Iuli v. Fasi

• Decision Date: 23 June 1980
• Docket Number: No. 6234,6234
• Citation: 62 Haw. 180,613 P.2d 653
• Parties: Gulstan A. IULI et al., Plaintiffs-Appellants, v. Frank F. FASI, in his individual capacity and also as Mayor of the City and County of Honolulu et al., Defendants-Appellees. Hawaii Teamsters and Allied Workers, Local 996, Intervenor.
• Court: Hawaii Supreme Court

Page 653

613 P.2d 653

62 Haw. 180

Gulstan A. IULI et al., Plaintiffs-Appellants, v. Frank F. FASI, in his individual capacity and also as Mayor of the City and County of Honolulu et al. Defendants-Appellees Hawaii Teamsters and Allied Workers, Local 996, Intervenor.

No. 6234.

Supreme Court of Hawai'i.

June 23, 1980.

Syllabus by the Court

1. To maintain a suit based on taxpayers' standing, the alleged wrongful act must be such as to imperil the public interest or work public injury.

2. A taxpayer's action must allege loss in revenues resulting in an increase in plaintiff's tax burdens or to taxpayers in general.

3. In the absence of a statute governing taxpayers' suits, demand upon the proper public officer to take appropriate action is a condition precedent to maintenance of the action unless facts alleged sufficiently show that demand to bring suit would be useless.

4. Under HRCP 56(c), a summary judgment will be granted only if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

5. In reviewing a summary judgment proceeding, the standard to be applied by an appellate court is identical to that employed by the trial court.

6. In reviewing a motion for summary judgment, the inferences drawn from the underlying facts alleged in depositions, answers to interrogatories, admissions and affidavits must be viewed in the light most favorable to plaintiffs.

Kazuhisa Abe, Abe & Abe, Honolulu, for plaintiffs-appellants.

Adrienne Sepaniak, Deputy Corp. Counsel, City & County of Honolulu, Honolulu, for appellees Fasi, Sakai and City and County of Honolulu.

Walter G. Chuck, Honolulu, for appellees Koga, et al. (City Council).

Before RICHARDSON, C. J., and OGATA and MENOR, JJ. ^*

PER CURIAM.

Plaintiffs-appellants Gulstan A. Iuli, Rocky Mataalii, Henry Kanahele, Leroy Keliiliki, Robert Auelua, Jr. and William Uale, appeal from the judgment of the First Circuit Court granting summary judgment in favor of defendants-appellees Frank F. Fasi, the City Council, MTL, Inc. and James K. Sakai. We affirm.

Plaintiffs' second amended complaint alleged standing by virtue of their status as private citizens and individual taxpayers of the City and County of Honolulu. The action charges the defendants with wilful and intentional violation of HRS § 103-22 ¹ and § 8-301(3) ² of the 1973 Honolulu Charter authorizing an "Interim Agreement" executed between the City and MTL. The complaint seeks injunctive relief and general and punitive damages against the separate defendants. ³ The Interim Agreement, entered February 25, 1971, provided that MTL would manage, supervise and operate on a "temporary basis all buses and equipment acquired or leased by the City" until the City could complete acquisition of HRT (which at the time was incapacitated by a Hawaii Teamsters and Allied Workers Local 996 strike). ⁴

Plaintiffs charged defendants with unlawfully authorizing the execution of the contracts without public notice of bids as required by HRS § 103-22 and § 8-301 of the Honolulu Charter. ⁵ Motions for Summary Judgment were filed by each of the separate defendants. Hearings on the motions were held December 24, 1975 and January 7, 1976 before the Honorable Hiroshi Kato, Judge of the Circuit Court, First Circuit, and an Order Granting Summary Judgment in favor of all the defendants was entered on March 3, 1976. Plaintiffs' appeal from the order raises two main issues:

(1) Whether plaintiffs have standing to bring the action as individual taxpayers of the City and County of Honolulu;

(2) Whether the Interim Agreement between MTL and the City fell within the provisions of HRS and the Honolulu Charter requiring competitive bidding.

The question of plaintiffs' standing must be reached before we even consider the validity of the Interim Agreement. We conclude that plaintiffs lack standing to bring this suit.

Plaintiffs are all residents of the State of Hawaii and assert standing as taxpayers of the City and County of Honolulu. They allege that millions of dollars were expended by the City to pay MTL pursuant to the allegedly illegal Interim Agreement and that their taxes have been increased. They concede that they are unable to determine whether these increases were a result of the MTL contract but argue that under certain Hawaii cases involving taxpayers, damages to themselves and all taxpayers should be presumed. Defendants respond that damage to some interests or property of the taxpayer is a requisite of his right to sue and that actual pecuniary loss must be shown. Defendants further state that other requisites of standing as prescribed by a number of other state cases have not been met.

A review of this court's cases involving taxpayers' standing must be undertaken to resolve the initial question of plaintiffs' standing. Early Hawaii cases indicated that it was unnecessary for a plaintiff to show actual damage to himself where consequences of an action are so obvious that damages will be presumed. Wilson v. Lord-Young Engineering Co., Ltd., 21 Haw. 87 (1912); Castle v. Secretary of the Territory, 16 Haw. 769 (1905); Lucas v. American Hawaiian Electric Co., Ltd., 16 Haw. 80 (1904). However, the requisites for taxpayer standing were delineated more clearly in Munoz v. Commissioner Public Lands et al., 40 Haw. 675 (1955), where plaintiff, an unsuccessful bidder at an auction for a lease of land, sued on grounds that conditions of the statute requiring public notice of sale were not complied with. This court denied relief, stating that mere irregularity without more and not amounting to fraud was insufficient to justify intervention by the taxpayer. In addition to an illegal act, the act must be such as to imperil the public interest or work public injury. The petition must allege loss in revenues resulting in an increase in plaintiff's tax burdens or to taxpayers in general. Furthermore, in the absence of a statute governing such suits, demand upon the proper public officer to take appropriate action is a condition precedent to maintenance of a taxpayer's action unless facts alleged sufficiently show that demand to bring suit would be useless. Accord, Helela v. State of Hawaii, 49 Haw. 365, 418 P.2d 482 (1966); Air Terminal Services v. Matsuda, 47 Haw. 499, 393 P.2d 60 (1964). Thus, what emerges from these cases are specific requirements which must be met before standing to taxpayers is granted.

Under HRCP 56(c), a summary judgment will be granted only if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Lau v. Bautista, 61 Haw. 144, 598 P.2d 161 (1979); City and County of Honolulu v. Toyama, 61 Haw. 156, 598 P.2d 168 (1979); Hunt v. Chang, 60 Haw. 608, 594 P.2d 118 (1979).

On review of a summary judgment proceeding, the standard this court should apply is identical to that employed by the trial court. Gealon v. Keala, 60 Haw. 513, 591 P.2d 621 (1979); Technicolor v. Traeger, 57 Haw. 113, 551 P.2d 163 (1976). Thus, the inferences drawn from the underlying facts alleged in the depositions, answers to interrogatories, admissions and affidavits must be viewed in the light most favorable to plaintiffs.

The facts presented by the record including the motions and materials in support of the motion for summary judgment indicate that essential elements necessary to maintain a taxpayer suit are missing. First, defendants have pointed out that the contract did not result in any kind of public harm or injury. In fact, the Interim Agreement instituted a temporary bus system during the pendency of the HRT strike which worked a benefit to the public because it maintained the city's only major public transportation operation during a period of crisis. Secondly, plaintiffs could not show nor did they even allege actual pecuniary loss as a result of the contracts. At best they state only that their taxes have been increased but that admittedly they were unsure that this resulted from the contract. Speculative allegations of this nature lack merit and mandate dismissal. Air Terminal, supra at 536, 393 P.2d 60. Not only have these two points made by defendants not been controverted, but plaintiffs admit in depositions ⁶ that they did not suffer any cognizable loss as a result of the MTL contract. Finally, the last requirement that demand be made upon the proper public official to take appropriate action has not been fulfilled. Nor have plaintiffs alleged alternatively that such demand would have been useless.

Plaintiffs cite Bulgo v. County of Maui, 50 Haw. 51, 430 P.2d 321 (1967) and Federal Electric Corp. v. Fasi, 56 Haw. 57, 527 P.2d 1284 (1974) as supporting their arguments for standing. However, those cases involved special situations. In Bulgo, plaintiff-taxpayer sought to restrain the holding of special elections for Maui County Chairman in 1967. His complaint alleged that he paid real property taxes to the County of Maui which go into the county general fund out of which expenses for the special election are payable and that he would be irreparably damaged by the illegal expenditure of funds raised by taxation in holding elections under an invalid statutory provision. This court granted standing based on Castle v. Secretary of the Territory, supra, finding that plaintiff alleged sufficient personal interest in the controversy to entitle him to his "day in court." The controversy concerned the constitutionality of a special election and implicit in the court's holding was the recognition that voting rights and rights pertaining to the right to vote were of primary importance, mandating that each citizen be heard when questions involving these rights are raised. Cf. State v. Robinson, 50 Haw. 501, 444 P.2d 140 (1968) (plaintiff without interest in property which is subject of the case does not have taxpayer standing). Because the right to...