Delaware Department of Labor, Division of Unemployment Insurance v. Pasquale.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
THE STATE OF DELAWARE, )
DEPARTMENT OF LABOR—DIVISION )
OF UNEMPLOYMENT INSURANCE, )
)
Plaintiff, )
v. )
) C.A. No. N15C-04-238 RRC
MICHAEL J. PASQUALE, )
)
Defendant. )
Submitted: June 22, 2015
Decided: September 17, 2015
On Plaintiff State of Delaware Department of Labor—Division of Unemployment
Insurance’s Motion for Judgment on the Pleadings.
GRANTED.
MEMORANDUM OPINION
Oliver J. Cleary, Esquire, Deputy Attorney General, Department of Justice, Wilmington,
Delaware, Attorney for Plaintiff State of Delaware, Department of Labor – Division of
Unemployment Insurance
Michael J. Pasquale, pro se, Smyrna, Delaware
COOCH, R. J.
I. INTRODUCTION
On April 24, 2015, the State of Delaware, Delaware Department of Labor—
Division of Unemployment Insurance (“Plaintiff”) filed a Complaint against
Michael Pasquale (“Defendant”) for fraudulent payments of unemployment
benefits. Defendant has acknowledged all allegations against him. Pursuant to
Superior Court Civil Rule 12(c), Plaintiff moves for judgment on the pleadings
against Defendant. For the foregoing reasons, this Court GRANTS Plaintiff’s
Motion. Further, pursuant to Superior Court Civil Rule 132, this matter shall be
referred to a Commissioner of the Superior Court for a hearing to determine the
amount of fees and/or costs that are statutorily required under the Delaware False
Claims and Reporting Act.
II. FACTUAL AND PROCEDURAL
BACKGROUND/PARTIES’ CONTENTIONS
Plaintiff filed a Complaint against Defendant alleging unjust enrichment and
violations of the Delaware False Claims and Reporting Act. 1 Specifically, Plaintiff
alleges that Defendant knowingly made false claims for unemployment benefits,
and as a result, “received $11,715.00 in unemployment benefits . . . to which he
was not entitled” over a period of 33 weeks in 2009 and 2010.2 The following
table illustrates the amounts paid by Plaintiff, the amounts of wages reported, and
the actual amounts earned 3:
Check Check Amount of Wages Actual Wages
Date Number Unemployment Reported Earned
Insurance
Check
07/13/09 8542529 $355.00 $0.00 $737.07
07/21/09 8574706 $355.00 $0.00 $1571.53
07/27/09 8588410 $355.00 $0.00 $648.65
08/03/09 8611060 $355.00 $0.00 $1107.75
08/10/09 8633902 $355.00 $0.00 $661.50
1
Pl.’s Compl. at ¶¶ 12-18, (Apr. 24, 2015).
2
Pl.’s Compl. at ¶ 12, 15-18.
3
The Court notes that the State lists 6 dates on which Defendant correctly reported that he did
not receive any wages. That fact, however, does not impact the Court’s decision. Rather, that is
for consideration by a Commissioner of the Delaware Superior Court when a determination of
the appropriate amount of fees and costs that should be levied against Defendant is made.
2
08/17/09 8657403 $355.00 $0.00 $755.91
08/24/09 8680072 $355.00 $0.00 $503.94
08/31/09 8703056 $355.00 $0.00 $1588.28
09/08/09 8725955 $355.00 $0.00 $42.00
09/14/09 8740414 $355.00 $0.00 $1109.34
09/23/09 8779579 $355.00 $0.00 $1233.75
09/28/09 8784517 $355.00 $0.00 $517.82
10/05/09 8806507 $355.00 $0.00 $777.00
10/12/09 8829013 $355.00 $0.00 $441.78
10/19/09 8851018 $355.00 $0.00 $803.73
10/26/09 8873619 $355.00 $0.00 $625.95
11/02/09 8896139 $355.00 $0.00 $189.00
10/11/09 8934227 $355.00 $0.00 $630.00
11/16/09 8941722 $355.00 $0.00 $630.00
11/23/09 8965627 $355.00 $0.00 $840.00
12/01/09 9003972 $355.00 $0.00 $378.00
12/07/09 9013785 $355.00 $0.00 $796.15
12/14/09 9039133 $355.00 $0.00 $546.00
12/21/09 9064616 $355.00 $0.00 $1218.00
12/28/09 9089658 $355.00 $0.00 $756.00
01/06/10 9137318 $355.00 $0.00 $1674.75
01/12/10 9160784 $355.00 $0.00 $0.00
01/19/10 9171541 $355.00 $0.00 $189.00
01/25/10 9197821 $355.00 $0.00 $0.00
02/01/10 9225606 $355.00 $0.00 $0.00
02/08/10 9253039 $355.00 $0.00 $0.00
02/15/10 9278334 $355.00 $0.00 $0.00
02/24/10 9329732 $355.00 $0.00 $0.00
Totals: $11,715.00 $0.00 $20,972.90
In his Answer to the Complaint, Defendant stated:
The Defendant does not deny the allegations and recognizes the
seriousness of the offenses against him and the risk and damages
he created. He apologizes for taking-up [sic] valuable time from
Your Honor’s Court and all agencies involved in this matter for
resolution. Moreover, he is remorseful for his decisions and
actions that led to his current circumstance, and, [sic] has
3
understand [sic] that these behaviors are unacceptable and accepts
full responsibility. 4
Defendant does not offer any defense to Plaintiff’s allegations. Instead, Defendant
only asks the Court for leniency in its imposition of penalties.5
Plaintiff filed the instant Motion for Judgment on the Pleadings arguing the
“absence of contrary legal rationale and the absence of questions of material fact”6
entitle it to judgment as a matter of law. Plaintiff points out that Defendant admits
the allegations in the Complaint.7 Defendant again does not deny Plaintiff’s
contentions in his Response to the Motion.8 No party asserts that any material
issues of fact exist.
Finally, Plaintiff lists 4 claims for relief: (1) that a judgment be entered in
favor of the Division of Unemployment Insurance (“DUI”) against Defendant in
the amount of $11,715.00 as restitution; (2) that a judgment be entered in favor of
DUI and against Defendant for an additional amount of $23,430.00 as treble
damages pursuant to 6 Del. C. § 1201(a); (3) that Defendant pay DUI’s costs,
including reasonable attorneys’ fees pursuant to 6 Del. C. § 1201(b); and (4) that a
judgment in favor of DUI be entered against Defendant for an amount not less than
$5,500.00 and not more than $11,000.00 for each of the claims alleged in the
Complaint.9
III. STANDARD OF REVIEW
“After the pleadings are closed but within such time as not to delay the trial,
any party may move for judgment on the pleadings.” 10 “On such a motion, the
Court must accept all well-pled facts in the complaint as true and construe all
reasonable inferences in favor of the non-moving party.” 11 “The standard for a
motion for judgment on the pleadings is ‘almost identical’ to the standard for a
motion to dismiss.”12 The Court will grant a motion for judgment on the pleadings
4
Def.’s Answer to Compl. at 1, 4, 9 (May 21, 2015).
5
Id. at 4, 9.
6
Pl.’s Mot. for J. on the Pleadings at ¶ 3 (Jun. 8, 2015).
7
See id. at ¶ 5.
8
See Def.’s Resp. to Pl.’s Mot. for J. on the Pleadings at 1-5, D.I. 15 (Jun. 12, 2015).
9
Compl. at 5-6.
10
Del. Super. Ct. Civ. R. 12(c).
11
Blanco v. AMVAC Chem. Corp., 2012 WL 3194412, at *6 (Del. Super. Aug. 8, 2012).
12
Id. (internal citations omitted).
4
“when no material issues of fact exist, and the moving party is entitled to judgment
as a matter of law.” 13
IV. DISCUSSION
I. Fraud—Unjust Enrichment
Accepting all of the well-pled facts as true and construing all reasonable
inferences in favor of Defendant, Plaintiff is entitled to judgment as a matter of law
for the claim of unjust enrichment. “Normally factual statements in the pleadings
are considered conclusive unless they are amended or withdrawn.” 14 After a
review of the pleadings, it is apparent to the Court, and the parties agree, that there
are no material issues of fact in dispute.
Plaintiff asserts that beginning on July 13, 2009, and continuing on a weekly
basis until Feb. 24, 2010, Defendant defrauded the DUI. Defendant represented to
DUI that he was not receiving any wages. However, during that period Defendant
was being paid for his work with Daisy Construction Company. 15 Despite
Defendant’s attempts to show mitigating factors—such as the fact that he is
allegedly currently unable to pay any fines or restitution because he is in prison;
the recent death of his father; and his repeated attempts to contact the United States
Department of Labor to try to resolve the claim—there are no genuine issues of
material fact that would otherwise require the case to move forward to a discovery
phase. Therefore, Plaintiff is entitled to judgment as a matter of law as to this
count.
II. Delaware False Claims and Reporting Act
The Court further finds that Plaintiff is entitled to judgment on the pleadings
as to its claims for relief under 6 Del. C. § 1201, also known as the Delaware False
Claims and Reporting Act (“DFCRA”). The DFCRA provides liability for anyone
who “[k]knowingly presents . . . a fraudulent claim for payment” to the State “shall
be liable to the [State] for a civil penalty of not less than $5,500.00 and not more
than $11,000.00” for each violation.16 The statute also requires that 3 times the
13
Velocity Exp., Inc. v. Office Depot, Inc., 2009 WL 406807, at *3 (Del. Super. Feb. 4, 2009).
14
Ervin v. Vesnaver, 2000 WL 1211201 at *2 (Del. Super. June 20, 2000) (citing 29A
Am.Jur.2d, Evidence, § 775).
15
Pl.’s Aff. For Answers of Civil Compl. at 1 (“Defendant does not deny the allegations and
recognizes the seriousness of the offenses against him.”).
16
6 Del. C. § 1201(a).
5
amount of damages sustained by the State must be repaid in addition. 17 The
DFCRA is modeled after the federal False Claims Act (“FCA”). 18 Because the
DFCRA mirrors the FCA (here the relevant sections mirror the FCA verbatim),
this Court will look to authority interpreting and applying the FCA for guidance in
addition to Delaware authority. 19
Notably, to prove fraud under the DFCRA, Plaintiff need not prove reliance
or damages, but Plaintiff must prove that a false claim was knowingly presented to
the government.20 A person acts knowingly when he: “(1) has actual knowledge of
the information; (2) acts in deliberate ignorance of the truth or falsity of the
information; or (3) acts in reckless disregard for the truth or falsity of the
information, and no specific proof of intent to defraud is needed.” 21
The DFCRA is an anti-fraud statute, and as a result, claims brought under
the DFCRA are subject to the heightened pleading requirements of Superior Court
Civil Rule 9(b). 22 Rule 9(b) requires that “the circumstances constituting fraud . . .
shall be stated with particularity. Malice, intent, knowledge and other condition of
mind of a person may be averred generally.” 23 Put another way, Plaintiff must
allege with sufficient particularity the “‘who, what, where, when and how’ of the
fraud.”24
17
Id.
18
Compare 31 U.S.C. § 3729 and 6 Del. C. § 1201.
19
The sections at issue, 31 U.S.C.A. § 3728(a)(1) and 6 Del. C. § 1201(a)(1)-(2) are identical,
and thus this Court finds it reasonable to rely on authority interpreting the federal statute to the
extent it is necessary. See also State ex rel. Higgins v. SourceGas, LLC, 2012 WL 1721783, at
*5 (Del. Super. May 15, 2012) (recognizing the lack of Delaware authority interpreting the
DFCRA and relying mostly on federal law).
20
State ex rel. Higgins v. SourceGas, LLC, 2012 WL 1721783, at *4, *6 (Del. Super. May 15,
2012). The elements of common law fraud would require a Plaintiff to plead both reliance and
damages. See id. at *5, n.34. Neither the FCA nor the identical language in 6 Del. C. §1201(1)
require proof of reliance and damages. See id. at *5.
21
31 U.S.C. § 3729(b); see also Thompson Pacific Const., Inc. v. City of Sunnyvale, 66 Cal. Rptr.
3d 175, 195 (Cal. Ct. App. 2007) (applying the federal definition of “knowingly” to the
California version of the Federal False Claims Act); State ex rel. Beeler Schad & Diamond, P.C.
v. Ritz Camera Ctrs., 878 N.E.2d 1152, 1157 (Ill. App. Ct. 2007) (applying a verbatim state-law
version of the definition of “knowingly” to the Illinois False Claim Act).
22
State ex rel. Higgins v. SourceGas, LLC, 2012 WL 1721783, at *4 (Del. Super. May 15, 2012)
(“The DFCRA, like its federal counterpart, is an anti-fraud statute. Therefore, all claims brought
under the DFCRA are subject to the heightened pleading requirements of Rule 9(b).”).
23
Super. Ct. Civ. R. 9(b).
24
U.S. ex rel. Streck v. Allergan, Inc., 894 F. Supp. 2d 584, 601 (E.D. Pa. 2012) (quoting
Fed.R.Civ. P. 9(b)).
6
The threshold question is whether the State has pleaded with sufficient
particularity the elements necessary to prove fraud. Analogous cases decided in
the federal courts are instructive. Applying Rule 9(b), the court in U.S. ex rel.
Johnson v. Shell Oil Co. found that the plaintiffs’ complaint did satisfy the “who,
what, where, when, and how” of the fraud.25 The plaintiffs stated that land
containing crude oil was owned by the United States and leased to Shell Oil Co.26
Shell Oil was required to file a monthly report (Form MMS-2014) detailing the
amount of oil sales attributable to the leased land. 27 From those reported sales
numbers, Shell Oil was required to pay a royalty fee to the United States.28 The
plaintiffs alleged that the defendant made a false claim each month by misstating
the amount of oil sales on items 16 and 18 of the report, causing an underpayment
to the government.29 The court found that the “what, when, and where” were
satisfied by plaintiffs’ allegation that false statements were entered into items 16
and 18 of the report on a monthly basis.30 The “who” was satisfied by naming
Shell Oil Co. as the defendant.31 Finally, the court found the “how” was
sufficiently alleged, because defendant undervalued oil proceeds to avoid paying a
greater amount in royalties to the government. 32 The Court finds the approach of
U.S. ex rel. Johnson v. Shell Oil Co. persuasive, in part, because it has been relied
upon by other federal courts as authority. 33
25
183 F.R.D. 204, 207-08 (E.D. Tex. 1998).
26
Id. at 207.
27
Id.
28
Id.
29
Johnson, 183 F.R.D. at 207.
30
Id.
31
Id. (rejecting defendant’s argument that plaintiff be required to name the individual employees
who caused the false information to be entered, because of the undue burden that would place on
plaintiff).
32
Id. At 208.
33
See S.E.C. v. Sharp Capital, Inc., 1999 WL 242691, at * 1-2 (N.D. Tex. Apr. 16, 1999)
(holding the S.E.C.’s complaint pled fraud with sufficient particularity to put the defendant on
notice of the claims against it); U.S. ex rel. Reagan v. Eat Texas Med. Ctr. Reg’l Heathcare Sys.,
274 F. Supp. 2d 824, 857-58 (S.D.Tex. 2003) (granting the defendant’s motion to dismiss,
because the plaintiff relied entirely on conclusory statements to support her claim under the
FCA); In re Cardiac Devices Qui Tam Litig., 221 F.R.D. 318, 333 (D.Conn. 2004) (holding the
United States sufficiently met the pleading requirements for fraud under Rule 9(b)); Boutain v.
Radiator Specialty Co., 2011 WL 6130754 at *3 (E.D. La. Dec. 8, 2011) (granting defendant’s
motion to dismiss with leave to amend, because plaintiffs failed to include particularized
allegation of fraud in the complaint); Barney J. Finberg, Annotation, Construction and
Application of Rule 9(b), Federal Rules of Civil Procedure, That Circumstances Constituting
Fraud or Mistake Be Stated With Particularity, 27 A.L.R. FED. 407 (1976) (citing Shell Oil Co.
7
Here, the Court finds that Plaintiff has pleaded with sufficient particularity
the elements necessary to prove the alleged fraud. Further, Plaintiff has shown that
false claims were knowingly presented to the government. Plaintiff alleges in its
Complaint that Defendant knowingly made weekly certifications using the
Department of Labor’s Telebenefits system. 34 He has acknowledged the
certifications were false at the he made them. Specifically, Defendant made
weekly certifications to the DUI from July 13, 2009, until Feb. 24, 2010, that he
was not receiving any wages for employment. In fact, each week that Defendant
stated that he was not being paid he in fact earned $42.00 - $1,674.75 as a result of
his undisclosed employment at Daisy Construction. This caused an overpayment
of $355.00 to be paid to him 33 times. Again, Defendant has admitted to all of the
allegations.
V. CONCLUSION
The Court finds that Plaintiff is entitled to judgment on the pleadings. 35
There are no issues of material fact, and in fact, several times in his Answer to the
Complaint and in his Response to the instant Motion, Defendant admits to the
conduct alleged in the Complaint.36 Accordingly, Plaintiff’s Motion for Judgment
on the Pleadings is GRANTED.
Specifically, judgment is entered against Defendant for $11,715.00 in favor
of DUI for Plaintiff’s restitution claim. A judgment is entered against Defendant
and in favor of DUI for an additional $23,430.00 pursuant to 6 Del. C. § 1201(a)
for Plaintiff’s second claim. Lastly, a judgment against Defendant for DUI’s costs
in bringing this action, including reasonable attorneys’ fees pursuant to 6 Del. C. §
1201(b) is entered.
Finally, pursuant to Superior Court Civil Rule 132, the matter shall be
referred to a Commissioner of the Superior Court for a hearing to determine the
amount of all fees and/or costs owed by Defendant pursuant to 6 Del. C. § 1201(a).
for the proposition that a “[c]omplaint brought under the False Claims Act must contain the
‘who, what, where, when and how’ of the false representation.”).
34
Compl. at 3.
35
The Court makes no ruling on the merits of any possible defense to the “fraud—unjust
enrichment” component of the claim, such as any statute of limitations defense. Defendant has
not raised any such defense.
36
See Def.’s Answer to Compl. at 1, 4, 9 (May 21, 2015); Def.’s Resp. to Pltf.’s Mot. for J. on
the Pleadings at 1-5
8
As previously mentioned, the DFCRA provides for a range of civil penalties “of
not less than $5,500 and not more than $11,000 for each act constituting a
violation.” The Commissioner will also determine appropriate interest on the
balance of unpaid judgments, and determine reasonable attorneys’ fees and costs.
______________________
Richard R. Cooch, R.J.
oc: Prothonotary
9