PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GEORGE VESSELL,

Plaintiff-Appellant,

and

UNITED STATES OF AMERICA, ex

relatio,

Plaintiff,

v.

DPS ASSOCIATES OF CHARLESTON,

INCORPORATED, d/b/a Remax

Professional Realty, a/k/a DPS of

Charleston, Incorporated;

CANDACE N. PRATT, Broker-InNo. 97-1484

Charge; DAVID FINN; JANINE

TOWNSEND; FRED RICE,

Defendants-Appellees,

and

THOMAS J. GIBBONS; BILL KONEFAL;

HOWARD JACKSON; CENTURY PEST

CONTROL, INCORPORATED; FRANK

THOMPSON; THOMPSON & SONS;

PRUDENTIAL CAROLINAS REALTY;

RESULTS REALTY; AGENT-OWNED

REALTY; ANITA DUNN,

Defendants.

Appeal from the United States District Court

for the District of South Carolina, at Charleston.

C. Weston Houck, Chief District Judge.

(CA-95-1887-2-12)

Argued: December 4, 1997

Decided: July 8, 1998
Before WILKINSON, Chief Judge, and ERVIN and

MICHAEL, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Ervin wrote the opinion, in

which Chief Judge Wilkinson and Judge Michael joined.

_________________________________________________________________

COUNSEL

ARGUED: Gregg Meyers, PRATT-THOMAS, PEARCE, EPTING

& WALKER, P.A., Charleston, South Carolina, for Appellant.

Charles R. Norris, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Charleston, South Carolina, for Appellees. ON

BRIEF: Craig E. Burgess, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Charleston, South Carolina, for Appellees.

_________________________________________________________________

OPINION

ERVIN, Circuit Judge:

This case comes before us on the district court's grant of judgment

as a matter of law for the defendant-appellee, DPS Associates, a real

estate agency doing business as Re/Max Professional Realty

("Re/Max"). The plaintiff-appellant, George Vessell, had claimed

breach of contract under state law and retaliatory discharge under the

False Claims Act, 31 U.S.C. § 3729 et seq. (1994). The district court

correctly found that any contract between Vessell and Re/Max was

saturated with fraud and thus unenforceable, and that Vessell, who

was at best an independent contractor, could not recover for retaliatory discharge under the False Claims Act because its coverage

extends only to employees. We therefore affirm the district court's

resolution of Vessell's claims.

I.

When the United States decided to close its Navy base in Charleston, South Carolina, the government, under its Housing Assistance

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Program ("HAP"), acquired the homes of government employees

forced to sell their homes because of the closing. Under the HAP, the

United States would manage and sell the homes over time to avoid

having to sell all of the homes in the depressed market that likely

would result from the base closing.

The United States Army Corps of Engineers, which oversaw the

HAP, contracted with various real estate agencies to manage and sell

the homes. One of the real estate agencies was the Re/Max agency in

this case, which operated under the supervision of Broker-In-Charge

Candace Pratt. The winning Re/Max bid was one of three submitted

by that Re/Max office, and had been prepared by Re/Max agent Tom

Gibbons.

In preparing the bid, Gibbons requested that George Vessell estimate how much he would charge for the lawn maintenance and

upkeep on the HAP properties. Vessell had been a Re/Max agent himself at one time, and had since started a landscaping company. His

company maintained several yards for Gibbons and other Re/Max

agents. Vessell estimated to Gibbons that it would cost $43 per yard

for the initial yard cutting and $20 every two weeks to maintain the

yards. Vessell stated that Gibbons asked him not to provide a quote

for any of the other agents in the Re/Max office who were preparing

bids.

In the bid he submitted to the Corps of Engineers, Gibbons quoted

$0 for the initial cutting and $12 for recurring cuttings. He stated that

he did this to "get the contract for Re/Max." In March, 1994, the

Corps of Engineers opened the sealed bids and awarded one of the

contracts to Re/Max based on Gibbons's bid. One of the other bidders

disputed the award; the bid acceptance was not finalized until July,

1994. The one-year contract had renewal options for two more years.

Gibbons informed Vessell that he had bid the yardwork at $0/12

soon after he submitted the bid. Vessell argued with him about the

amount and prepared a breakdown of his costs to show Gibbons why

he could not cut the yards for that amount and still make a reasonable

profit. Vessell refused to cut the lawns at that amount. Gibbons suggested that Vessell recover the price by bid-rigging and stealing appliances to make up the difference. When Vessell protested, Gibbons

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said that landscapers were easy to come by and that Vessell would not

get the HAP job if he did not cooperate.

Vessell had engaged in a similar enterprise with Gibbons in the

past. Vessell would remove "abandoned" personal property and appliances from bank-repossessed homes and sell them at Gibbons's direction. Vessell maintained that Gibbons said the removals were

authorized and that he, Vessell, did not know otherwise, but that the

current enterprise suggested by Gibbons made Vessell realize that the

prior actions had probably been illegal.

Vessell decided to turn Gibbons in to the FBI. He considered, but

dismissed, the idea of talking to Broker-in-Charge Pratt, because his

previous experience with her led him to believe she would be ineffective in dealing with Gibbons. Vessell contacted FBI agent Quick, with

whom he worked over the next several months. Quick directed Vessell to cooperate with Gibbons and not to tell Pratt about Gibbons's

practices. Vessell thus sold appliances, as suggested by Gibbons, and

created an apparent "slush fund" out of which Gibbons could pay

legitimate expenses incurred in the management of the HAP properties. The FBI paid Vessell's fees for the lawn maintenance; he did not

take monies out of the slush fund.

Vessell started cutting lawns around August 1, 1994. The FBI conducted its "sting" operation against Gibbons in November. The FBI

did not direct its investigation against any other members of the

Re/Max staff, and Re/Max continued to operate under the HAP contract, which was renewed for the two years permissible under the

original contract with increased rates awarded for lawn maintenance.

After the sting, Vessell sought to continue cutting HAP lawns for

Re/Max, but received no response from the Re/Max office. According

to Vessell, Re/Max managed and marketed an average of 180 homes

at a time under the HAP contract. When he could not get the HAP

work, he gave up landscaping and has since become a private investigator.

Vessell brought suit under the False Claims Act against Gibbons,

Re/Max, and various Re/Max agents. The United States intervened,

as it is entitled to do in False Claims Act cases, and settled its claims

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against Re/Max, Candace Pratt, Gibbons, and other interested parties

on February 28, 1997.

Vessell's primary claim was that he should be permitted to carry

out the terms of the contract he allegedly made with Re/Max through

Gibbons. He further argued that Re/Max retaliated against him in violation of the False Claims Act by refusing to carry out the terms of

his contract. Vessell's action went to trial in March, 1997, and the district court directed a verdict against Vessell. The United States chose

not to intervene in Vessell's appeal from that verdict.

II.

The district court had jurisdiction over Vessell's False Claims Act

claim under 31 U.S.C. § 3732(a) and exercised supplemental jurisdiction over Vessell's state law claims under 28 U.S.C.§ 1367. We have

jurisdiction over Vessell's timely appeal under 28 U.S.C. § 1291.

III.

Vessell first contends that the district court erred in dismissing his

breach of contract claim. The district court directed a verdict that no

contract existed between Vessell and Re/Max because 1) Vessell had

not demonstrated a meeting of the minds between the parties; 2) there

was no mutuality of obligation; and 3) Vessell's contract, if any, was

between him and Tom Gibbons, a Re/Max agent, and not between

him and the Re/Max agency. The district court further held that any

contract the parties could be said to have had was saturated with fraud

and thus unenforceable.

"Judgment as a matter of law is proper when without weighing the

credibility of the evidence there can be but one reasonable conclusion

as to the proper judgment." Benner v. Nationwide Mut. Ins. Co., 93

F.3d 1228, 1234 (4th Cir. 1996). Our review of the district court's

decision is plenary. Id. We must view the evidence in the light most

favorable to the non-moving party. Westfarm Assocs. Ltd. Partnership

v. Washington Suburban Sanitary Comm'n, 66 F.3d 669, 683 (4th Cir.

1995).

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In order to have a binding contract, the parties must have a meeting

of the minds with regard "to all essential and material terms of the

agreement." Player v. Chandler, 382 S.E.2d 891, 893 (S.C. 1989).

These essential terms include price, time, and place. Edens v. Laurel

Hill, Inc., 247 S.E.2d 434, 436 (S.C. 1978). The meeting of the minds

cannot be based on "secret purpose or intention on the part of one of

the parties, stored away in his mind and not brought to the attention

of the other party." Player, 382 S.E.2d at 894.

Vessell argues that he and Gibbons had a meeting of the minds. He

contends that, after wrangling over the difference in price between

Vessell's proposal and Gibbons's bid, they agreed Vessell would do

the work for $12 per yard and make up any difference through the

"slush fund" that would be created by the sale of appliances. He contends that his actual work cutting the lawns is evidence of this deal,

and that he further had a deal to cut the lawns at the straight price of

$26 and $27 per yard once the Corps of Engineers renewed the contract and agreed to modify the contract price for option years two and

three.

Whether the parties have a meeting of the minds is ordinarily a

question of fact for the jury to decide. Hobgood v. Pennington, 387

S.E.2d 690, 693 (S.C. App. 1989). In this case, however, the most

Gibbons and Vessell could be said to have had agreed on was a deal

whereby Vessell would be minimally paid for mowing lawns, and

would supplement his lawn-mowing pay by stealing and selling

household appliances. This court will not set its imprimatur on a contract permeated with fraud. See W&N Construction Co. v. Williams,

472 S.E.2d 622, 623 (S.C. 1996) (construction company cannot

recover on contract it had entered illegally); Jackson v. Bi-Lo Stores,

Inc., 437 S.E.2d 168, 170 (S.C. App. 1993) (contract secured by illegal conduct cannot be enforced). Thus, even if a jury, taking all the

evidence in Vessell's favor, could have found that Gibbons and Vessell had a contract, any such contract was unenforceable and the district court appropriately directed a verdict on Vessell's breach of

contract claim.

Vessell cannot show that he had an enforceable contract for the

first year of the HAP contract. Any argument that his contract was

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effectively renewed by virtue of the Corps of Engineers' renewal of

Re/Max's HAP contract must therefore fail as well.

Vessell argues that not enforcing his contract violates public policy

by penalizing him for cooperating with law enforcement officials.

This argument has some appeal, but is not ultimately persuasive. It

ignores the fact that Vessell entered into the alleged contract knowing

its fraudulent aspects. This is not a situation in which he was already

working for Gibbons, or Re/Max, under a legitimate contract, which

Gibbons then "modified" by requiring unlawful behavior. In this

instance, Vessell could have walked away from the entire business.

Our holding that Gibbons and Vessell had an unenforceable contract effectively disposes of Vessell's remaining arguments on his

contract claim. Even were we to find that Gibbons had actual or

apparent authority to bind Re/Max to the contract, and that Vessell

and Re/Max were mutually obligated to perform the terms of the contract, the fraudulent underpinnings of the contract would defeat its

enforceability.

IV.

The False Claims Act encourages private plaintiffs, acting on

behalf of the government, to prosecute any person who is attempting

to defraud the government. 31 U.S.C. § 3729. The False Claims Act

is also known as the Qui Tam Act, an abbreviation of "qui tam pro

domino rege quam pro si ipso in hac parte sequitur ," which means

one "[w]ho sues on behalf of the King as well as for himself." Black's

Law Dictionary 1251 (6th ed. 1990). It was originally adopted in

1863, and is based on the premise that private parties are often in a

better position to detect fraudulent activity than the government itself.

Congress amended the False Claims Act in 1986 to include an antiretaliation provision to protect "whistle blowers" from adverse

employment consequences as a result of their cooperation with the

federal government. False Claims Amendments Act, Pub. L. No. 99-

562, § 4, 100 Stat. 3153 (codified at 31 U.S.C. § 3730(h)).

The anti-retaliation provision of the False Claims Act provides

that:

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any employee who is discharged, demoted, suspended,

threatened, harassed, or in any other manner discriminated

against in the terms and conditions of employment by his or

her employer because of lawful acts done by the employee

on behalf of the employee or others in furtherance of an

action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to

be filed under this section, shall be entitled to all relief necessary to make the employee whole.

31 U.S.C. § 3730(h). Vessell claims that Re/Max's refusal to use his

landscaping service after he cooperated with the FBI in exposing Gibbons's scheme violated the anti-retaliation provision of the statute.

The district court found that Vessell was not an employee of Re/Max

and therefore was not entitled to protection under the plain language

of the statute.

On appeal, Vessell argues that the statute should not be read so narrowly. He describes himself as a "subcontractor employee," which is

a defined term in the HAP contract, Joint Appendix at 172, and contends that the presence of the word "employee" places him under the

statute's protection. He further argues that the provision should be

read to protect independent contractors. In addition, Vessell argues

that public policy dictates that he not be punished for having exposed

Gibbons's fraud.

The False Claims Act does not define "employee." No circuit court

has yet addressed whether the False Claims Act's protection of "employees" extends to independent contractors, though the few district

courts that have addressed the question have all held that it does not.

In Shapiro v. Sutherland, which involved a consultant who had formerly been an employee of a government contractor, the district court

applied the common-law agency test to determine whether the qui tam

plaintiff was an employee entitled to invoke § 3730(h), or an independent contractor who did not fall within the law's ambit. 835 F. Supp.

836, 837-38 (E.D. Pa. 1993); see also Hardin v. DuPont Scandinavia,

731 F. Supp. 1202, 1205 (S.D.N.Y. 1990) (holding in dicta that antiretaliation provision does not extend to independent contractors); cf.

Mruz v. Caring, Inc., 991 F. Supp. 701 (D.N.J. 1998) (liability under

qui tam statute does not extend to employer's agents).

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The Shapiro court applied the common-law agency test articulated

in Nationwide Mutual Insurance Company v. Darden , 503 U.S. 318

(1992), to determine whether the plaintiff had been an employee or

an independent contractor. In Darden, an ERISA case, the Supreme

Court reiterated its position that when Congress uses the term "employee" without defining it, the Court has concluded that Congress

intends to describe the conventional master-servant relationship as

understood by common-law agency doctrine. 503 U.S. at 322-23. The

Court set forth the test as follows:

In determining whether a hired party is an employee under

the general common law of agency, we consider the hiring

party's right to control the manner and means by which the

product is accomplished. Among the other factors relevant

to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration

of the relationship between the parties; whether the hiring

party has the right to assign additional projects to the hired

party; the extent of the hired party's discretion over when

and how long to work; the method of payment; the hired

party's role in hiring and paying assistants; whether the

work is part of the regular business of the hiring party;

whether the hiring party is in business; the provision of

employee benefits; and the tax treatment of the hired party.

Id. at 323-24 (quoting Community for Creative Non-Violence v.

Reid, 490 U.S. 730, 751-52 (1989) (internal citations omitted)).

Applying the common-law agency principles in this case leads to

the conclusion that Vessell was not Re/Max's employee. Vessell set

his own schedule for cutting the lawns; he owned his own tools; and

he hired, fired, and supervised his own assistants. In addition, his

work was not part of the regular business of the hiring party; he did

not receive any employee benefits; and his tax status was not that of

an employee. Vessell had at most a contract to perform services for

a specified period of time; he was to be paid for each service performed, not on a salaried basis.

Vessell's attempt to categorize himself as a "subcontractor

employee" is unavailing. The term as used in the HAP contract refers

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to employees of subcontractors hired by the main contractor; as such,

one of Vessell's employees might more properly be termed a "subcontractor employee." That contractual language, however, has no

effect on the statute's coverage.

Unless the anti-retaliation provision of the False Claims Act covers

independent contractors, Vessell's claim must fail. The plain language

of the statute includes only employees, and our inquiry generally

stops there. Other provisions of the False Claims Act, which permit

anyone with knowledge of wrongdoing to bring a qui tam action and

to share in the proceeds of the suit, 31 U.S.C.§ 3730(b)-(d), indicate

that Congress was perfectly capable of extending the statute's coverage as broadly as it desired. In contrast, the anti-retaliation provision

is limited by its express language to employees. We must presume

that Congress intended to so limit the anti-retaliation provision.

Even were we to examine the legislative history, our conclusion

would not change. The legislative history to the 1986 amendments

indicates only that the term "employee" is to be read broadly to

include "[t]emporary, blacklisted, or discharged workers," but says

nothing about including independent contractors. S. Rep. No. 99-345,

at 34 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5299.

Vessell's public policy argument is not wholly unpersuasive. If an

independent contractor were to learn of, and expose, the fraud of a

principal contractor, the independent contractor should not lose its

contract by virtue of having exposed wrongdoing any more than an

employee should. Nevertheless, the statutory language is plain and

does not, by its terms, extend to independent contractors. Moreover,

independent contractors would have a breach of contract remedy,

whereas an employee-at-will would not have such protection. The

facts of this particular case demonstrate the principle. Had Vessell's

contract not been permeated with fraud, he would have had a contractual remedy against Gibbons, and potentially against Re/Max, so long

as he could have established mutuality of obligation and Gibbons's

apparent authority to bind Re/Max to the contract.

The anti-retaliation provision of the False Claims Act does not

extend to independent contractors, and Vessell is therefore not covered.

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V.

The district court's grant of judgment as a matter of law is

affirmed. The only contractual arrangement Vessell could be said to

have had with Re/Max was tainted by fraud and thus unenforceable.

Vessell is not entitled to recover under the anti retaliation provision

of the False Claims Act because he was, at most, an independent contractor and thus is not protected by that provision of the Act.

AFFIRMED

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