110 F. 3d 72 - United States Estrada v. Northrop Corporation

Before: BROWNING and KLEINFELD, Circuit Judges, and MERHIGE,* Senior District Judge.

MEMORANDUM**

Estrada presented both the "double billing" and the "advance payment" arguments in her statement of genuine issues of material fact and in her opposition to summary judgment. We therefore proceed to the merits of her appeal.1

Summary judgment was properly granted for Northrop. Estrada presented no evidence of double billing. Read in the light most favorable to Estrada, the allusions to double billing in the McConnell and McRorie declarations were completely undermined by their respective supplemental declarations. Laviola's deposition did not suggest that double billing occurred, and while Captain Kelly initially thought double billing might have occurred, he found no evidence of it after his investigation. The only remaining evidence of double billing was the $24 million and $22 million credits given to the Air Force by Northrop, but nothing in the record indicates these credits were given because of double billing.

Estrada also failed to create a triable issue regarding the advance payment theory. The possibility that Northrop's use of the borrow/payback mechanism may have violated the production contract does not establish a false claim. See United States ex rel. Butler v. Hughes Helicopters, Inc., 71 F.3d 321, 326 (9th Cir.1995) (mere failure to adhere to contractual and military specifications raises questions of contract interpretation rather than false claims). Nor does a demand for payment before the payment is actually due automatically constitute a false claim. The case cited by Estrada to the contrary, Young-Montenay, Inc. v. United States, 15 F.3d 1040, 1043 (Fed.Cir.1994), addressed the issue of damages, not falsity. In contrast to Young-Montenay, this case involved no altered invoice or other direct evidence of falsity. Northrop's claims under the spares contract were not false: the Air Force received what it paid for--a spare part. The fact that the spare part may have been transferred out of the inventory of parts manufactured under the production contract does not establish falsity or fraud, so long as Northrop properly accounted for the transfer or replaced the part. There is some evidence that Northrop's inventory and accounting system worked less than perfectly, but there is no evidence the system gave rise to claims that were knowingly false.

AFFIRMED.