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United States ex rel. Tran v. Detroit Land Bank Authority

United States District Court, E.D. Michigan, Southern Division

March 12, 2018

UNITED STATES OF AMERICA ex rel. BEVERLY TRAN, Plaintiff,
v.
DETROIT LAND BANK AUTHORITY, et al., Defendants.

          Avern Cohn District Judge

          REPORT AND RECOMMENDATION

          MONA K. MAJZOUB UNITED STATES MAGISTRATE JUDGE

         Beverly Tran (“Relator”) filed this qui tam action alleging that Defendants Detroit Land Bank Authority (“DLBA”), Detroit Land Bank Community Development Corporation (“DLBCDC”), the City of Detroit, Mayor Mike Duggan, Wayne County, and Title Source, Inc. violated the False Claims Act, 31 U.S.C. §§ 3729-3733. (Docket no. 30.) This matter is before the Court on Wayne County's motion to dismiss (docket no. 38), DLBA's and DLBCDC's motion to dismiss (docket no. 42), and Title Source's motion to dismiss (docket no. 44). Also before the Court are several procedural motions, including Relator's motion to compel corporate disclosures of DLBA and DLBCDC (docket no. 31), Relator's motion for entry of default against DLBA (docket no. 39) and DLBCDC (docket no. 37.), and Defendants' joint motion to stay discovery (docket no. 48).

         This matter has been referred to the undersigned for all pretrial proceedings, including a hearing and determination of all non-dispositive matters pursuant to 28 U.S.C. § 636(b)(1)(A) and/or a report and recommendation on all dispositive matters pursuant to 28 U.S.C. § 636(b)(1)(B). (Docket no. 47.) The Court has reviewed the pleadings and determined that the motions will be resolved without oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f)(2).

         I. RECOMMENDATION

         For the reasons that follow, the undersigned recommends that Defendants' motions to dismiss (docket nos. 38, 42, 44) be GRANTED, and that this matter be dismissed in its entirety. Accordingly, the pending procedural motions (docket nos. 31, 37, 39, 48) should be DENIED as moot.

         II. REPORT

         A. Background

         Relator Beverly Tran filed this matter under the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”), alleging that Defendants “through machination of fraudulent acquisition, administration, demolition, legal fees, levying of taxes, mortgages, all other real estate activities, and manipulation of public records, billed to the federal program of Hardest Hit Funds (HHF) of the Troubled Asset Relief Program (TARP).” (Docket no. 30, p. 3.) Relator asserts that she became aware of the alleged fraudulent scheme when she purchased a property at 4239 Tyler Street in Detroit, Michigan through DLBA's public auction website. (Id. at 4.)

         The FCA establishes a scheme that permits either the Attorney General, § 3730(a), or a private party, § 3730(b), to initiate a civil action alleging fraud on the Government. A private enforcement action under the FCA is called a qui tam action, with the private party referred to as the “relator.” Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 769, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). Such actions are brought in the name of the Government. § 3730(b)(1). When a relator initiates such an action, the United States is given 60 days to review the claim and decide whether it will “elect to intervene and proceed with the action, ” §§ 3730(b)(2), (b)(4); see also § 3730(c)(3) (permitting the United States to intervene even after the expiration of the 60-day period “upon a showing of good cause”). If the United States intervenes, the relator has “the right to continue as a party to the action, ” but the United States acquires the “primary responsibility for prosecuting the action.” § 3730(c)(1). If the United States declines to intervene, the relator retains “the right to conduct the action.” § 3730(c)(3).

         On April 14, 2017, the United States declined to intervene in this action, but reserved the right to intervene in this action for good cause at a later date, and to seek the dismissal of the Relator's action or certain claims. (Docket no. 10.)

         On June 15, 2017, Relator's attorney Crystal Hopkins filed a motion to withdraw as counsel on the basis of a “fundamental and irreparable breakdown in the attorney-client relationship” with Relator. (Docket no. 20.) The Court granted the motion to withdraw, and directed Relator to file an amended complaint “stat[ing], with particularity, the nature of her claims and entitlement to relief against each defendant.” (Docket no. 28.) Relator elected to proceed pro se and filed an amended complaint. (Docket no. 30.)

         Before the Court are Wayne County's motion to dismiss (docket no. 38), DLBA's and DLBCDC's motion to dismiss (docket no. 42), and Title Source's motion to dismiss (docket no. 44). Defendants contend that Relator's amended complaint fails to state a claim on which relief may be granted.

         B. ...


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