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United States of America Ex Rel. Greg Hudalla v. Walsh Construction Company

January 21, 2012


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge


The relator in this False Claims Act qui tam suit, Greg Hudalla, has moved to bar forty-six witnesses identified in supplemental Rule 26(a)(1) disclosures served by defendant Walsh Construction Co. on December 22, 2011. The case is set for trial on January 30, 2012.

Hudalla alleges that Walsh engaged in fraudulent billing practices as the general contractor on a number of federally-funded housing projects and received government funds to which it was not entitled. Hudalla's claims concern eight projects: South Park Plaza, Beth-Anne Extended Living, Lake Park Crescent, Pershing Courts, Roosevelt Tower, St. Sabina Senior Housing, Westhaven I, and Westhaven II.

Hudalla worked on one of these projects, South Park Plaza, when he was employed by Walsh. He alleged in his original and amended complaint, the latter filed in February 2009, that Walsh had engaged in fraudulent billing practices on the South Park project and that when he raised concerns about this, he was told that this was the way Walsh typically billed. Hudalla's claims thus have never been limited to South Park: he alleged in the original and amended complaint that the fraudulent billing included, but was not limited to, not just South Park but several other projects, including Westhaven, Park Crescent, and two others. Am. Compl. ¶ 33. In June 2009, the Court denied Walsh's motion to strike allegations regarding projects other than South Park. See Order of June 23, 2009. In short, it has been clear from the outset of the litigation that Hudalla's claims concerned projects in addition to South Park.*fn1 See Summary Judgment decision at 10 (docket no. 198).

As the case progressed, there were pitched discovery battles involving, among other things, whether and the extent to which Hudalla could get discovery regarding projects other than South Park. In November 2010, the Court permitted Hudalla to obtain discovery beyond the South Park project. This discovery included projects other than those on which Hudalla now seeks to recover damages. Walsh argues, and Hudalla does not dispute, that it was not aware until after fact discovery closed -- specifically, when Hudalla provided his expert disclosures -- of which particular projects within the overall universe on which Hudalla would seek to recover damages. But Walsh certainly was aware of the composition of the universe of projects potentially at issue.

Fact discovery closed on April 9, 2011, and Hudalla provided his expert disclosures in July 2011. On March 3, 2011, the Court set the case for trial on January 17, 2012 and made it clear to counsel that this was a firm date. (On December 6, 2011, just after denying Walsh's motion for summary judgment, the Court reset the trial date to February 27, 2012 due to a conflicting trial, but about two weeks later, on December 22, 2011, the Court moved the date up to January 30, 2012.)

On December 22, 2011, Walsh served the supplemental Rule 26(a)(1) disclosures that are at issue in the present motion. In those disclosures, Walsh named a total of forty-seven witnesses whom it had not previously named in either its Rule 26(a)(1) disclosures or in response (or any supplemental response) to interrogatories served by Hudalla seeking identification of persons with knowledge regarding the claims or defenses in this case. These include:

- three Walsh employees, including its president; - two HUD representatives; - eleven project sponsor representatives; - seventeen subcontractor representatives; and - thirteen others.

Hudalla seeks to bar all of these witnesses due to the lack of timely disclosure.

Under Rule 37(c)(1),

[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.

Fed. R. Civ. P. 37(c)(1). "The exclusion of non-disclosed evidence is automatic and mandatory under Rule 37(c)(1) unless non-disclosure was justified or harmless."

Musser v. Gentiva Health Servs., 356 F.3d 751, 757 (7th Cir. 2003).

Rule 26(a)(1) requires a party, without awaiting a discovery request, to disclose (among other things) "each individual likely to have discoverable information -- along with the subjects of that information -- that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment." Fed. R. Civ. P. 26(a)(1)(A). Rule 26(e) requires a party that has made disclosures under Rule 26(a) to supplement or correct its disclosure . . . in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the ...

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