"Catastrophic" Construction?: The Government's Continued Payment Defeats Materiality

This January, the Eastern District of Pennsylvania rejected a subcontractor's doomsday allegations that a general contractor had submitted false claims for defective construction work on a project to build a new school on the Marine Corps Base in Quantico, Virginia. In Chowns Group LLC v. John C. Grimberg Co., the court held that notwithstanding the subcontractor's assertions that the defects were so severe as to create a "catastrophic safety hazard," the alleged non-compliance was not material to the government's decision to pay. The subcontractor, a company called Chowns, also brought a novel retaliation claim under Section 13730(h)(1) of the False Claims Act (FCA), claiming that the general contractor, Grimberg, terminated Chowns in retaliation for Chowns' complaint about the construction defects to the government. Both claims failed and were dismissed at the pleadings stage.