Gilbane Building Co. v. Superior Court (2014) · DecisionDepot
Gilbane Building Co. v. Superior Court
California Court of Appeal Jan 23, 2014 No. D063685Unpublished
Before: McINTYRE
Filed 1/23/14 Gilbane Building v. Super. Ct. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
GILBANE BUILDING COMPANY, D063685
Petitioner, (San Diego County Super. Ct. No. 37- 2012-00091137-CU-MC-CTL) v.
THE SUPERIOR COURT OF SAN DIEGO COUNTY,
Respondent;
SAN DIEGANS FOR OPEN GOVERNMENT,
Real Party in Interest.
PROCEEDINGS IN MANDATE after the superior court overruled petitioner's
demurrer to real party in interest's first amended complaint. William S. Dato, Judge.
Petition denied.
McKenna Long & Aldridge, Charles A. Bird, Christian D. Humphreys and Gary
K. Brucker, Jr., for Petitioner.
Briggs Law, Cory J. Briggs, Mekaela M. Gladden, and Anthony N. Kim for Real
Party in Interest.
Gilbane Building Company (Gilbane) petitions for writ of mandate challenging the
trial court's overruling of its demurrer to San Diegans for Open Government's (SanDOG)
first amended complaint. In that complaint, SanDOG asserted claims against Gilbane and
other construction companies seeking to disgorge all monies those companies allegedly
637-638 [taxpayer sued the city, several city council members, and various corporations
under section 1090 to challenge the validity of a land transaction in which a city council
member conveyed land to a corporation who in turn conveyed it to the city].) These
lawsuits may be against the public agency as well as the private parties who entered into
the improper contract with the public agency. (See Terry v. Bender (1956) 143
Cal.App.2d 198; Thomson, supra, at pp. 637-638.)
However, "[a] taxpayer may not bring an action on behalf of a public agency
unless the governing body has a duty to act, and has refused to do so. If the governing
body has discretion in the matter, the taxpayer may not interfere." (Silver v. Watson
(1972) 26 Cal.App.3d 905, 909.) "The rule is explained in . . . Dunn [v. Long Beach
Land & Water Co. (1896) 114 Cal. 605, 609] . . . : 'The rule is that the municipality,
through its governing body, has control of the property and general supervision over the
ordinary business of the corporation; and there would be utter confusion in such matters
if every citizen and taxpayer had the general right to control the judgment of such body,
or usurp the office. Where the thing in question is within the discretion of such body to
do or not to do, the general rule is that then neither by mandamus, quo warranto, or other
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judicial proceeding, can either the state or a private citizen question the action or
nonaction of such body; nor in such cases can a private citizen rightfully undertake to do
that which he thinks such body ought to do. It is only where performance of the thing
requested is enjoined as a duty upon said governing body that such performance can be
compelled, or that a private citizen can step into the place of such body and himself
perform it.' " (Silver, supra, at p. 909.) Where the public agency has expended funds
illegally or for an unlawful purpose and its management is in the hands of the persons
accused of the wrongdoing, a taxpayer is not required to make a demand on the public
agency as it would be unavailing. (Osburn v. Stone (1915) 170 Cal. 480, 482; Citizens'
Committee for Old Age Pensions v. Board of Sup'rs of Los Angeles County (1949) 91
Cal.App.2d 658, 660.)
Here, the parties dispute whether a demand to the District and refusal was required
before SanDOG could initiate its action against Gilbane. The demand and refusal
requirement does not apply in this case because SanDOG is not seeking to usurp the
District's discretion in managing its affairs. Rather, if the allegations in SanDOG's
complaint are true, the District expended funds illegally and the subject contracts are
void, not merely voidable. Whether the contracts are void is not a matter within the
District's discretion.
We also conclude that a demand was not required under the circumstances of this
case because it would have been unavailing. SanDOG alleged the District's officials,
including its board members, were involved in the wrongdoing subject to its lawsuit. It is
unlikely that the District's officials would have initiated a lawsuit to correct its own
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wrongs. Where, as here, "the facts alleged in the complaint sufficiently show that . . . a
demand would have been useless, and when it appears from the complaint that a demand
would have been unavailing, it is not required." (Briare v. Mathews (1927) 202 Cal. 1,
9.)
Even if a demand and refusal was required, SanDOG alleged that "[b]efore
commencing this lawsuit, [it] notified DISTRICT of [its] intent to file this lawsuit and
inquiring whether DISTRICT would like to prosecute the action with [SanDOG], but
[SanDOG] has never received a response." Gilbane argues this allegation was
insufficient because it "invited the District to join SanDOG" in commencing the action
instead of demanding the District initiate the action and does not show the District
refused. We reject Gilbane's argument.
In our view, the purpose of the demand requirement is to put a public agency on
notice of wrongdoing and give it the opportunity to commence an action on behalf of its
constituents. SanDOG's allegation satisfies the purpose of the demand requirement.
Further, SanDOG alleged the District did not respond. If we were to construe the refusal
requirement as Gilbane suggests and require an actual refusal, a public agency could
prevent taxpayer initiated litigation simply by failing to respond to any demand. This
result would not comport with the policy supporting taxpayer actions.
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DISPOSITION
The petition is denied. SanDOG is entitled to costs in this proceeding.
McINTYRE, J.
WE CONCUR:
McCONNELL, P. J.
HUFFMAN, J.
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AI Brief
AI-generated · verify before citing
Holding. An organization has associational standing to bring a taxpayer action under Code of Civil Procedure section 526a if its members individually possess standing, and a taxpayer is not required to make a formal demand on a public agency to sue when the agency lacks discretion to validate illegal contracts or when such a demand would be unavailing.
Issues
Whether an organization has associational standing to bring a taxpayer action under Code of Civil Procedure section 526a when the organization itself does not pay taxes but its members do.
Whether a taxpayer must make a formal demand on a public agency to sue before initiating an action to recover funds paid under contracts alleged to be void under Government Code section 1090.
Disposition. denied
Quotations verified verbatim against the opinion
“it has been held a representative organization or association may have standing to bring an action if its members would have had standing to bring that action as individuals.”
“The demand and refusal requirement does not apply in this case because SanDOG is not seeking to usurp the District's discretion in managing its affairs.”