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United States ex rel. Richards v. R&T Investments LLC

United States District Court, W.D. Pennsylvania

July 3, 2014

UNITED STATES OF AMERICA EX REL. LATASHA RICHARDS, and LATASHA RICHARDS, Plaintiffs,
v.
R&T INVESTMENTS LLC, Defendant

For UNITED STATES OF AMERICA, ex rel. LATASHA RICHARDS, Relator, Plaintiff: Paul E. Skirtich, LEAD ATTORNEY, United States Attorney's Office, Pittsburgh, PA.

For LATASHA RICHARDS, Plaintiff: Eileen D. Yacknin, LEAD ATTORNEY, Neighborhood Legal Services Association, Pittsburgh, PA.

For R & T INVESTMENTS LLC, Defendant: Robert J. Garvin, LEAD ATTORNEY, Goldberg, Kamin & Garvin, Pittsburgh, PA.

OPINION

Page 554

Mark R. Hornak, United States District Judge.

This case is a qui tam action brought by Relator-Plaintiff Ms. Latasha Richards, on behalf of the United States Government, against her former residential landlord, Defendant R& T Investments, LLC, under the False Claims Act (" FCA" ), 31 U.S.C. § 3729 et seq. , as amended. Plaintiff alleges tat Defendant violated the

Page 555

FCA by knowingly submitting false claims to the federal government for rental subsidy payments under the Section 8 Low-Income Housing Choice Voucher Program.

Pending before the Court is Defendant's Motion to Dismiss for Failure to State a Claim, ECF No. 39. The Court has considered Plaintiff's First Amended Complaint (" Amended Complaint" ), ECF No. 32, Defendant's Motion to Dismiss, Defendant's Brief in Support of Motion to Dismiss, ECF No. 40, and Plaintiff's Brief in Opposition to Defendant's Motion to Dismiss, ECF No. 45. The matter is ripe for disposition, and for the reasons that follow, Defendant's Motion to Dismiss is denied.

I. BACKGROUND

a. Factual Background

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept the factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. See Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). Therefore, for the purpose of the disposition of Defendant's Motion, the essential facts are as follows.

In the spring of 2010, Plaintiff, a low-income single mother of three minor children, sought housing for her family via the Section 8 program administered by the Housing Authority of the City of Pittsburgh (" HACP" ). Pl.'s Am. Compl. ¶ 36. She located a suitable four bedroom residence at 305 Anthony Street, Mount Oliver, Pennsylvania, 15210 (" the premises" ), for lease by its owner, Defendant R& T Investments, LLC, in consideration of $850.00 in monthly rent. Id. at ¶ 37. On April 21, 2010, Plaintiff and Defendant signed a lease for rental of the premises, effective June 1, 2010. Id. at ¶ 38. Plaintiff signed the lease because she had to vacate her then-current premises by June 1, 2010, wanted to protect the availability of her prospective residence, and anticipated that Defendant's premises would be approved by the Section 8 program before June 1, 2010. Id.

On or about April 23, 2010, Plaintiff and Defendant submitted to the HACP a Request for Tenancy Approval (" RFTA" ) of the premises under the Section 8 program. Id. at ¶ 39. Because the new residence was located within the jurisdiction of the Allegheny County Housing Authority (" ACHA" ) rather than the HACP, the HACP had to transfer Plaintiff's Section 8 voucher and the RFTA to the ACHA for administration. Id. at ¶ 40. On or about May 19, 2010, the ACHA received from the HACP the parties' RFTA. Id. at ¶ 41. Although the parties' lease initially required $850.00 in monthly rent, the RFTA submitted by the parties indicated that Defendant would agree to accept $776.00 in monthly rent. Id. at ¶ 42. However, the ACHA determined that $732.00 in monthly rent was the appropriate " Rent to Owner." [1] Id. In its RFTA, Defendant also agreed to pay for the costs of water and sewage service at the premises. Id. at ¶ 43. Due to the delay in accomplishing the transfer of Plaintiff's voucher from the HACP to the ACHA, the ACHA was unable to conduct the mandatory inspection of the premises to ensure compliance with housing quality standards (" HQS" ) before June 1, 2010, and therefore the ACHA was unable to approve the subject property for Section 8 benefits before June 1, 2010. Id. at ¶ 45.

Page 556

Although Section 8 approval had not yet been granted, Plaintiff and her family moved into the premises on June 1, 2010 because Plaintiff's former residence was no longer available. Id. at ¶ 46. As a result, while waiting for ACHA approval of the RFTA, Plaintiff paid Defendant the full $732.00 monthly rent for June 2010. Id. After Plaintiff moved into the premises, she discovered that the residence lacked water and sewage service. Id. at ¶ 47. Defendant instructed Plaintiff to open the service accounts for those utilities in her name, and she did so. Id. Although Defendant promised to reimburse Plaintiff for all expenses associated with those utilities services, Defendant never did so. Id

The ACHA conducted the HQS inspection of the premises, and on August 3, 2010, Defendant and the ACHA executed a HAP Contract. Id. at ¶ 49. This HAP Contract, retroactive to July 1, 2010 and with an initial term ending on June 30, 2011, set forth that the total Rent to Owner was $732.00 per month. Id. The HAP Contract also provided that Defendant was required to pay any water and sewage costs associated with the premises. Id.; see also HAP Contract, ECF No. 32-1, at 11. Pursuant to the HAP Contract, the ACHA remitted to Defendant housing assistance rent subsidy payments in the amount of $589.00 per month for July and August of 2010. Pl.'s Am. Compl. ¶ 51. For those same months, Plaintiff remitted to Defendant her tenant portion of $143.00 per month. Id.

In early September of 2010, Plaintiff received her first water and sewage service bill, and, in accordance with Defendant's agreement in the HAP Contract, requested that Defendant tender to her the money necessary to pay the bill. Id. at ¶ 52. Defendant refused, insisting that the water bill was Plaintiff's responsibility, and asserting that the pre-HAP Contract, April 21, 2010, $850.00/month lease prevailed. Id. at ¶ 53. When Plaintiff indicated that she would have to move out because she could not afford to pay the water bill, Defendant threatened to evict her for failing to pay additional rent payments to total $850.00 per month, as the April 21, 2010 lease provided, as opposed to the Rent to Owner of $732.00 that Defendant subsequently agreed to in the HAP Contract. Id. at ¶ 54.

Plaintiff, afraid of eviction if she did not pay the additional $118.00 in monthly rent (the difference, which Defendant allegedly started to demand, between the $850.00 per-month rent in the April 2010 lease and the $732.00 per-month rent in the HAP Contract), remitted to Defendant, for the 11 months from September 2010 through July 2011, rent payments in the amount of $261.00 per month ($118.00 plus $143.00), rather than $143.00 per month as prescribed by the Section 8 program and the HAP Contract between the ACHA and Defendant. Id. at ¶ 56. For each of those months, the ACHA remitted to Defendant housing assistance rent subsidy payments in the amount of $589.00 per month. Id. at ¶ 57.

Part B of Defendant's HAP Contract provides, in pertinent part:

¶ 5 Provision and Payment for Utilities and Appliances
c. Part A of the HAP contract specifies what utilities and appliances are to be provided or paid by the owner or the tenant. The lease shall be consistent with the HAP contract.
¶ 6 Rent to Owner: Reasonable Rent
a. During the HAP contract term, the rent to owner may at no time exceed the reasonable rent for the contract unit as most recently determined or redetermined by the PHA in accordance with HUD requirements.
¶ 7 PHA Payment to Owner

Page 557

b. Owner compliance with HAP contract. Unless the owner has complied with all provisions of the HAP contract, the owner does not have a right to receive housing assistance payments under the HAP contract.
¶ 8 Owner Certification
During the term of this contract, the owner certifies that
b. The contract unit is leased to the tenant. The lease includes the tenancy addendum (Part C of the HAP contract), and is in accordance with the HAP contract and program requirements. The owner has provided the lease to the PHA, including any revisions of the lease.
d. Except for the rent to owner, the owner has not received and will not receive any payments or other consideration (from the family, the PHA, HUD, or any other public or private source) for rental of the contract unit during the HAP contract term.

Pl.'s Am. Compl. ΒΆ 58. Part C of Defendant's HAP Contract (the Tenancy Addendum) sets forth that, " [t]he owner certifies that the terms of the lease are in accordance with all provisions of the HAP contract and that the lease includes the ...


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