Pflueger v. City and County of Honolulu

• Decision Date: 06 January 1984
• Docket Number: No. 9176,9176
• Citation: 674 P.2d 1019,5 Haw.App. 13
• Parties: James H. PFLUEGER, Plaintiff-Appellant, v. CITY AND COUNTY OF HONOLULU, a body politic and corporate of the State of Hawaii, and Peter D. Leong, Director of Finance, City and County of Honolulu, Defendants-Appellees, and J.C. Hearn Co., Inc., Intervenor-Appellee.
• Court: Hawaii Court of Appeals

Page 1019

674 P.2d 1019

5 Haw.App. 13

James H. PFLUEGER, Plaintiff-Appellant, v. CITY AND COUNTY OF HONOLULU, a body politic and corporate of the State of Hawaii, and Peter D. Leong, Director of Finance, City and County of Honolulu Defendants-Appellees and J.C. Hearn Co., Inc., Intervenor-Appellee.

No. 9176.

Intermediate Court of Appeals of Hawai'i.

Jan. 6, 1984.

Syllabus by the Court

1. The requirements imposed on a complainant to maintain a taxpayer's suit are: (1) the act complained of must be more than a mere irregularity and in addition to being illegal, must be such as to imperil the public interest or work public injury; (2) the complaint must allege loss in revenues resulting in an increase in the complainant's tax burdens or to taxpayers in general; and (3) in the absence of a statute governing taxpayers' suits, a demand upon the proper public officer to take appropriate action must have been made unless the facts alleged show that such demand would have been useless.

2. Where the bidding procedure used is found to be patently improper and defective, the deleterious consequences to taxpayers flowing from such method can be presumed.

3. Concerning concessions on public property, Hawaii Revised Statutes § 102-3 does not preclude the contracting officer from imposing and publicly disclosing, before notices of intention to bid are received, the minimum requirements regarding experience, competence, and financial standing to qualify responsible bidders, provided that such requirements are reasonable and not arbitrary and they are applied uniformly.

Neil F. Hulbert (Jerry C. Wilk, Honolulu, with him on briefs), Hong, Iwai, Ho & Hulbert, Honolulu, for plaintiff-appellant.

Ronald B. Mun, Deputy Corp. Counsel, City and County of Honolulu, for defendants-appellees.

Dewey H. Kim, Jr., (Ronald H.W. Lum and David L. Fairbanks, Honolulu, with him on brief), Goodsill, Anderson, Quinn, & Stifel, Honolulu, for intervenor-appellee.

Before BURNS, C.J., and HEEN and TANAKA, JJ.

TANAKA, Judge.

Plaintiff James H. Pflueger (Pflueger) appeals from the order denying his motion for preliminary injunction and dismissing his complaint against defendants City and County of Honolulu (the City) and Peter D. Leong (Leong), its Director of Finance. The sole issue on appeal is whether the trial court erred in holding that Pflueger lacked standing to maintain a taxpayer's action challenging the City's award of a golf shop concession to J.C. Hearn Co., Inc. (Hearn). We answer no and affirm.

In August 1982, the City issued its General Instructions to Bidders and solicited bids for the golf shop concession at the Ala Wai Golf Course in Honolulu. The General Instructions stated that prospective bidders must file the Notice of Intention to Bid on or before September 1, 1982. Bidders were further instructed to file, with the Notice of Intention to Bid, the Application to Bid which was to be "answered in full and sworn to before a notary, providing evidence of the following minimum qualifications":

a. Five years full-time experience in operating a golf shop, sporting goods, or related business.

b. Gross income of not less than $350,000.00 a year within any two of the three immediately preceding calendar years from operating a golf shop, sporting goods, or related business.

c. Evidence of ability to provide a minimum of $150,000.00 in liquid working capital, or a firm commitment from a financial institution doing business in the State of Hawaii for a loan of $150,000.00.

(General Instructions to Bidders, Plaintiff's Exhibit 1.)

The General Instructions further required all bidders to submit their bid proposals on or before 10:30 a.m., September 10, 1982. Hearn was the sole bidder and its bid proposal was accepted by the City as the winning bid.

On September 23, 1982, Pflueger filed a complaint as a taxpayer alleging that the City's imposition of the minimum qualifications was illegal and, consequently, the award of the concession to Hearn would be "null and void." Simultaneously, he moved for a preliminary injunction enjoining the City and Leong from awarding a concession contract to Hearn. The City and Leong answered and, inter alia, interposed a defense of lack of standing to maintain the action. Upon its intervention, Hearn raised a similar defense.

On October 21, 1982, the trial court heard Pflueger's motion. On November 17, 1982, the court denied the motion and dismissed the complaint on the ground that Pflueger "lack[ed] the requisite standing to pursue [the] action." Pflueger's timely appeal followed.

I.

In Iuli v. Fasi, 62 Haw. 180, 613 P.2d 653 (1980), our supreme court reviewed the Hawaii cases involving taxpayer standing and detailed the requirements imposed on a complainant to maintain a taxpayer's suit. It stated that the early cases of Wilson v. Lord-Young Engineering Co., Ltd., 21 Haw. 87 (1912); Castle v. Secretary of the Territory, 16 Haw. 769 (1905); and Lucas v. American Hawaiian Engineering and Construction Co., Ltd., 16 Haw. 80 (1904), 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," Iuli, 62 Haw. at 183, 613 P.2d at 656, but Munoz v. Commissioner of Public Lands, 40 Haw. 675 (1955), more clearly defined the requirements for taxpayer standing. As delineated in Munoz, the requisites are: (1) the act complained of must be more than a mere irregularity and in addition to being illegal, "must be such as to imperil the public interest or work public injury," Iuli, 62 Haw. at 184, 613 P.2d at 656; (2) the complaint "must allege loss in revenues resulting in an increase in plaintiff's tax burdens or to taxpayers in general," Id.; and (3) in the absence of a statute governing taxpayers' suits, a demand upon the proper public officer to take appropriate action must have been made unless the facts alleged show that such demand would have been useless. Id.

Iuli further held that the foregoing requisites do not apply in cases involving special situations such as 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). Bulgo involved a controversy dealing with the fundamental right to vote. In Federal Electric, the supreme court "recognized the obvious resulting injury to taxpayers where the bidding procedures used were found to be patently improper and defective" and held that "[t]he deleterious consequences to taxpayers flowing from such a method could be presumed." Iuli, 62 Haw. at 186, 613 P.2d at 657.

II.

Appellees contend that Pflueger failed to meet the requisites for taxpayer standing and, therefore, his complaint was properly dismissed. We agree for the reason that the record clearly indicates that Pflueger failed to meet the requisites delineated in Iuli.

First, the complaint alleges that the City's imposition of minimum qualifications upon prospective bidders was illegal. However, it lacks allegations of specific facts showing that the illegal act was "such as to imperil the public interest or work public injury."

Second, Pflueger generally alleges that as a taxpayer he "will suffer great and irreparable damage." However, there is no specific allegation that there will be a loss in revenues resulting in an increase in his tax burdens or to taxpayers in general.

Finally, the complaint is devoid of any allegation that a demand had been made upon Leong or any other City officer to correct the alleged illegal act or that making such demand would have been useless.

III.

Pflueger asserts that (1) the bidding procedure used by the City violated the provisions of Hawaii Revised Statutes (HRS) § 102-3 (1976) and was "patently improper and defective"; (2) consequently, this case involves a special situation like that in Federal Electric Corp. v. Fasi, supra; and (3) "deleterious consequences to taxpayers could be presumed and standing is granted to a taxpayer." Reply Brief at 4. We disagree.

A.

Hawaii Revised Statutes chapter 102 (1976 & 1982 Supp.) deals with concessions on public property and HRS § 102-3 (1976) provides in pertinent part:

Before any prospective bidder is entitled to submit any bid for the occupancy of any such space, he shall, not less than six calendar days prior to the day designated for opening bids, give written notice to the officer charged with letting the contract of his intention to bid, and the officer shall satisfy himself of the prospective bidder's financial ability, experience and competence to carry out the terms and conditions of any contract that may be awarded. For this purpose, the officer may, in his discretion, require prospective bidders to submit answers, under oath, to questions contained in a form of questionnaire setting forth a complete statement of the experience, competence and financial standing of the prospective bidders. Whenever it appears to the officer, from answers to the questionnaire or otherwise, that any prospective bidder is not fully qualified and able to carry out the terms and conditions of the contract that may be awarded, the officer shall, after affording the prospective bidder an opportunity to be heard and if still of the opinion that the bidder is not fully qualified to carry out the terms and conditions of the contract that may be awarded, refuse to receive or consider any bid offered by...