The Tenth Circuit vacated and remanded an order dismissing a qui tam suit as barred by the statute of limitations. The district court found the case had been filed more than six years after the latest possible date an FCA violation could have occurred in relation to a federal loan, relying on the Tenth Circuit’s decision in Sikkenga. However, in the interim, the Supreme Court issued its decision in Cochise, which meant the 10-year limitations period should apply. Because the district court did not consider whether the complaint was also barred by the 10-year statute of limitations, the circuit court remanded the order for review of this issue.
Plaintiff Mark Tracy appealed the district court’s order dismissing his qui tam complaint and ordering him to pay attorneys’ fees to Emigration Improvement District and other defendants. EID cross-appealed the portion of the court’s order declining to hold Tracy’s attorneys jointly and severally liable for those fees.
In his complaint, Tracy alleged that EID made false statements to obtain a federal loan for a water project in violation of the False Claims Act. The district court concluded that Tracy’s reverse false claims allegation failed to state a claim upon which relief could be granted. The court also concluded that even if Tracy had stated a claim under his direct false claim theory—which the district court assumed but did not decide—the claim was nevertheless barred by the statute of limitations.
In its holding, the district court noted Tenth Circuit precedent requiring it to apply the six-year statute of limitations, rather than the 10-year timeline. The district court reasoned that any false statements that induced the government to disburse funding must necessarily have occurred before the date of the final disbursement of September 29, 2004. Because Tracy did not file his suit until September 26, 2014, the court found the six-year statute of limitations had passed.
The district court later entered an order requiring Tracy to pay $92,665 in attorneys’ fees and expenses to EID because EID had prevailed and because it found Tracy’s claims frivolous. The court explained that Tracy had urged the court to ignore prior cases and made arguments contrary to Tenth Circuit law. He also changed basic factual assertions each time his underlying facts were disproved. The court also noted that Tracy alleged “new damages” after the six-year period had expired without any factual support for those damages. The court also reasoned the case was frivolous because the terms of the loan documents were inconsistent with Tracy’s conclusory allegations. In general, the court found the lawsuit vexatious and intended to air personal grievances.
Despite its findings, the district court declined to hold Tracy’s attorneys liable for EID’s defense fees because because after being disciplined for their conduct related to a wrongful filing of lis pendens, the attorneys had not multiplied the proceedings unreasonably and vexatiously. Specifically, the district court concluded that Tracy’s conduct was not attributable to his attorneys because the attorneys filed Tracy’s clearly frivolous complaint based upon factual representations made by Tracy. The court also noted that, unlike Tracy, the attorneys had not used the lawsuit to attack EID and its business operations.
The circuit court vacated both orders. After Tracy and EID briefed the statute-of-limitations issue, the Supreme Court found that the ten-year statute of limitations period also applies to private relators, abrogating the court’s holding in Sikkenga. As noted, the district court did not evaluate the timeliness of Tracy’s complaint under this timeline, but only assumed that September 29, 2004, was the latest possible date that an FC violation could have occurred. Now that the 10-year limitations period applies, the Tenth Circuit remanded the decision to the district court to decide whether or not the complaint was barred by the 10-year statute of limitations.
Because the court vacated the dismissal of Tracy’s complaint, it also vacated the order on attorneys’ fees, noting that EID had not yet prevailed in its case.
