Lodge Construction, Inc. v. United States

In the United States Court of Federal Claims

No. 13-499

Filed: April 14, 2022

LODGE CONSTRUCTION, INC.,

Plaintiff,

v.

THE UNITED STATES,

Defendant.

Michael H. Payne, Cohen Seglias Pallas Greenhall & Furman, Philadelphia, PA, and Edward

Parrott, Watt, Tieder, Hoffar & Fitzgerald, L.L.P., McLean, VA, for Plaintiff.

John H. Roberson, Senior Trial Counsel, with whom were Steven Hough, Trial Attorney, Ioana

Cristei, Trial Attorney, Deborah A. Bynum, Assistant Director, Martin F. Hockey, Jr., Acting

Director, Commercial Litigation Branch, and Brian M. Boynton, Acting Assistant Attorney

General, Civil Division, U.S. Department of Justice, Washington, D.C., for Defendant.

MEMORANDUM OPINION AND ORDER

TAPP, Judge.

This is an epilogue. The history of this case is extensive and well-documented. See, e.g.,

Lodge Constr., Inc. v. United States, No. 13-499, __ Fed. Cl. __, 2022 WL 92659 (Fed. Cl. Jan.

10, 2022) (Post-Trial Opinion, docketed at ECF No. 89). Following trial and the Court’s Post-

Trial Opinion, the parties filed three motions for reconsideration regarding various issues, new

and old, and two motions seeking disposal of Lodge Construction, Inc.’s (“Lodge”) wrongful

termination claim. (ECF Nos. 95–99).

First, the United States moves for summary judgment on Lodge’s wrongful termination

claim. (USA MSJ, ECF No. 95). Second, the United States moves for reconsideration of the

Court’s April 14, 2021 Opinion and Order dismissing the United States’ Counterclaim Count II,

a fraud counterclaim brought under the Contract Disputes Act’s (“CDA”) anti-fraud provision—

41 U.S.C. § 7103(c)(2). (USA MTR Dism., ECF No. 96). Third, Lodge moves for

reconsideration of the Court’s Status Conference Order, (ECF No. 94), insofar as that Order

permitted the United States to begin discovery related to piercing Lodge’s corporate veil; Lodge

further requests that the Court quash the subpoenas the United States issued to third parties.

(Lodge MTR Veil Disc., ECF No. 97). Fourth, rather than respond to the United States’ Motion

for Summary Judgment on Lodge’s wrongful termination claim, Lodge moves to voluntarily

dismiss that claim under RCFC 41(a). (Lodge R41 MTD, ECF No. 98). Fifth and finally, Lodge

moves for reconsideration of the Court’s Status Conference Order insofar as it contemplates a

second trial to resolve its fraud liability for claims Lodge passed through from its subcontractor,

Civil Construction Technologies, Inc. (“CCT”). (Lodge MTR Trial, ECF No. 99). The Court

begins with an explanation as to why the Court will not now, at this late stage, revive the United

States’ CDA counterclaims.

I. The Court will not revisit its determination that the United States’ CDA

counterclaims are time-barred.

Almost one year ago, this Court issued an Opinion and Order denying the parties’ cross-

motions for summary judgment, dismissing the United States’ CDA counterclaims, and teeing

this case up for a trial on the remainder of the United States’ fraud counterclaims. Lodge Constr.,

Inc. v. United States, 153 Fed. Cl. 430 (2021). Only now, after a trial of fraud issues and the

determination that Lodge committed violations of the False Claims Act and, therefore, must

forfeit certain claims under the Special Plea in Fraud, the United States seeks to revive its CDA

counterclaims. (USA MTR Dism. at 1). The United States contends that the Court erred by

failing to “consider the facts and law of fraudulent concealment” in finding the United States was

time-barred from asserting counterclaims under the CDA’s anti-fraud provision, 41 U.S.C. §

7103(c)(2). 1 (Id. at 5). In response, Lodge argues that § 7103(c)(2) is a statute of repose that is

not subject to equitable tolling. (Lodge Resp. at 8, ECF No. 100). While intriguing, the Court

need not reach that question.

Pursuant to RCFC 54(b), the Court has discretion to reconsider its interlocutory opinions

and orders “as justice requires.” E&I Glob. Energy Servs., Inc. v. United States, 152 Fed. Cl.

524, 533 (2021). However, as the Court has previously noted and stresses again, interlocutory

opinions are not merely first drafts inviting revisions and comments as disappointed litigants see

fit. Id.; see also Dixon v. Shimenski, 741 F.3d 1367, 1378 (Fed. Cir. 2014) (quoting Official

Comm. of the Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d

147, 167 (2d Cir. 2003) (“[W]here litigants have once battled for the court’s decision, they

should neither be required, nor without good reason permitted, to battle for it again.”)) (internal

quotation marks omitted). Despite the strength of this admonition, litigants routinely ignore it.

Stated plainly: motions to reconsider are seldom appropriate. Consideration of such motions

should be preceded by a period of intensive introspection which cautiously considers well-

established strictures governing such reconsideration. See Finnigan Corp. v. Int’l Trade

Comm’n, 180 F.3d 1354, 1363 (Fed. Cir. 1999) (“A party’s argument should not be a moving

target.”); Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1231 (3d Cir. 1995) (rejecting a

motion for reconsideration as a “second bite at the apple” and explaining that “[h]aving failed in

its first effort to persuade the court,” the plaintiff “simply changed theories and tried again”). To

proceed otherwise, as seems to be the current practice, is to impose an unjustifiable onus upon a

litigant who has already successfully borne their burden, imposing additional unwarranted

expense, and unnecessarily prolonging resolution. A motion for reconsideration should not

enable a party to “sandbag” its adversary. See Senza–Gel Corp. v. Seiffhart, 803 F.2d 661, 663–

64 (Fed. Cir. 1986) (discussing this disfavored strategy in the context of motions to reconsider

1

“Liability . . . shall be determined within 6 years of the commission of the misrepresentation of

fact or fraud.” 41 U.S.C. § 7103(c)(2).

2

under FRCP 59(e) and 60). Hence, in many instances, a “presumption against reconsideration

makes sense.” 18B Wright & Miller, Federal Practice and Procedure § 4478.1 (3d ed. 2022).

Here, after Lodge has been subjected to trial, civil penalties under the False Claims Act, and

forfeiture of some claims, notions of justice mitigate against revisiting a year-old decision

regarding the time constraints of the CDA’s plainly worded anti-fraud provision. See McSurely v.

McClellan, 753 F.2d 88, 96 (D.C. Cir. 1095) (noting that as litigation “wend[s] closer to final

disposition, stability takes on increased importance.”) (cleaned up). However, as the United

States’ motion overstates its earlier arguments with respect to equitable tolling, clarification is

appropriate.

As an initial matter and as already suggested, the United States’ timing is frustrating. The

United States only filed its motion for reconsideration after a trial that resolved most fraud

issues. The Court dismissed the United States’ claims on April 14, 2021. Lodge Constr., Inc.,

153 Fed. Cl. 430 (docketed at ECF No. 31). Approximately four months later, starting August 2,

2021, trial began. Judgment against Lodge has issued. (ECF No. 90). The time for appeal has

expired. RCFC 58.1; FRAP 4. Setting the merits of its argument aside, the United States asks to

turn back time when time itself is the issue. Entertaining such a belated request presents at least

two practical problems for the speedy and just resolution of this case. First, Lodge would be

prejudiced by having to endure either a second trial or second round of briefing on a long-settled

issue after the parties have already had a full and fair opportunity to litigate this issue. The

salience of that concern is magnified by the significantly stiffer penalties contained in the CDA’s

anti-fraud provision. Second, the underlying case is nearly a decade old. Even if the United

States were to prevail on this CDA issue, the United States does not offer a date from which it

believes the statute of limitations should begin to run or cease to be tolled. Potentially, even

applying equitable tolling until mid-to-late 2016, when the United States asserts its fraud

suspicions were first raised, (USA MTR Dism. at 8, 11, 13), six years would pass from the end

of the tolling period, and the Court would have not yet determined that Lodge was liable for

fraud under the CDA. 2

Even more importantly, the United States muddles the arguments previously raised in its

earlier briefing. (Def.’s Reply and Resp. at 3, ECF No. 24 (responding that “Lodge’s [statute of

limitations] argument fails because it ignores the doctrine of equitable tolling and the discovery

rule, which forestall the running of the statute of limitations until the fraud is known or should

have been known.”) (emphasis added)). The United States did not raise a fraudulent concealment

argument. That omission is significant, and the Court will not consider an argument not

previously presented.

2

Although there is considerable overlap between the False Claims Act and the CDA’s anti-fraud

provision, it would not be so simple as to impute all of Lodge’s fraud that the Court found

violated the False Claims Act into a fraud claim under the CDA. For example, the Court would

need to determine whether the alleged acts of concealment relevant to the settlement agreement

thwarted the United States’ pursuit of an actionable CDA claim. The answer to that question is

not a foregone conclusion. See Hanover Insurance Co. v. United States, Case No. 20-11989-PBS

(D. Mass. Sept. 20, 2021) (holding that a maintaining a civil complaint is not a “claim” under the

CDA).

3

Admittedly, the overlap of the discovery rule and fraudulent concealment with similar

doctrines can be “terribly confusing[.]” Transcript of Oral Argument at 23, Rotkiske v. Klemm,

140 S. Ct. 355 (2019) (No. 18-328) (Sotomayor, J.). Fraudulent concealment is a basis for

equitable estoppel, not equitable tolling; those two doctrines are distinct. Additionally, applying

either equitable doctrine—tolling or estoppel—becomes even more confusing when the party

raising them attempts to prevent the statute of limitations from running on its substantive fraud

claims. The United States did not raise a “fraudulent concealment” argument, much less meet its

burden to establish that either equitable doctrine applies. Lodge Constr., Inc., 153 Fed. Cl. at 438

(holding that “[t]o the extent that the briefing meagerly addresses [equitable tolling],” the United

States had not met its burden to demonstrate its application.). In fact, in the four-and-a-half pages

the United States devoted to responding to Lodge’s arguments regarding the CDA statute of

limitations, the words “conceal” or “concealment” do not appear even once! The United States’

suggestion of, “well, that’s what we meant,” is not supported by any fair reading of its prior

briefing. 3 As a background rule, federal courts apply equitable tolling principles sparingly. Irwin

v. Dep’t of Veterans Affs., 498 U.S. 89, 90 (1990). It would be inconsistent with that background

principle for the Court to find that fraudulent concealment applies here given how little attention

the United States devoted to the issue in its initial Reply and Response.

The discovery rule, equitable estoppel, and equitable tolling are three distinct doctrines

that bear on the statute of limitations. Judge Posner sorted out the confusion in Cada v. Baxter

Healthcare Corp., 920 F.2d 446 (7th Cir. 1990)—a decision that Justice Breyer has referred to as

his “Bible” on the interplay of fraud, equitable tolling, equitable estoppel, and the discovery rule.

Transcript of Oral Argument at 20, Rotkiske, 140 S. Ct. 355 (Breyer, J.). In Cada, Judge Posner

explained the distinction between accrual of a claim and tolling. Accrual of a claim is postponed

by the discovery rule, which refers to the date on which the claimant “discovers he has been

injured[,]” not “the date on which the wrong that injured the [claimant] occurs[.]” Cada, 920

F.2d at 450. On the other hand, “[t]olling doctrines stop the statute of limitations from running

even if the accrual date has passed.” Id.

The Court has already explained that Gabelli v. S.E.C. forecloses the discovery rule’s

application to actions enforcing the CDA’s antifraud civil penalty. Lodge Constr., Inc., 153 Fed.

Cl. at 436 (citing Gabelli for analysis of the discovery rule, not fraudulent concealment); Gabelli

3

The United States spent most of those four-and-a-half pages in its briefing litigating the

application of the discovery rule, a theory distinct from fraudulent concealment. The only

excerpt from the United States’ Reply and Response that could even plausibly contain an

assertion of fraudulent concealment or affirmative acts to conceal wrongdoing is the following

sentence: “The doctrine of equitable tolling allows for the tolling of the statute of limitations

where a complainant has been induced or tricked by his adversary’s misconduct into allowing the

filing deadline to pass.” (Def.’s Reply and Resp. at 3 (citing two cases that, likewise, do not

mention fraudulent concealment)). Even an expansive reading of this sentence, when placed in

the context of the United States’ brief and the factual assertions contained within, does not reveal

a “fraudulent concealment” argument. The Court need not consider cursory arguments. See, e.g.,

Sprint Corp. v. Dep’t of the Interior, 356 F. Supp. 3d 12, 27 (D.D.C. 2018) (“The Court need not

address an argument raised only cursorily in a footnote.”); Herbert v. Architect of Capitol, 839 F.

Supp. 2d 284, 298 (D.D.C. 2012) (same).

4

v. S.E.C., 568 U.S. 442 (2013) (holding that the discovery rule does not apply to civil penalty

enforcement actions); Daewoo Eng’g & Const. Co. v. United States, 557 F.3d 1332 (Fed. Cir.

2009) (describing 41 U.S.C. § 7103(c)(2) as a “penalty”); see also Hernandez, Kroone &

Assocs., Inc. v. United States, 110 Fed. Cl. 496, 529 n.8 (2013) (“[r]ecovery under 41 U.S.C. §

7103(c)(2) comprises a civil penalty.”). Thus, the United States must rely on one of the tolling

doctrines, rather than the discovery rule, to avoid the statute of limitations.

Under the tolling umbrella, there are two often-confused doctrines: (1) equitable estoppel;

and (2) equitable tolling. Cada, 920 F.2d at 451. Equitable estoppel estops a party from pleading

the statute of limitations as a defense when that party has “take[n] active steps to prevent the

[claimant] from suing in time[.]” Id. at 450–51. Equitable estoppel is colloquially known as

“fraudulent concealment.” Id. Equitable estoppel, i.e., fraudulent concealment, requires an

affirmative act to obstruct the claimant’s prosecution of a known claim that is distinct from the

conduct which gave rise to the cause of action. Id. at 451 (“Fraudulent concealment in the law of

limitations presupposes that the plaintiff has discovered, or, as required by the discovery rule,

should have discovered, that the defendant injured him, and denotes efforts by the defendant—

above and beyond the wrongdoing upon which the plaintiff’s claim is founded—to prevent the

plaintiff from suing in time.”) (emphasis added). Where the question is whether the statute of

limitations on a fraud claim may be estopped, courts must be careful not to confuse efforts to

conceal the substantive fraud act with subsequent “active steps” to thwart the pursuit of a fraud

claim. Id. (“Equitable estoppel in the limitations setting is sometimes called fraudulent

concealment, but must not be confused with efforts by a defendant in a fraud case to conceal the

fraud.”) (emphasis added). Efforts to conceal the fraud to prevent the detection and initiation of a

fraud suit fall under the discovery rule, not equitable estoppel (aka, fraudulent concealment), as

they prevent a claimant from discovering the injury. Id.

Equitable tolling, on the other hand, “permits a [claimant] to avoid the bar of the statute

of limitations if despite all due diligence he is unable to obtain vital information bearing on the

existence of his claim.” Cada, 920 F.2d at 451. Equitable tolling is frequently confused with both

the discovery rule and equitable estoppel:

Equitable tolling is frequently confused both with fraudulent concealment on

the one hand and with the discovery rule—governing, as we have seen,

accrual—on the other. It differs from the former in that it does not assume a

wrongful—or any—effort by the defendant to prevent the plaintiff from

suing. It differs from the latter in that the plaintiff is assumed to know that he

has been injured, so that the statute of limitations has begun to run; but he

cannot obtain information necessary to decide whether the injury is due to

wrongdoing and, if so, wrongdoing by the defendant.

Id. Under the equitable tolling doctrine, the statute of limitations begins to run once the claimant

is aware of a possible claim—the claimant need not be certain their rights have been impaired.

Id. (“The qualification ‘possible’ is important. If a [claimant] were entitled to have all the time he

needed to be certain his rights had been violated, the statute of limitations would never run—for

even after judgment, there is no certainty.”) (emphasis in original).

In fraud suits, where the fraudster does not readily disclose their wrongdoing, the

5

application of these three doctrines can be confusing. But that nuance and distinction was not

captured in the United States’ Reply and Response to Lodge’s statute of limitations argument.

The United States raised “equitable tolling,” (Def.’s Reply and Resp. at 3), discussed the delayed

efforts to obtain evidence of scienter, (id. at 5), and argued that its fraud claim did not accrue

until some period after Lodge submitted its claims to the Contracting Officer, (id.). While these

three arguments present an amalgam containing elements of both the discovery rule and

equitable tolling, they do not allege affirmative wrongful acts that prevented the United States

from asserting fraud claims as required by the equitable estoppel “fraudulent concealment”

doctrine the United States now invokes. See Rotkiske, 140 S. Ct. at 364 n.* (Ginsberg, J.

dissenting) (“The two doctrines are often blended or confused . . .. But as this Court recently

clarified [in Gabelli], each doctrine has an independent office.”). And, as mentioned previously,

the United States did not cite “fraudulent concealment,” much less make any mention of post-

fraud affirmative acts to “conceal” the evidence the United States needed to pursue the fraud. 4

While the United States may have aimed for equitable estoppel within its brief, it missed, only

hitting the discovery rule and equitable tolling. Additionally, despite bearing the burden to do so,

the United States previously failed to establish that either the discovery rule or the equitable

tolling doctrine applied when the statute of limitations issue was first presented. Lodge Constr.,

Inc., 153 Fed. Cl. at 438; Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005) (“Generally, a litigant

seeking equitable tolling bears the burden of establishing [its elements].”); see also Menominee

Indian Tribe of Wisconsin v. United States, 577 U.S. 250, 256 (2016); Redding v. District of

Columbia, 828 F. Supp.2d 272, 282 (D.D.C. 2011) (“[I]t is the [claimant’s] burden to raise and

prove an equitable tolling defense.”).

But even if the Court were to revisit its prior decision and consider the United States’

untimely application of the fraudulent concealment doctrine, the Court queries whether the

United States’ newly presented factual bases qualify as “active steps” necessary to support

application of the doctrine. Cada, 920 F.2d at 451; see also Simmons Oil Corp. v. Tesoro

Petroleum Corp., 86 F.3d 1138, 1143 (Fed. Cir. 1996) (holding that the party seeking to toll the

statute of limitations due to fraudulent concealment must show the counterparty “actively

concealed its wrongdoing.”). The United States now (post-trial) argues that Lodge (1) failed to

disclose that the age and value of its equipment differed from those qualities that would support

the operating and standby rates Lodge utilized, (USA MTR Dism. at 7–9); (2) failed to disclose

information in support of its fraudulent “Inefficiency Ratio,” (id. at 9–11); and (3) failed to

disclose the existence of a settlement agreement between Lodge’s surety and its subcontractor,

(id. at 11–14). Facially, much of that alleged conduct appears passive rather than active

concealment of wrongdoing. Furthermore, Lodge produced much of the information forming the

basis for the United States’ fraud claims in 2014 and, in the case of the settlement agreement,

4

Notably, like the Court, Lodge did not read the United States’ brief as raising allegations of

affirmative acts of misconduct that would be necessary to establish fraudulent concealment.

(Lodge’s Reply in Support of xMSJ at 15–17, ECF No. 25 (“[T]he United States’ Opposition

dedicates only a single paragraph to citing general legal principles of “equitable tolling.” But the

United States makes no attempt to establish the applicability of this doctrine. . . . Moreover, none

of these allegations involve affirmative misconduct by Lodge to ‘trick’ the United States to fail

to litigate any claim of fraud within six years[.]”) (citations to the United States’ brief omitted))

6

2016; 5 the United States primarily lacked only evidence of the requisite fraudulent intent. (Tr. of

Hearing at 21:9–22:16, ECF No. 110).

Although there is some ambiguity as to the date on which the United States believed it

had a full accounting of Lodge’s misrepresentations, 6 the United States concedes that it had this

information at the time the statute of limitations was first invoked. (Id. at 25:11–26:4). The

United States chose not to assert it in the appropriate response brief for strategic reasons. (Id. (“If

[in an earlier motion] we had made all the arguments I’m making to you now, it might have just

been words going—just too many words, too many concepts. . . . it makes sense for us to have

waited for the evidence to come in and for the Court to . . . see that there was fraudulent

concealment.”)). Courts widely disfavor the practice of using motions for reconsideration to

present previously known facts and arguments for the first time; the undersigned not excepted.

See, e.g., Robinson v. District of Columbia, 296 F. Supp. 3d 189, 192 (D.D.C. 2018) (“[I]t is

well-established that [Rule 54(b)] motions for reconsideration cannot be used as an opportunity

to reargue facts and theories upon which a court has already ruled, nor as a vehicle for

presenting theories or arguments that could have been advanced earlier.”) (emphasis added).

Aside from the Court’s concerns regarding piecemeal litigation strategies, the fact that the United

States has long possessed the evidence supporting its fraud claims undercuts the basis of the

fraudulent concealment doctrine—a doctrine premised on one party’s conduct that thwarts the

pursuit of claims against it.

Should the Court consider whether the fraudulent concealment doctrine applied on the

three new bases the United States now articulates, the Court would be required to analyze how

Lodge’s failure to make disclosures, which is seemingly passive conduct, could be construed as

active, affirmative acts of concealment. Cf. Simmons Oil Corp., 86 F.3d at 1143 (“[A] mere

failure to come forward with facts that would provide the plaintiff with a basis for suit does not

constitute fraudulent concealment.”). However, this case, nearly a decade in the making, cries

out for finality rather than additional extended litigation. See In re Baxter Int’l, Inc., 678 F.3d

1357, 1368 (Fed. Cir. 2012) (Newman, J. dissenting) (“Finality is reflected in the law of the case

doctrine, which ‘promotes the finality and efficiency of the judicial process by protecting against

the agitation of settled issues.’”) (quoting Christianson v. Colt Industries Operating Corp., 486

U.S. 800, 815–16 (1988)). The United States could have raised those facts in opposition to

Lodge’s brief that sought application of the statute of limitations, or even in a motion to

reconsider shortly after the Court’s decision, still months ahead of trial. It chose not to do so.

Protracted litigation to consider these weighty questions under the facts presented now would be

5

The Court previously discussed the failure to produce this settlement agreement in some detail.

See generally Hanover Ins. Co. v. United States, 134 Fed. Cl. 51 (2017). Although the United

States propounded requests for production on both Lodge and its surety (Hanover Insurance), it

was the surety, rather than Lodge, that failed to disclose the settlement agreement. (See Decl.

from Hanover, Case No. 13-500, ECF No. 199; Tr. of October 13, 2020 Status Conference, Case

No. 13-500). Therefore, another issue the Court would need to consider related to the fraudulent

concealment doctrine is Lodge’s role in that failure and whether the surety’s conduct can be

fairly attributed to Lodge. Those issues have not been raised by either party.

6

The United States did not submit a supporting declaration on this point.

7

unjust, even if the United States had preserved its fraudulent concealment argument.

While the Court’s prior decision was interlocutory, justice does not require the Court to

allow the United States to amend its prior response to assert a new argument premised on

fraudulent concealment. Wilson v. Sellers, 138 S. Ct. 1188, 1199 (2018) (“In our adversarial

system a federal court generally isn’t required to imagine or hypothesize arguments that neither

the parties before it nor any lower court has presented.”). Not only would reversal of its prior

order present practical obstacles severely prejudicing Lodge, but the United States waited nearly

a year after failing to raise (or clarify) an argument that was previously available. Bos. Edison

Co. v. United States, 156 Fed. Cl. 632, 637 (2021) (“A motion for reconsideration [under RCFC

54(b)] is also unavailing where the moving party ‘raise[s] an issue for the first time that was

available to be litigated earlier in the case.’”) (quoting Martin v. United States, 101 Fed. Cl. 664,

671 (2011), aff’d sub nom. Fournier v. United States, No. 2012-5056, 2012 WL 6839784 (Fed.

Cir. Nov. 27, 2012)). But even if fraudulent concealment had been preserved and then reasserted

with the factual bases belatedly presented in the United States’ current Motion for

Reconsideration, the Court is skeptical whether the doctrine would apply to Lodge’s facially

passive conduct here.

Importantly, this decision should not be read as even the mildest endorsement of Lodge’s

behavior; its fraudulent conduct was egregious and significant. But the nature of the underlying

misconduct in a fraud prosecution can never be the basis for expansion of an applicable

limitations period. Although the United States’ confusion between the discovery rule and tolling

doctrines is understandable, its attempt to convince the Court that it previously raised an

argument, when it clearly did not, is unavailing.

II. A second trial regarding the passed-through claims is unwarranted.

The United States next urges that a second trial is necessary to resolve Lodge’s fraud

liability for passing through and maintaining claims from its subcontractor, CCT. (Tr. of Post-

Trial Conf. at 12:2–8, ECF No. 93). At that time, the Court declined to address that issue but

probed the timeline on which such a trial would proceed. (Id.). In the Court’s Status Conference

Order, in the interests of judicial economy and without affixing a trial date, the Court requested

that the parties provide potential pre-trial dates for a trial that would commence sometime in

June 2022. (Status Conference Order at 2). The Court is now convinced a second trial is

unwarranted.

Federal courts may only adjudicate live cases and controversies. Lewis v. Continental

Bank Corp., 494 U.S. 472, 478 (1990) (“Under Article III of the Constitution, federal courts may

adjudicate only actual, ongoing cases or controversies.”); Anderson v. United States, 344 F.3d

1343, 1350 (Fed. Cir. 2003) (“The Court of Federal Claims . . . applies the same standing

requirements enforced by other federal courts created under Article III.”). A claim or issue

becomes moot when the party pursuing that claim lacks a legally cognizable interest in its

resolution. Powell v. McCormack, 395 U.S. 486, 496 (1969) (“[A] case is moot when the issues

presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.”).

The United States’ counterclaims asserting that Lodge is liable for fraud in its submission

and maintenance of claims passed through from its subcontractor, CCT, (the “CCT Claims”) are

8

moot. Lodge submitted the CCT Claims within its Dewatering and Design claims. (See Lodge

MTR Trial at 4). After trial, the Court found both Lodge’s Dewatering and the Design claims to

be fraudulent, forfeited them under 28 U.S.C. § 2514 (the Special Plea), and imposed an $11,000

civil penalty for each under the False Claims Act. Lodge Constr., Inc., __ Fed. Cl. __, 2022 WL

92659 at *34, *35 (Post-Trial Opinion). In its Post-Trial Opinion, the Court determined that, in

counting False Claims Act penalties, only two penalties could attach for the various fraudulent

acts that culminated in Lodge’s submission of two fraudulent claims to the Contracting Officer.

Id. at *34. Therefore, as the CCT Claims are part of the Dewatering and Design claims, no

further False Claims Act liability may attach. Moreover, a determination that individual

components of the Dewatering and Design claims need to be independently forfeited would be

meaningless, as the Court has already ordered forfeiture of those claims in their entirety. Id. at

*35; (see also Tr. of Hearing at 44:23–45:2 (Lodge’s concession that the CCT Claims had been

forfeited)). Consequently, no live controversy remains with respect to the CCT Claims.

The United States no longer has a legally cognizable interest in a determination under

either the False Claims Act or the Special Plea with respect to the CCT Claims. Furthermore, as

the Court explained above, the United States’ CDA counterclaims have been dismissed and will

remain so. The United States has not articulated any other legally cognizable interest that could

be vindicated via trial on the CCT Claims. Therefore, the United States’ counterclaims related to

the CCT Claims are moot.

III. There is no basis for further discovery regarding veil piercing remedies.

The Court has jurisdiction to “entertain veil piercing as a counterclaim remedy.” (Status

Conference Order at 2 (citing Alli v. United States, 83 Fed. Cl. 250 (2008) and Twin City

Shipyard, Inc. v. United States, 21 Cl. Ct. 582, 590 (1990))). In the interests of judicial economy,

the Court directed the parties to begin discovery on the veil piercing remedy. (Status Conference

Order at 2). The posture of this litigation has since altered.

Lodge argues that, by satisfying the $22,000 False Claims Act judgment against it,

further liability imputed to natural persons behind the corporate veil is a moot issue, and the

United States’ subpoenas to third parties should be quashed. 7 (Lodge MTR/MTQ Veil Disc. at

1–2, ECF No. 101). The Court agrees.

The United States concedes that the $22,000 judgment has been satisfied and Lodge has

no other monetary judgment outstanding. 8 (See Tr. of Hearing at 53:16–54:15; 33:4–10). Veil

piercing is merely a remedy that ensures individuals with interest in a corporate entity are not

7

Lodge also requests that the Court reevaluate whether it possesses jurisdiction to entertain an

equitable veil piercing remedy and that veil piercing would be inappropriate without joinder of

the natural persons behind the corporate veil. (Lodge MTR/MTQ Veil Disc. at 2). The Court

need not address these arguments given Lodge’s satisfaction of its monetary obligations.

8

Lodge’s motion to reconsider, unlike the overwhelming majority of such motions, is proper

because an important intervening fact occurred—complete satisfaction of Lodge’s monetary

sanctions.

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shielded from liability due to their abuse of the corporate form. See In re Cambridge Biotech

Corp., 186 F.3d 1356, 1376 (Fed. Cir. 1999) (“The concept of ‘piercing the corporate veil’ is

equitable in nature and courts will pierce the corporate veil ‘to achieve justice, equity, to remedy

or avoid fraud or wrongdoing, or to impose a just liability.’”) (quoting 1 William M. Fletcher,

Fletcher Cyclopedia of the Law of Private Corporations § 41.20, at 598–601, 603 (Perm. ed.

1999)). One of those methods of abuse is undercapitalization, which prevents a judgment

creditor from gaining the full satisfaction of their judgment against the corporate entity. See

Labadie Coal Co. v. Black, 672 F.2d 92, 96 (D.C. Cir. 1982) (“when particular circumstances

merit—e.g., when the incentive value of limited liability is outweighed by the competing value

of basic fairness to parties dealing with the corporation—courts may look past a corporation’s

formal existence to hold shareholders or other controlling individuals liable for ‘corporate’

obligations.”). However, where a judgment against the entity is satisfied, there is no injustice in

continuing to recognize the corporate form and no need to impose further liability behind the

veil.

Therefore, with no judgment currently outstanding that natural persons would potentially

be required to satisfy, the United States no longer has a legally cognizable interest in piercing the

corporate veil. Furthermore, having determined that the CDA counterclaims remain dismissed

and that no further False Claims Act liability may attach to the CCT Claims, the United States

does not identify another source of monetary liability for which Lodge, as an entity, may be

unable to satisfy a monetary judgment. (USA Resp. to MTR/MTQ, ECF No. 101). Consequently,

continued discovery related to veil piercing is unwarranted.

IV. Lodge’s wrongful termination claim is dismissed with prejudice under RCFC 41(a).

Both parties appear to agree that Lodge cannot maintain its wrongful termination claim,

an issue left unresolved by the Court’s Post-Trial Opinion. Lodge Constr., Inc., __ Fed. Cl. __,

2022 WL 92659 at *34 n.21. However, the parties disagree on how to accomplish its disposal.

Lodge wishes to voluntarily dismiss the wrongful termination claim with prejudice under

RCFC 41(a)(2). (Lodge R41 MTD at 1). The United States, on the other hand, requests that the

Court forfeit that claim and enter judgment against Lodge. (USA MSJ at 1). The United States

argues that the Court “should not provide Lodge with [the] courtesy or luxury” of a Rule 41(a)

dismissal, and instead hold that Lodge’s claim is forfeited due to the fraudulent conduct that

resulted in the forfeiture of Lodge’s other affirmative claims. (USA Resp. to R41 MTD at 2, ECF

No. 103). The United States asserts interests in the deterrent effects of forfeiture and related

litigation in the Middle District of Florida. (Id.). However, the United States’ position would

require the Court to unnecessarily plow new ground regarding the scope of forfeiture under the

Special Plea, 28 U.S.C. § 2514, without the benefit of full briefing on the issue. And, as Lodge

points out, the United States’ stated motivations for seeking a forfeiture judgment rather than

agreeing to dismissal are misplaced because (1) the Court’s 45-page Opinion detailing Lodge’s

fraud adequately serves any interest in deterrence, and (2) neither forfeiture nor dismissal would

resolve the merits of the wrongful termination claim and thus would not affect litigation in

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Florida. 9 (Lodge Reply in Supp. of Dism. at 3–5, ECF No. 107). The Court agrees with Lodge.

Rule 41(a)(2) provides:

[A]n action may be dismissed at the plaintiff’s request only by court order,

on terms that the court considers proper. If the defendant has pleaded a

counterclaim before being served with the plaintiff’s motion to dismiss, the

action may be dismissed over the defendant’s objection only if the

counterclaim can remain pending for independent adjudication.

RCFC 41(a)(2). The Court “has considerable discretion in deciding whether to dismiss a case

with or without prejudice, and such dismissal will not be overturned except upon a finding of

abuse of discretion.” Fala Corp. v. United States, 53 Fed. Cl. 90, 91 (2002). “No precise formula

governs dismissals with prejudice. The decision largely hinges on the equities of the case, with

due regard for the interests of both parties.” Deuterium Corp. v. United States, 21 Cl. Ct. 132,

134 (1990).

Here, Lodge agrees to a dismissal with prejudice and acknowledges that the United

States’ counterclaims would be unaffected by such a dismissal. 10 (Lodge R41 MTD at 2; Lodge

Reply in Supp. of Dism. 5). Therefore, there is no need for the Court to resolve whether Lodge’s

wrongful termination claim, which arose after the submission of the fraudulent claims, is subject

to the forfeiture sanction mandated by 28 U.S.C. § 2514. 11 See Air Courier Conference v. Postal

Workers, 498 U.S. 517, 531 (1991) (the doctrine of judicial restraint counsels decisions on “the

best and narrowest ground available.”) (Stevens, J. concurring). Lodge’s Complaint in Case No.

13-499 is dismissed with prejudice. Consequently, the United States’ Motion for Summary

Judgment, (ECF No. 95), is denied as moot.

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While the monetary penalties heretofore imposed are modest, they nevertheless are equal to the

maximum authorized by Congress. See 31 U.S.C. § 3729(a)(1). In addition, the additional

consequences of Lodge’s misconduct should not be ignored. Lodge’s multiple claims for

substantial sums due from the United States have been withdrawn or forfeited. Lodge is the

subject of a fraud determination which will likely adversely impact any future possible public,

and perhaps private, economic opportunities. It has suffered the burden of a decade of

contentious litigation. It is, presumably, liable for a potentially large bill of costs. See RCFC

54(d). And lastly, Lodge forewent its appeal opportunity thereby leaving intact the Court’s fraud

determinations.

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The Court in unable, at this stage, to determine what impact, if any, dismissal versus judgment

would have on entitlement to costs. Neither party has broached this issue.

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This decision should not be read as an endorsement of Lodge’s arguments that its wrongful

termination claim is outside the scope of forfeiture. The United States has presented a

compelling argument that, when the Court finds that a party has practiced fraud in the

performance of a government contract, all claims brought by the contractor related to that

contract must be forfeited. However, since the posture of this case allows the Court to punt that

determination, the Court exercises judicial restraint to do so.

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V. Conclusion

The Court has issued several decisions in this case that, together with this Order, have

fully adjudicated Lodge’s claims and the United States’ counterclaims in this consolidated

action. Previously, the Court disposed of all but one of Lodge’s causes of action and adjudicated

all three of the United States’ counterclaims. (See Post-Trial Opinion; Rule 54(b) Judgment, ECF

No. 90 (entering Judgment in favor of the United States on Counterclaim Counts I & III and

forfeiting Lodge’s Complaint in Case No. 13-800); Opinion and Order, ECF No. 31 (dismissing

the United States’ Counterclaim Count II as time-barred)). This Order (1) clarifies that the

United States achieved full relief on its counterclaims through those decisions, and (2) dismisses

Lodge’s final cause of action—its wrongful termination claim—pursuant to Rule 41(a)(2).

Accordingly, this Order constitutes a final adjudication and decision in this action. This case

shall be closed without further judgments.

Based on the foregoing, the Court ORDERS the following:

(1) The United States’ Motion for Reconsideration of the Court’s Order dismissing the CDA

anti-fraud counterclaims, (ECF No. 96), is DENIED.

(2) Lodge’s Motion for Reconsideration, (ECF No. 99), is GRANTED IN PART. The

United States’ counterclaims, as they related to the CCT Claims, are DISMISSED AS

MOOT, and the Court does not intend to hold a second trial in this matter.

(3) Lodge’s Motion for Reconsideration/Motion to Quash, (ECF No. 97), is GRANTED.

(4) The portion of the Court’s February 3, 2022, Status Conference Order directing the

parties to begin discovery on veil piercing issues is VACATED.

(5) All subpoenas, interrogatories, and documents requests issued by the United States in

connection with a veil piercing remedy are QUASHED.

(6) Lodge’s Motion to Dismiss its Complaint in Case No. 13-499, (ECF No. 98), is

GRANTED. Lodge’s wrongful termination claim is DISMISSED WITH PREJUDICE

pursuant to RCFC 41(a)(2).

(7) The United States’ Motion for Summary Judgment, (ECF No. 95), is DENIED AS

MOOT.

(8) The Clerk is DIRECTED TO ENTER JUDGMENT dismissing this case.

IT IS SO ORDERED.

s/ David A. Tapp

DAVID A. TAPP, Judge

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