Holloway v. Showcase Realty Agents, Inc.

CourtCalifornia Court of Appeal
DecidedApril 26, 2018
DocketH043492
StatusPublished

This text of Holloway v. Showcase Realty Agents, Inc. (Holloway v. Showcase Realty Agents, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holloway v. Showcase Realty Agents, Inc., (Cal. Ct. App. 2018).

Opinion

Filed 4/5/18; Certified for Publication 4/26/18 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

BRUCE HOLLOWAY, H043492 (Santa Cruz County Plaintiff and Appellant, Super. Ct. No. CV180394)

v.

SHOWCASE REALTY AGENTS, INC. et al.,

Defendants and Respondents.

BRUCE HOLLOWAY, H043704 (Santa Cruz County Plaintiff and Appellant, Super. Ct. No. CV180394)

GREGORY DILDINE et al.,

The San Lorenzo Valley Water District (District) acquired real property in Boulder Creek, California from Gregory and Edwige Dildine (Dildines). Bruce Holloway is a taxpayer within District, and filed suit claiming the contract was void under Government Code section 1090, because one of District’s directors, Terry Vierra, had an interest in the contract by nature of his partial ownership in Showcase Realty (Showcase), the agency that facilitated the property sale, and the fact that his wife was the listing agent for the property. District and Showcase brought a successful demurrer on the ground that Holloway lacked standing to assert a claim for conflict of interest. On appeal, we consider whether Holloway had standing under Government Code section 1092 to bring an action for conflict of interest. We also consider whether Holloway was required to bring a validation action to challenge the real estate contract under Code of Civil Procedure section 863. STATEMENT OF THE FACTS AND CASE1 Holloway filed his second amended complaint in July 2015 alleging the following: He is a citizen and taxpayer served by District. Vierra was a board member of District, and a majority shareholder of Showcase. In September 2010, District began negotiations to purchase real property in Boulder Creek, California from the Dildines. The contract was finalized and escrow closed in November 2010. When escrow closed, Vierra received a real estate broker’s commission of $13,050 through his ownership of Showcase, as well as a community property interest in his wife’s real estate commission for facilitating the sale. Holloway became aware that Vierra’s wife, who worked for Showcase, was the listing agent for the property in November 2013. Holloway asserted causes of action for conflict of interest against District, Showcase and Vierra pursuant to Government Code section 1090, and liability pursuant to Government Code section 91005.2 He sought a declaration that the real estate contract was void, and disgorgement of public monies paid to Vierra in real estate commissions, and the Dildines for the property sale.

1 Because this case is an appeal of a judgment entered following a demurrer, we take the facts as stated in the operative second amended complaint. 2 Government Code section 91005 is the liability provision encompassed in the Political Reform Act of 1974, as codified in Government Code sections 81000 through 91014. Government Code section 87100 prohibits public officials from acting to influence a government decision in which they have a financial interest.

2 In September 2015, District, Showcase and Vierra filed a demurrer to the second amended complaint arguing Holloway lacked standing under Government Code section 1092,3 and the second cause of action for liability under Government Code section 91005 was time barred by a four-year statute of limitations as stated in Government Code section 91011, subdivision (b). The court sustained the demurrer without leave to amend as to the first cause of action for conflict of interest, finding Holloway did not have standing to assert the claim. The court overruled the demurrer as to the second cause of action, finding facts sufficient to justify Holloway’s delayed discovery of Vierra’s financial interest in District’s action. 4 Holloway filed a notice of appeal of the judgment entered following the court’s sustaining the demurrer to his conflict of interest cause of action in the second amended complaint. DISCUSSION Holloway argues that the trial court erred in finding he did not have standing to bring a conflict of interest challenge pursuant to Government Code section 1090.5

3 Government Code section 1092, subdivision (a) provides, in relevant part: “(a) Every contract made in violation of any of the provisions of Section 1090 may be avoided at the instance of any party except the officer interested therein.” 4 Following the court overruling the demurrer to the second cause of action, Showcase filed a motion for judgment on the pleadings on the ground that liability under Government Code section 91005 could only be pursued against Vierra as the public official, and not against Showcase. Holloway did not oppose the motion, and the court entered a judgment of dismissal in favor of Showcase. 5 Government Code section 1090 provides: “(a) Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity. [¶] (b) An individual shall not aid or abet a Member of the Legislature or a state, county, district, judicial district, or city officer or employee in violating subdivision (a). [¶] (c) As used in this article, ‘district’ means any agency of the (continued) 3 In response, District and Showcase argue for the first time that the trial court lacked jurisdiction to consider the matter, because Holloway failed to bring a validation action within 60 days of District entering into the real estate contract as required by Code of Civil Procedure section 863.6 Jurisdiction Holloway filed his complaint challenging District’s actions in 2014, four years after District entered into the real estate contract in 2010. District and Showcase argue that we should dismiss this appeal for lack of jurisdiction because Holloway’s complaint was filed beyond the 60-day period for validation actions as set forth in Water Code section 30000 et seq., and Code of Civil Procedure sections 860 and 863. Whether Holloway’s conflict of interest claim is encompassed within Water Code section 30000 et seq., and the 60-day statute of limitations set forth in the validation statutes is a question of law requiring our independent review. (Kaatz v. City of Seaside (2006) 143 Cal.App.4th 13, 28 (Kaatz).) The validation statutes are found in Code of Civil Procedure sections 860 through 870.5. A public agency may file a validation action to determine the validity of any matter brought within the scope of the validation statutes. (Code Civ. Proc., § 860.) Alternatively, any “interested person” may bring a validation action to determine the validity of the matter. (Id., § 863.) A validation action initiated by an “ ‘interested person’ ” is sometimes referred to as a “ ‘reverse validation action.’ ” (Kaatz, supra, 143 Cal.App.4th at p. 30, fn. 16.) If an agency does nothing, and no interested person brings

state formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.” 6 Code of Civil Procedure section 863 provides, in relevant part: “If no proceedings have been brought by the public agency pursuant to this chapter, any interested person may bring an action within the time and in the court specified by Section 860 to determine the validity of such matter.”

4 suit to determine the validity of the action within 60 days, the action is deemed valid. (Id. at p. 19.) The procedures for validation actions are accelerated so the agency or interested persons can obtain a definitive ruling on the validity of the agency’s action. (Code Civ.

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Bluebook (online)
Holloway v. Showcase Realty Agents, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/holloway-v-showcase-realty-agents-inc-calctapp-2018.