Whitney, Bradley & Brown, Inc. v. Kammermann, No. 1:2009cv00596 - Document 74 (E.D. Va. 2010)
Court Description: MEMORANDUM OPINION re Defendant's Motion for Summary Judgment. Signed by District Judge Claude M. Hilton on 7/7/10. (klau, )
Download PDF
<![CDATA[
Whitney, Bradley & Brown, Inc. v. Kammermann IN THE Doc. 74 UNITED FOR THE STATES DISTRICT EASTERN DISTRICT COURT OF VIRGINIA Alexandria Division I- L WHITNEY, BRADLEY & BROWN, JUL-?2OIO INC.) ) ) Plaintiff, V. ZJ CLERK, U.S. DISTRICT COURT ALEXANDRIA, VIRGINIA ) Civil Action No.# 01:09-CV-596 ) CHRISTIAN L. KAMMERMANN ) ) ) Defendant. MEMORANDUM This case is before Summary Judgment. employed full 6, 2009. Decisions, of time by WBB is industry. LLC reports expense (Ret.) Plaintiff 2006, Mr. ("CLKED") still on Defendant's Motion for Christian L. WBB from May Kammermann Kammermann was 2004 to $13,387.95. to the defense and began providing services to clients employed by WBB. On approximately reports through January formed CLK Executive Mr. Kammermann for reimbursement and was reimbursed twice about Col. employed by WBB, to WBB expenses. the Court involved in consulting services In May, CLKED while While Lt. OPINION CLKED for the He also 14 occasions, clients for same expense the submitted expense reimbursed for those Mr. same in the submitted time Kammermann submitted expenses, total sheets and was amount of to WBB (Mr. Dockets.Justia.com Kammermann was salaried, and not an hourly employee) contends were not accurate. timesheets submitted Mr. Kammermann contends that all to WBB were accurate. The Second Amended Complaint counts (the last Jurisdiction of While Complaint, two counts this Court incorporating ("Complaint") consists of six are both identified as is predicated upon the prior 95 28 paragraphs "Count V"). U.S.C. of § 1331. the the RICO claim is based on two allegations Defendant knowingly misrepresented to WBB the hours worked, which WBB that that he and that he submitted false expense reimbursement requests thereby receiving approximately $14,000 reimbursements 101. to which he was not entitled. As part of these schemes, in expense Specifically: Kammermann committed multiple predicate acts of mail fraud. WBB and other companies relied on Kammermann's material, knowingly fraudulent pretenses, representations and omissions of fact. Specifically, Kammermann knowingly misrepresented the hours he worked also sent for WBB travel and other expense companies to collect companies for the reports companies. to WBB and other reimbursement same travel from WBB and other expenses. In doing Kammermann caused WBB and other companies and deliver payment 102. As part of predicate these acts checks schemes, of wire relied on Kammermann's pretenses, Kammermann committed multiple fraud. WBB and other companies material, knowingly fraudulent of fact. Kammermann knowingly misrepresented the hours he worked also sent companies companies so, to deposit to Kammermann. representations and omissions Specifically, Kammermann for WBB and other companies. Kammermann travel expense reports to WBB and other to collect reimbursement from WBB and other for the same travel expenses. In doing so, Kammermann caused WBB and other companies and deliver payment checks to Kammermann. -2- to deposit Plaintiff contends Kammermann is double billing business of hours he Rule if there liable under RICO based on expenses and misrepresenting the number worked. 56 (c) provides is no genuine that summary judgment should be issue as to any material entered fact of the case. When a party fails to demonstrate the existence of an essential element of his case, matter of law. then summary judgment Anderson v. Liberty Lobby, should be granted as a Inc.. 477 242, 250 (1986) . The party bearing the burden of proof produce some quantum of evidence at the summary judgment stage. Thompson v. Kings Entertainment Co., 674 F. is U.S. required to Supp. 1194 (E.D. Va. 1987) . Kammermann was through January 6, was Manager, employed 2009. full-time by WBB From May 2004 through 2007, Army & Joint Concepts and Programs. through the end of his employment with WBB, Manager, Army & Joint There was Concepts no employment employment was at-will. 2006 through the From his his title During 2008 title was Senior and Programs. contract, and Kammermann's He was a salaried employee. termination of his approximately $558,674.69 benefits, from May 2004 employment, in salary and bonuses, he From May, received 401(k) matching, and ESOP payments. 2006 through the approximately $2,307,000 end of 2008, in business -3- Kammermann for WBB. developed In 2006, he developed about $642,000 in new business developed $1,396,000 in business $269,000 for WBB. In 2008, Kammermann started CLK Executive Decisions, during May 2006. Virginia law. companies CLKED is CLKED provided services to individuals and/or commerce. President of CLKED From May 2006 While he was headquarters to the end of Virginia office 2009. employment with WBB, to WBB in a located at VA office. He his travel submitted his expense payments Federal administrative aide's travel expense copy attached to his from to Kammermann's WBB Hampton, its Reston, Virginia office by Express. WBB contends that in 2008, Kammermann received about expense his to his CLKED clients by electronic WBB sent Executive Officer and travel expense reports envelope in the Hampton, Federal the Chief Kammermann Virginia by placing them in Reston, Express overnight employed by WBB, from May 2006 until January 6, Kammermann submitted his e-mails. ("CLKED") a business entity organized under engaged in outside employment as reports LLC developed located inside and outside Virginia and is engaged in interstate desk he he for WBB. in business for WBB. In 2007, reimbursements payments expenses, from his Mr. CLKED in fourteen separate $13,387.95 for which he clients. Kammermann was As in payments from WBB for also billed and received to these double reimbursed by his -4- instances, billed employer, WBB, and five CLKED clients: Schiebel, Electrovaya, and Security First. Freewave, Recon Robotics, Karamermann does not dispute these allegations. Kamraermann's employment with WBB required him to submit timesheets which detailed both direct and indirect hours of work performed by Mr. hours Kammermann on behalf of WBB. that are billed to clients of WBB; (i.e., time spent submitted WBB by Kammermann contends indirect hours are not for business development, non-billable activities). that WBB contends to WBB were on behalf of not scope of work on behalf of a CLKED, have been devoting to WBB. own benefit, clients WBB contends and that while of WBB, that he performed time he could Kammermann, for his from existing or potential WBB and otherwise diverted diverted opportunities. makes it unlawful by or associated with any enterprise activities of which affect, conduct or participate, enterprise's activity sheets for work that was detracted from the solicited business Section 1962(c) such time Kammermann performed full-time employee CLKED that the and other accurate. work performed by WBB, receiving a salary as travel, that services and collected money from clients within the Direct hours are ..." The engaged interstate or directly or affairs "for any person employed through or the foreign commerce, indirectly, a pattern of statutory elements -5- in, are: (a) to in the conduct racketeering racketeering of activity, (b) enterprise, 1962. of conducted through a pattern, and (d) "Racketeering activity" "predicate acts". consists of one or more the commission of Fourth Circuit has which affect a number was disputes involving allegations not fraud or impropriety, address situations of Inc. v. Northwestern Bell 229, 242 (1989). As concerned with but was long term criminal Telephone of attempting to conduct. Co.. Inc., repeatedly recognized HJ. 492 in the U.S. Fourth RICO's extraordinary remedies should not be to encompass ordinary or isolated allegations of fraud that often arise in commercial disputes. Flip Mortgage Corp. v. McElhone, 841 F.2d 531, Cir. 1988). The "pattern" requirement is more than incidental to the operation of the RICO statute. In providing a remedy of treble damages for injury "by reason of a violation of" RICO's substantive provisions, 18 U.S.C. § 1964(c), Congress contemplated that widespread fraud would be consequences. 158 (1969) See U.S. S.Rep. Code only a party engaging subject No. Cong. 617, to such 91st & Admin. News in serious Cong., ("One 1st Sess. isolated 'racketeering activity' was thought insufficient to trigger the remedies provided under the proposed chapter, largely because the net would be too large and the remedies disproportionate to the gravity of the offense."}; 116 Cong.Rec. 35193 (1970) (RICO "not aimed at isolated offender") (statement of Rep. Poff). The pattern requirement in § 1961(5) thus acts to ensure that RICO's extraordinary remedy does not threaten the ordinary run of commercial transactions; that treble damage suits are not brought against isolated offenders for their harassment and settlement value; and that the multiple state and federal laws bearing on transactions such as this one are not eclipsed or preempted. Menasco, Inc. v. Wasserman. 886 F.2d -6- § a observed: Congress expanded business See e.g. 538 (4th of an enterprise. In enacting RICO, Circuit, U.S.C. two or more predicate acts ordinary business business 18 To establish liability under RICO, in a manner constituting a pattern, the affecting an an effect on interstate commerce. plaintiff must prove As (c) 681 (4th Cir. 1989). Section activity" the of 1961(5) as last of "at least RICO defines two acts of a "pattern of racketeering racketeering activity which occurred within ten years a prior act of means more of racketeering activity." than simply the commission of after . . the commission However, two acts . a of "pattern" racketeering activity. The Supreme two predicate in H.J. S.Ct. Inc. 2893, Court addressed acts v. are the necessary in order Northwestern Bell 2906, 106 requirement Tel. L.Ed.2d 195 that more than to establish a pattern Co., (1989). 492 The U.S. 229, 109 Court held: A pattern is not formed by 'sporadic activity,' and a person cannot be subjected to the sanctions of title IX simply for committing two widely separated and isolated criminal offenses. Instead, Mt]he term 'pattern' itself requires the showing of a relationship1 between the predicates, and of the threat of continuing activity. It is this factor of continuity plus relationship which combines to produce a pattern. H.J.. Inc., 492 concurring) U.S. at (internal The Supreme 239, citations Court themselves Continuity is to, 2900 (Scalia, J., omitted). Inc. that also be shown that or that "[t]o the they otherwise continuing racketeering activity." an essential racketeering activity" at and quotations it must amount constitute a threat of, 24 0. S.Ct. further held in H.J., establish a RICO pattern predicates 109 element of requirement the necessary to Id. "pattern of establish a RICO claim. In H.J. Inc., the Court described two -7- at classifications of "continuity plus for purposes of schemes. a Id., "series of period of includes relationship" RICO: at at A "closed-ended" while an of extend[s] . . the allegation of a "continuity" "pattern" to establish that favorably to the of the Plaintiff constitute . is one which [conduct] of that by its repetition." employee who was the alleged actions of activity constitutes Here, the to demonstrate At most, facts viewed most that Defendant's involves a threat of continuity. threat of a regular way of conducting an of for criminal Technology Libertad v. Welch, Harbridge Merchants exists Fin. 53 Group, F.3d 428 Servs.. 20 67 (1st F.3d 463 Cir. F.3d 771 -8- purposes. (2d Cir. 1995); are part GICC Capital 1995); Viacom. (7th Cir. Courts repetition or whether the predicates that a fired. whether the predicates are an enterprise the either an open ongoing legitimate business, v. 4 92 the Plaintiff the Complaint describes will generally consider whether a specific Corp. in which over a substantial racketeering activity, fail either. An open ended scheme exists, is one necessary to sustain an ended scheme or a close ended scheme. disloyal "pattern" "open-ended" scheme future with a threat in order to establish that Defendant have actions and "open-ended scheme" continuity into the schemes in a 240-42. Thus, needs 241-242. "threat nature projects U.S. "closed-ended" related predicates time," the which would result 1994); Inc. v. Allwaste. Local Inc. 372 v. v. Hecht, 65 F.3d 1523 Detroit Newspapers. 956 (9th Cir. F. Supp. 1995); 753 Teamsters {E.D. Mich. 1997). Courts have refused to racketeering activity was find open ended continuity where not actually continuing when the court considered the defendant's motion to dismiss. No. Civ. A-96-3957, (noting that recent "[a] WL 627590 (E.D.Pa. alleged racketeering activities Intern. Union, 1996) Spano, (unpublished) Inc. 633 v. in October 1995"); most Cf., United Food and Commercial Workers F.Supp.2d 214, 227 (E.D. Va. 2008) (noting the alleged racketeering activity continued even after the filing of the Complaint). Although Plaintiff makes a pro-forma allegation of of continued racketeering activity, there activity continued beyond December, 2008 was McMahon v. full year has now passed since defendants' Smithfield Foods, that 1996 the continuing at matter. There activities is the time continue to is fatal to 155 Menasco, Wasserman, In Anderson, v. the the failure a RICO claim. for Advancement. Inc. or that that the such activity filed in this any of the the present. In the Fourth Circuit, continuity is no evidence that the Complaint was absolutely no evidence a threat F.3d 500, 506 to allege a threat of See Anderson v. {4th Cir. Foundation 1998)(citing 886 F.2d 681, 684 Fourth Circuit held that the District -9- (4th Cir. 1989)). Court for the Western District judgment against of Virginia erred in entering default the defendant for discovery violations plaintiff's RICO claim because plaintiff upon which relief could be granted. The though plaintiff alleged the requisite (mail mail fraud), it did not find services to defraud [plaintiff] unlawful threat activity whose to F.2d at scope social well-being." 681. See "that also Menasco, 886 federal * * make out an 506 telephone and evidence[d] F2.d at it ^ongoing a special (quoting Menasco, 685 is ("If 886 the pattern to prevent this type fraud from being transformed into a cannot establish any ongoing "open ended" scheme or any 18 consists U.S.C. of a both Plaintiff § series 1961. of scheme sufficient "ongoing unlawful scope and persistence pose a special being." the RICO claim.") Plaintiff whose even two minimum predicate acts * requirement has any force whatsoever, of ordinary commercial Court held that the use of at to failed to state a claim and persistence pose Id. as threat to activity to social well- The predicate acts alleged by Plaintiff expense and certain of reports his submitted by Defendant CLKED clients, received reimbursement. The There a threat of ongoing racketeering is no evidence of activity. activities for which he In the Fourth Circuit, supporting an inference of persistence pose a special the an ongoing threat took place during 2008. failure scheme to the -10- to establish facts "whose scope and social well-being" is to fatal to a RICO claim. to Plaintiff's Thus, and . . . attempt there Menasco. Plaintiff circuits, 155 F.3d at 506. This is fatal to establish an open ended scheme. no "pattern of plaintiffs must statute." tests is Anderson, 886 racketeering activity existed seek recourse outside F.2d at the RICO 683. also cannot establish a close ended scheme. including the Fourth Circuit, have for determining whether a pattern of Most adopted multi-factor racketeering has sufficient closed-ended continuity to satisfy the requirement of a "pattern" of activity. length of time ommitted, (b) over which (f) occurrence Corp. the v. (d) of 868 claim." scale, F.Supp. 828 separate F.2d The 88 6 schemes, 1060 (CD. F.2d 970 1071, 1073 (4th Cir. factors are (e) and schemes 685. whose (g) the Corp. 1994) 1987) scope -11- the (noting that to that federal scheme. S HMK ordinary RICO Of particular importance of v. (citing "to prevent transformed into a F.2d at the number of (7th Cir.1986)); applied the the variety of 111. 804 duration and number of victims reserved for those (c) (a) were See Resolution Trust 1047, fraud from being Menasco. acts has adopted an approach similar in Morgan). commercial alleged predicate injuries. Bank of Waukeaan. Walsev, include: the number of participants, distinct Fourth Circuit applied the the presence of & K Chevrolet, Morgan v. factors generally the number of predicate acts, predicate acts, victims, The Id. and persistence is the "RICO set them is above the The routine." length of Id. time is a whether a pattern exists. Co., 195 492 U.S. 241, See H.J. 42, 109 (1989)(emphasizing that concept"). of 229, In the the alleged v. aspect to determine Inc. S.Ct. v. Northwestern Bell Tel. 2893, "continuity" is 2901-02, dispositive. Wollersheim, 971 the length of 366-67 long term criminal conduct to which RICO was apply); Primary Care 1208, that 1215-16 (8th Cir. 1993) Wisdom v. First Midwest Bank. time PHP Healthcare not intended to Corp.. 986 F.2d (impliedly establishing per se racketeering activity must last 167 2d (9th Cir. few months does reflect Investors v. L.Ed. See Religious F.2d 364, (pattern of activity lasting only a 106 "centrally a temporal Eighth and Ninth Circuits, scheme may be Technology Ctr. 1992) "central" for more F.3d 402, rule than one year); 407 (8th Cir. 1999) (finding ten month period too short to establish closed-end pattern). "conduct The Third Circuit has held on several occasions lasting no more than twelve months standard for closed-ended continuity." 1280, 1293 (3d Cir.) Block Tax Servs.. (citing cases). Inc., 22 [does] Tabas v. not meet Tabas. 47 See also Peterson v. F.Supp.2d 795, 805 (N.D. that 111. the F.3d H & R 1998) (finding no pattern despite more than 14,000 victims where single mail fraud scheme The years is lasted only thirteen weeks). Fourth Circuit has insufficient found that a scheme lasting only two to establish a closed-ended scheme GE -12- Investment (4th Cir. Private 2001), Placement Partners II v. Parker. and has affirmed a judgment of 247 this dismissing a RICO claim involving only seven months. v. J.C. Pro Wear, (unpublished). v. the 94-1498, In Menasco. (4th Cir.1989), where Inc., the Court Inc. Baltimore and Ohio R.R., 890 Cf.. and Commercial Workers (E.D. Va. 2008) (noting that The courts of F.2d present Group. (1996), For example, F.3d 463 681, the Second Circuit as substantial period of racketeering activity. 684 year. 633 Cf. Walk (4th Cir.1989) Inc. v. ten United Food F.Supp.2d 214, 227 the alleged racketeering activity activity continued Complaint). 1995), to the alleged scheme in GICC Capital (2nd Cir. Third Circuit has held, a F.2d 1995) other Circuits have also been reluctant eleven month period did not not 690 the relatively short period that case. 67 over one 688, Union, find the necessary continuity where encompasses See Leonard find a closed ended scheme but noting that the 886 543 Court (4th Cir. activity occurred over Intern. filing of to Smithfield Foods. established over 18 months, even after the 508894 Wasserman. took place (RICO claim established where also, v. refused alleged activities year period); 1995 WL F.3d cert, is alleged in the Corp. denied, v. Tech. 518 U.S. Fin. 1017 held that an alleged scheme over an satisfy the pattern requirement. a matter of time Hughes v. law, that The twelve months for alleging a pattern of Consol.-Pa. -13- Coal Co.. 945 F.2d is 594, 611 (3rd Cir. 1991), cert, denied 504 U.S. The alleged double billing activities in this place over a twelve month period from January, December 955 2008 (1992). case took through 2008. All inferences which can fairly be drawn from the Complaint and the evidence indicate a limited number of predicate acts, weighing against the establishment of a RICO claim. contends that, Plaintiff on approximately fourteen separate instances, Kammermann double billed expenses, and that such double-billing was accomplished through mail and/or wire fraud. accuracy of over a twelve month period is this, fourteen predicate acts insufficient to make out a case for RICO. In determining whether predicate acts racketeering activity as Fourth Circuit mail and wire fraud, inasmuch as 155 F.3d at it will be 506. find civil RICO liability for a the The The involved are the unusual in its the fraud service at least Fourth Circuit hesitates "pattern of to racketeering predicated on acts of mail and wire fraud because of sheer scope of wires." claim under RICO, is especially cautious when the acts Anderson. activity" form a pattern of required for civil that does not enlist the mails and wires twice. Assuming the Securelnfo fraud cases Corp., 3 87 involving use F.Supp.2d at limited variety of predicate acts, mail fraud as a predicate act, of the mail and 614. and the reliance upon weighs heavily against a finding -14- of a "pattern of racketeering activity." Block Tax Servs.. Inc., 22 F.Supp.2d 795, (finding no pattern despite more mail fraud scheme liability company. individuals expense Peterson v. 805 H & R {N.D.Ill.1998) than 14,000 victims where single lasted only thirteen weeks). The participants other See consist of Defendant and his There is involved reimbursement no indication that in creating or requests or false limited there were any submitting either false timesheets. The limited number of participants weighs against the establishment of a valid RICO claim. In the suffice the Fourth Circuit, to demonstrate level of Tudor Assoc. conduct v. (unpublished), scheme AJ the necessary conduct to support 36 victims may alleged does a RICO F.3d 1094 Court held that despite lasted over 10 years recovery because the & AJ Servicing, did not rise to the single that a limited number of the not rise recovery. (4th Cir. fact and involved millions to In 1994) that the of dollars, it level of conduct necessary to support a RICO it only involved a injury on a single victim. similar conclusion, holding that single scheme to inflict a The Seventh Circuit reached a a small number of fraudulent mailings directed to a single plaintiff is not be sufficient to establish a pattern. F.3d v. 1041, 1049-50 El-Shamari, 217 Corley v. (7th Cir. F.3d 225 Rosewood Care 1998). (4th Cir -15- Center. See Al-Abood ex 2000) Inc.. rel. 142 Al-Abood (limited number of victims weighing against Here, it appears one victim - itself - misrepresenting his WBB and five Robotics, that of reports victim - report At most, there Freewave, Electrovaya, Recon a misrepresentation of are six: (While Defendant denies submitted false To the extent billing or incorrect, there time reports that Plaintiff hours worked, is to any contends there is one WBB. in order to obtain expense existence of a single establishment of Servicing. 36 Peterson v. (N.D. expense employer. The Complaint alleges a single made attempting to establish submitted to WBB were that Defendant there was is and Security First. entity other than WBB.) that to his CLKED clients: that any time RICO). Plaintiff the double time Schiebel, no evidence finding of 111. H reimbursements from WBB. scheme ways very heavily against a RICO pattern. F.3d 1094 (4th Cir. Tudor Assoc. 1994) & R Block Tax Servs., 1998) scheme misrepresentations v. AJ 22 F. fraud scheme & AJ see also Supp.2d (finding no pattern despite more victims where single mail the (unpublished); Inc., The 795, 805 than 14,000 lasted only thirteen weeks). The Complaint is silent as to any allegation concerning any damage suffered by any entity or Complaint fraudulent alleges that WBB was activity, individual. caused to thereby alleging a -16- At most, issue single checks the based upon injury to a single victim. Considering all Plaintiff, this heartland of case facts "does not fraud cases Investment Private 551 the (4th Cir. With the jurisdiction in the fall to warrant Placement in this RICO Partners claim resolved, case and dismissed without prejudice appropriate Order shall the favorable 'sufficiently outside 2001)(citing Al-Abood. federal light most treatment.'" II v. 217 F.3d at there state Parker. is 247 no diversity claims should be to be pursued in state court. issue. United States District Judge 7 , F.3d 543, 238). /§/ July Virginia 2010 -17- the GE Claude M. Hilton Alexandria, to the An
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
