Facts

Plaintiffs Dora Figueroa and Francisca Pages filed a qui tam action under the False Claims Act for Medicare fraud. The United States of America prosecuted the case and settled with the qui tam defendants for $7,585,623. Pursuant to that agreement, the defendants were to deliver a recordable deed of trust on certain property in Corona Del Mar in favor of the U.S. to act as collateral and to secure their performance on their payment obligations under the settlement agreement.

The qui tam defendants thereafter defaulted on their payment obligations under the settlement agreement and filed for bankruptcy. After plaintiffs filed an administrative claim against the government, plaintiffs and the government entered into a settlement agreement in which the U.S. agreed to give plaintiffs a portion of what it received from the qui tam defendants in bankruptcy and any additional payments they would make under the qui tam settlement agreement.

Plaintiffs then initiated the instant action against the U.S. for negligence and breach of the covenant of good faith and fair dealing.

PLAINTIFFS' CONTENTIONS:
Figueroa and Pages contended that the government failed to correctly draft the deed of trust, resulting in a $1,439,313.76 recovery instead of the almost $7 million recovery because the negligently drafted deed resulted in forfeiture of a "secured debtor" position in bankruptcy court.

DEFENDANT'S CONTENTIONS:
The U.S. contended that summary judgment was warranted because the agreement contained a release that barred the claims in this action.

Result

The court granted the United States' motion for summary judgment, finding that the claims were released by the agreement.

Other Information

FILING DATE: March 25, 2014.