F.3d at 88, albeit in a shoddy manner requiring
subsequent repairs (the CSILO roof was still leaking as of the
federal trial). This does not follow the pattern in Longhi and
Feldman where government entities DoD and NIH, respectively,
directly meted out funds for research to recipients that never
- 19 -
made good on their grant application promises in any way
whatsoever. Longhi, 575 F.3d at 473; Feldman, 697 F.3d at 88.
Nor is it clear that the government received something "valueless,"
U.S. ex rel. Compton v. Midwest Specialties, Inc., 142 F.3d 296,
304 (6th Cir. 1998), in this case: research that was never
consummated is different from a defectively patched roof on a
government-funded facility, especially where the latter's
condition may, nonetheless, have been improved over its initial
state and further remediated by a method not yet explored. But
without the benefit of evidence of damages in the record, we do
not know what value, if any, to ascribe to the work already done
on CSILO's roof, and it is far from clear that CSILO should be
entitled to recover the full price it paid out particularly where
some work was in fact done. Compare id. (awarding full contract
price damages where the goods delivered by defendant to the U.S.
Army "were completely valueless, not only because most of them
could not withstand 5,000 pounds of force, but also because none
of them came with the quality assurance of a product that had been
subjected to periodic production testing") with U.S. ex rel. Wall
v. Circle C Constr., LLC, 868 F.3d 466, 470-71 (6th Cir. 2017)
(rejecting "the government's argument that [defendant's]
electrical work was worthless," and therefore declining to award
the full contract price). We therefore find that CSILO has not
persuaded us that it would have been entitled to the full contract
- 20 -
price paid to JCR, and so CSILO's request to amend the Pretrial
Order was not necessarily as simple as it made it out to be.9
BRINGING IT ALL TOGETHER
Considering the high bar set to amend a pretrial order,
Monfore, 778 F.3d at 851; Brook Vill. N. Assocs., 686 F.2d at 71,
and the lack of record evidence as to the damages CSILO would have
been entitled to under the FCA, Feldman, 697 F.3d at 88, we find
that the district court did not abuse its discretion when it
decided, over three years into litigation, with discovery closed
and trial less than a month away, that CSILO's request to amend
the Pretrial Order would not have caused it "manifest injustice,"
Rodríguez-García, 610 F.3d at 774, and would have instead caused
prejudice and hardship to JCR, Genesis Health Clubs, 639 F. App'x
at 557, and therefore denied it. And so we affirm.10 Each side
shall bear its own costs.
9 Even had CSILO established that it was entitled to the
full contract price, it is still possible that the district court
would have been within its discretion to deny CSILO's request to
amend the Pretrial Order. But we need not opine on that issue
here.
10 CSILO also appeals the district court's denial of its
Motion to Reconsider the district court's denial of CSILO's Motion
to Amend the Pretrial Order. We reject this as well, as "a motion
for reconsideration may only be granted if the original judgment
evidenced a manifest error of law, if there is newly discovered
evidence, or in certain other narrow situations." Global Naps,
Inc. v. Verizon New Eng., Inc., 489 F.3d 13, 25 (1st Cir. 2007).
We "will not overturn the court's determination 'unless a
miscarriage of justice is in prospect or the record otherwise
reveals a manifest abuse of discretion.'" Meléndez v. Autogermana,
Inc., 622 F.3d 46, 55 (1st Cir. 2010) (quoting Rivera v. Riley,
- 21 -
209 F.3d 24, 27 (1st Cir. 2000)); see also Rodríguez v.
Municipality of San Juan, 659 F.3d 168, 175 (1st Cir. 2011); Ruiz
Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 81 (1st Cir. 2008).
Here, we do not find that the district court's original decision
to deny CSILO's Motion to Amend the Pretrial Order "evidenced a
manifest error of law," or that CSILO has been able to point us to
any "newly discovered evidence" that should disrupt the district
court's original judgment. If anything, the facts of this case
show that nothing changed from the beginning of this drama in 2014
to the time when CSILO filed its first motion and subsequent motion
for reconsideration. We therefore spy no abuse of discretion in
the district court's denial of CSILO's Motion for Reconsideration.
- 22 -