San Bernardino County v. Superior Court, 239 Cal. App. 4th 679

Background

In Nov. 2006 San Bernardino County settled an inverse-condemnation suit with Colonies Partners, L.P., paying $102 million; the settlement was incorporated into a stipulated judgment (Jan. 2007).
County issued judgment obligation bonds and obtained a 2007 validation judgment declaring the settlement, inverse condemnation judgment, and bonds valid and binding.
Former County Supervisor William Postmus later pleaded guilty (2011) to bribery-related charges alleging he accepted payments from Colonies in connection with his vote approving the settlement.
In 2012 two taxpayer organizations (IOC and CREED) sued under Government Code §1090 seeking to void the settlement, disgorge payments, and enjoin transfers; they alleged Postmus’s conflict rendered the contract void.
County and Colonies demurred; the trial court overruled the demurrers. County sought writ review arguing plaintiffs lacked standing.
The Court of Appeal granted the writ, holding plaintiffs lack standing and ordering the demurrer sustained without leave to amend (also noting amendment would be futile because of the 2007 validation judgment).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether taxpayers may sue "directly under" Gov. Code §1090 to void the County–Colonies settlement	Plaintiffs: §1090 itself permits a taxpayer to seek voidance of a contract made in violation of §1090.	County: §1090/1092 do not grant nonparty taxpayers a direct cause of action; only parties may avoid contracts under §1092.	Court: Rejected plaintiffs; §1090 does not independently confer taxpayer standing.
Whether plaintiffs have taxpayer standing under Code Civ. Proc. §526a	Plaintiffs: §526a or associational principles allow taxpayer suit to challenge illegal expenditure and seek recovery.	County: §526a and common law do not permit taxpayers to force a governmental entity to pursue discretionary legal claims.	Court: Rejected plaintiffs; §526a requires a duty to act (not discretionary decisions), and no facts show County refused a mandatory duty.
Whether common-law taxpayer standing applies because of alleged public-official misconduct	Plaintiffs: Alleged bribery and invalid approval of settlement justify taxpayers stepping in.	County: Absent allegations that current officials are colluding or that the government has a nondiscretionary duty to sue, the claim is within County discretion.	Court: Rejected plaintiffs; fraud/collusion exception did not apply because no present officials shown to be hostile or colluding.
Whether leave to amend should be allowed	Plaintiffs: Could amend to add facts about current supervisors to show lack of legitimate discretion.	County: Amendment would be futile because the 2007 validation judgment bars challenge to the settlement.	Court: Sustained demurrer without leave to amend (amendment would be futile due to validation judgment).

Key Cases Cited

Casterson v. Superior Court, 101 Cal.App.4th 177 (de novo review of demurrer standard)
City of Stockton v. Superior Court, 42 Cal.4th 730 (standards for writ review of demurrer)
Terry v. Bender, 143 Cal.App.2d 198 (taxpayer suit discussed in context of §526a)
Gilbane Building Co. v. Superior Court, 223 Cal.App.4th 1527 (taxpayer associational standing under §526a discussed)
Thomson v. Call, 38 Cal.3d 633 (taxpayer suit alleging §1090 violations; does not address standing)
Daily Journal Corp. v. County of Los Angeles, 172 Cal.App.4th 1550 (taxpayer standing requires governmental duty to act; discretion bars suit)
Silver v. City of Los Angeles, 57 Cal.2d 39 (common-law taxpayer standing limited to fraud, collusion, ultra vires, or failure to perform specific duty)
Miller v. McKinnon, 20 Cal.2d 83 (taxpayer may recover from third party where statute imposes an imperative duty on public official)
Schaefer v. Berinstein, 140 Cal.App.2d 278 (exception where charter/statute imposes mandatory duty to declare contracts void)