United States v. Schimmels (In re Schimmels)

On behalf of the United States of America, relators brought a qui tam action under the False Claims Act, 31 U.S.C. § 3729-3731 , against defendants, alleging fraud against the government. Relators received partial judgment against defendants who, in turn, filed for bankruptcy. Both relators and the government filed a Proof of Claim in the defendants’ bankruptcy ease and brought independent adversary proceedings therein concerning the dischargeability of the defendants’ False Claims Act debts. The bankruptcy court granted summary judgment in favor of the defendants in- the relators’ adversary proceeding, and the government’s .adversary proceeding was subsequently dismissed as res judicata. The government appealed its dismissal to this court. We affirm.

*877 I. FACTS AND PROCEDURAL HISTORY

A. The Qui Tam Action.

In 1989, Steven Rudd, Mark Lanterman, Howard Hamby, Debbie Gibson, and Henry Winburn (hereinafter collectively referred to as the “relators”) commenced an action in the United States District Court for the Eastern District of Washington under the False Claims Act against General Contractors, Inc. (“GCI”), a sewage and water projects contractor in Spokane, Washington, and…