San Bernardino Cnty. v. Superior Court of San Bernardino Cnty.

• Decision Date: 17 August 2015
• Docket Number: E058359
• Citation: 190 Cal.Rptr.3d 876,239 Cal.App.4th 679
• Court: California Court of Appeals Court of Appeals
• Parties: SAN BERNARDINO COUNTY et al., Petitioners, v. The SUPERIOR COURT of San Bernardino County, Respondent; The Inland Oversight Committee et al., Real Parties in Interest.

239 Cal.App.4th 679

190 Cal.Rptr.3d 876

SAN BERNARDINO COUNTY et al., Petitioners

v. The SUPERIOR COURT of San Bernardino County, Respondent;The Inland Oversight Committee et al., Real Parties in Interest.

E058359

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

Filed August 17, 2015

Theodora Oringher, Todd C. Theodora and Roy Z. Silva ; Jean–Rene Basle, County Counsel, and Mitchell L. Norton, Deputy County Counsel, for Petitioners.

Briggs Law Corporation, Cory J. Briggs, Mekaela M. Gladden and Anthony N. Kim ; Leibold McClendon & Mann and John G. McClendon, for Real Parties in Interest.

OPINION

HOLLENHORST, Acting P.J.Real parties in interest The Inland Oversight Committee (IOC) and Citizens for Responsible Equitable Environmental Development (CREED and, together with IOC, plaintiffs) are taxpayer organizations that have brought suit challenging a November 2006 settlement agreement between petitioners County of San Bernardino and San Bernardino County Flood Control District (County) and defendant Colonies Partners, L.P. (Colonies and, together with County, defendants), pursuant to which County paid Colonies $102 million. Plaintiffs seek to have the settlement agreement declared void under state law governing conflicts of interests of government officials, and to force Colonies to disgorge any money already paid pursuant to the agreement.

Now pending before this court are Colonies' appeal of the denial of its special motion to strike the complaint as a strategic lawsuit against public participation (anti-SLAPP motion) pursuant to Code of Civil Procedure section 425.16 (the anti-SLAPP statute) and two writ petitions, one brought by County, the other by Colonies, regarding the denial of their respective demurrers. This opinion addresses only County's writ petition; we rule on Colonies' appeal and writ petition in separate opinions, issued contemporaneously herewith.

In its petition, County argues that the respondent trial court erred by overruling County's demurrer, because plaintiffs lack standing. For the reasons stated below, we agree.

I. FACTS AND PROCEDURAL BACKGROUND¹

The November 2006 settlement agreement between County and Colonies, pursuant to which County paid Colonies $102 million, resolved a lawsuit brought by Colonies against County alleging that the County had taken 67 acres of Colonies' land for use as part of a regional flood control facility. That settlement was incorporated into a stipulated judgment, filed January 23, 2007.²

County satisfied its obligation under the settlement agreement and stipulated judgment by issuing judgment obligation bonds, pursuant to a resolution by the San Bernardino County Board of Supervisors. Subsequently, County brought a validation action, and obtained a judgment, dated March 29, 2007, declaring the settlement agreement between Colonies and the County, the inverse condemnation judgment, and the bonds issued to satisfy the inverse condemnation judgment to be “valid, legal and binding obligations of [County].”³

In 2010, the San Bernardino County District Attorney's Office filed a felony indictment accusing William Postmus, a former county supervisor, of (among other things) receiving bribes—disguised as contributions to political action committees—from Colonies in exchange for his vote approving the settlement agreement. In March 2011, Postmus pleaded guilty to various bribery-related charges.

In February 2012, plaintiffs filed the present action, and in April 2012, they filed the operative first amended complaint (complaint). The complaint asserts a single cause of action for violation of Government Code section 1090. Plaintiffs seek to have the settlement agreement between Colonies and County declared void as in violation of Government Code section 1090 because of Postmus's personal financial interest; to require Colonies to disgorge any monies received under the agreement; and to enjoin any transfer of monies Colonies received under the agreement.

In May 2012, Colonies filed its demurrer to the complaint, and in June 2012, filed its anti-SLAPP motion. The demurrer first came on for hearing in June 2012, but the matter was continued pending supplemental briefing. Both Colonies' demurrer and its anti-SLAPP motion were set for hearing on September 19, 2012; the trial court overruled Colonies' demurrer, but continued the hearing of Colonies' anti-SLAPP motion.⁴ On October 15, 2012, the County filed its demurrer. Both Colonies' anti-SLAPP motion and County's demurrer were heard on December 13, 2012; the trial court overruled the demurrer and denied the anti-SLAPP motion.

II. DISCUSSION

In opposition to County's petition, plaintiffs advance three alternative theories as to why they have standing, County's arguments to the contrary notwithstanding. They contend that they have taxpayer standing under either Code of Civil Procedure section 526a or the common law, and they also assert a right to sue “directly under Government Code Section 1090.”

“The standard of review for an order overruling a demurrer is de novo.”

( Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 182, 123 Cal.Rptr.2d 637.) Although the matter arrives in this court “by the unusual path of a writ petition ... the ordinary standards of demurrer review still apply.” (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747, 68 Cal.Rptr.3d 295, 171 P.3d 20.) Applying those standards, we reject each of plaintiffs' theories of standing, and grant County's petition.

A. Plaintiffs Do Not Have Standing to Bring a Claim on Behalf of County Under Government Code Section 1090.

Government Code section 1090 forbids public officers from being financially interested in any contract made by them in their official capacity. (Gov.Code, § 1090, subd. (a).) Government Code section 1092 provides that “[e]very contract made in violation of any of the provisions of Section 1090 may be avoided at the instance of any party except the officer interested therein.” (Gov.Code, § 1092, subd. (a), italics added.) Plaintiffs, however, are not parties to the contract at issue, the settlement agreement between Colonies and the County. Nothing in the plain language of either section 1090 or section 1092 grants nonparties to the contract, such as plaintiffs, the right to sue on behalf of a public entity that may bring a claim as provided in section 1092, but has not done so. Indeed, the Legislature's choice of the word “party” in section 1092—as opposed to, say, “person”—suggests the Legislature intended only parties to the contract at issue normally to have the right to sue to avoid contracts made in violation of section 1090.

Plaintiffs nevertheless assert a right to sue “directly under Government Code Section 1090 in order to have the $102 million settlement agreement declared void.” The case law that they rely on, however, does not support their assertion. For example, Terry v. Bender (1956) 143 Cal.App.2d 198, 300 P.2d 119, addresses an action brought explicitly under Code of Civil Procedure section 526a. (Terry,supra, at p. 204, 300 P.2d 119.) Nothing in the Terry opinion is reasonably interpreted to contemplate Government Code section 1090 as an independent source of the plaintiffs' standing, though that statute is discussed as a piece of the substantive law governing the activities of public officials. (See Terry,supra, at p. 207, 300 P.2d 119 [citing Gov.Code, §§ 1090 –1092 in summarizing substantive law regarding conflicts of interests of public officials].)

Similarly, in Gilbane Building Co. v. Superior Court (2014) 223 Cal.App.4th 1527, 168 Cal.Rptr.3d 1, the Court of Appeal states that “[t]axpayers may sue under [Government Code] section 1090 in order to have improper contracts declared void.” (Id. at p. 1532, 168 Cal.Rptr.3d 1.) In context, however, this statement is best understood to refer to the circumstance that taxpayers who otherwise have standing under Code of Civil Procedure section 526a or the common law may assert a claim that a contract is in violation of Government Code section 1090. The quoted language follows the Court of Appeal's ruling that the plaintiff organization had associational standing under Code of Civil Procedure section 526a, based on its status as a representative organization or association of members who would have had standing to bring the action as individuals. (Gilbane Building Co., supra, at p. 1531, 168 Cal.Rptr.3d 1 ) It is not reasonably interpreted to suggest that Government Code section 1090 grants a cause of action to any taxpayer, as plaintiffs would have it.

Thomson v. Call (1985) 38 Cal.3d 633, 214 Cal.Rptr. 139, 699 P.2d 316 (Thomson ) and

Finnegan v. Schrader (2001) 91 Cal.App.4th 572, 110 Cal.Rptr.2d 552 are each cases in which taxpayers brought suit claiming violations of Government Code section 1090 as the substantive base of their claims. (Thomson,supra, at pp. 638–639, 214 Cal.Rptr. 139, 699 P.2d 316 ; Finnegan,supra, at p. 579, 110 Cal.Rptr.2d 552.) Neither case, however, contains any discussion of standing. Neither case, therefore, supports plaintiffs' assertion of a right to sue “directly under Government Code Section 1090.”⁵ (Murphy v. City of Alameda (1992) 11 Cal.App.4th 906, 914, 14 Cal.Rptr.2d 329 [“It is fundamental that cases are not authority for propositions not considered and decided.”].)

In short, plaintiffs have identified cases in which taxpayers have successfully sued, claiming violations of Government Code section 1090, even though the taxpayers were not parties to the contract at issue, and therefore were not provided a cause of action by Government Code section 1092. Plaintiffs have identified no authority, however, supporting the proposition that a taxpayer has standing to sue “directly under Government Code section 1090.” Because we find no support for plaintiffs' argument in the relevant statutory language or in case law, we reject it. We turn, therefore, to the question of whether plaintiffs might have standing under the usual sources of taxpayer...