Petition for Writ of Certiorari — United States, ex rel. Concilio de Salud Integral de Loíza, Inc., et al., Petitioners v. J.C. Remodeling, Inc., et al.

APPENDIX

Case: 18-1199 Document: 00117602028 Page: 1 Date Filed: 06/15/2020 = Entry ID: 6345800

United States Court of Appeals

For the First Circuit

No. 18-1199

UNTTED STATES OF AMERICA, EX REL.

CONCILIO DE SALUD INTEGRAL DE LOIZA, INC. ("CSILO"),

Plaintiffs, Appellants,

Vv.

J.C. REMODELING, INC. AND JOSE GARCTA-SUAREZ,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Pedro A. Delgado-Hernandez, U.S. District Judge]

Before

Torruella, Dyk,” and Thompson,

Circuit Judges.

Victor M. Rivera-Rios for appellant CSILO.

Carlos J. Sagardia-Abreu and Maria Celeste Colberg-Guerra,

were on brief, for appellees.

June 15, 2020

* Of the Federal Circuit, sitting by designation.

001

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THOMPSON, Circuit Judge. A jury verdict and civil

penalty in its favor notwithstanding, Appellant Concilio De Salud

Integral De Loiza, 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 Loiza, 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 CSITLO "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

fin 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." CSTILO 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

se: 18-1199 Document: 00117602028 Page:3 Daie Filed: 06/15/2020 Entry ID: 6345800

contract titled "CONTRATO DE OBRA ENTRE EL DUENO 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

003

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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

"filfing] a civil suit against JCR on April 2013 at the First

Instance Court of Puerto Rico."! 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 Loiza, Inc.

v. J.C. Remodeling, Inc., et al., Civ. No. FCCI2013-00222, was

pending as of the federal court trial.

004

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CSILO, "[b]lecause 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 action? 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

"Ta]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.

2° We refer to appellees JCR and Mr. José Garcia-Suarez,

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).

|

on

|

005

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than $11,000 for each violation of 31 U.S.c. [§] 3729."5 ICR

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 "({sjubmitted 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.® It was then that CSILO moved the court for

° 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.

006

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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. [CSTLO] has provided no

compelling reason to justify the omissions.

Discovery is no longer available here, to

[JCR]'s detriment. Accordingly, the motion is

DENTED.

U.S. ex rel. Concilio De Salud Integral De Loiza, 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.’ Dissatisfied with

7 “TA] 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

007

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that result and believing it is still entitled to damages,*® 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. CSTILO 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.

008

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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: CSTLO 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. Corporacién De Puerto Rico Para La Difusioén Publica, 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." Rodriguez-Garcia v. Miranda-

Marin, 610 F.3d 756, 774 (1st Cir. 2010) (internal quotation marks

009

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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 (lst 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 (Sth

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 selfediting 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

010

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Vill. N. Assocs. v. Gen. Elec. Co., 686 F.2d 66, 71 (lst 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 (lst 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,

O11

e.g., McAlister-Jones v. Foote, 720 F. App'tx 971, 974-75 (lith

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

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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").

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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

t

absent which CSILO would suffer "manifest injustice," Rodriguez~

Garcia, 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, 6393

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.'"

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U.S. ex rel. Feldman v. van Gorp, 697 F.3d 78, 36-87 (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 §.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]Jhe 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]

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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 (lith 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

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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

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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 indicatej[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]ls 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

018

Case: 18-1199 Document: 001717602028 Page: 19 Date Filed: 06/15/2020 — Entry 1D: 6345800

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

019

Case: 18-1199 Document: 00117602028 Page: 20 Date Filed: 06/15/2020 — Entry 1D: 6

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]

t

electrical work was worthless," and therefore declining to award

the full contract price). We therefore find that CSTLO has not

persuaded us that it would have been entitled to the full contract

020

Case: 18-1199 Document 00717602028 Page: 24 Date Filed: 06/15/2020 — Entry ID: 6345800

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.?

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,"

Rodriguez-Garcia, 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.!° Each side

shall bear its own costs.

° 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 (lst Cir. 2010) (quoting Rivera v. Riley,

- PL =

Case: 18-1199 Document: 00117602028 Page: 22 Date Filed: 06/15/2020 = Entry ID: 6345800

209 F.3d 24, 27 (lst Cir. 2000)); see also Rodriguez v.

Municipality of San Juan, 659 F.3d 168, 175 (list Cir. 2011); Ruiz

Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 81 (lst 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 CSTLO 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.

Case: 18-1199 Document: 00117611458 Page: 1 Date Filed: 07/07/2020 = Entry ID: 6350847

United States Court of Appeals

For the First Circuit

No. 18-1199

UNITED STATES, ex rel. CONCILIO DE SALUD INTEGRAL DE LOIZA, INC. (CSILO)

Plaintiff - Appellant

Vv.

JC REMODELING, INC.; JOSE GARCIA-SUAREZ

Defendants - Appellees

Before

Torruella, Dyk.” and Thompson,

Circuit Judges.

ORDER OF COURT

Entered: July 7, 2020

Appellant Concilio De Salud Integral De Loiza, Inc.'s petition for rehearing is denied.

By the Court:

Maria R. Hamilton, Clerk

CC:

Mariana E. Bauza Almonte

David O. Martorani-Dale

Victor Manuel! Rivera-Rios

Victor Manuel Rivera-Torres

Carlos Javier Sagardia Abreu

Maria Celeste Colberg-Guerra

* Of the Federal Circuit, sitting by designation .

023

Case 3:14-cv-01821-PAD Document 92 Filed 01/19/18 Page 1 of 2

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

UNITED STATES OF AMERICA, ex rel.

CONCILIO DE SALUD INTEGRAL DE

LOIZA, INC.,

Plaintiff,

CIVIL NO. 14-1821 (PAD)

Vv.

JC REMODELING, INC., et al.,

Defendants.

ORDER

Trial is scheduled for January 22, 2018 (Docket No. 74). Before the court are plaintiffs’

(1) “Motion in Compliance with Docket 83 Order and Request for Leave to Amend Plaintiffs’ Part

of the Joint Pretrial Conference Report” (Docket No. 84); and (2) “Motion in Limine Regarding

USA’s Non-Intervention Notice” (Docket No. 85).

L Motion in Limine (Docket No. 85)

Plaintiff seeks exclusion from trial of the “United States’ Notice of Election to Decline

Intervention.” Defendant does not object (Docket No. 86). The motion is GRANTED.

Hl. Motion to Amend Plaintiffs’ Part of the Joint Pretrial Conference Report

(Docket No. $4)

Plaintiff requests leave to amend the Pretrial Conference Report to include evidence of

damages. Defendant opposes the request (Docket No. 87). Pursuant to Rule 16 of the Federal

Rules of Civil Procedure, the court may hold a final pre-trial conference to formulate a trial plan,

including a plan to facilitate the admission of evidence. Fed.R.Civ.P.16(e). After the conference,

an order shall be entered reciting the action taken. Fed.R.Civ.P.16(d). The order controls the

subsequent course of action unless modified by an order to prevent manifest injustice.

Fed.R.Civ.P.16(d) and (e).

024

Case 3:14-cv-01821-PAD Document 92 Filed 01/19/18 Page 2 of 2

Concilio de Salud Integral de Loiza, Inc. (CSILO) v. JC Remodeling. Inc. et al.

Civil No. 14-1821 (PAD)

Order

Page 2

The Pretrial Conference was held on December 22, 2017 (Docket No. 83). The court

adopted the parties’ Joint Pretrial Conference Report (Docket No. 80) as the court’s order under

Rule 16(e) to govern subsequent proceedings (Docket Nos. 82 and 83). In its estimation, however,

no manifest injustice supports plaintiff's request to amend the Report. The case started in 2014

(Docket No. 3). Defendant points out that plaintiff did not include a computation of damages in

its Initial Disclosures; and did not produce any evidence and/or computation of damages during

discovery (Docket No. 87 at pp. 2, 4). Moreover, it omitted from the Pretrial Report any specific

request for discrete fraud damages as well as a discussion on the subject. Plaintiff has provided

no compelling reason to justify the omissions. Discovery is no longer available here, to the

defendant’s detriment. Accordingly, the motion is DENIED.

SO ORDERED.

In San Juan, Puerto Rico, this 19th day of January, 2018.

s/Pedro A. Delgado-Hernandez

PEDRO A. DELGADO-HERNANDEZ

United States District Judge

Case 3:14-cv-01821-PAD Document 99 Filed 01/22/18 Page 1 of 2

Time set: 9:00 AM

Start time: 10:14 AM

End time: 11:44 AM

Recalled time: 1:15 PM

End time: 4:30 PM

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

© MINUTE OF PROCEEDINGS:

HONORABLE PEDRO A. DELGADO-HERNANDEZ, U.S. DISTRICT JUDGE

Date: January 22, 2018

COURTROOM DEPUTY: Christina A. Cole 3:14-CV-1821 (PAD)

COURT REPORTER: Amy Walker

PLAINTIFF'S INTERPRETER: Juan Segarra

Attorneys

Concilio de Salud Integral de Loiza,

inc. (CSILO) Victor Rivera-Rios, Esq.

Victor Rivera-Torres, Esq.

vs.

Carlos Sagardia-Abreu, Esq.

JC Remodeling, Inc., Maria Colberg-Guerra, Esq.

& Jose Garcia

CASE CALLED FOR FIRST DAY OF JURY TRIAL.

The Courtroom is open io the public.

Prior to calling the potential jurors for Jury Selection, the following housekeeping matters were

discussed in chambers:

e Plaintiffs motions at dockets [94] “Motion for Reconsideration of the Docket 92 Order’ & [95]

“Supplemental Motion to Motion for Reconsideration of Docket 92 Order’.

o After listening to the arguments presented by both parties, the Court denied motion af

docket [94] & noted motion at docket [95]. ™*

e Attorney Victor Rivera-Torres’ verbal notice of appearance on behalf was noted. Attorney

Rivera-Torres shail file a notice of appearance on the docket by tomorrow 1/23/2018.

e Plaintiff's motion at docket [96] “Motion Requesting Leave to File Spanish Documents and

Extension of Time to Submit Translations” was granted. The plaintiff shall submit the

translations by January 29, 2018.

Voir dire conducted. Among other things, the Court informed the potential jurors that this trial is

estimated to last until 1/29/2018 with trial sessions from 9 am — 5pm, Friday 1/26/2018 the trial will

not be held. The Jury was impaneled and sworn in.

Page I of 2

026

Case 3:14-cv-01821-PAD Document99 Filed 01/22/18 Page 2 of 2

Time set: 9:00 AM

Start time: 10:14 AM

End time: 11:44 AM

Recalled time: 1:15 PM

End time: 4:30 PM

During the afternoon session, preliminary instructions were delivered by the Court.

Attorney Rivera-Rios delivered opening statements on behalf of the plaintiff.

Attorney Sagardia-Abreu presented opening statements on behalf of the defendant.

Testimonies of the following witnesses were heard on behaif of the Plaintiff:

e Jose Garcia-Suarez, President of JC Remodeling, Inc. - continued testimony shall be heard

tomorrow 1/23/2018.

Further Jury Trial set for 1/23/2018 at 9:00 AM in Courtroom 3 before Judge Pedro A. Delgado-

Hernandez.

The Court instructed the Court Security Officer (CSO) to provide the jury with morning and afternoon

snacks, as well as with lunch for the entirety of the trial. Dinner will be provided, if necessary, during

deliberations.

s/ Christina A. Cole

Courtroom Deputy

to Hon. Pedro A. Delgado-Hernandez, U.S.D.J.

U.S. District Court for the District of Puerto Rico

Exhibits:

Plaintiffs 1, 4 & 7 admitted.

Joint | admitted.

Page 2 of 2

24

25

UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

CONCILIO DE SALUD INTEGRAL

DE LOIZA, INC.,

Plaintiff,

Vv. Docket No. 14-1821

San Juan, Puerto Rico

JC REMODELING, INC., et al., January 23, 2018

Defendants.

JURY TRIAL

BEFORE THE HONORABLE JUDGE PEDRO A. DELGADO HERNANDEZ,

UNITED STATES DISTRICT JUDGE

APPEARANCES:

For the Plaintiff: Mr. Victor Rivera Torres, Esq.

Mr. Victor Rivera Rios, Esq.

For the Defendants: Mr. Carlos Sagardia Abreu, Esq.

Ms. Maria Colberg Guerra, Esq.

Proceedings recorded by stenography. Transcript produced by

CAT.

028

INDEX

WITNESSES:

JOSE GARCIA SUAREZ (Continued)

Direct examination by Mr. Rivera Rios (Cont.)

Cross-examination by Mr. Sagardia Abreu

Redirect examination by Mr. Rivera Rios

Recross-examination by Mr. Sagardia Abreu

EXHIBITS:

Plaintiff's Exhibit 9-A

Plaintiff Exhibit 9-B

Plaintiff's Exhibit Ten

PAGE

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