Los Altos Property Owners Assn. v. Hutcheon

• Decision Date: 18 April 1977
• Court: California Court of Appeals Court of Appeals
• Parties: LOS ALTOS PROPERTY OWNERS ASSOCIATION et al., Plaintiffs and Appellants, v. Ian L. HUTCHEON, etc., et al., Defendants and Respondents. Civ. 38366.

Page 775

137 Cal.Rptr. 775

69 Cal.App.3d 22

LOS ALTOS PROPERTY OWNERS ASSOCIATION et al., Plaintiffs and Appellants, v. Ian L. HUTCHEON, etc., et al., Defendants and Respondents.

Civ. 38366.

Court of Appeal, First District, Division 2, California.

April 18, 1977.

Hearing Denied June 16, 1977.

Dean C. Storkan, San Jose, for plaintiffs and appellants.

William M. Siegel, County Counsel, James A. Ersted, Deputy County Counsel, County of Santa Clara, San Jose, for defendants and respondents.

ROUSE, Associate Justice.

Plaintiffs ¹ brought this taxpayers' suit to enjoin defendants from proceeding with a consolidation plan involving the junior high schools in the Los Altos School District. Defendants' demurrer to plaintiffs' first amended complaint (hereafter referred to as 'complaint') was sustained by the trial court as to plaintiffs' second cause of action, and plaintiffs were given 15 days to amend. Plaintiffs did not amend, and upon their motion, the trial court dismissed plaintiffs' second cause of action. Plaintiffs now appeal from this order of dismissal. ²

Plaintiffs brought this action to obtain a temporary and permanent injunction preventing defendants from proceeding with any phase of the consolidation plan that is the subject of this dispute, including the construction or alteration of classrooms and other facilities, the making of contracts, and the acceptance of bids for the sale of school property. Plaintiffs object to the proposed consolidation plan for a number of reasons. ³ The first cause of action alleges that the consolidation plan adopted by the defendants wastes public funds and constitutes a manifest abuse of discretion because there are less expensive alternative plans available; that these alternative plans would cost from $1,100,000 to $1,200,000 less to implement; that they would 'provide a level of benefits, services, efficiency, and protection of educational goals and values equal to or greater than the level of benfits, services, efficiency and protection provided by the consolidation plan adopted by the Board of Trustees'; that the plan adopted by the Board of Trustees would 'provide no substantial educational services, benefits, or values greater than the alternative plans for consolidation which were presented to the Board of Trustees'; that defendants were aware of these facts when the selection of the consolidation plan was made; that defendants have repeatedly refused to reevaluate their decision despite repeated requests by plaintiffs that they do so; that defendant Relocatable Structures, Inc., will soon begin ordering materials and subcontracting out work to implement this consolidation plan; and that because of this, plaintiffs will be irreparably injured if defendants are not enjoined from proceeding with the consolidation plan selected.

In the second cause of action, plaintiffs allege that in 'implementing the consolidation plan adopted on October 7, 1974, the Los Altos School District must spend approximately $747,000 needlessly, uselessly and improvidently in that . . . neither the Los Altos School District, the schools within the Los Altos School District, the teachers, administration, taxpayers, or students in the Los Altos School District, or anyone else, will receive any financial, educational, or public benefits, or any other type of benefits, from the expenditure of this $747,000'; that the construction of new facilities under the consolidation plan will 'duplicate already existing, adequate, and equivalent facilities and assets and these existing facilities and assets will not be utilized by the Los Altos School District as a result of this expenditure'; and that the expenditure of this $747,000 without 'the receipt of any benefit, public or otherwise, by the Los Altos School District, was a manifest abuse of discretion and beyond the jurisdiction of the Board of Trustees of the Los Altos School District.'

There are two issues raised on appeal: first, whether plaintiffs have standing to bring suit under section 526a of the Code of Civil Procedure, and whether the allegations of the complaint state a cause of action under that section; and, second, whether the allegations state a cause of action for Ultra vires actions under the common law basis for taxpayers' suits.

It is settled that a taxpayer can bring suit against governmental bodies in California under either of two theories, one statutory, the other based upon the common law. Section 526a of the Code of Civil Procedure ⁴ provides, in part, that 'An action to obtain a judgment, restraining and preventing any illegal expenditure of, Waste of, or injury to, the estate, Funds, or other property Of a county, town, city or city and county of the state, may be maintained against any officer thereof, or any agent, or other person, acting in its behalf, either by a citizen resident therein, or by a corporation, who is assessed for and is liable to pay, or, within one year before the commencement of the action, has paid, a tax therein.' (Emphasis added.) This provision is to be compared to and contrasted with the common law authority for taxpayer suits, as stated in Silver v. City of Los Angeles (1961) 57 Cal.2d 39, 40--41, 17 Cal.Rptr. 379, 380, 366 P.2d 651, 652, that a 'taxpayer in his representative capacity can sue a municipality Only in cases involving Fraud, collusion, ultra vires, or a failure on the part of the governmental body to perform a duty specifically enjoined.' (Emphasis added.) This common law theory applies not only to municipalities but to all governmental bodies. (Gogerty v. Coachella Valley Junior College Dist. (1962) 57 Cal.2d 727, 730, 21 Cal.Rptr. 806, 371 P.2d 582.)

While the two theories are similar in many respects, they differ in two important areas. First, section 526a includes the waste of public property as a ground for bringing suit, while the common law limits the grounds to fraud, collusion, Ultra vires, or a failure to perform a duty specifically enjoined. While waste may seem to be a form of Ultra vires act, courts have distinguished between the two. (See City of Ceres v. City of Modesto (1969) 274 Cal.App.2d 545, 79 Cal.Rptr. 168.) Second, section 526a, on its face, only applies to towns, cities, counties, and cities and counties of the state, while the common law theory applies to all state and local governmental bodies.

Defendants contend that plaintiffs have no standing to sue for waste under section 526a since it only applies to suits directed at counties, towns, cities, or cities and counties of the state, and defendant school district falls into none of these categories. ⁵ Since plaintiffs have cited no authority extending section 526a to school districts, defendants argue that plaintiffs are without standing to sue under that statute.

The cases arising under section 526a have consistently held that the statute is to be liberally construed. In Blair v. Pitchess (1971) 5 Cal.3d 258, 96 Cal.Rptr. 42, 486 P.2d 1242, a case involving a taxpayer suit under section 526a to enjoin the sheriff from illegally expending public funds, our Supreme Court emphasized the strong public policy in favor of taxpayer suits and summarized the line of cases liberally construing section 526a as follows: 'The primary purpose of this statute, originally enacted in 1909, is to 'enable a large body of the citizenry to challenge governmental action which would otherwise go unchallenged in the courts because of the standing requirement.' (Comment, Taxpayers' Suits: A Survey and Summary (1960) 69 Yale L.J. 895, 904.)

'California courts have consistently construed section 526a liberally to achieve this remedial purpose. . . .

'Moreover, we have not limited suits under section 526a to challenges of policies or ordinances adopted by the county, city or town. If county, town or city officials implement a state statute or even the provisions of the state Constitution, an injunction under section 526a will issue to restrain such enforcement if the provision is unconstitutional. (Lundberg v. County of Alameda (1956) 46 Cal.2d 644, 298 P.2d 1, app. dism. (1956), 352 U.S. 921, 77 S.Ct. 224, 1 L.Ed.2d 157; Vogel v. County of Los Angeles, supra, 68 Cal.2d 18, 64 Cal.Rptr. 409, 434 P.2d 961.) Indeed, it has been held that taxpayers may sue State officials to enjoin such officials from illegally expending state funds. (Ahlgren v. Carr (1962) 209 Cal.App.2d 248, 252--254, 25 Cal.Rptr. 887; ⁶ California State Employees' Ass'n v. Williams (1970) 7 Cal.App.3d 390, 395, 86 Cal.Rptr. 305.) We have even permitted taxpayers to sue on behalf of a city or county to recover funds illegally expended. (Osburn v. Stone (1915) 170 Cal. 480, 482, 150 P. 367.)' (Pp. 267--268, 96 Cal.Rptr. at p. 48, 486 P.2d at p. 1248.)

In Serrano v. Priest (1971) 5 Cal.3d 584, 96 Cal.Rptr. 601, 487 P.2d 1241, our Supreme Court held that certain Los Angeles school children and their parents, suing on behalf of a class, had stated a cause of action against various state and county officials by alleging that the then existing school financing system violated the Fourteenth Amendment and the California Constitution. Although the standing issue was not the central issue in the case, our Supreme Court disposed of it in favor of plaintiffs, noting that 'Although plaintiff parents bring this action against state, as well as county officials, it has been held that state officers too may be sued under section 526a. (Citing Blair v. Pitches, supra, 5 Cal.3d at p. 267, 96 Cal.Rptr. 42, 486 P.2d 1242; California State Employees' Ass'n v. Williams, supra, 7 Cal.App.3d at p. 395, 86 Cal.Rptr. 305, and Ahlgren v. Carr, supra, 209 Cal.App.2d at pp. 252--254, 25 Cal.Rptr. 887.)' (P. 618, fn. 38, 96 Cal.Rptr. p. 626, 487 P.2d p. 1266.)

More recently, in Stanson v. Mott (1976) 17 Cal.3d 206, 130 Cal.Rptr. 697, 551 P.2d 1, our Supreme Court held that a taxpayer had stated a cause of action against the Director of the State Department of...