STATE of Oklahoma ex rel. Charles W. WRIGHT and Rachel Lawrence Mor, individuals and Taxpayer Citizens of the State of Oklahoma, Plaintiffs/Appellants, v. OKLAHOMA CORPORATION COMMISSION, a state agency, and Commissioners Denise A. Bode, Jeff Cloud, Bob Anthony, and Brooks Mitchell, Director of the Oklahoma Storage Tank Division, and Ben Jackson, General Counsel Oklahoma Corporation Commission, and ConocoPhillips Company, an Oklahoma corporation, Defendants/Appellees. State of Oklahoma ex rel. Oklahoma Corporation Commission, State of Oklahoma ex rel. Brooks Mitchell, Director of the Oklahoma Storage Tank Division; and, State of Oklahoma ex rel. Robyn Strickland, Administrator of the Oklahoma Petroleum Storage Tank Release Environmental Cleanup Indemnity Fund, Plaintiffs/Appellees, v. ConocoPhillips Company, Defendant/Appellee, v. Rachel Lawrence Mor and Charles W. Wright, Intervenors/Appellants.
Nos. 101,605, 101,606
Supreme Court of Oklahoma
Oct. 2, 2007
As Corrected Oct. 3, 2007.
2007 OK 73
Kieran D. Maye, Jr., Miller Dollarhide, Oklahoma City, OK, for Defendant/Appellees Oklahoma Corporation Commission, Commissioner Denise A. Bode, Commissioner Jeff Cloud, Commissioner Bob Anthony, Brooks Mitchell, and Ben Jackson in No. 101,605, and for Plaintiffs/Appellees in 101,606.
Rob F. Robertson, Dennis C. Cameron, Gable & Gotwals, Oklahoma City, OK, for Appellee ConocoPhillips Company in 101,605 and Defendant/Appellee in 101,606.
EDMONDSON, V.C.J.
¶1 This case involves procedural issues in a qui tam proceeding and a related declaratory judgment proceeding. The first order brought for appeal is a district court order granting a motion, without prejudice, that sought dismissal of a taxpayer qui tam remedy sought against the Oklahoma Corporation Commission and other defendants.1 The second order brought before us on appeal is a district court order denying those same taxpayers’ motion to intervene in a related declaratory judgment proceeding brought by the Oklahoma Corporation Commission that sought judicial approval of a settlement agreement made by the Corporation Commission and others.2 We address both appeals with a single opinion.3
¶2 The Oklahoma Legislature created the Petroleum Storage Tank Release Indemnity Program in 1989.
¶3 Phillips Petroleum Company, now ConocoPhillips Company (and herein Phillips), between 1991 and 1998 filed claims for reimbursement from the Indemnity Fund and was paid approximately 2.9 million dollars. In 2000 Phillips filed twenty-seven claims for additional payments from the Indemnity Fund. Employees of the Corporation Commission determined that Phillips was entitled
¶4 The total amount requested by Phillips was in excess of 5.9 million dollars, but it received only $3,941,170.00. Phillips pressed the Commission for additional payment on its claims. The State Auditor and Inspector reviewed the amounts paid to Phillips and determined that of the $3,941,170.00 paid to Phillips only $2,914,346.00 was within the pertinent statutory authority, and that $1,026,824.00 was questioned as an unauthorized overpayment.
¶5 Phillips pressed for additional payment on its claims. In August of 2003 Brooks Mitchell, Director of the Storage Tanks Division, and Ben Jackson, General Counsel for the Oklahoma Corporation Commission, agreed to pay Phillips an additional 3.6 million dollars from the Indemnity Fund. In August of 2003 the agreement was executed authorizing payment of an additional 3.6 million dollars in monthly installments, and Phillips agreed to refrain from pressing for additional payments.
¶6 Taxpayers allege that prior to the 3.6 million-dollar payment, new Commission employees became involved with the “leadership” of the Indemnity Fund and the Petroleum Storage Tanks Division. They allege in their Petition that the Commissioners, Commission management, including Brooks Mitchell, Director of the Storage Tanks Division, and Ben Jackson, General Counsel for the Corporation Commission, “were repeatedly informed by their legal counsel of the findings of the State Auditor that . . . Phillips’ claims had been more than fully paid and no further payment was authorized by statute or other authority.”
¶7 Taxpayers allege that the impropriety of the settlement agreement includes (1) payment on a case in which the Commission entered an order denying Phillips’ claim, that order having been affirmed on appeal to the Oklahoma Supreme Court and mandate previously issued, (2) payment for cases where not statutorily authorized, (3) payment on claims where there was no qualifying documented release of petroleum into the environment, (4) payment for attorney fees and litigations costs when the cases were not litigated, and (5) payment for landscaping and other nonenvironmental cleanup costs.
¶8 In July, 2004, Taxpayers sent to the Corporation Commission and the individual Commissioners a Tax Payer Demand—Qui Tam Notice demanding that the Commission rescind the agreement and reclaim funds paid to Phillips in violation of Oklahoma law. The demand letter states that the State Auditor and Inspector questioned $1,026,824.00 as an unauthorized payment to Phillips and that the Commission had improperly agreed to pay an additional 3.6 million dollars to Phillips.
¶9 In support of their view that funds had been improperly paid to Phillips, Taxpayers’ demand letter alleges that the 3.6 million included payment for a claim that the Commission had previously denied, which order “had been affirmed on appeal to the Oklahoma Supreme Court.” They also allege that the settlement agreement provided for payment “on cases for which reimbursement is statutorily not permitted, such as attorney fees, litigation costs, landscaping and other non-environmental clean-up costs.” The demand letter also alleges that the settlement agreement improperly paid Phillips for sites and claims not eligible for reimbursement from the Indemnity Fund. The demand letter states that Officers of the Commission “entered into the settlement agreement permitting the transfer of state environmental funds for claims which were ’ . . . known to be fraudulent or void, or in pursuance of any unauthorized, unlawful or fraudulent contract or agreement.’ ”
¶10 In August of 2004, the Corporation Commission filed a Petition for Declaratory Judgment in the District Court of Oklahoma County. The petition alleged that Phillips filed claims in excess of $7,000,000.00 against the Indemnity Fund for reimbursement of expenses involved relating to forty-six retail fuel outlets. The claims had been previously disallowed by the Indemnity Fund. The petition states that the parties reached a settlement agreement by which the Indemnity Fund would pay Phillips 3.6 million dollars in monthly installments and Phillips would dismiss its pending claims. The Indemnity
¶11 The petition states that after extensive evaluation of Phillips’ claims, with the assistance of a mediator, the Indemnity Fund and Phillips “reached a settlement agreeing upon a fair and reasonable value of the services in question and resolving all disputes for all claims that were the subject of the mediation.” The petition states that the settlement resolved claims “which could have exceeded $9,000,000.00 inclusive of interest, costs and attorney‘s fees.”
¶12 The petition states that the Commission and its Commissioners had received a letter demanding that the agreement be rescinded and that the Commission “reclaim all environmental funds which had been paid to Phillips as a result of the Settlement Agreement which the demanders contend was made in violation of Oklahoma law.” It also states that the claims asserted in the written demand “have raised certain questions which need resolution.” The petition does not state what those “certain questions” are or otherwise identify the specific nature of the claims made by the taxpayers. The Settlement Agreement is attached as an exhibit to the petition but the demand letter is not. Phillips answered and claimed that the settlement agreement should be enforced. Taxpayers sought to intervene in the declaratory judgment action brought by the Corporation Commission. Taxpayers alleged that the settlement was “illegal,” “fraudulent,” and a “sham” because the Commission and Phillips had earlier agreed to “settle” the claims for 3.6 million, and that the Settlement Agreement was the result of “clandestine meetings, mistreatment of Commission employees, and manipulating a sham mediation leading” to the Settlement Agreement.5 Both Phillips and the Corporation Commission objected to the intervention.
¶13 Shortly after the Commission filed its declaratory judgment action the Taxpayers sought a qui tam remedy in a different District Court proceeding. They sought relief against the Oklahoma Corporation Commission, the three Commissioners, the Director of the Storage Tank Division, the General Counsel for the Corporation Commission, and Phillips. The Corporation Commission defendants and Phillips sought dismissal of the qui tam request. The District Court granted their motions to dismiss and denied the Taxpayers’ motion to intervene in the Corporation Commission‘s declaratory judgment action.
¶14 The taxpayers appealed both orders, and both were reversed by the Court of Civil Appeals by unpublished opinions. Although our conclusions lead us to the same result reached by appellate court, we granted certiorari to address the first-impression questions raised by the parties that involve the public nature of the Petroleum Storage Tank Release Environmental Cleanup Indemnity Fund.6
¶15 Phillips sought dismissal of the qui tam proceeding based upon
¶16 On certiorari Phillips argues that (1) the Indemnity Fund does not contain state funds or funds belonging to the state, (2) dismissal of the qui tam action is required because of this Court‘s holdings in City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, 988 P.2d 901 (Tal I) and State ex rel. Tal v. Norick, 1999 OK 85, 991 P.2d 999 (Tal II), and (3) the appellate court incorrectly applied a standard of review appropriate for a summary judgment motion instead of one for a motion to dismiss. Similar arguments are made by the Corporation Commission in its petition for certiorari. We address both petitions for certiorari in the order presented by Phillips.
¶17 A qui tam request is one brought under a statute that establishes a penalty for the commission or omission of a certain act and provides that the penalty shall be recoverable in a civil action, with part of it going to the one bringing the action and the rest to the state or a public body. State ex rel. Trimble v. City of Moore, 1991 OK 97, n. 1, 818 P.2d 889, 891 and 894. Resident taxpayers of a state governmental unit may, in the name of the State of Oklahoma as plaintiff, seek qui tam relief under
I. Indemnity Funds Are State Funds
¶18 The Indemnity Fund was created by the Legislature in 1989,8 and is now codified at
D. The Indemnity Fund shall consist of:
1. All monies received by the Commission as proceeds from the assessment imposed pursuant to Section 354 of this title;
2. Interest attributable to investment of money in the Indemnity Fund; and
3. Money received by the Commission in the form of gifts, grants, reimbursements, or from any other source intended to be used for the purposes specified by or collected pursuant to the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program.
¶19 The assessment imposed pursuant to
qualify for payment or reimbursement from such Indemnity Fund.
Any costs incurred by and reimbursed to the Commission pursuant to the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program shall not exceed the actual expenditures made by the Commission to implement the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program.
4. Payment of claims from the Indemnity Fund shall not become or be construed to be an obligation of this state. No claims submitted for reimbursement from the Indemnity Fund shall be paid with state monies.
islative intent is that the Oklahoma Petroleum Storage Tank Release Indemnity Program be funded by an assessment on the sale of motor fuel, diesel fuel, and blending materials in this state by a distributor.
¶20 The
¶21 The Oklahoma Attorney General, through an Assistant Attorney General, filed an amicus curiae brief with the District Court and addressed the issue of the nature of the Indemnity Fund. The brief describes the Indemnity Fund as containing public money funded by a one penny gasoline tax. In support of this conclusion that the one-
¶22 Neither Phillips nor the Corporation Commission challenges the one-cent assessment as creating state funds that are distributed to the Corporation Commission Revolving Fund, the Department of Environmental Quality Revolving Fund, and the Higher Education Facilities Revolving Fund. They do not expressly argue that the public nature of these funds somehow loses its character as state funds when distributed to the Indemnity Fund. Instead, they rely upon a statute,
¶23 Section 353(E)(1) states the following.
E. 1. The monies deposited in the Indemnity Fund shall at no time become monies of the state and shall not become part of the general budget of the Commission or any other state agency. Except as otherwise authorized by the
Oklahoma Storage Tank Regulation Act and the Oklahoma Petroleum Storage Tank Release Indemnity Program, no monies from the Indemnity Fund shall be transferred for any purpose to any other state agency or any account of the Commission or be used for the purpose of contracting with any other state agency or reimbursing any other state agency for any expense.
Phillips and the Commission emphasize the language: “The monies deposited in the Indemnity Fund shall at no time become monies of the state. . . .” Of course, this language shows legislative intent, but a mere legislative declaration that particular funds are not monies of the state is not, by itself, determinative of the issue.14
¶24 One of the circumstances we examine is the identity of the owner of the funds at issue. State ex rel. Twist v. Bailey, 1956 OK 103, ¶ 14, 295 P.2d 763, 765. While the Commission and Phillips deny ownership interest in these funds by the State of Oklahoma, they do not state what entity owns such funds. They argue that the funds are distributed to the Petroleum Storage Tank Release Environmental Cleanup Indemnity Fund. But nothing in the Petroleum Storage Tank Release Indemnity Program indicates that the Indemnity Fund is anything other than a specified account for holding money to be distributed according to the indemnity program. The Indemnity Fund cannot own the funds distributed to the Indemnity Fund unless it is an entity as well as an account. The Indemnity Fund is maintained, operated, and administered by the Corporation Commission, a constitutional agency of the State created by
¶25 We also examine the nature of the transaction that generated the funds at issue. For example, in Moran v. State ex rel. Derryberry, 1975 OK 69, 534 P.2d 1282, we examined the nature of the transaction that generated funds for the State Insurance Fund. We said, “It appears to be agreed, or
¶26 In the case before us, a mandatory assessment is made upon those required to pay the motor fuel tax.
¶27 Phillips and the Commission argue that funds in the Indemnity Fund are not subject to appropriation by the Legislature for purposes other than the Indemnity Fund, and this proves the funds are not state funds. They regard the language in
its the actions of state officials charged with administering the Indemnity Fund and states how the funds in the Fund should be regarded for state budgetary purposes.
¶28 Money in the Indemnity Fund must be owned by someone, some entity. With the Corporation Commission, a constitutional agency of the State, administering those funds for the purposes required by the Petroleum Storage Tank Release Indemnity Program, the money in the Indemnity Fund belongs to the State of Oklahoma.
II. The Tal Opinions
¶29 Phillips and the Corporation Commission argue that dismissal of the taxpayers’ qui tam action is required because of this Court‘s holdings in City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, 988 P.2d 901 (Tal I), State ex rel. Tal v. Norick, 1999 OK 85, 991 P.2d 999 (Tal II), and related opinions. They argue that taxpayers had no right to prosecute an action on behalf of the state because the Corporation Commission brought a declaratory judgment action testing the validity of its agreement with Phillips. Taxpayers respond and argue that the Corporation Commission and Phillips are seeking to uphold the agreement via the declaratory judgment proceeding, and arguments against the agreement have not been advanced by the Corporation Commission for judicial review. Taxpayers argue that they should be allowed to intervene in the Commission‘s declaratory judgment proceeding and be allowed to prosecute a qui tam remedy.
¶30 In five recent opinions the Court discussed a taxpayer‘s demand upon a public body, the public body‘s response thereto by filing a declaratory judgment action, a taxpayer‘s response by seeking to intervene in the declaratory judgment proceeding, and the taxpayer‘s subsequent qui tam proceeding filed as a separate action.18 Therein, although the parties to the declaratory judgment proceeding agreed that the public contracts at issue were lawful, such agreement did not deprive the declaratory judgment proceeding of its justiciable character when the issues presented were not feigned or collusive by those seeking to uphold the public contracts. State ex rel. Moshe Tal v. City of Oklahoma City, 2002 OK 97, ¶ 8, 61 P.3d 234, 241 (Tal IV), citing City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, ¶ 29, 988 P.2d 901, 907 (Tal I).
¶31 In State ex rel. Moshe Tal v. Norick, 1999 OK 85, 991 P.2d 999 (Tal II), we concluded that a taxpayer qui tam proceeding was filed prematurely because a pending declaratory judgment proceeding was filed in response to the taxpayers’ written demand. The Corporation Commission and Phillips make a similar argument. However, our conclusion in Tal II was based upon more than the mere fact that declaratory judgment proceeding had been filed. The record showed that the same claims of allegedly wrongful conduct were presented for adjudication in both the declaratory judgment proceeding and the subsequent qui tam proceeding. Tal II, 1999 OK 85, at ¶¶ 8-9, 991 P.2d at 1001.
¶32 In the Tal cases, we examined whether the facts and applicable law of the controversy were before the trial court for it to consider when adjudicating the merits of the controversy. The taxpayers argued that the facts and law were not before the trial court in the declaratory judgment proceeding and
¶33 When we rejected the taxpayers’ argument that the city‘s suit was nonresponsive, we relied upon State, Bd. Com‘rs Pontotoc County ex rel. Braly v. Ford, 1941 OK 270, 116 P.2d 988. Tal I, at ¶ 17, 988 P.2d at 906. In Braly the taxpayers alleged that a county treasurer expended money from a sinking fund in an allegedly unlawful manner for certain securities. Braly, 116 P.2d at 989. The same day that the taxpayers’ demand was made to the board of commissioners the board directed the county attorney to institute suit against the treasurer, and the county attorney immediately ordered an audit. Id. Prior to completion of the audit the taxpayers sued, and then upon the audit‘s completion the county attorney filed an action against the treasurer. Id. 116 P.2d at 989.
¶34 We stated that “diligence on the part of the proper officials in prosecuting the action after the statutory demand is a matter of defense against the taxpayer‘s [qui tam] action.” Braly, 116 P.2d at 990. We also explained that public officials are presumed, in the absence of any showing to the contrary, to be ready and willing to perform their duties. Id. We affirmed the dismissal of the qui tam claim because “The evidence fully supports the court‘s finding that the officers had not failed to act diligently in instituting and presenting the suit on behalf of the county.” Braly, 116 P.2d at 992. In Braly the taxpayers’ lack of a qui tam remedy was based upon the character of the officials’ actions as shown by the evidence before the trial court.
¶35 In Tal I we also distinguished State ex rel. Lockhart v. Board of Com‘rs of Lincoln County, 1946 OK 291, 173 P.2d 725, because in Tal I certain facts were before the trial court when it adjudicated the merits of the controversy, and no contrary facts were raised in the trial court in support of certain conclusory allegations raised in the written demand letter. Tal I, at ¶ 19, 988 P.2d at 906. For example, our discussion includes the following:
Here the issue is much different from the issue involved in Lockhart. The case has been tried and the record developed supports the trial court‘s finding that the property at issue was sold at its fair market value and that the protections for the public to safeguard its interests spelled out in the Agreements were adequate. This ends the inquiry and T.A.R.‘s [taxpayers‘] expression of a contrary opinion in its Demand, without factual support, does not change the result.
Tal I, 1999 OK 71, ¶ 19, 988 P.2d 901.
In Tal I the taxpayers’ possessed no right to intervene in the declaratory judgment proceeding where the controversy and the facts material to that controversy were before the trial court in a form that the trial court could consider when making its decision on the merits.
¶36 In explaining that a controversy was before the trial court, although the parties sought the same relief, we cited opinions from Wyoming, Idaho, and New Jersey. Tal I, at ¶¶ 25-28, 988 P.2d at 907. In Brimmer v. Thomson, 521 P.2d 574 (Wyo.1974), although the actual litigants before the trial court held a similar view on the controversy, the opposing view was before the trial judge in the form of a previous attorney general‘s opinion, and the issue did not turn on an issue of fact. Tal I, at ¶¶ 25-26; 988 P.2d at 907. See Brimmer, 521 P.2d at 577, where the court stated that “the matter of the controversy and adversity is presented by the attachment of Exhibit A, a copy of the
¶37 The Tal opinions indicate that when a public body receives the written demand letter, one of the appropriate responses may be to bring a declaratory judgment proceeding to adjudicate the legality of the issues raised by the demand letter. The declaratory judgment proceeding may be deemed, as a matter of law, to be an appropriate response because officials are entitled to the presumption that their action in seeking declaratory judgment is in good faith. State ex rel. Moshe Tal. v. City of Oklahoma City, 2000 OK 70, ¶ 14, 19 P.3d 268, 271, cert. denied, 534 U.S. 814, 122 S.Ct. 40, 151 L.Ed.2d 13 (2001). In State, Bd. Com‘rs Pontotoc County ex rel. Braly v. Ford, supra, one of the issues was the diligence of the officials in bringing an action after receiving a demand letter. Braly, 116 P.2d at 990-992. A recurring issue in the Tal opinions is similar, but not identical; i.e., the diligence of the officials’ representation of the alleged illegal official acts in the declaratory judgment proceeding. In the Tal cases, the taxpayers failed to show that the facts material to the legality of the issues were not presented to the trial court for it to consider when adjudicating the merits of the claimed legality or illegality. Tal I and Tal II, supra. For additional example, we specifically noted in Tal IV that the taxpayers failed to assert that the public body failed to raise any substantive issue arising from the allegations of the taxpayers’ written demand upon the public body that related to the lawfulness of the challenged acts of the public body. Tal IV, 2002 OK 97, at ¶ 18, 61 P.3d 234, at 241.
¶38 The same diligence required of public officials we recognized in Braly is equally
¶39 In the matter before us, whether Taxpayers’ qui tam proceeding was premature is based upon the appropriateness of the officials’ actions in response to the written demand. Braly, supra. Clearly, a declaratory judgment proceeding brought by officials in response to a demand letter is one of many procedurally appropriate responses. Tal II, supra. While officials are not required to adopt all of taxpayers’ arguments and seek judicial invalidation of their previous actions, the officials’ declaratory judgment proceeding must present the material facts of the controversy and applicable law before the trial court in a judicially cognizable form.
¶40 The Commission‘s petition for declaratory judgment states that a Settlement Agreement was reached with Phillips. It also states that a written demand letter was delivered to the Commission and the Commissioners and that the letter alleges that the Settlement Agreement permitted “the transfer of state environmental funds for claims which were ’ . . . known to be fraudulent or void, or in pursuance of any unauthorized, unlawful or fraudulent contract or agreement.’
¶41 The declaratory judgment petition contains many allegations for the purpose of showing that the Settlement Agreement should not be rescinded. The petition cites several statutes for the purpose of showing the Settlement Agreement is not invalid. It cites case law and statutes for an argument that the Indemnity Fund contains no state funds and that taxpayers’ threatened qui tam action is improper. The petition contains allegations relating to circumstances leading up the Settlement Agreement, and why the Settlement Agreement should be considered advantageous to the state.
¶42 None of the facts relied upon by the taxpayers for showing illegality are in the declaratory judgment petition. The petition does not mention the allegation that the State Auditor and Inspector performed an audit of Phillips’ claims, and that of the initial 3.9 million dollars paid approximately one million dollars was questioned by the State Auditor and Inspector as an overpayment. The petition does not mention the allegation that Phillips did not submit claims with statutorily required information for payment from the Indemnity Fund. The petition does not mention that many of the claims by Phillips had been previously denied by the Commission acting through certain employees, after which Phillips resubmitted these claims to different Commission employees who approved their payment via a settlement agreement.
¶43 Taxpayers make several allegations relating to ex parte meetings between representatives of Phillips and one of the Commissioners while administrative claims were pending, change in employees of the Commission, meetings of Phillips’ representatives and a state senator, and other allegations all for the purpose of showing bad motives, or at least a motive other than one for payment of legitimate claims. An official‘s declaratory judgment proceeding need not put forward allegations of motive where motive is not an element of the taxpayer‘s alleged action showing an unauthorized, or unlawful, or fraudulent contract. But, as here, where taxpayers allege facts in support of statutory violations pertaining to payment of public funds, and allege facts from an audit by a government official charged with making audits of public funds, the officials must put
¶44 Two reasons require this result. First, a matter is proper for declaratory relief only when an actual justiciable controversy is presented for adjudication. Cherokee Nation v. Nomura, 2007 OK 40, n. 9, 160 P.3d 967. Second, the procedure for presenting a justiciable controversy is to present material facts and law to the trial court by pleading and evidence. For example, we recently stated the following.
We have stated that declaratory relief is based upon the existence of a justiciable controversy. City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, ¶ 28, 988 P.2d 901, 907; Ethics Commission v. Cullison, 1993 OK 37, 850 P.2d 1069, 1073. The term “justiciable” refers to a lively case or controversy between antagonistic demands. Lawrence. v. Cleveland County Home Loan Authority, 1981 OK 28, 626 P.2d 314, 315. When a party presents antagonistic demands that are merely speculative a prohibited advisory opinion is being requested. State ex rel. Oklahoma Capitol Imp. Authority v. E.A. Cowen Const. Co., 1974 OK 4, 518 P.2d 1264, 1266; Post Oak Oil Co. v. Stack & Barnes, P.C., 1996 OK 23, 913 P.2d 1311, 1314.
House of Realty, Inc. v. City of Midwest City, 2004 OK 97, ¶ 12, 109 P.3d 314, 318. The material facts and law relied on by the taxpayers in their written demand provide the “antagonistic demands” that are before the trial court in an officials’ declaratory judgment proceeding, although the actual relief sought may be to judicially validate the officials’ prior action that is challenged by the taxpayers. These antagonistic demands show that the officials’ declaratory judgment request is not a prohibited advisory opinion.
¶45 The material facts in the written demand may be, but are not required to be, quoted verbatim in the officials’ petition for declaratory relief. This is so because notice pleading does not require pleading every fact upon which a claim is based, but merely a short and plain statement of the claim that will give fair notice of what the plaintiff‘s claim is and the grounds upon which it rests.19 Merely pleading that a controversy exists without mentioning any of the facts relied on by the taxpayers in alleging an unlawful agreement does not provide the trial court with sufficient facts to identify an actual controversy to adjudicate. Where the legality of officials’ conduct turns on a question of law, as in Brimmer v. Thomson, supra, the officials are to inform the trial court of the nature of that dispute; and when the legality of officials’ conduct turns on a question of fact, those facts must be before the trial court in such form that the trial court can consider them when adjudicating the merits of the petition for declaratory judgment.20
¶46 In summary, officials may use a declaratory judgment proceeding for the purpose of testing the legality of their prior actions after they have been challenged by a taxpayer‘s written demand. However, the procedural vehicle of declaratory relief has a substantive standard as well; it must include, at a minimum, a short and plain statement of the taxpayer‘s challenge that will give fair notice of the nature of the controversy that the trial court is being requested to adjudicate. In the matter before us the declaratory judgment petition and answer did not contain the taxpayers’ demand letter or otherwise plead the nature of the taxpayers’ challenge to the settlement agreement. The declaratory judgment request by the officials is insufficient to make taxpayers’ qui tam
III. The Qui Tam Petition, Intervention, and Remand
¶47 Phillips and the Corporation Commission argue on certiorari that the Court of Civil Appeals incorrectly construed their motions to dismiss as motions for summary judgment when they challenged taxpayers’ qui tam petition. Taxpayers responded to the motions to dismiss with a response containing attached materials outside of the pleadings. The replies by the Commission and Phillips did not include materials outside of the pleadings.21 The appellate court construed the motions as motions for summary judgment because of the materials attached to taxpayers’ responses.
¶48 This Court has consistently stated that a motion to dismiss for failure to state a claim upon which relief may be granted, as provided by
¶49 Title 12, section 2012(B) provides in part:
If, on a motion asserting the defense numbered 6 of this subsection to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and all parties shall be given reasonable opportunity to present all material made pertinent to the motion by the rules for summary judgment.
This language treats a motion to dismiss based upon a failure to state a claim upon which relief may be granted as a motion for summary judgment when matters outside the pleading are presented to, and not excluded by, the trial court.
¶50 The substance of a motion requesting judicial relief, rather than the motion‘s title, is determinative of the relief requested from the court. Horizons, Inc. v. Keo Leasing Co., 1984 OK 24, 681 P.2d 757, 759; Deen v. Fruehauf Corp., 1977 OK 27, 562 P.2d 505, 506. When the movant has challenged the facial sufficiency of a petition and not relied upon matters outside the pleadings in either movant‘s motion or movant‘s replies to an opposing party‘s responses on the motion, it makes little sense to convert the motion to one for summary judgment when its content is not seeking summary judgment.
¶52 The function of a motion to dismiss is to test the law of the claims, not the facts supporting them. Estate of Hicks ex rel. Summers v. Urban East, Inc., 2004 OK 36, ¶ 5, 92 P.3d 88. “The applicable test for appraising the sufficiency of a pleading challenged for failure to state a claim upon which relief may be granted teaches that no dismissal may be effected unless it should appear beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle her to relief.” Dyke v. Saint Francis Hospital, Inc., 1993 OK 114, 861 P.2d 295, 298 (note omitted).
¶53 We stated the following in a previous qui tam proceeding where the sufficiency of a petition was challenged:
We have no doubt that an allegation to the effect that county officials charged with the responsible duties of disposing of real estate held by the county by purchase at resale, knowingly caused same to be transferred to one at a small fraction of its true value as known to them, is sufficient to state a prima facie case of fraud and is sufficient to withstand a demurrer directed at the sufficiency of the petition to state a cause of action.
State ex rel. Lockhart v. Board of Com‘rs of Lincoln County, 1946 OK 291, 173 P.2d 725, 727.
¶54 In Lockhart the allegation was simply that the officials had transferred public property for a small fraction of its true value. We concluded that the petition was sufficient to withstand a challenge to its sufficiency in stating a cause of action. In the present matter the allegations include but are not limited to (1) that state funds were paid upon claims that the officials knew were not legally due because of insufficient information supplied by Phillips, (2) that an audit by the State Auditor and Inspector had informed officials that payment had been made without authority, and (3) that officials had been coerced to make payments that were not authorized by law. As in Lockhart, we have no doubt that the allegations are sufficient to withstand a
¶55 In this case, the taxpayers sought to intervene in the declaratory judgment proceeding and sought review on appeal of the trial court‘s order denying their motion to intervene. In Tal II, supra, we said that taxpayers had no right to intervene because the controversy was properly presented to the trial court by the actions of the officials after the demand letter. In the matter before us, the taxpayers claim a right to intervene.
¶56 The Pleading Code makes timely intervention a matter of right23 when there is
¶57 In State, Bd. Com‘rs Pontotoc County ex rel. Braly v. Ford, 1941 OK 270, 116 P.2d 988, we stated that when the officials fail to take the proper actions after a taxpayer‘s statutorily sufficient written demand, a “taxpayer may institute a suit as provided by the statute and thereby acquire a substantial interest in the subject matter of the litigation.” Id. 116 P.2d at 990. But because of the presumption that officials will take proper actions subsequent to a demand letter, the taxpayer‘s interest does not come into being until the taxpayer shows that officials failed to take the proper actions after receiving the demand letter. Id. 116 P.2d at 990-991.
¶58 The qui tam interest of taxpayers is thus limited to that created by the qui tam statute. Taxpayers must show the insufficiency of the declaratory judgment petition as a condition precedent to a successful intervention in the declaratory judgment proceeding. The motion to intervene argues that intervention is necessary to put before the trial court the facts of the controversy24 that were not raised by the declaratory judgment proceeding. Taxpayers showed the insufficiency of the allegations of the declaratory judgment petition for the purpose of intervening to present the facts of the controversy to the trial court for its consideration on the merits of the controversy.
¶59 Another argument raised on certiorari is that the taxpayers improperly sought intervention for the purpose of dismissing the declaratory judgment petition. Taxpayers stated that if they were allowed to intervene they would seek dismissal of the officials’ petition. Taxpayers made various allegations against the petition, including that the Corporation Commission did not authorize the declaratory judgment proceeding and that the declaratory judgment proceeding was not brought in good faith. Phillips and the Commission argue that public officials are presumed to act in good faith and, because of that presumption, taxpayers may not seek to intervene to challenge a declaratory judgment petition filed in response to a taxpayers’ demand letter.
¶60 The argument of Phillips and the Commission is based upon the unstated premise that the good-faith presumption of public officials in presenting the taxpayer controversy to a court is an irrebuttable or conclusive presumption, and thus the attempt to intervene is barred as a matter of law. An irrebuttable, conclusive, or absolute presumption is a rule of law that once the averment is shown it may not be overcome by any proof that the fact is otherwise.25 While
¶61 In Tal IV we stated that the taxpayers failed to overcome the presumption that the City would act in good faith in presenting the controversy in the declaratory judgment proceeding. State ex rel. Moshe Tal v. City of Oklahoma City, 2002 OK 97, ¶ 8, 61 P.3d 234, 241. We did not hold that the taxpayers were barred from presenting evidence and making legal arguments for the purpose of overcoming the presumption. The taxpayers in the controversy before us are challenging not only the sufficiency of the declaratory judgment petition in presenting the nature of the controversy so as to show the propriety of their quest for seeking qui tam relief, but also that the entire declaratory judgment proceeding was improperly brought and tainted by a lack of good faith on the part of the officials involved. While we have concluded that the allegations of the declaratory judgment petition are insufficient to present the taxpayer‘s controversy so as to bar their seeking qui tam relief, we expressly do not determine whether the allegations of taxpayers’ motion to dismiss attached to their motion to intervene are sufficient either factually, or as a matter of law, to dismiss a declaratory judgment petition brought by officials in response to a taxpayers’ written demand.27
¶62 In State, Bd. Com‘rs Pontotoc County ex rel. Braly v. Ford, 1941 OK 270, 116 P.2d 988, the qui tam taxpayers were allowed to present evidence on the issue of whether the officials acted in good faith, although they ultimately failed to meet their evidentiary burden. Braly, 116 P.2d at 992. Phillips and the Commission have not pointed to any overriding public and social policies mandating that taxpayers should be barred from having an opportunity to present evidence and legal argument that public officials have not acted in good faith in response to a taxpayer‘s written demand. We hold that the presumption is not irrebuttable and may be challenged by qui tam plaintiffs.
¶63 In one appeal we have concluded that the trial court‘s order sustaining the motion dismissing the qui tam petition was error and must be reversed. In another appeal we have concluded that the trial court‘s order denying the motion to intervene was error and must be reversed. The orders reversed are on appeal from two different trial court cases. We limit our appellate review to the claims made on certiorari, reverse both orders appealed from the trial court, and remand the causes to the trial court for further proceedings consistent with this opinion.
¶64 EDMONDSON, V.C.J., HARGRAVE, KAUGER, WATT, TAYLOR, COLBERT, JJ., concur.
¶65 OPALA, J., concurring in result in Part I of the court‘s opinion and concurring in its remainder
No literal meaning can ever be ascribed to a statutory declaration that is in patent discord with legal reality and its consequences. Instead of attributing to the statute‘s words an intention of effecting an
¶66 WINCHESTER, C.J., Disqualified.
Notes
Every officer of the state and of any county, township, city, town or school district, who shall hereafter order or direct the payment of any money or transfer of any property belonging to the state or to such county, city, town or school district, in settlement of any claim known to such officers to be fraudulent or void, or in pursuance of any unauthorized, unlawful or fraudulent contract or agreement made or attempted to be made, for the state or any such county, city, town or school district, by any officer thereof, and every person, having notice of the facts, with whom such unauthorized, unlawful or fraudulent contract shall have been made, or to whom, or for whose benefit such money shall be paid or such transfer of property shall be made, shall be jointly and severally liable in damage to all innocent persons in any manner injured thereby, and shall be furthermore jointly and severally liable to the state, county, city, town or school district affected, for triple the amount of all such sums of money so paid, and triple the value of property so transferred, as a penalty, to be recovered at the suit of the proper officers of the state or such county, city, town or school district, or of any resident taxpayer thereof, as hereinafter provided.
Upon the refusal, failure, or neglect of the proper officers of the state or of any county, township, city, town, or school district, after written demand signed, verified and served upon them by ten resident taxpayers of the state or such county, township, city, town, or school district, to institute or diligently prosecute proper proceedings at law or in equity for the recovery of any money or property belonging to the state, or such county, township, city, town, or school district, paid out or transferred by any officer thereof in pursuance of any unauthorized, unlawful, fraudulent, or void contract made, or attempted to be made, by any of its officers for the state or any such county, township, city, town, or school district, or for the penalty provided in the preceding section, any resident taxpayer of the state or such county, township, city, town, or school district affected by such payment or transfer after serving the notice aforesaid and after giving security for cost, may in the name of the State of Oklahoma as plaintiff, institute and maintain any proper action which the proper officers of the State, county, township, city, town, or school district might institute and maintain for the recovery of such property, or for said penalty; and such municipality shall in such event be made defendant, and one-half (1/2) the amount of money and one-half (1/2) the value of the property recovered in any action maintained at the expense of a resident taxpayer under this section, shall be paid to such resident taxpayer as a reward. If all claims stated by the resident taxpayers in the written demand are determined in a court of competent jurisdiction to be frivolous, the resident taxpayers who signed such demand and who are parties to the lawsuit in which such claims are determined to be frivolous shall be jointly and severally liable for all reasonable attorney fees and court costs incurred by any public officer or officers or any other person alleged in such demand to have paid out, transferred, or received any money or property belonging to the state, or such county, township, city, town or school district in pursuance of any alleged unauthorized, unlawful, fraudulent, or void claim paid or contract or conveyance made, or attempted to be made, by such officer or officers
A. There is hereby created within the Corporation Commission, the “Petroleum Storage Tank Indemnity Fund“. The Director shall hire an Administrator who shall administer the Indemnity Fund and Indemnity Fund Program. The Indemnity Fund shall be administered by the Administrator for the benefit of those persons determined to be eligible by the Administrator to receive total or partial reimbursement for:
1. The costs determined to be eligible by the Administrator in preparing a corrective action plan;
2. The cost of corrective action taken in response to an eligible release;
3. Payment of claims for property damage or personal injury resulting from an eligible release; and
4. Necessary costs incidental to the cost of a site assessment or the corrective action taken and for filing and obtaining reimbursement from the Indemnity Fund.
B. Reimbursements made to or for the benefit of eligible persons shall be exempt from the
C. 1. Costs incurred as a result of a release from a storage tank system owned or operated by this state or by the federal government are not reimbursable pursuant to the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program. State and federally owned facilities shall take the proper corrective action as may be necessary to protect the environment from a leaking storage tank system. Provided, that an agency of the state may access said fund for reimbursement when it purchases property containing storage tanks from an owner or operator qualified to access the Indemnity Fund and upon which an eligible release has occurred prior to the agency acquiring the property. In such case, the agency of the state shall be reimbursed for allowable costs in excess of Five Thousand Dollars ($5,000.00) with the attendant co-pay as referenced in subsection H of Section 356 of this title available to the agency at the same level or amount of reimbursement as the qualified owner or operator would have received pursuant to Section 356 of this title.
2. Costs incurred as a result of a release from a storage tank system owned or operated by a Class I Railroad are not reimbursable pursuant to the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program.
D. The Indemnity Fund shall consist of:
1. All monies received by the Commission as proceeds from the assessment imposed pursuant to Section 354 of this title;
2. Interest attributable to investment of money in the Indemnity Fund; and
3. Money received by the Commission in the form of gifts, grants, reimbursements, or from any other source intended to be used for the purposes specified by or collected pursuant to the provisions of the Oklahoma Petroleum Storage Tank Release Indemnity Program.
E. 1. The monies deposited in the Indemnity Fund shall at no time become monies of the state and shall not become part of the general budget of the Commission or any other state agency. Except as otherwise authorized by the
2. No monies from the Indemnity Fund shall be used to pay or reimburse the Commission for the salary of any employee, except for the Compliance and Inspection Department, while such employee is performing work involved in the regulation of storage tanks pursuant to the
3. Monies in the Indemnity Fund shall only be expended for:
a. reimbursements to eligible persons unless duly assigned to another, and
b. costs incurred by the Indemnity Fund Program for the administration of the fund and costs incurred for the sole purpose of evaluating claims and determining whether specific claims
A. AMENDMENTS. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within twenty (20) days after it is served. Amendments to add omitted counter-claims or to add or drop parties may be made as a matter of course within the time specified above. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shall respond to an amended pleading within the time remaining for response to the original pleading or within ten (10) days after the service of the amended pleading, whichever period may be longer, unless the court otherwise orders.
A. INTERVENTION OF RIGHT. Upon timely application anyone shall be permitted to intervene in an action:
1. When a statute confers an unconditional right to intervene; or
2. When the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest.