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Sierra View Local Health Care District v. Influence Health, Inc.

United States District Court, E.D. California

August 5, 2016

SIERRA VIEW LOCAL HEALTH CARE DISTRICT, Plaintiff,
v.
INFLUENCE HEALTH, INC., and DOES 1 through 100, Defendants.

          ORDER GRANTING DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS (DOC. NO. 58)

         This matter came before the court on June 21, 2016, for hearing of defendant’s motion for judgment on the pleadings brought pursuant to Rule 12(c) of the Federal Rules of Civil Procedure with respect to plaintiff’s California False Claims Act claims. Attorney Robert Krase appeared at the hearing on behalf of plaintiff Sierra View Local Health Care District (“Sierra View”). Attorney Daniel L. Baxter appeared on behalf of defendant Influence Health, Inc. (“Influence”). Following oral argument, defendant’s motion was taken under submission. For the reasons stated below, the court will grant defendant’s motion for judgment on the pleadings.

         BACKGROUND

         On April 9, 2015, plaintiff Sierra View commenced this action in the Superior Court of California for the County of Tulare-South County Justice Center, Case No. PCU260332. (Doc. No. 1.) On April 8, 2015, defendant Influence removed this action from state court pursuant to 28 U.S.C. § 1441(b). (Id.)

         The case now proceeds before this court on plaintiff‘s first amended complaint (“FAC”), filed October 27, 2015. (Doc. No. 26.) In the FAC, plaintiff brings eight claims against defendant: (1) four breach of contract claims, (2) one unjust enrichment claim, (3) and three claims under the California False Claims Act (“CFCA”), California Government Code § 12650. (Id. at 1.) With respect to the CFCA claims, plaintiff brings these claims in its capacity as “a political subdivision of the State of California.” (Id. at 18, 21, 25, ¶¶ 68, 80, 94.)

         The FAC alleges in relevant part as follows. On February 26, 2010, plaintiff Sierra View entered into a Software License Agreement (“License Agreement”) to purchase software modules from the defendant Influence. (Id. at 3, ¶ 5.) Plaintiff also entered into a Software Maintenance Agreement (“Maintenance Agreement”) with defendant. (Id.) Defendant submitted notices of completion for software modules that were not finished, and in May 2011, defendant began wrongfully billing plaintiff maintenance fees for incomplete modules. (Id. at 5, ¶ 11.) Three years after beginning paying those maintenance fees, plaintiff discovered that only four of the twelve modules purchased from defendant were functioning. (Id. at 7, ¶ 17.) When defendant refused plaintiff‘s verbal and written requests for a reduction in the maintenance fees, plaintiff stopped payments. (Id. at 7, ¶ 18.) In January 2015, plaintiff’s counsel demanded a refund of the paid maintenance fees and notified defendant of plaintiff‘s CFCA claims. (Id. at 8, ¶ 19.)

         On May 20, 2016, defendant filed a motion for judgment on the pleadings, arguing that plaintiff lacked standing to pursue CFCA claims. (Doc. No. 58.) On June 7, 2016, plaintiff filed their opposition to defendant’s motion for judgment on the pleadings. (Doc. No. 59.) On June 14, 2016, defendant filed their reply to plaintiff’s opposition. (Doc. No. 60.)

         LEGAL STANDARDS

         Rule 12(c) of the Federal Rules of Civil Procedure provides that: “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” In reviewing a motion brought under Rule 12(c), the court “must accept all factual allegations in the complaint as true and construe them in the light most favorable to the nonmoving party.” Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009).

         The same legal standard applicable to a Rule 12(b)(6) motion applies to a Rule 12(c) motion. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). Accordingly, “judgment on the pleadings is properly granted when, taking all the allegations in the non-moving party’s pleadings as true, the moving party is entitled to judgment as a matter of law.” Marshall Naify Revocable Trust v. U.S., 672 F.3d 620, 623 (9th Cir.2012) (quoting Fajardo v. Cnty. of L.A., 179 F.3d 698, 699 (9th Cir.1999)). See also Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009) (stating that “judgment on the pleadings is properly granted when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law”). The allegations of the nonmoving party must be accepted as true, while any allegations made by the moving party that have been denied or contradicted are assumed to be false. MacDonald v. Grace Church Seattle, 457 F.3d 1079, 1081 (9th Cir. 2006). The facts are viewed in the light most favorable to the non-moving party and all reasonable inferences are drawn in favor of that party. Living Designs, Inc. v. E.I. DuPont de Nemours & Co., 431 F.3d 353, 360 (9th Cir. 2005).

         Courts have discretion both to grant a motion for judgment on the pleadings with leave to amend or to simply grant dismissal of causes of action rather than grant judgment as to them. Lonberg v. City of Riverside, 300 F.Supp.2d 942, 945 (C.D. Cal. 2004) (citations omitted); see also Pacific West Group, Inc. v. Real Time Solutions, Inc., 321 Fed.Appx. 566, 569 (9th Cir. 2008)[1]; Woodson v. State of California, No. 2:15-cv-01206-MCE-CKD, 2016 WL 524870, at *2 (E.D. Cal. Feb. 10, 2016). Generally, dismissal without leave to amend is proper only if it is clear that “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005)); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (noting that “[l]eave need not be granted where the amendment of the complaint . . . constitutes an exercise in futility”).

         ANALYSIS

         In their motion for judgment on the pleadings, defendant argues that plaintiff, Sierra View Local Health District, lacks standing to pursue their CFCA claims. (Doc. No. 58.)

         Under the CFCA, any person who submits a false claim to the state or a political subdivision may be sued for damages and civil penalties. Cal. Gov. Code, § 12651(a); State Ex Rel. Harris v. PricewaterhouseCoopers, LLP, 39 Cal.4th 1220, 1227 (2006). A political subdivision includes “any city, city and county, county, tax or assessment district, or other legally authorized local government entity with jurisdictional boundaries.” Cal. Gov. Code § 12650(b)(3).

         Under California Government Code § 12652, CFCA claims can only be brought by the Attorney General, the prosecuting authority of a political subdivision, or a private party in a quitam action. Cal. Govt. Code § 12652; Los Angeles Memorial Coliseum Commission v. Insomniac, Inc., 233 Cal.App.4th 803, 819 (2015). When a person has submitted a false claim upon political subdivision funds, or upon state and political subdivision funds, the “prosecuting authority of the affected political subdivision may bring an action.” Cal. Gov. Code § 12652(b)(1). See also State ex rel. Harris v. PricewaterhouseCoopers, LLP, 39 Cal.4th 1220, 1227 (2006); State ex rel. Dockstader v. Hambyi, 162 Cal.App.4th 480, 490 (2008) (stating that “CFCA authorizes the prosecuting authority of a local agency to pursue recovery only where its own political subdivision funds are at issue, or where both its own and state funds are at issue”). Under the statute, the “prosecuting authority” may be “the county counsel, city attorney, or other local government official charged with investigating, filing, and conducting civil legal proceedings on behalf of, or in the name of, a particular political subdivision.” Cal. Gov. Code § 12650(b)(4); see ...


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