Tulsa Indus. Auth. v. City of Tulsa

Decision Date06 February 2012
Docket NumberNo. 105,460.,105,460.
Citation270 P.3d 113,2011 OK 57
PartiesTULSA INDUSTRIAL AUTHORITY, an Oklahoma Public Trust, Plaintiff/Appellee, v. CITY OF TULSA, Oklahoma, and Tulsa Hills, L.L.C., Defendants/Appellees.State of Oklahoma, ex rel. J. Clark Bundren, M.D., a resident taxpayer of the City of Tulsa, State of Oklahoma, Intervenor/Appellant.
CourtOklahoma Supreme Court

OPINION TEXT STARTS HERE

ON CERTIORARI TO THE OKLAHOMA COURT OF CIVIL APPEALS, DIVISION NO. 4¶ 0 Taxpayer gave qui tam notice and demand to the Tulsa Industrial Authority (TIA) and the City of Tulsa. TIA sought a declaratory judgment that its conduct was legal, and Taxpayer sought to intervene. The parties objected, and the Hon. Mary F. Fitzgerald, District Judge, Tulsa County, denied Taxpayer's motion to intervene and he appealed. Appellees claimed that the appeal was moot and sought dismissal of the appeal. The Court of Civil Appeals dismissed Taxpayer's appeal for reason that he did not seek to stay the trial court proceedings during the appeal. Taxpayer petitioned this Court for certiorari to the Court of Civil Appeals. We hold that: (1) The qui tam statutes, 62 O.S. §§ 372 and 373, do not ordinarily apply to a public trust; (2) The trial court correctly denied the motion to intervene on Taxpayer's claim for qui tam relief but incorrectly denied the motion to intervene on Taxpayer's equitable relief claim; and (3) Taxpayer's appeal is not moot.CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF CIVIL APPEALS VACATED; ORDER OF THE DISTRICT COURT AFFIRMED IN PART AND REVERSED IN PART; AND CAUSE REMANDED WITH DIRECTIONS

J. Douglas Mann, Jerry A. Richardson, Rosenstein, Fist & Ringold, Tulsa, Oklahoma, for Appellee Tulsa Industrial Authority.

Deidre O. Dexter, Patrick T. Bolden, Tulsa, OK, for Appellee City of Tulsa.

Lewis N. Carter, Michael S. Hall, Doerner, Saunders, Daniel & Anderson, L.L.P., Tulsa, OK, for Appellee Tulsa Hills, L.L.C.Larry R. Steidley, Jr., Claremore, OK, and Terry Guy Shipley, Norman, OK, for Appellant.EDMONDSON, J.

¶ 1 Two issues are presented in this appeal. The first is whether a taxpayer should have been allowed to intervene in a District Court proceeding that was brought to obtain a declaratory judgment stating that certain public expenditures and financing were lawful. A portion of this first issue involves whether a qui tam action may be brought on behalf of a public trust and against its officers. The second is whether this appeal is moot because the parties proceeded to obtain a declaratory judgment in the District Court after Taxpayer was not allowed to intervene. We address the second issue first because Appellees' claim for mootness would make unnecessary a decision on the first issue if they are correct, and because the mootness issue involves the same issue for both a mootness analysis and a determination whether a qui tam plaintiff should be allowed to intervene in a qui tam proceeding.

¶ 2 Tulsa Hills, L.L.C., (THL) sought to create a shopping center in Tulsa, Oklahoma. The City of Tulsa (or City) established a Tax Increment District, 62 O.S.2001 § 861, and accompanying project plan pursuant to the Local Development Act, 62 O.S.2001 §§ 850–869. This plan included the site for the Tulsa Hills Shopping Center created by THL. THL sought the City's assistance to finance “infrastructure improvements” at the Tulsa Hills Shopping Center. The improvements included drainage for rain, a public road, a sanitary sewer mainline, a water line, and road improvements in and adjacent to the property. The City Council for Tulsa authorized the Tulsa Industrial Authority (or TIA) to issue and sell tax apportionment bonds totaling 18.5 million dollars, 13.5 million of the proceeds to be transferred to THL.

¶ 3 Taxpayer argued that ad valorem and sales taxes attributed to a tax increment district would be used to pay for bonds which had been issued by a public trust to provide money to a developer building a retail outlet. Taxpayer alleged that from the $18,500,000.00 obtained from the bonds, $13,500,000.00 would be given to the developer. The developer would use those funds for: (1) on the developer's property, site leveling, streets connecting to existing streets, storm water drainage for the shopping center, sanitary sewer and water extensions to the shopping center (for a total of $11,214,000.00); (2) unspecified off-site improvements (for a total of $561,000,00.); and (3) “contingencies” (for a total of $1,725,000.00). Taxpayer alleged that in order to get the Jenks school District to agree that the incremental ad valorem taxes attributed to the new shopping mall could be used for payment of the bonds, TIA and the City and the developer agreed to pay $765,000.00 to the school district from the proceeds obtained from the sale of the bonds. Taxpayer alleged that approximately $4,235,000.00 was used for reserves for debt service, underwriters and financial advisors fees, insurance and other borrowing costs.

¶ 4 Several taxpayers served a written demand on the TIA and the City of Tulsa pursuant to 62 O.S.2001 §§ 372, 373, and alleged that the money transferred to THL violated the Oklahoma Public Trust Act, 60 O.S.Supp.2007 § 178.4 and Art. 10 § 19 of the Oklahoma Constitution. Taxpayers claimed that § 178.4 prohibited a public trust from participating in a retail outlet, and that Art. 10 § 19 prohibited tax proceeds for a purpose other than that authorized by the voters. Taxpayers demanded that TIA and the City of Tulsa bring suit to recover the money transferred to THL.

¶ 5 TIA responded to Taxpayers' demand by filing an action in the District Court for Tulsa County against the City of Tulsa and THL, requesting a declaratory judgment affirming the legality and constitutionality of the project plan. THL and City filed answers supporting TIA's claims and request for a declaratory judgment. TIA filed a motion for summary judgment seeking “a declaratory judgment confirming the validity of the creation and financing of the Tulsa Hills Increment District in all respects.”

¶ 6 Bundren, a taxpayer (Taxpayer), sought to intervene in the declaratory judgment action. TIA, THL, and City filed objections to the request to Intervene. The trial court denied Taxpayer's motion to intervene, and a few days later the court granted and memorialized TIA's request for summary judgment. A few days after granting summary judgment the trial court memorialized its denial of Taxpayer's motion to intervene. Taxpayer filed in the District Court two petitions to vacate the judgment. Taxpayer appealed. The Court of Civil Appeals, with one judge dissenting, dismissed the appeal because Taxpayer did not seek to stay the trial court proceedings during Taxpayer's appeal. Taxpayer sought certiorari for review of the appellate court's decision and the issues in the appeal left unaddressed.

I. Motions to Dismiss and Qui Tam Relief

¶ 7 THL, City of Tulsa, and TIA filed motions to dismiss Taxpayer's appeal. They argued that the summary judgment granted to the parties decided the legality of the conduct of the City of Tulsa, and that this decision made Taxpayer's claims moot. They argued that: (1) Taxpayer did not seek a stay of the trial court proceeding during the appeal; (2) The claims presented in the declaratory judgment proceeding were merged into a judgment during the appeal; and (3) Due to the judgment on all claims (or causes of action), no claim remains pending in the trial court for the Taxpayer to intervene as a party and present the Taxpayer's interest in the litigation.

¶ 8 Taxpayer asserted that the appeal is not moot because his status as a non-party to the summary judgment process denied to him the authority to appeal the order granting summary judgment, and that as a non-party the judgment is not binding on him. He also argued that if allowed to intervene he will seek vacation of the judgment, and that he has already filed a petition to vacate in the District Court.

¶ 9 Appellees' analysis focused on whether Taxpayer was a party in the trial court proceeding and could thus obtain a stay of the trial court proceeding pursuant to 12 O.S.Supp.2008 § 990.4. That section states that “... a party may obtain a stay of the enforcement of a judgment, decree or final order: ... 3. While an appeal is pending in any court in or outside of this state.” Id. at 990.4(A). Appellees also argued that a stay of the trial court proceeding pending an appeal is within this Court's supervisory writ jurisdiction, and thus was an available remedy for Taxpayer. Because we hold herein that the failure to seek a stay did not moot the appeal, we need not analyze Taxpayer's available remedies for a stay.

¶ 10 The statutory authorization for taxpayers to seek a qui tam remedy occurs after they make their qui tam demand to the public body and the public body fails to seek recovery of the money or property unlawfully paid. 62 O.S.2001 § 373.1 What if the public body does not seek recovery of the money but files a declaratory judgment proceeding to judicially validate its expenditure of the public's money? 2 Is this litigation conduct a § 373 failure to “institute or diligently prosecute ... for the recovery of any money?” In City of Oklahoma City v. Oklahoma City Urban Renewal Authority, we did not address the issue as a § 373 failure, but relied upon opinions from courts in Wyoming, Idaho, and New Jersey, and concluded that a public body's request for declaratory judgment seeking judicial validation of its actions could, in some circumstances, be a justiciable controversy.3

¶ 11 When is a public body's request for declaratory judgment a justiciable controversy? We indicated that justiciability was shown by the antagonistic claims (fact and law) presented by the public body, and this justiciability also demonstrated that the qui tam taxpayer did not possess a right to intervene in a proceeding and seek § 373 relief.4 The public body must raise the claims of the ...

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