Gunn v. Shelton et al.

Filing 20

MEMORANDUM OPINION re 1 [SEALED] COMPLAINT. Signed by Judge Richard G. Andrews on 11/12/2013. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
UNITED STATES OF AMERICA
ex rei LA MAR GUNN,
Plaintiff,
Civ. No. 13-163-RGA

v.

NIKOLE SHELTON and
CREDIT SUISSE GROUP AG,
Defendants.

La Mar Gunn, Camden Wyoming, Delaware, Pro Se Plaintiff.

MEMORANDUM OPINION

November {2.,, 2013
Wilmington, Delaware

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Qui tam Plaintiff La Mar Gunn filed this action under the False Claims Act, 31

U.S.C. § 3730(a). (0.1. 1, 1f5). He sues on behalf of the United States of America. He
alleges violations under 18 U.S.C. § 1964 for civil fraud. Gunn appears prose and has
been granted leave to proceed in forma pauperis. (0.1. 4). The United States has

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declined to intervene in this action. (0.1.15). See 31 U.S.C. § 3730(b)(4)(B). The Court

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proceeds to review and screen the Complaint (0.1. 1) pursuant to 28 U.S.C. §

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1915(e )(2)(8).
This Court must dismiss certain in forma pauperis actions that are frivolous,
malicious, fail to state a claim, or seek monetary relief from a defendant who is immune
from such relief. See 28 U.S.C. § 1915(e)(2)(8). The Court must accept all factual

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allegations in a complaint as true and take them in the light most favorable to a pro se

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plaintiff. See Phillips v. County of Allegheny, 515 F.3d 224,229 (3d Cir. 2008). An

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action is frivolous if it "lacks an arguable basis either in law or in fact." Neitzke v.

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Williams, 490 U.S. 319, 325 (1989). Under 28 U.S.C. § 1915(e)(2)(B)(i), a court may

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dismiss a complaint as frivolous if it is "based on an indisputably meritless legal theory"
or a "clearly baseless" or "fantastic or delusional" factual scenario. Neitzke, 490 U.S. at
327-28.
The legal standard for dismissing a complaint for failure to state a claim pursuant
to§ 1915(e)(2)(B)(ii) is identical to the legal standard used when ruling on Rule 12(b)(6)
motions. See Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 1999). However,
before dismissing a complaint or claims for failure to state a claim upon which relief
may be granted pursuant to the screening provisions of 28 U.S. C. § 1915, the Court

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must grant Gunn leave to amend his Complaint, unless amendment would be
inequitable or futile. See Grayson v. Mayview State Hasp., 293 F .3d 103, 114 (3d Cir.
2002).
A well-pleaded complaint must contain more than mere labels and conclusions.

See Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007). The assumption of truth is inapplicable to legal conclusions or to
"[t]hreadbare recitals of the elements of a cause of action supported by mere
conclusory statements." Iqbal, 556 U.S. at 678. When determining whether dismissal
is appropriate, the Court conducts a two-part analysis. Fowler v. UPMC Shadyside,
578 F.3d 203, 210 (3d Cir. 2009). First, the factual and legal elements of a claim are
separated. /d. The Court must accept all of the Complaint's well-pleaded facts as true,
but may disregard any legal conclusions. /d. at 210-11.
Second, the Court must determine whether the facts alleged in the Complaint
are sufficient to show that the plaintiff has a "plausible claim for relief." Fowler, 578
F.3d at 211. In other words, the Complaint must do more than allege the plaintiff's
entitlement to relief; rather, it must "show'' such an entitlement with its facts. /d. A
claim is facially plausible when its factual content allows the Court to draw a reasonable
inference that the defendant is liable for the misconduct alleged. See Iqbal, 556 U.S. at
678. The plausibility standard "asks for more than a sheer possibility that a defendant
has acted unlawfully." /d. "Where a complaint pleads facts that are 'merely consistent
with' a defendant's liability, it 'stops short of the line between possibility and plausibility
of 'entitlement to relief."' /d. (quoting Twombly, 550 U.S. at 570).

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Because Gunn proceeds pro se, his pleadings are liberally construed and his
Complaint, "however inartfully pleaded, must be held to less stringent standards than
formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(internal quotation marks omitted).
Gunn asserts that jurisdiction is appropriate under the False Claims Act, 31
U.S.C. § 3730(a), and 28 U.S.C. § 1331. Section 3730(b) permits an individual to bring
a suit on behalf of the United States based on violations of 31 U.S.C. §3729, which
enumerates seven separate ways of making a false claim. The Complaint, however,
does not indicate under which of the seven subsections Gunn proceeds. The
Complaint does discuss and quote at some length various provisions of the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-64. Gunn seeks
injunctive relief, disgorgement, and civil monetary penalties. (D. I. 1, at 19-20).
Gunn alleges Defendants Nikole Shelton and Credit Suisse committed fraud in
connection with unlawful residential mortgage practices when they intentionally altered
securitization documents filed with the Internal Revenue Service and the United States
Securities and Exchange Commission. (D. I. 1, 1J2). It appears that, at one time,
Shelton worked at Credit Suisse f/k/a Fairbanks Capital and that she is currently
employed by GMAC Mortgage. (D. I. 1, 1J23).
The Complaint alleges that Shelton, under the direction of Credit Suisse,
engaged in the regular practice of falsifying thousands of mortgage related documents
beginning in 1998 to the present, with the intention of defrauding homeowners,
mortgage backed securities investors, and the United States. (D.I. 1, 1J2). According to
Gunn, Defendants have "tricked" courts throughout the United States into accepting

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counterfeit documents (0.1. 1, 1f3), and Shelton signed an order admitting that she and
others performed illegal actions with regard to mortgage related trust documents. (D. I.
1, 1f4, ex. 1). The Complaint refers to GMAC Mortgage's purported improper acts in
foreclosure actions in cases filed in Ohio, Florida, and Maine courts. (0.1. 1, 1f1f23-25).
Gunn asserts jurisdiction under the False Claims Act, 31 U.S.C. § 3730(a). The
False Claims Act provides that a private individual, known as a relator, "may bring a civil
action for a violation of section 3729 for the person and for the United States
Government ... in the name of the Government." 31 U.S.C. § 3730(b)(1 ). "[A]Ithough
qui tam actions allow individual citizens to initiate enforcement against wrongdoers who

cause injury to the public at large, the Government remains the real party in interest in
any such action." Minotti v. Lensink, 895 F.2d 100, 104 (2d Cir.1990). The qui tam
relator stands in the shoes of the government and is not acting on his own behalf. See
Stoner v. Santa Clara Cnty. Office of Educ., 502 F .3d 1116, 1126 (91h Cir. 2007). Here,

Gunn proceeds prose, is not a licensed attorney, and is not qualified to represent the
interests of the United States. See United States ex ref. Banks v. Aramark Corr.
Services, 2008 WL 3833459, *4 (W.O. Pa. Aug. 15, 2008). The law is clear that Gunn,

as the relator, may not proceed prose in this matter. See id. at *4-*5 (citing and
collecting cases). Therefore, the Complaint will be dismissed in its entirety.
The False Claims Act imposes important procedural requirements on the relator,
as follows: (1) the relator must serve the Government with a copy of the Complaint and
"all material evidence and information the person possesses"; (2) the relator must file
the Complaint in camera; (3) the Complaint must remain under seal for at least sixty

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(60) days; and (4) the Complaint may not be served on Defendants until a court so
orders. 31 U.S.C. § 3730(b)(2).
A relator's failure to comply with the False Claims Act service and filing
requirements may justify dismissal of the claim. See Erickson ex ref. United States v.
Am. lnstit. of Biological Sciences, 716 F. Supp. 908,911-12 (E.D. Va.1989) (court

looked at the mandatory language of the False Claims Act and finds a procedural
defect is fatal to a plaintiff's claim relying upon United States ex ref. Texas Portland
Cement Co. v. McCord, 233 U.S. 157, 162 (1913) that holds the failure to comply with

procedural requirement is fatal to Heard Act claim). See a/so United States ex ref. Pilon
v. Martin Marietta Corp., 60 F.3d 995, 998-99 (2d Cir. 1995) (holding relator's failure to

serve the Government and comply with filing requirements frustrated congressional
goals and warranted dismissal of False Claim Act claim). 1
Gunn failed to comply with the False Claims Act service and filing requirements.
The docket reveals that Gunn did not seek to file the Complaint in camera.
Nonetheless, the Clerk's Office opened the case under seal after reading in the
Complaint that Gunn had invoked 31 U.S. C. § 3730(a). Next, while Gunn served a
copy of the complaint upon the United States Attorney for the District of Delaware, he
did not serve it upon the Attorney General of the United States of America, as is
required. (See D.l. 7.) There is no docket entry reflecting that Gunn served the
Government with "all material evidence and information [he] possesses," as required by

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The Court notes that the Second Circuit raised the issue whether complying
with the procedural requirements was jurisdictional. /d. at 999 n.4. The Court decided it
did not have to decide the issue.

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§3730(b)(2), although the absence of such a docket entry does not prove such a failure.
Moreover, Gunn served the Complaint upon Defendants (D.I. 1, at 21; D.l. 6, 8), without
a court order, in derogation of the False Claims Act. See 31 U.S.C. § 3730(b)(2).
Therefore, the Court will also dismiss Gunn's False Claims Act claims for failure to
comply with the service and filing requirements.
Dismissal would also be appropriate because, despite the length of the
Complaint, it does not actually set out a cognizable False Claims Act claim. 2 Were this
the only defect with the Complaint, Gunn would be given the opportunity to file an
amended prose complaint.
It also appears that Gunn intended to raise a RICO claim. There is nothing in
the False Claims Act, however, that allows any private citizen to file RICO claims on

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Gunn filed his Complaint on January 31, 2013. The Government declined to
intervene on June 12, 2013 (D.I. 15), after the Court ordered it to advise the Court if it
elected to intervene. (D. I. 11 ). Before dismissing any claims premised upon the False
Claims Act, the Court must receive the written consent of the Attorney General of the
United States. See 31 U.S.C. § 3730(b)(1 ). The Third Circuit has not spoken to the
issue, but other Circuits have construed this provision to mean that such "written
consent" is only applicable in matters voluntarily dismissed. See United States ex ref.
O'Malley v. Xerox Corp., 846 F.2d 75 (4th Cir. 1988) {per curiam) ("Section 3730(b)(1)
is intended to reach voluntary dismissals and not dismissals based on substantive
grounds."); see also Salmeron v. Enterprise Recovery Systems, Inc., 579 F.3d 787, 797
n. 5 (7th Cir. 2009) ("Salmeron also claims that the district court violated 31 U.S.C. §
3730(b)(1) by failing to obtain the Attorney General's written consent before dismissing
the action. Such consent is not required, however, for suits like Salmeron's that are
involuntarily dismissed."); United States ex ref. Mergent Services v. Flaherty, 540 F.3d
89, 91 (2d Cir. 2008) ("[W]e have previously construed [§ 3730(b)(1 )] to apply 'only in
cases where a plaintiff seeks voluntary dismissal of a claim or action brought under the
False Claims Act, and not where the court orders dismissal."'). Given this Court's
findings herein, "written consent" is not required.

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behalf of the United States. Even if there were, because Gunn cannot represent the
government, the RICO claim would also be subject to dismissal.
Since Gunn cannot represent the United States, and has shown a lack of
compliance with the required False Claims Act procedures in a qui tam lawsuit, and
since the United States has declined to intervene, the Complaint will be dismissed in its
entirety pursuant to 28 U.S.C. § 1915(e)(2)(B). The only way Gunn could possibly cure
the identified defects would require, at a minimum, that counsel enter an appearance
and file an amended complaint. Thus, Gunn will be given until December 2, 2013, to
obtain counsel and have counsel enter an appearance, and file an amended complaint.
If no counsel enters an appearance and files an amended complaint by that date, the
Clerk will be directed to close the case.
An appropriate order will be entered.

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