Sloan v. School Dist. of Greenville County, 3238.

• Decision Date: 21 August 2000
• Docket Number: No. 3238.,3238.
• Court: South Carolina Court of Appeals
• Parties: Edward D. SLOAN, Jr., individually, and as a Citizen, Resident, Taxpayer and Registered Elector of Greenville County, and on behalf of all others similarly situated, Appellant, v. The SCHOOL DISTRICT OF GREENVILLE COUNTY, South Carolina, an Agency of the State of South Carolina, J. Coleman Shouse, Vivian Richardson, Debra Bush, Margaret Burch, Ralph Chandler, Marilyn Hendrix, Valerie Hollinger, Roger Meek, Tommie Reece, William Renninger, Leola Robinson, and Ann Southerlin, Respondents.

342 S.C. 515

537 S.E.2d 299

Edward D. SLOAN, Jr., individually, and as a Citizen, Resident, Taxpayer and Registered Elector of Greenville County, and on behalf of all others similarly situated, Appellant, v. The SCHOOL DISTRICT OF GREENVILLE COUNTY, South Carolina, an Agency of the State of South Carolina, J. Coleman Shouse, Vivian Richardson, Debra Bush, Margaret Burch, Ralph Chandler, Marilyn Hendrix, Valerie Hollinger, Roger Meek, Tommie Reece, William Renninger, Leola Robinson, and Ann Southerlin, Respondents.

No. 3238.

Court of Appeals of South Carolina.

Heard April 12, 2000.

Decided August 21, 2000.

James G. Carpenter and Jennifer J. Horton, both of James G. Carpenter, PC, of Greenville, for appellant.

N. Ward Lambert, of The Harper Law Firm, of Greenville, for respondents.

CONNOR, Judge:

Edward D. Sloan, Jr., individually, and as a citizen, resident, taxpayer, and registered elector of Greenville County, and on behalf of all others similarly situated, brought this declaratory judgment action against the School District of Greenville County and the individual members of the District board. Sloan requested a declaration that certain contracts entered into by the District were ultra vires to the District's procurement code, invalid, and illegal. Sloan also asked the court to enjoin performance and payment of the illegal contracts. The trial court granted the District's motion to dismiss, finding Sloan lacked standing to contest the District's actions. It also found Sloan had no implied right of action under the District's procurement code. Sloan appeals. We reverse and remand.

FACTS

The District awards contracts amounting to $25,000 or more through competitive sealed bidding under its procurement code.¹ That code provides an emergency procurement may be made when an emergency condition arises and the need cannot be met through normal procurement methods. The code limits such procurement to "when there exists an immediate threat to public health, welfare, critical economy and efficiency, or safety under emergency conditions as defined in regulation." The District's applicable regulation provides examples of such emergency conditions, including floods, epidemics, riots, equipment failures, and fire loss. The regulation also requires the condition "must create an immediate and serious need for supplies, services, equipment, or construction[,]... the lack of which would seriously threaten: (1) the functioning of the District; (2) the preservation or protection of property; or (3) the health or safety of any person." The emergency procurement is to "be made with as much competition as is practicable under the circumstances."

On February 23, 1998, the District decided to procure construction contracts for three schools under the emergency exception to its competitive sealed bid procedure. It justified the need for the emergency procurement by asserting it would assure completion of the construction prior to school opening in August 1999, as required by the "Long-Range Facilities Plan." Eston Skinner, a purchasing agent in the District's procurement office spoke to Larry Sorrell, the Manager of Audit and Certification for the State Budget and Control Board, to get his input. Sorrel advised the District had the option of doing an emergency procurement, but warned the District would be cited in the procurement department's audit for not starting the project in time to allow for a normal bidding procedure. He also advised that a disenchanted contractor or other aggrieved party could protest the emergency procurement. The District's procurement code allows determinations under the emergency exception to be challenged if "they are clearly erroneous, arbitrary, capricious or contrary to law."

The District invited contractors to submit fee proposals for the construction of the three middle school projects. After reviewing the proposals, the District awarded the contracts to Beers-York Construction Company, Inc. for construction of all three schools. Construction of the schools began soon thereafter.

Sloan brought this declaratory judgment action challenging the award of the contracts. He conceded he did not try to bid on the project. Instead, he asserted he was a taxpayer contesting an illegal expenditure. Relying on Citizens for Lee County, Inc. v. Lee County, 308 S.C. 23, 416 S.E.2d 641 (1992), the trial court found Sloan did not having standing in this case. As an alternate ground for dismissal, the court held Sloan did not have an implied right of action under the District's procurement code.

TAXPAYER STANDING

Sloan argues the trial court erred in holding he lacked standing to challenge the District's award of the contracts.

A fundamental prerequisite to institute an action is the requirement that the plaintiff have standing. Blandon v. Coleman, 285 S.C. 472, 330 S.E.2d 298 (1985). "Standing is `a personal stake in the subject matter of a lawsuit'" Newman v. Richland County Hist Preserv. Com'n, 325 S.C. 79, 82, 480 S.E.2d 72, 74 (1997) (quoting Bailey v. Bailey, 312 S.C. 454, 458, 441 S.E.2d 325, 327 (1994)). In Florence Morning News, Inc. v. Building Comm'n, 265 S.C. 389, 218 S.E.2d 881 (1975), the South Carolina Supreme Court held:

A private person may not invoke the judicial power to determine the validity of executive or legislative action unless he has sustained, or is in danger of sustaining, prejudice therefrom. `(I)t is not sufficient that he has merely a general interest common to all members of the public.'

Id. at 398, 218 S.E.2d at 884-85 (emphasis added) (quoting Ex parte Levitt, 302 U.S. 633, 634, 58 S.Ct. 1, 82 L.Ed. 493 (1937)). Deciding the plaintiffs in Florence Morning News lacked standing, the Supreme Court specifically noted they did not "sue as taxpayers." Id. at 398, 218 S.E.2d at 885.

In the case at bar, Sloan is not maintaining this action as a "private person," nor is he maintaining it merely as a "member of the public." Sloan has pursued this action as a taxpayer of Greenville County.

In Mauldin v. City Council, 33 S.C. 1, 11 S.E. 434 (1890), the South Carolina Supreme Court examined the issue of taxpayer standing.² In Mauldin, taxpayers challenged the purchase of an electric plant by the city council as ultra vires, claiming the purchase increased their tax burden. Id. at 15, 11 S.E. at 434. The Court explained how taxpayers differ from other members of the general public and how taxpayers suffer harm from ultra vires acts. Id. at 18-21, 11 S.E. at 435-36. The Mauldin court stated:

"The injury charged as the result of the acts complained of is a private injury in which the tax-payers of the county ... are the individual sufferers, rather than the public. The people out of the county bear no part of the burden; nor do the people within the county, except the tax-payers, bear any part of it. It is therefore an injury peculiar to one class of persons, namely the tax-payers of the county...."

Id. at 20, 11 S.E. at 436 (quoting Newmeyer v. Missouri & Miss. R.R. Co., 52 Mo. 81 (1873)). The Court held the taxpayers were "not the whole public, but comparatively a small part of it." Id. at 18, 11 S.E. at 435. The taxpayers "constitute a class specially damaged by the alleged unlawful act," and therefore have "a special interest in the subjectmatter of the suit, distinct from that of the general public." Id. at 19, 11 S.E. at 436 (quoting Mayor and City Council of Baltimore v. Gill, 31 Md. 375, 394 (1869)).

A taxpayer's standing to challenge unauthorized or illegal governmental acts has been repeatedly recognized in South Carolina. In Sligh v. Bowers, 62 S.C. 409, 40 S.E. 885 (1902), taxpayers of a school district challenged the school district's plan to relocate a school building. The taxpayers alleged "all expenditures of the public money [on the new school] are without lawful authority." Id. at 411, 40 S.E. at 886. The taxpayers' standing to challenge the allegedly illegal expenditures was not in question, but the South Carolina Supreme Court, quoting the United States Supreme Court, held:

This is an unlawful use of the public funds, which the court, in the exercise of its equitable powers, will enjoin. In Crampton v. Zabriskie, Mr. Justice Field used this language: "Of the right of resident taxpayers to invoke the interposition of a court of equity to prevent an illegal disposition of the moneys of the county ... there is at this day no serious question."

Id. at 413, 40 S.E. at 887 (citation omitted) (quoting Crampton v. Zabriskie, 101 U.S. 601, 609, 25 L.Ed. 1070 (1879)³).

In Kirk v. Clark, 191 S.C. 205, 4 S.E.2d 13 (1939), a bondholder sued the County Board of Commissioners and the Treasurer of Chesterfield County to enjoin the misapplication and diversion of tax funds collected for the payment of his bonds. Although the plaintiff had standing as a bondholder, the South Carolina Supreme Court stated, "The principle is firmly settled in this State that a taxpayer may maintain an action in equity, on behalf of himself and all other taxpayers, to restrain public officers from paying out public money for purposes unauthorized by law." Id. at 210, 4 S.E.2d at 15.

In Brown v. Wingard, 285 S.C. 478, 330 S.E.2d 301 (1985), the plaintiff taxpayers sued the Mayor and City Council of Greenwood for illegally reimbursing expenses incurred at a convention. The defendants questioned the taxpayers' standing to bring the action. Holding the taxpayers had standing, the Supreme Court confirmed that taxpayers "have an interest in seeing that city officials disburse funds in a lawful manner." Id. at 480, 330 S.E.2d at 302.

Although South Carolina has allowed taxpayer standing in other contexts, we have not been confronted with a case wherein a taxpayer challenges a violation of a statute requiring competitive bidding in the award of governmental contracts. However, other states have addressed this issue and held taxpayers have standing because competitive bidding laws are for the...