Gilbane Building Co. v. Superior Court
223 Cal. App. 4th 1527
| Cal. Ct. App. | 2014Background
- San Diegans for Open Government (SanDOG) sued Gilbane and other contractors to disgorge funds allegedly obtained through contracts procured by gifts and pay-to-play conduct involving Sweetwater Union High School District officials.
- SanDOG alleged at least one member was a resident and taxpayer in the District and that the organization sought relief on its own behalf, on behalf of its members, taxpayers in the District, and the District itself.
- SanDOG notified the District of its intent to sue and asked whether the District wanted to prosecute the action with SanDOG; the District did not respond.
- Gilbane demurred, arguing SanDOG lacked standing because the organization itself did not pay District taxes and that SanDOG failed to allege a demand on the District and its refusal.
- The superior court overruled the demurrer, finding associational standing under Code Civ. Proc. § 526a and that a demand/refusal was not required because the contracts were void under Gov. Code § 1090 and a demand would have been futile.
- Gilbane petitioned for a writ of mandate; the Court of Appeal denied the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Associational standing to bring taxpayer action under § 526a | An organization may sue if its members are taxpayers/residents; SanDOG's members satisfy that | SanDOG lacks standing because the organization itself does not pay District taxes | Court: Associational standing allowed — an organization can invoke members' standing (citing Taxpayers) |
| Demand on public agency and refusal requirement before taxpayer suit under § 1090 | No demand required here because (a) contracts alleged void under § 1090 (not discretionary), and (b) demand would be futile given official involvement; SanDOG's notice satisfied the purpose of demand | SanDOG failed to allege a proper demand and refusal by the District; invited District to join rather than asking District to sue | Court: No demand/refusal required — contracts void and demand would be unavailing; SanDOG's notice sufficed if demand were required |
Key Cases Cited
- Taxpayers for Accountable School Bond Spending v. San Diego Unified School Dist., 215 Cal.App.4th 1013 (2013) (associational standing allowed where members have taxpayer standing)
- Thomson v. Call, 38 Cal.3d 633 (1985) (contracts made in violation of Gov. Code § 1090 are void)
- Finnegan v. Shrader, 91 Cal.App.4th 572 (2001) (public entity can recover compensation paid under void § 1090 contracts)
- Silver v. Watson, 26 Cal.App.3d 905 (1972) (taxpayer cannot sue on behalf of public agency when agency has discretion and has not refused to act)
- Osburn v. Stone, 170 Cal. 480 (1915) (demand excused where agency management is controlled by wrongdoers and demand would be futile)
- Briare v. Mathews, 202 Cal. 1 (1927) (allegations that a demand would be futile excuse the requirement)