Wednesday, September 12, 2012
C.A. Revives Claim Lawyer Obtained Fraudulent Fee Waivers
By KENNETH OFGANG, Staff Writer
The Court of Appeal for this district has reinstated a lawsuit charging a well-known litigator of disability access cases with filing fraudulent applications for fee waivers.
Div. Four Monday reversed a Los Angeles Superior Court judge’s ruling that Morse Mehrban could not be sued under the qui tam provisions of the California False Claims Act because it was publicly known that his client, prolific litigant Thomas Mundy, had repeatedly sought and obtained fee waivers. Justice Nora Manella said that Mao’s Kitchen, Inc. presented sufficient evidence to avoid summary judgment on its CFCA claim.
The CFCA, modeled after the federal False Claims Act, permits a private citizen who has knowledge of fraud being perpetrated against the government to sue on its behalf for civil penalties and treble damages. If the suit is successful, the private litigant—called a relator—keeps a percentage of the recovery.
Qui Tam Cross-Complaint
Mao’s Kitchen, which operates restaurants in Hollywood and Venice, filed a qui tam cross-complaint against Mundy and Mehrban after being sued for disability access violations. In that cross-complaint, filed in December 2009, it alleged that Mehrban had filed more than 200 lawsuits on Mundy’s behalf, and that in the bulk of the cases, fee waivers on grounds of indigence were asked for and granted.
The assertions of impecuniousness were prevarications, Mao’s Kitchen claimed, because Mundy had earned a substantial income by bringing, and generally settling, disability access suits. They noted that Mundy had testified in one case that he spent up to $70 per day eating at restaurants, and in another that he had earned $65,000 in one year from settlements.
They also alleged that Mehrban obtained fraudulent fee waivers in other cases, although no other clients were named.
Mehrban and Mundy demurred on the ground that the claim was based on publicly disclosed information, of which Mao’s Kitchen was not the “original source.” Mehrban also demurred on the ground that has counsel, he had no obligation to pay filing fees.
Mao’s Kitchen replied that the gravamen of its claim was based on non-public information, and alternatively that it was the original source of the information, which the company and its attorneys had sought out by research in court files and communication with other litigation targets and their counsel.
Judge Conrad Aragon, who has since retired, overruled the demurrer. Mehrban then moved for judgment on the pleadings, and after that was denied, moved for summary judgment.
Judge Diedre Hill granted summary judgment, finding that the qui tam claim was based on public information. She cited information found in media reports on the various cases; court dockets; a 2009 letter by defense attorney James Link to then-Assistant Presiding Judge Lee Edmon, complaining that Mehrban was abusing the fee waiver process; and lodged deposition transcripts in which Mundy acknowledged the income that he draws from settlements.
Manella, however, said there was “no public disclosure of the information critical to appellant’s claims.”
The media reports, she explained, dealt with disability access suits, but not with fee waivers. The fee waiver requests, the justice noted, were confidential, and Link’s letter to Edmon was not made public.
As to the deposition transcripts, Manella went on to say, they should not be considered public because they were merely lodged, not filed, with the court.
“The temporary, often voluminous nature of lodged documents persuades us that lodged documents should not be treated in the same manner as filed documents for purposes of the public disclosure jurisdictional bar,” the justice wrote. Treating those documents as publicly disclosed, she said, “would not be compatible with the legislative purpose of encouraging relators to assist in the investigation and prosecution of false claims. “
Anton Dragan represented Mao’s Kitchen, while Julie Mehrban represented Morse Mehrban, who did not return a MetNews phone call. Mundy did not appear in the Court of Appeal.
The case is Mao’s Kitchen, Inc. v. Mundy, 12 S.O.S. 4648.
Copyright 2012, Metropolitan News Company