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United States ex rel. Salvatore v. Fleming

United States District Court, W.D. Pennsylvania

February 24, 2015

UNITED STATES OF AMERICA ex rel. DIANA SALVATORE, and DIANA M. SALVATORE, Plaintiffs,
v.
MICHAEL FLEMING, TAYLOR MANAGEMENT, INC., and DIXIE REALTY, INC., d/b/a BUY-N-SELL Real Estate, Defendants.

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

CYNTHIA REED EDDY, Magistrate Judge.

I. RECOMMENDATION

Before the Court is Defendant Michael Fleming's ("Fleming") motion to dismiss (ECF Realty, Inc. ("Dixie Realty") pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, it is respectfully recommended that this motion to dismiss be granted, and that Dixie Realty be granted leave to amend its pleading.

II. REPORT

A. Relevant Facts and Procedural Background

Plaintiff Diana Salvatore initiated the underlying qui tam action pursuant to the False Claims Act ("FCA") against the above captioned Defendants. Plaintiff avers that Defendants submitted false claims to the federal government for rental subsidy payments under the Section 8 Low-Income Housing Choice Voucher ("Section 8") Program. According to Plaintiff, pursuant to the Section 8 Program, Fleming entered into agreements with both the Housing Authority of the City of Pittsburgh and Plaintiff which provided that Plaintiff would lease a residential housing unit owned by Fleming. (Am. Compl. ¶ 70, ECF No. 33). Starting in October of 2008, Dixie Realty began working as Fleming's tenant management agent. (Id. at ¶ 72). In essence, Plaintiff has alleged that until January 2010, Fleming, by and through his agent Dixie Realty, fraudulently and illegally collected excess rent payments and excess water and sewage payments from Plaintiff, and unlawfully received federal rent subsidies from the United States Government. (Id. at ¶¶ 115, 122-124).

The action was initially filed under seal by Plaintiff on September 15, 2011 (ECF No. 2) and was unsealed by the Court on May 20, 2014 (ECF No. 23). On September 11, 2014, Plaintiff filed an amended complaint (ECF No. 33), to which Dixie Realty filed a pleading entitled Answer, Defenses, and Crossclaims on December 18, 2014. (ECF No. 58). Specifically, the cross-claims section of this pleading stated the following.

119. This Defendant continues to deny any and all liability to the Plaintiff or any other party to this action under any theory or cause of action set forth. If it is determined at time of trial, however, that Plaintiff or any other party hereto is entitled to any relief whatsoever against this Defendant as a result of the alleged events, this Defendant claims that all other named Defendants are solely liable to any other party entitled to relief for the reasons set forth in Plaintiff's Complaint against any other original Defendant in this action. This Defendant incorporates by reference as if the same had been set forth at length, those allegations of Plaintiff's Complaint as contained in Counts 1 and 2 as they apply to Defendants Fleming and Taylor Management. In the alternative, said Defendants are liable over to this Defendant for any and all sums which may be recovered against this Defendant, although the existence of any liability on the part of this Defendant is specifically denied.
120. This Defendant further joins Defendants Fleming and Taylor Management in this Crossclaim to protect its rights of contribution and/or indemnification in the event that it is judicially determined that this Defendant and/or all of the other Defendants are jointly and severally liable to Plaintiff, although the existence of any liability on the part of this Defendant is specifically denied.

(Id. at ¶¶ 119, 120).

On January 6, 2015, Fleming filed the present motion to dismiss the cross-claims (ECF (ECF No. 63) and a brief in opposition (ECF No. 64).[1] The matter has been fully briefed and is ripe for disposition.

B. Standard of Review

Recently, our court of appeals aptly summarized the appropriate standard of review when considering a defendant's motion to dismiss for failure to state a claim under Rule 12(b)(6) as follows:

Under the "notice pleading" standard embodied in Rule 8 of the Federal Rules of of the claim showing that the pleader is entitled to relief." As explicated in Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), a claimant must state a "plausible" claim for relief, and "[a] claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Although "[f]actual allegations must be enough to raise a right to relief above the speculative level, " Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), a plaintiff "need only put forth allegations that raise a reasonable expectation that discovery will reveal evidence of the necessary element." ...

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