Helena Parents Com'n v. Lewis and Clark County Com'rs

• Decision Date: 25 July 1996
• Docket Number: No. 95-579,95-579
• Citation: 277 Mont. 367,922 P.2d 1140
• Parties: , 112 Ed. Law Rep. 1051 HELENA PARENTS COMMISSION, et al., Plaintiffs and Appellants, v. LEWIS AND CLARK COUNTY COMMISSIONERS, et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 1140

922 P.2d 1140

277 Mont. 367, 112 Ed. Law Rep. 1051

HELENA PARENTS COMMISSION, et al., Plaintiffs and Appellants, v. LEWIS AND CLARK COUNTY COMMISSIONERS, et al., Defendants and Respondents.

No. 95-579.

Supreme Court of Montana.

Submitted on Briefs May 2, 1996.

Decided July 25, 1996.

Lawrence G. Allen and William Wewer, Wewer Law Firm, Helena, for Appellants.

Allen B. Chronister, Chronister, Moreen & Larson, Helena, for Lewis and Clark County Respondents.

P. Keith Keller, Keller, Reynolds, Drake, Johnson & Gillespie, Helena, for School District Respondents.

TRIEWEILER, Justice.

Appellants, the Helena Parents Commission and several individuals (HPC), filed a complaint in the District Court for the First Judicial District in Lewis and Clark County in which they sought a declaratory judgment against respondents, Lewis and Clark County and Helena School District Number One, related to certain investments of public funds made by them from 1991 to present. Respondents filed motions to dismiss and after a hearing, the District Court granted the dismissal. The Court dismissed a claim against the County Attorney for failure to state a claim and dismissed the other claims for lack of standing. HPC appeals the court's order of dismissal. We affirm that part of the District Court's order which pertains to the County Attorney and reverse the remainder of the order in which the Court concluded that HPC did not have the requisite standing.

Two issues are presented on appeal:

1. Did the District Court err when it dismissed HPC's claim against both respondents for lack of standing?

2. Did the District Court err when it dismissed HPC's claim against the County Attorney for failure to state a claim?

FACTUAL BACKGROUND

Appellants, Helena Parents Commission and several individuals (HPC), brought a declaratory judgment action, in which they asked the District Court to interpret relevant Montana statutes and determine the parties' rights pursuant to those statutes. HPC contends that Lewis and Clark County and Helena School District Number One (respondents) illegally managed public funds from 1991 to the present. HPC asserts standing as property taxpayers residing in Lewis and Clark County, as parents who have children attending school in Helena School District Number One, or as persons who receive benefits or services from local government entities.

HPC's complaint consists of several counts:

Count I alleges that respondents illegally invested School District and County funds in certain collateralized mortgage obligations (CMOs); Count II alleges that Lewis and Clark County illegally purchased the School District's illegal CMO investments; Count III alleges that Lewis and Clark County illegally invested its own money in CMOs; Count IV alleges that there was an illegal investment concerning the County's bond sinking funds in CMOs; Count V alleges that the County Treasurer violated her statutory duty to protect the investments of the County's bond sinking funds; Count VI alleges that the Treasurer or Finance Officer made an improper accounting of interest earned on bond sinking fund investments; and Count VII alleges that the Lewis and Clark County Attorney had an affirmative duty to pursue legal recourse and seek recovery of the losses against such government officials but failed to do so despite being informed by HPC prior to its filing of the request for declaratory judgment. HPC contended that these investments of public funds were not only illegal pursuant to statute, but also resulted in a loss of more than $5.5 million of property tax revenue intended to support taxpayer services provided by the School District and the numerous local government entities of Lewis and Clark County.

Respondents filed a motion to dismiss and after a hearing, the District Court granted the dismissal. The court dismissed the claim against the County Attorney for failure to state a claim and dismissed the other claims for lack of standing. HPC appeals the court's order of dismissal.

ISSUE 1

Did the District Court err when it dismissed HPC's claim against both respondents for lack of standing?

The question of whether the District Court properly granted the motion to dismiss is a conclusion of law. Common Cause v. Argenbright (1996), 276 Mont. 382, ----, 917 P.2d 425, 427,. We review a district court's conclusions of law to determine whether the court's interpretation and application of the law is correct. Jim's Excavating Serv. v. HKM Assocs. (1994), 265 Mont. 494, 501, 878 P.2d 248, 252.

When it considers a motion to dismiss made pursuant to Rule 12(b)(6), M.R.Civ.P, a court must view the allegations in the light most favorable to the plaintiff and accept as true all facts well pleaded. Lockwood v. W.R. Grace & Co. (1995), 272 Mont. 202, 207, 900 P.2d 314, 317. A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Farris v. Hutchinson (1992), 254 Mont. 334, 336, 838 P.2d 374, 375.

The District Court concluded that HPC lacked standing and dismissed HPC's complaint. "In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin (1975), 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343. In addition, "when standing is placed in issue in a case, the question is whether the person whose standing is challenged is a proper party to request an adjudication of a particular issue and not whether the issue itself is justiciable." Flast v. Cohen (1968), 392 U.S. 83, 99-100, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947. We have stated that the following criteria must be satisfied to establish standing:

(1) The complaining party must clearly allege past, present or threatened injury to a property or civil right; and (2) the alleged injury must be distinguishable from the injury to the public generally, but the injury need not be exclusive to the complaining party.

Sanders v. Yellowstone County (1996), 276 Mont. 116, ----, 915 P.2d 196, 198 (citing Stewart v. Board of County Comm'rs (1977), 175 Mont. 197, 201, 573 P.2d 184, 186).

As to the injury requirement, we have stated that a plaintiff is required to allege "a personal stake in the outcome of the controversy," Bowen v. McDonald (1996), 276 Mont. 193, ----, 915 P.2d 201, 206 (citing Olson v. Department of Revenue (1986), 223 Mont. 464, 469, 726 P.2d 1162, 1166); Western Litho v. Board of County Comm'rs (1977), 174 Mont. 245, 247, 570 P.2d 891, 892 (quoting Baker v. Carr (1962), 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663), and that "[i]t is not enough that appellants allege an injury which others may have suffered by the operation of some statute. They must allege an injury personal to themselves as distinguished from one suffered by the community in general." Olson, 223 Mont. at 470, 726 P.2d at 1166. But see Grossman v. Department of Natural Resources (1984), 209 Mont. 427, 439, 682 P.2d 1319, 1325 (holding that in special circumstances, presenting issues of an urgent nature, this Court will accept original jurisdiction and drape the taxpayer with standing). The requirement that a plaintiff demonstrate an injury "is most easily satisfied if a plaintiff alleges either a direct economic injury or alleges that she is confronted with the prospect of criminal prosecution." Eric J. Kuhn, Comment, Stood Up at the Courthouse Door, 63 Geo. Wash. L.Rev. 886, 891 (1995) (citing Pennell v. City of San Jose (1988), 485 U.S. 1, 8, 108 S.Ct. 849, 855-56, 99 L.Ed.2d 1 (concluding that the likelihood of enforcement of a rent-control ordinance causing lower rents for landlords is sufficient to constitute an injury-in-fact) and Virginia v. American Booksellers Ass'n (1988), 484 U.S. 383, 392-93, 108 S.Ct. 636, 642-43, 98 L.Ed.2d 782).

Here, plaintiffs alleged that the government will impose tax burdens on them as it seeks to recoup losses and that the investments will result in a lessening of governmental services. These allegations of an economic injury satisfy the injury requirement.

The District Court, however, did not conclude that HPC failed to meet the injury requirement. Instead, it based its dismissal of HPC's complaint on its failure to meet the second requirement for standing--"the alleged injury must be distinguishable from the injury to the public generally." Sanders, 276 Mont. at ----, 915 P.2d at 198. In dismissing HPC's complaint, the Court relied on Chovanak v. Matthews (1948), 120 Mont. 520, 527, 188 P.2d 582, 585, and stated that "the interest of a citizen, electorate, taxpayer, and resident of Lewis and Clark County is not, alone, sufficient to invoke the exercise of judicial power." In so holding, the court failed to consider that "the injury need not be exclusive to the complaining party," Sanders, 276 Mont. at ----, 915 P.2d at 198, and failed to consider Lee v. State (1981), 195 Mont. 1, 635 P.2d 1282.

In Lee, we discussed Chovanak and held that a plaintiff who drove an automobile on Montana's highways had sufficient standing to attack, via a declaratory judgment, the constitutionality of a 55 mile-per-hour speed limit proclaimed by the attorney general. Lee, 195 Mont. 1, 7, 635 P.2d 1282, 1285. In Lee, the State claimed that the plaintiff lacked standing because all members of the driving public had an affected interest in the statute, and attempted to dismiss the case on those grounds. We distinguished Chovanak, rejected defendant's argument, and noted that such an argument would render the Uniform Declaratory Judgment Act meaningless. We stated:

In that case [Chovanak] Chovanak attacked a 1945 Montana statute providing for the licensing of slot machines owned and operated by religious, fraternal, charitable or nonprofit organizations. He sued as a resident, citizen and elector. This Court pointed out that he...