In San Diegans for Open Government v. Public Facilities Financing Authority of the City of San Diego, published November 9, 2017, the Fourth District Court of Appeal, Div. 1 reversed dismissal of the plaintiff organization's action challenging municipal ordinance authorizing issuance of bonds to refinance the defendant authority and defendant city's obligations concerning building of a baseball park. The plaintiff organization alleged that it is a nonprofit taxpayers association and that at least one member is a resident of the defendant city. It alleged that one or more members of the financing team that participated in preparing the bonds had a financial interest in the bonds' sale, giving rise to a conflict of interest under Government Code section 1090. Government Code section 1092 prescribes that a contract made in violation of section 1090 may be avoided at the instance of "any party" except the officer interested in the contract. The trial court dismissed the action for lack of standing, ruling that the plaintiff was not a party to the contract and so could not bring a section 1092 action.
The appellate court disagreed. In light of the broad deterrent purpose of section 1090, intended to prevent contracts that violate the statute regardless of the subjective intent of those who entered into them, the court interpreted the term "any party" was interpreted to mean any litigant with an interest in the contract sufficient to confer standing. That includes taxpayers of the municipality that entered into the transaction. The court disagreed with the holding in San Bernardino County v. Superior Court (2015) 239 Cal.App.4th 679 that taxpayer status is insufficient to confer standing. The result in San Bernardino County was distinguishable because the contract in the case was validated by a court judgment before the challenge took place, and so could not be avoided.
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