Taxpayer does have standing, court says

After hearing oral arguments in March, the Court of Appeal ruled a taxpayer does have standing to challenge a governmental entity, in this case a water district that has a conflict of interest.
The Court of Appeal from the Sixth Appellate District filed its opinion on April 5. The two cases ruled on were Holloway v. Edwidge and Gregory Dildine and the San Lorenzo Valley Water District and Holloway v. Showcase Realty Agents, Inc. For the purposes of briefing and argument the court ruled on both cases together.
The cases were on appeal from decisions issued in 2016 by the Superior Court of Santa Cruz County, which dismissed Holloway’s lawsuits on the grounds that Holloway did not have “standing.” Holloway’s lawsuits challenged the legality of the contract between SLVWD and the Dildines, signed in 2010, for the purchase of property by the District and brokered by a real estate agency in which Terry Vierra, then serving on the SLVWD Board, allegedly had an improper interest.
During oral arguments last month, presiding Justice Franklin Elia stated, “The contract is void if I have an interest and I am married to the person selling property—a taxpayer has the standing to go after you.”
Representing taxpayer Bruce Holloway, the plaintiff and appellant in both cases, was Scotts Valley attorney Gary Redenbacher. Michael Colantuono was the attorney representing the SLVWD and Shannon Jones represented Showcase Realty Agents.
According to court documents, Holloway asserted that the District’s real estate contract was tainted by a conflict of interest in violation with Government Code section 1090. Holloway’s action was dismissed after a judge sustained demurrers without leave to amend. Justice Eugene Premo wrote the opinion reversing that action.
In the unofficial opinion it stated, “Vierra was a district director who had a personal financial interest in the real estate contract, making the contract ‘void not merely voidable,’ and District had a duty to act to avoid it.”
An unofficial opinion simply means the case cannot be used in citing precedent, but it is still considered a binding opinion.
According to Redenbacher, discussions have already been made with the District’s legal counsel on settling the case. However, Redenbacher said in the event the case is not settled the next step would be to go to trial court in Santa Cruz County Superior Court.
When an appellate court writes a decision and the case is sent back to a lower court, often times the lower court will be sent a “law of the case” or rather instructions that cannot be deviated from. In this particular case, Redenbacher stated he believes the law of the case would mean the trial court would uphold the statement that the Court of Appeal found the contract to be void.
According to the San Lorenzo Valley Water District Manager Brian Lee, the district’s legal counsel did reach out to discuss a settlement with Redenbacher.
“We are hopeful a settlement can be reached,” said Lee on Monday. “The district does not want to go to trial.”
While next steps are pending, Lee reiterated that this case is “not consuming the district” and “not eating up the resources.”
“In the long run this is not the big elephant in the room,” Lee said.
According to Lee, it is up to the judges to make the opinions and decisions and it should be left up to them.
According to the Court of Appeal decision, “Holloway has taxpayer standing,” and “Holloway has standing to assert a conflict of interest claim.”
To read the opinion in its entirety visit: http://www.courts.ca.gov/opinions-nonpub.htm