Filed 11/24/20

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

STEPHEN K. DAVIS,

Plaintiff and Appellant,

v.

FRESNO UNIFIED SCHOOL DISTRICT et al.,

Defendants and Respondents.

F079811

(Super. Ct. No. 12CECG03718)

OPINION

APPEAL from a judgment of the Superior Court of Fresno County. Kimberly A. 

Gaab, Judge.

Carlin Law Group and Kevin R. Carlin for Plaintiff and Appellant.

Lang Richert & Patch, Mark L. Creede and Stan D. Blyth for Defendant and 

Respondent Fresno Unified School District.

Whitney Thompson & Jeffcoach, Timothy L. Thompson and Mandy L. Jeffcoach 

for Defendant and Respondent Harris Construction Company, Inc.

-ooOooIn 2012, plaintiff Stephen Davis sued the Fresno Unified School District (Fresno 

Unified) and Harris Construction Co., Inc. (Contractor), alleging they entered into a 

$36.7 million contract for the construction of a middle school in violation of California’s 

competitive bidding requirements, the statutory and common law rules governing 

conflicts of interest, and Education Code sections 17406 and 17417. Defendants filed a 
2.

demurrer and obtained a judgment of dismissal. In Davis v. Fresno Unified School Dist.

(2015) 237 Cal.App.4th 261 (Davis I), we reversed the judgment and remanded for 

further proceedings. Based on our review of the four corners of the construction 

agreements and resolution of Fresno Unified’s board, which were attached to Davis’s 

pleadings, we concluded Davis properly alleged three grounds for why Education Code 

section 17406’s exception to competitive bidding did not apply to the purported leaseleaseback contracts. First, the contracts used were not genuine leases but were, in 

substance, simply a traditional construction contract with progress payments. (Davis I, 

supra, at pp. 286, 290.) Second, the contractual arrangement “did not include a financing 

component for the construction of the project.” (Id. at p. 271.) Third, the contractual 

arrangement “did not provide for Fresno Unified’s use of the newly built facilities 

‘during the term of the lease’ as required by [Education Code] section 17406, subdivision 

(a)(1).” (Ibid.) We also concluded California’s statutory and common law rules 

governing conflicts of interest extended to corporate consultants and Davis alleged “facts 

showing Contractor, as a consultant to Fresno Unified, participated in the making of a 

contract in which Contractor subsequently became financially interested”—that is, 

Contractor participated in creating the terms and specifications of the purported leaseleaseback contracts and then became a party to those contracts. (Ibid.)

After remand, the further proceedings included defendants’ motion for judgment 

on the pleadings, which argued the lawsuit had become moot because the construction 

was finished and the contracts terminated. The trial court agreed, concluding (1) the case 

was a reverse validation action under Code of Civil Procedure section 863,1 which is an 

in rem proceeding; (2) invalidating the contracts was no longer effective relief because 

the contracts had been fully performed; and (3) disgorgement of monies paid to 

1 All undesignated statutory references are to the Code of Civil Procedure. 
3.

Contractor was not effective relief because California law does not allow disgorgement in 

an in rem proceeding. Davis appealed. As explained below, we reverse.

First, in determining the type of action or actions Davis is pursuing, his pleading 

must be given a liberal yet objectively reasonable interpretation. (§ 452.) The 

interpretation must take account of both the allegations of fact and the relief requested. 

Here, all of Davis’s causes of action, except for the cause of action labeled declaratory 

relief, requested the disgorgement of funds paid under the illegal contracts. 

Disgorgement is an in personam remedy available in a section 526a taxpayer’s action, but 

is not available in an in rem reverse validation action. Consequently, we interpret 

Davis’s pleading as containing both a reverse validation action under section 863 and a 

taxpayer’s action under section 526a. (See Regus v. City of Baldwin Park (1977) 70 

Cal.App.3d 968, 972 (Regus) [validation action and taxpayer’s action are not mutually 

exclusive].) Thus, defendants and the trial court erroneously interpreted Davis’s lawsuit 

as exclusively an in rem reverse validation action.

Second, based on our interpretation of Davis’s pleading, we consider the legal 

question of whether California’s validation statutes insulate the completed contracts 

between Fresno Unified and Contractor from attack in a taxpayer’s action. The parties’ 

contentions present this issue as whether the purported lease-leaseback contracts fall 

within the ambit of the validation statutes—more specifically, Government Code section 

53511, subdivision (a), which refers to “an action to determine the validity of [a local 

agency’s] bonds, warrants, contracts, obligations or evidences of indebtedness.” (Gov. 

Code, § 53511, subd. (a), italics added.) The term “contracts” is narrowly construed to 

encompass only contracts involving financing and financial obligations. In Davis I, 

based on our review of the documents, we determined the purported lease-leaseback 

contracts “did not include a financing component for the construction of the project.” 

(Davis I, supra, 237 Cal.App.4th at p. 271.) As a result, we conclude the contracts do not 

fall within the ambit of Government Code section 53511 and California’s validation 
4.

statutes. It follows that Davis may pursue a taxpayer’s action and seek an order to 

“disgorge any profits earned ... under the contract.” (San Diegans for Open Government 

v. Public Facilities Financing Authority of City of San Diego (2019) 8 Cal.5th 733, 737 

(San Diegans).) Disgorgement qualifies as effective relief and, therefore, the taxpayer’s 

action part of this lawsuit is not moot.

We therefore reverse the judgment and remand for further proceedings.

FACTS

Consulting Relationship

In February 2012, Fresno Unified and Contractor entered into a preconstruction 

services agreement under which Contractor agreed to provide professional consulting 

services to Fresno Unified relating to the construction of the Rutherford B. Gaston Sr. 

Middle School located in southwest Fresno. A recital stated Contractor agreed to furnish 

preliminary design review services under the agreement, including plan and design 

review, value engineering, schedule preparation and other services for the project. The 

agreement stated Contractor would act as an independent contractor. 

In May 2012, Fresno Unified and Contractor entered into a second, separate 

preconstruction services agreement. The second agreement stated Contractor would 

provide detailed plans, drawings and other documents for the ultimate fabrication and 

erection of steel members to be used in the construction of the project. Davis contends 

the second preconstruction services agreement was approved by Fresno Unified’s 

governing board. The consulting relationship established by the two preconstruction 

service agreements is the basis for Davis’s contention that Contractor had a relationship 

with Fresno Unified similar to an employee or officer and, therefore, Contractor was 

subject to the conflict of interest rules that barred it from having a financial interest in a 

contract that it participated in making.
5.

Construction Agreements

In September 2012, Fresno Unified’s governing board adopted a resolution 

authorizing the execution of contracts under which Contractor would build the project 

described as the Rutherford B. Gaston Sr. Middle School, Phase II. The resolution stated 

the construction would be “a lease-leaseback project” in which (1) Fresno Unified would 

lease the project site, which it owned, to the Contractor, (2) Contractor would build the 

project on the site, and (3) Contractor would lease the improvements and the site back to 

Fresno Unified. The resolution stated it was in the best interest of Fresno Unified to 

construct the project through a lease and leaseback of the site pursuant to Education Code 

section 17406, which allows such arrangements without advertising for bids. The 

contracts between Fresno Unified and Contractor were a site lease (Site Lease) and a 

facilities lease (Facilities Lease; collectively, the Construction Contracts).2 The Site 

Lease and the Facilities Lease were executed by Ruth F. Quinto, the deputy 

superintendent and chief financial officer of Fresno Unified, and Timothy J. Marsh, the 

president of Contractor. 3

Site Lease

The Site Lease provided Fresno Unified would lease the project site to Contractor 

for $1.00 in rent for a period coinciding with the term of the Facilities Lease. The Site 

Lease also stated that title to all improvements made on the site during its term “shall vest 

2

In Davis I, we referred to the Site Lease and the Facilities Lease collectively as the 

“Lease-leaseback Contracts.” (Davis I, supra, 237 Cal.App.4th at p. 271.) Here, we use 

the term “Construction Contracts” because it accurately describes the true nature of the 

arrangement established by the provisions in those documents. (See Park etc. Co. v. 

White River L. Co. (1894) 101 Cal. 37, 39 [calling a paper a lease does not establish it is a 

lease; “the contents of the paper determine its true character”].) 

3 The resolution, Site Lease and Facilities Lease were attached as exhibits A, B, and 

C, respectively, to Davis’s initial complaint and his first amended complaint (FAC), 

which is the operative pleading in this appeal. 
6.

subject to the terms of the Facilities Lease.” The Site Lease was the “lease” portion of 

the purported lease-leaseback arrangement. 

Facilities Lease

The Facilities Lease identified Contractor as the sublessor and Fresno Unified as 

the sublessee. The Facilities Lease is the “leaseback” portion of the purported leaseleaseback arrangement. Under the Facilities Lease, Contractor agreed to build the project 

on the site in accordance with the plans and specifications approved by Fresno Unified 

and the “Construction Provisions” for the project contained in exhibit D to the Facilities 

Lease. The Construction Provisions were a detailed, 55-page construction agreement in 

which Contractor agreed to perform all work and provide and pay for all materials, labor, 

tools, equipment and utilities necessary for the proper execution and completion of the 

project. The guaranteed maximum price of the project was $36,702,876. The time 

allowed for Contractor to complete the project was 595 days from the notice to proceed. 

The Facilities Lease included a provision describing Fresno Unified’s obligation to 

pay by stating “Lease Payments shall be made for the Site and portions of the Project as 

construction of the Project is completed. All Lease Payments will be subject to and not 

exceed the Guaranteed Maximum Price set forth in the Construction Provisions.” The 

“Schedule of Lease Payments” attached to the Facilities Lease referred to the “payments 

for the Project as set forth in the Construction Provisions.” In turn, the Construction 

Provisions outlined monthly progress payments for construction services rendered each 

month, up to 95 percent of the total value for the work performed, with a 5 percent 

retention pending acceptance of the project and recordation of a notice of completion. 

Final payment for all the work was to be made within 35 days after Fresno Unified 

recorded the notice of completion. 

Despite the fact that the funds paid by Fresno Unified to Contractor under the 

Facilities Lease were based solely on the construction services performed by Contractor, 

the Facilities Lease stated the lease payments constituted “the total rent[] for the Project” 
7.

and were paid “for and in consideration of the right to use and occupy the Project during 

each month ....”4 The Facilities Lease also stated the parties “have agreed and 

determined that the total Lease Payments ... do not exceed the fair rental value of the 

Project.” 

The Facilities Lease characterized Fresno Unified’s obligation to make the lease 

payments as “a current expense” of Fresno Unified. It stated the lease payment “shall not 

in any way be construed to be a debt of [Fresno Unified] in contravention of any 

applicable constitutional or statutory limitation or requirement concerning the creation of 

indebtedness of [Fresno Unified] .... Lease Payments due hereunder shall be payable 

only from current funds which are budgeted and appropriated, or otherwise legally 

available, for the purpose of paying Lease Payments ... as consideration for use of the 

Site during the fiscal year of [Fresno Unified] for which such funds were budgeted and 

appropriated ....” 

The Facilities Lease addressed Fresno Unified’s source of funding in a paragraph 

labeled “Appropriation.” The provision stated Fresno Unified “has appropriated that 

portion of the Guaranteed Maximum Price to be earned during the current fiscal year 

from [Fresno Unified’s] current fiscal year and/or State funds to be received during 

[Fresno Unified’s] current fiscal year, and has segregated or will segregate such funds in 

a separate account to be utilized solely for Lease Payments. [Fresno Unified] will do so 

4

It appears Fresno Unified did not actually exercise this right to use and occupy the 

construction site during each (or any) month of the purported lease. In Davis I, we noted 

the FAC alleged “that Fresno Unified did not occupy or use the newly constructed 

facilities during the term of the Facilities Lease” (Davis I, supra, 237 Cal.App.4th at p. 

272) and, consistent with Davis’s allegations of fact, Fresno Unified’s opening brief in 

that appeal “acknowledged the Facilities Lease was in effect only during the construction 

of the school facilities and its counsel confirmed during oral argument that a phased 

completion of the project was not used in this case.” (Ibid.) Thus, Davis’s allegations 

about use and occupancy were not contradicted by the brief or the statements of its 

counsel. (Ibid.) 
8.

for each fiscal year during which the Project is to be constructed or Lease Payments are 

to be made.” 

During the term of the Facilities Lease, Fresno Unified held title to the land and 

obtained title to the improvements “as construction progresse[d] and corresponding Lease 

Payments [we]re made to [Contractor].” The Facilities Lease stated it terminated on the 

completion of the project and the payment of all lease payments due the Contractor. 

After the lease payments were made and the lease term ended, all remaining rights, title 

and interest of the Contractor, if any, to the project and the site were vested in Fresno 

Unified. 

On December 4, 2014, a notice of completion was recorded by the Fresno County 

Recorder. The notice of completion was executed under penalty of perjury by the 

purchasing manager of Fresno Unified. It stated the “work of improvement on the 

property hereinafter described was completed on November 13, 2014” and described the 

work as the construction of the middle school. 

PROCEEDINGS

In November 2012, Davis initiated this litigation by filing a verified complaint 

with two causes of action. The first cause of action was labeled “Reverse Validation 

Action Against Defendants” Fresno Unified and Contractor. The second cause of action 

was labeled “Taxpayer Action for Recovery of Funds Paid by [Fresno Unified] to 

[Contractor] on Facilities Lease.” The complaint’s prayer for relief was divided by cause 

of action. On the reverse validation action, Davis requested findings that (1) the action 

was properly brought under section 863 for judicial invalidation of proceedings leading 

up to and including the approval, execution and delivery of the Site Lease and Facilities 

Lease and (2) the Site Lease and Facilities Leases were illegal, void and unenforceable. 

On the taxpayer action, Davis requested (1) a preliminary injunction and a permanent 

injunction enjoining Fresno Unified from paying any further monies to Contractor on any 
9.

agreement relating to the project and (2) an order directing Contractor to pay back to 

Fresno Unified all monies received under any agreement relating to the project. 

In March 2013, Davis filed his FAC, which listed Fresno Unified, Contractor, and 

all persons interested in the matter of the Construction Contracts as defendants. The 

FAC’s causes of action are (1) failure to comply with the requirements of Public Contract 

Code section 20110 et seq., which applied because the Construction Contracts did not 

create the type of lease-leaseback arrangement authorized in Education Code sections

17400 through 17429, (2) breach of fiduciary duty, (3) failure to comply with the 

competitive bidding requirements of Education Code section 17417 that applied because 

the criteria for the exception outlined in Education Code section 17406 were not satisfied, 

(4) statutory and common law conflicts of interest, (5) improper use of Education Code 

section 17400 et seq., (6) improper delegation of discretion, and (7) declaratory relief. 

Unlike the original complaint, the FAC did not use the term “taxpayer action,” instead

Davis referred to himself throughout as “TAXPAYER.” Also, the labels for each of the 

first six causes of action in the FAC echoed the original complaint’s label for the 

taxpayer action by beginning: “Recovery of Funds Paid by [Fresno Unified] to 

CONTRACTOR ....”5 

Paragraph three of the FAC alleged Davis owned real property within the school 

district and paid taxes on that property. It also alleged Davis’s claims did not seek money 

or damages from any local public entity and, instead, the action was brought solely in the 

public interest to recover Fresno Unified funds paid to others. Paragraph eight of the 

FAC alleged the “action is brought in this court as a special in rem proceeding for judicial 

5 California Rules of Court, rule 2.112 provides that each separately stated cause of 

action must specifically state (1) its number, (2) its nature, (3) the party asserting it if 

there are multiple plaintiffs, and (4) the party or parties to whom it is directed. An 

example of appropriate labeling is “first cause of action for fraud by plaintiff Jones 

against defendant Smith.” 
10.

examination and invalidation of the contracts referenced below relative to the Project.” 

Paragraph nine of the FAC alleged Fresno Unified did not file an action to validate the 

contracts related to the project and, therefore, the action was properly brought by Davis 

under section 863. 

Paragraph 15 of the FAC alleges the Construction Contracts were not awarded as 

required by law and, therefore, were ultra vires, illegal, void and unenforceable, requiring 

monies paid to the Contractor be repaid to Fresno Unified. More specifically, the FAC’s 

first and third causes of action allege the Construction Contracts were awarded to 

Contractor in violation of the competitive bidding requirements for public construction 

contracts because the contracts did not satisfy the criteria for Education Code section 

17406’s exception to the competitive bidding requirements. 

In addition, the FAC’s fourth cause of action alleges common law conflict of 

interest principles and Government Code section 1090 precluded Contractor from being 

awarded the Construction Contracts because Contractor previously acted as a 

professional consultant to Fresno Unified relative to the project and was involved in 

designing and developing the plans and specifications for the project. The fourth cause 

of action further alleges the preconstruction services agreement created a conflict of 

interest for Contractor vis-à-vis subsequent contracts involving the project and, 

consequently, the Construction Contracts between Fresno Unified and Contractor were 

ultra vires, void and unenforceable, requiring all money paid thereunder to be returned by 

Contractor to Fresno Unified. 

The final paragraph of each of the FAC’s first six causes of action address the 

consequences of the violation or breach asserted by reiterating part of the allegations in 

paragraph 15. In particular, those paragraphs state the Construction Contracts are ultra 

vires, illegal, void and unenforceable under California law and all monies paid by Fresno 

Unified under the contracts must be paid back or returned by Contractor. 
11.

The FAC’s prayer for relief asked the trial court to (1) authorize publication of the 

summons as the method for obtaining jurisdiction over all interested parties, (2) find the 

“action was properly brought under CCP § 863 et seq., for judicial invalidation of 

proceedings leading up to and including the approval, execution and delivery of the Site 

Lease and Facilities Lease,” (3) declare the Site Lease and Facilities Lease ultra vires, 

illegal, void or unenforceable, and (4) order Contractor to pay back to Fresno Unified all 

monies received under the Site Lease and Facilities Lease. Davis also requested 

reasonable attorney fees under section 1021.5 and costs. 

First Appeal

In 2013, Fresno Unified and Contractor filed separate, similar demurrers to the 

FAC.6 (Davis I, supra, 237 Cal.App.4th at p. 274.) The trial court sustained the 

demurrers with leave to amend, Davis chose not to amend, and judgment was entered in 

favor of Fresno Unified and Contractor. Davis appealed. (Ibid.)

In June 2015, we reversed the judgment and remanded with instructions to 

overrule the demurrer except as to the second cause of action (breach of fiduciary duty), 

the fifth cause of action (improper use of lease-leaseback arrangement when sufficient 

funds are available), and the conflict of interest claim based on the Political Reform Act 

of 1974, Government Code section 81000 et seq. (Davis I, supra, 237 Cal.App.4th at p. 

302.) The FAC’s counts or legal theories that survived the demurrer alleged (1) other 

violations of California’s competitive bidding laws and Education Code sections 17406 

and 17417 (first and third causes of action) and (2) conflicts of interest under 

6 Filing a demurrer or answer without raising a jurisdictional objection constitutes a 

general appearance. (See Fireman’s Fund Ins. Co. v. Sparks Construction, Inc. (2004) 

114 Cal.App.4th 1135, 1145.) “ ‘A general appearance operates as a consent to 

jurisdiction of the person, dispensing with the requirement of service of process, and 

curing defects in service.’ ” (Ibid.; Code Civ. Proc., § 410.50, subd. (a).) Here, 

Contractor’s general appearance is one basis for concluding the trial court had personal 

(i.e., in personam) jurisdiction over Contractor.
12.

Government Code section 1090 and common law principles (fourth cause of action). In 

August 2015, after the Supreme Court denied review, this court issued a remittitur to the 

trial court. 

Proceedings on Remand

In October 2015, Fresno Unified and Contractor filed answers to the FAC that 

contained general denials and asserted many affirmative defenses, including mootness. 

In April 2016, Fresno Unified filed a motion for judgment on the pleadings on the 

grounds Davis lacked standing to pursue the claims. In May 2016, the trial court denied 

the motion. 

In August 2016, Davis filed a motion for summary adjudication of his statutory 

and common law conflict of interest claims against Contractor. In February 2017, the 

trial court denied Davis’s motion for summary adjudication, concluding there was at least 

a triable issue of fact regarding whether Contractor was an officer or employee for 

purposes of Government Code section 1090. Davis filed a petition for writ of mandate 

with this court seeking an order directing the trial court to grant the motion for summary 

adjudication. We summarily denied the petition. 

Judgment on the Pleadings

In May 2019, Fresno Unified filed another motion for judgment on the pleadings. 

This motion argued Davis’s FAC was subject to California validation statutes and his 

reverse validation action was moot because the Construction Contracts had been fully 

performed. Contractor joined in Fresno Unified’s motion. The motion was supported by 

a request for judicial notice of the notice of completion recorded on December 4, 2014,

by the Fresno County Recorder, which notice stated the construction of the middle school 

was completed on November 13, 2014. 

Davis’s opposition argued the trial “court can still grant Taxpayer his primary 

relief requested (disgorgement from [Contractor] to [Fresno Unified]) so this case is not 

moot.” (Fn. omitted.) Davis argued his taxpayer claims were not moot because (1) 
13.

conflict of interest claims are not subject to the validation statutes, (2) the contracts at 

issue were not the kind that are subject to validation, and (3) effective relief in the form 

of Contractor’s disgorgement of monies received from Fresno Unified was available 

despite the contracts being fully performed. Davis characterized the FAC’s gravamen7 as 

“disgorgement back to [Fresno Unified] of all funds paid by [Fresno Unified] to 

[Contractor] under the challenged contracts based on breach of the legal duties asserted in 

each cause of action.” (Italics added.) This argument is supported by, among other 

things, the statement in paragraph three of the FAC that “this action is brought solely in 

the public interest to recover to [Fresno Unified] funds it has paid to others under the 

contracts referenced below.” (Italics added.) 

In June 2019, the trial court heard argument on defendants’ motion for judgment 

on the pleadings. On July 3, 2019, the court issued a written order granting the motion as 

to both defendants without leave to amend. The court later filed a judgment stating 

Davis’s FAC was dismissed in its entirety and awarding allowable costs to Fresno 

Unified and Contractor. Davis appealed. 

DISCUSSION

I. BASIC LEGAL PRINCIPLES

A. Judgment on the Pleadings

1. Statutory Provisions

Section 438 allows defendants who have filed an answer to the complaint to 

“move for judgment on the pleadings.” (§ 438, subds. (b)(1), (f)(2).) The two grounds a 

defendant may raise are that (1) “[t]he court has no jurisdiction of the subject of the cause 

7 Black’s Law Dictionary (8th ed. 2004) defines “gravamen” as “[t]he substantial 

point or essence of a claim, grievance, or complaint.” (Id. at p. 721.) In effect, Davis is 

arguing that his FAC’s point of substance is the recovery of funds paid because a 

judgment stating a contract is invalid has less substance or impact than a judgment 

directing the disgorgement of funds. 
14.

of action alleged in the complaint” or (2) “[t]he complaint does not state facts sufficient 

to constitute a cause of action against that defendant.” (§ 438, subd. (c)(1)(B).)8 These 

grounds “shall appear on the face of the challenged pleading or from any matter of which 

the court is required to take judicial notice.” (§ 438, subd. (d).) If the motion is based on 

a matter that may be judicially noticed under Evidence Code sections 452 or 453, “the 

matter shall be specified in the notice of motion, or in the supporting points and 

authorities,” unless the court permits otherwise. (§ 438, subd. (d); see Cloud v. Northrop 

Grumman Corp. (1998) 67 Cal.App.4th 995, 999 [appellate court’s review of a judgment 

on the pleadings is limited to factual allegations in pleading and any matter for which 

judicial notice may be taken].) For purposes of this appeal, we treat defendants’ 

mootness argument as a challenge to whether Davis has alleged sufficient facts9to 

constitute a cause of action (§ 438, subd. (c)(1)(B)(ii)), rather than a challenge to the trial 

court’s subject matter jurisdiction (§ 438, subd. (c)(1)(B)(i)). 

When determining whether a complaint states facts sufficient to constitute a cause 

of action, trial and appellate courts apply the following principle: “In the construction of 

a pleading, for the purpose of determining its effect, its allegations must be liberally 

construed, with a view to substantial justice between the parties.” (§ 452.) If a motion 

for judgment on the pleadings is granted as to the entire complaint without leave to 

8 The quoted text is identical to that appearing in section 430.10, subdivisions (a) 

and (e) except the quoted text refers to the “complaint” instead of the “pleading.” Section 

430.10 sets forth the grounds that may be raised in a demurrer. 

9 Davis’s allegations include the contents of the Construction Contracts and related 

board resolution, which were attached to the FAC as exhibits. A motion for judgment on 

the pleadings, like a general demurrer, admits the contents of a contract attached to the 

complaint as an exhibit. (See Martinez v. Socoma Companies Inc. (1974) 11 Cal.3d 394, 

400 [general demurrer admits the contents of an instrument attached to the complaint].) 

Our interpretation of the Construction Contracts in Davis I did not consider parol 

evidence or the more basic question of whether parol evidence was admissible for use in 

construing those contracts. (See Winet v. Price (1992) 4 Cal.App.4th 1159, 1165–1166 

[admissibility and use of parol evidence in contract interpretation].) 
15.

amend, “then judgment shall be entered forthwith in accordance with the motion.” 

(§ 438, subd. (h)(3).)

2. Standard of Review

Some of the foregoing statutory provisions are reflected in our Supreme Court’s 

statements about appellate review of an order granting a motion for judgment on the 

pleadings:

“[W]e treat the properly pleaded allegations of [the] complaint as true, and

also consider those matters subject to judicial notice. [Citations.] 

‘Moreover, the allegations must be liberally construed with a view to 

attaining substantial justice among the parties.’ [Citation.] ‘Our primary 

task is to determine whether the facts alleged provide the basis for a cause 

of action against defendants under any theory.’ [Citation.]” (Alliance 

Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1232.) 

When liberally construing a pleading, courts give its allegations an objectively 

reasonable interpretation, reading it as a whole and its parts in their context. (Blank v. 

Kirwan (1985) 39 Cal.3d 311, 318.) When a motion for judgment on the pleadings is 

granted for failing to state facts sufficient to constitute a legally cognizable claim, 

appellate courts apply the same rules that govern the review of orders sustaining a general 

demurrer. (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1401.) 

Thus, appellate courts are not bound by the trial court’s interpretation of the pleading but 

are required to render their independent judgment on the legal question of whether a 

cause of action has been stated. (Hoffman v. State Farm Fire & Casualty Co. (1993) 16 

Cal.App.4th 184, 189; see Cellular Plus, Inc. v. Superior Court (1993) 14 Cal.App.4th 

1224, 1231 [sufficiency of allegations is a question of law].) 

B. Mootness Doctrine

Generally, California courts decide only justiciable issues. (Wilson & Wilson v. 

City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1573 (Wilson).) 

Justiciability means the questions litigated are based on an actual controversy. (Ibid.) 

Unripeness and mootness describe situations where there is no justiciable controversy. 
16.

(Ibid.) Unripe cases are those in which an actual dispute or controversy has yet to come 

into existence. (Ibid.) In comparison, mootness occurs when an actual controversy that 

once was ripe no longer exists due to a change in circumstances. (Ibid.)

As the parties recognize, the test for determining whether a case is moot is 

“whether the court can grant the plaintiff any effectual relief.” (Wilson, supra, 191 

Cal.App.4th at p. 1574.) As a general rule, when events render a case moot, the trial or 

appellate court should dismiss it. (Ibid.; see Connerly v. Schwarzenegger (2007) 146 

Cal.App.4th 739, 752 [if a controversy is not justiciable, the proper remedy is to dismiss 

rather than rendering judgment for one side or the other].) 

C. Validation Actions

1. Action by Public Agency

A validation action “is a lawsuit filed and prosecuted for the purpose of securing a 

judgment determining the validity of a particular ... governmental decision or act.” (Blue 

v. City of Los Angeles (2006) 137 Cal.App.4th 1131, 1135, fn. 4.) Validation actions are 

governed by the chapter in the Code of Civil Procedure that contains sections 860 

through 870.5. Section 860 provides: 

“A public agency may upon the existence of any matter which under any 

other law is authorized to be determined all to this chapter, and for 60 days 

thereafter, bring an action in the superior court ... to determine the validity 

of such matter. The action shall be in the nature of a proceeding in rem.”

Public agencies are not obligated to bring validation actions. Instead, an agency 

may choose to do nothing and allow the agency decision or act to be validated by 

operation of law based on the passage of time. (California Commerce Casino, Inc. v. 

Schwarzenegger (2007) 146 Cal.App.4th 1406, 1420, fn. 12.) Section 869 provides that 

“[n]o contest ... of any thing or matter under this chapter shall be made other than within 

the time and the manner herein specified.” 
17.

2. Reverse Validation by Interested Person

Prior to the expiration of the 60-day period, an “interested person” may initiate a 

proceeding to determine the validity of a particular agency decision or act. (§ 863.) 

Generally, such a proceeding is called a “ ‘reverse validation action.’ ” (Planning & 

Conservation League v. Department of Water Resources (2000) 83 Cal.App.4th 892, 922; 

cf. Santa Clarita Organization for Planning & Environment v. Castaic Lake Water 

Agency (2016) 1 Cal.App.5th 1084, 1096 [action under § 863 is “a so-called ‘inverse’ or 

‘reverse’ validation proceeding”] (Castaic Lake).) Section 863 states: “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.”10 When the 60-day period passes without an 

interested person bringing an action under section 863, the agency’s decision becomes

immune from attack whether it is legally valid or not. (City of Ontario v. Superior Court

(1970) 2 Cal.3d 335, 341–342 (Ontario).)

3. Statutory Purpose

The validation statutes and the 60-day limitation period seek (1) to limit the extent 

to which litigation may delay and thus impair a public agency’s ability to operate 

financially and (2) to remove uncertainty adversely impacting the agency’s access to 

credit. (Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 843 (Friedland).) 

Litigation, either pending or forthcoming, affects the marketability of public bonds and 

10 The remainder of section 863 states: “The public agency shall be a defendant and 

shall be served with the summons and complaint in the action in the manner provided by 

law for the service of a summons in a civil action. In any such action the summons shall 

be in the form prescribed in Section 861.1 except that in addition to being directed to ‘all 

persons interested in the matter of [specifying the matter],’ it shall also be directed to the 

public agency. If the interested person bringing such action fails to complete the 

publication and such other notice as may be prescribed by the court in accordance with 

Section 861 and to file proof thereof in the action within 60 days from the filing of his 

complaint, the action shall be forthwith dismissed on the motion of the public agency 

unless good cause for such failure is shown by the interested person.” 
18.

the agency’s ability to obtain other types of third-party financing. (Ibid.) The inability to 

obtain financing or the higher cost of that financing may impair the agency’s ability to 

fulfill its responsibilities. (Ibid.) 

Based on these concerns with delays and uncertainty, a central theme in the 

validation procedures is the speedy determination of the validity of the public agency’s 

decision or act in a single dispositive final judgment. (Friedland, supra, 62 Cal.App.4th 

at p. 843.) Accordingly, the validation statutes are construed to further their purpose—

that is, promptly settling all questions about the validity of the agency’s decision or act. 

(Ibid.; see § 870 [conclusive and binding effect of a judgment in a validation action].)

4. Scope of Validation Actions

Not all acts or transactions of a public agency are subject to validation. (Kaatz v. 

City of Seaside (2006) 143 Cal.App.4th 13, 19 (Kaatz).) The language in section 860 

does not specifically identify the matters subject to validation actions. Instead, section 

860 refers to “any matter which under any other law is authorized to be determined 

pursuant to this chapter.” Based on this reference to “any other law,” California courts 

examine other statutes (and cases interpreting those statutes) to determine the scope of 

agency decisions and acts that are subject to validation under the validation statute. 

California has over 200 statutes that provide validation proceedings, most of which are 

found in the Government Code and the Water Code. (Kaatz, supra, at p. 31, fn. 19.) 

The scope of the validation statutes is further defined by the text referring to a 

validation action as an in rem proceeding. As an in rem proceeding, a validation action 

operates against the property in question and, therefore, is distinct from a judgment, order 

or injunction that operates against persons. (Friedland, supra, 62 Cal.App.4th at p. 843.) 

For purposes of this appeal, “any other law” refers to Government Code section 

53511, subdivision (a), which states in full: “A local agency may bring an action to 

determine the validity of its bonds, warrants, contracts, obligations or evidences of 
19.

indebtedness pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 

of the Code of Civil Procedure.” (Italics added.) Application of this text raises the 

question of whether the Construction Contracts qualify as “contracts” for purposes of 

Government Code section 53511, subdivision (a). Davis contends they do not. 

Defendants argue the contrary. The narrow interpretation given to the term “contracts” 

and how that interpretation applies to the Construction Contracts is discussed in part 

III.B.2., post. 

5. Relief Available in Validation Action

California’s test for mootness asks whether the court can grant any effectual relief. 

(Wilson, supra, 191 Cal.App.4th at p. 1574.) Consequently, we identify the relief 

available in a validation action. A typical validation proceeding “seeks a declaratory 

judgment that the bonds, assessments, etc., of the agency are or are not valid.” (Ontario, 

supra, 2 Cal.3d at p. 344.) Injunctive relief or an order compelling restitution to the 

public agency of all money unlawfully paid are not authorized by the validation statutes. 

(Id. at pp. 344–345.) Accordingly, regardless of whether a validation action is brought by 

a public agency or an interested person, the relief available is limited to a judgment 

declaring the subject matter of the action is valid or invalid.

D. Taxpayer’s Action

“[S]ection 526a permits a taxpayer to bring an action to restrain or prevent an 

illegal expenditure of public money. No showing of special damage to a particular 

taxpayer is required as a requisite for bringing a taxpayer suit.” (Connerly v. State 

Personnel Bd. (2001) 92 Cal.App.4th 16, 29.) The primary purpose of section 526a is to 

“ ‘enable a large body of the citizenry to challenge governmental action which would 

otherwise go unchallenged in the courts because of the standing requirement.’ ” (Blair v. 

Pitchess (1971) 5 Cal.3d 258, 267–268 (Blair).) To promote this remedial purpose, 

section 526a is construed broadly. (Blair, supra, at p. 268.) The breadth of taxpayer’s 
20.

actions is demonstrated by the variety of legal theories that may be raised. For example, 

a taxpayer’s action may include claims alleging fraud, collusion, ultra vires transaction,

or the failure to perform mandatory duties. (Harman v. City and County of San 

Francisco (1972) 7 Cal.3d 150, 160; see Miller v. McKinnon (1942) 20 Cal.2d 83, 96 

[taxpayer had standing to sue based on noncompliance with competitive bidding statute].) 

The scope of taxpayer’s actions is not unlimited; they must not trespass into the domain 

of legislative or executive discretion but must measure governmental performance against 

a legal standard. (Harman, supra, at pp. 160–161.) 

Section 526a addresses the remedies available in a taxpayer’s action by referring 

to a judgment “restraining and preventing any illegal expenditure” of funds or other 

property by a local agency. Thus, an injunction preventing the illegal payment of funds 

is explicitly authorized. (Blair, supra, 5 Cal.3d at p. 268.) Our Supreme Court has 

construed the statute broadly and has “even permitted taxpayers to sue on behalf of a city 

or county to recover funds illegally expended. (Osburn v. Stone (1915) 170 Cal. 480, 482 

[150 P. 367].)” (Blair, supra, at p. 268; see 59 Cal.Jur.3d (2012) Taxpayers’ Actions, 

§ 7, pp. 191–193 [restoration of public funds].) Furthermore, “the fact that [the taxpayer] 

could have enjoined the illegal expenditure does not prevent [him] seeking to recover on 

behalf of the [local agency] monies illegally expended.” (59 Cal.Jur.3d, supra, 

Taxpayers’ Actions, § 7, pp. 192–193, citing Osburn v. Stone, supra, 170 Cal. 480.)

II. INTERPRETING DAVIS’S PLEADING

The first dispute we consider is whether the FAC alleges only a validation action 

or, alternatively, sets forth both a validation action and a taxpayer’s action. This is a 

matter of interpretation, which is a question of law. Our interpretation of Davis’s 

pleadings is guided by the principle that the “label given a petition, action or other 

pleading is not determinative; rather, the true nature of a petition or cause of action is 

based on the facts alleged and remedy sought in that pleading.” (Escamilla v. 
21.

Department of Corrections & Rehabilitation (2006) 141 Cal.App.4th 498, 511.) 

Although captions and labels are not determinative, they may provide some insight into 

the claims a plaintiff attempted to pursue. (See Cal. Rules of Court, rules 2.111(6) [first 

page of pleading must state the character of the action or proceeding], 2.112 [information 

about each cause of action or count].) 

Once we have identified the claim or claims Davis attempted to pursue, we can 

proceed to the question of whether the claim “falls within the boundaries of a particular 

legislative declaration that the validation statutes apply.” (Santa Clarita Organization for 

Planning & Environment v. Abercrombie (2015) 240 Cal.App.4th 300, 308 

(Abercrombie).) In this case, the “particular legislative declaration” is Government Code 

section 53511, subdivision (a). (See pt. I.C.4., ante.) Whether Davis’s claim or claims 

fall within the boundaries or language of Government Code section 53511, subdivision 

(a) involves an assessment of the gravamen of the complaint and the nature of the right 

sued upon, rather than the form of the action or relief demanded. (Abercrombie, supra, at 

p. 308.) That assessment is undertaken in part III.B.2. of this opinion.

A. Contents of the Pleadings

1. Original Complaint

The original complaint provides background for our interpretation of the FAC. Its 

caption states it is a complaint for (1) reverse validation pursuant to section 863 and (2) 

recovery of public funds expended on an illegal contract. The second cause of action was 

labeled “Taxpayer Action for Recovery of Funds Paid by [Fresno Unified] to 

[Contractor] on Facilities Lease.” Consistent with the label’s reference to a taxpayer 

action, paragraph 24 of the original complaint states: “Pursuant to long standing 

California law, any contract not made in strict conformity with the legal requirements 

thereto is null, void and unenforceable and a taxpayer can bring an action on behalf of 

the public entity involved therein for recovery of all funds paid thereunder.” (Italics 
22.

added.) Thus, the labels and allegations contained in the original pleadings show Davis 

attempted to state both a reverse validation action under section 863 and a taxpayer’s 

action.

Furthermore, the prayer for relief on the second cause of action requested 

injunctive relief and an order directing Contractor “to pay back to [Fresno Unified] all 

monies received under any contract relative to the Project.” Based on the foregoing 

contents of the original complaint, an objectively reasonable person familiar with 

California law would construe it as asserting both a reverse validation action (first cause 

of action) and a taxpayer action (second cause of action). 

2. First Amended Complaint

Davis’s FAC, unlike his original complaint, does not use the term “taxpayer 

action.” Also, the FAC does not cite section 526a. These omissions create the possibility 

that Davis abandoned the taxpayer action when he filed the FAC and focused exclusively 

on bringing a reverse validation action. However, the FAC’s allegations, labels, and 

prayer for relief demonstrate otherwise. 

For instance, Davis refers to himself as “TAXPAYER” throughout the FAC. 

Also, the FAC’s first paragraph states Davis brings the action on behalf of himself, 

taxpayers and all others similarly interested to (1) contest the validity of the Construction 

Contracts and (2) “recover to FRESNO UNIFIED ... all monies paid by it under said 

contracts.” The recovery of monies paid is emphasized in the labels for each of the 

FAC’s first six causes of action, all of which begin: “Recovery of Funds Paid by [Fresno 

Unified] to CONTRACTOR ....” The last sentence in the final paragraph of each of the 

first six causes of action—that is, paragraphs 26, 31, 41, 47, 51 and 55 of the FAC—

assert the Construction Contracts are ultra vires, illegal, void and unenforceable under 

California law and all monies paid by Fresno Unified under the contracts must be paid 

back or returned by Contractor. 
23.

The prayer for relief in the FAC is drafted so that each of the seven numbered 

paragraphs apply to “each of the foregoing causes of action.” The first numbered 

paragraph requests an order allowing notice of the lawsuit be given by publication, a 

procedure specifically authorized by the validation statutes. (§§ 861, 861.1.) The second 

paragraph requests a finding that “this action was properly brought under CCP § 863 et 

seq., for judicial invalidation of proceedings.” The third paragraph asks the court to 

declare the Site Lease and the Facilities Lease “are ultra vires, illegal, void, and/or 

unenforceable.” The fourth numbered paragraph of the FAC’s prayer for relief requests 

that Contractor be ordered to pay back to Fresno Unified all monies received under the 

Site Lease and the Facilities Lease. 

B. Analysis of the First Amended Complaint

1. Claims Remaining

Our analysis of the FAC’s contents to determine whether Davis attempted to assert 

only a validation action or whether he attempted to combine a validation action with a 

taxpayer’s action examines only the causes of action remaining after defendants’ earlier 

demurrer. In other words, we consider only the operative portions of the FAC. In Davis 

I, we reversed the judgment of dismissal and directed the trial court to enter an order 

sustaining the demurrer on the breach of fiduciary duty claim (the second cause of 

action), the conflict of interest claim based on a violation of the Political Reform Act of 

1974, and the fifth cause of action alleging the use of a lease-leaseback arrangement is 

improper when funds for construction are available to a school from another source. 

(Davis I, supra, 237 Cal.App.4th at p. 302.) We also directed the trial court to overrule 

“the demurrer as to the other causes of action.” (Ibid.) As a result, the legal theories 

surviving the demurrer fall into two categories: (1) violations of California’s competitive 

bidding laws and Education Code sections 17406 and 17417 (first and third causes of 
24.

action) and (2) conflict of interest claims (fourth cause of action). The conflict of interest 

claims are based on Government Code section 1090 and common law principles.

2. Reverse Validation Action

It is undisputed that the FAC sets forth a reverse validation action asserting the 

invalidity of the Construction Contracts based on conflicts of interest and violations of 

California’s competitive bidding laws and Education Code sections 17406 and 17417. 

Thus, the FAC’s many references to validation or invalidation and the related statutes 

need not be described here. Because the FAC unambiguously alleges a reverse validation 

action, the critical question is whether Davis attempted to combine a taxpayer action with 

the reverse validation action. 

3. Taxpayer’s Action

California law allows a claim brought under the validation statutes to be combined 

in a single lawsuit with other types of claims. In Regus, supra, 70 Cal.App.3d 968, the 

court set forth the principle that “a validation action under ... section 860 et seq., and a 

taxpayer’s action under ... section 526a are not mutually exclusive.” (Id. at p. 972.) 

Accordingly, California law allowed Davis to pursue a validation action and a taxpayer 

action in a single lawsuit. In other words, the fact that Davis pursued a reverse validation 

action in the FAC does not necessarily prevent his pursuit of a taxpayer’s action in the 

same pleading. 

Initially, we note that paragraph eight of the FAC stated in full: “This action is 

brought in this court as a special in rem proceeding for judicial examination and 

invalidation of the contracts referenced below relative to the Project.”

11

 Paragraph eight

11 This statement is similar to the statement made in the complaints considered in 

McGee v. Torrance Unified School Dist. (2020) 49 Cal.App.5th 814 (McGee II). There, 

the Second District stated, “McGee alleged each complaint was ‘brought in this court as a 

special in rem proceeding’ to declare the challenged agreements void and invalid.” (Id. at 

p. 820.) 
25.

did not state the action was brought as “exclusively” or “only” as an in rem proceeding 

for the invalidation of the Construction Contracts. Conversely, it did not state that it was 

brought as, “among other things,” a special in rem proceeding. Consequently, the 

question of interpretation presented is whether to infer the entire lawsuit was brought 

exclusively as an in rem validation proceeding. Whether such an inference should be 

drawn requires an evaluation of the contents of the FAC as a whole. (See Blank v. 

Kirwan, supra, 39 Cal.3d at p. 318 [pleading interpreted as a whole with its parts read in 

context.) Also, because “pleadings are to be liberally construed in favor of the pleader” 

(Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 835),

the inference drawn should be favorable to Davis so long as it is objectively reasonable. 

Viewing the FAC as a whole and reading its parts in context, we consider its 

repeated statements that all monies paid to Contractor by Fresno Unified under the 

Construction Contracts must be paid back by Contractor and its prayer for relief 

requesting that Contractor be ordered to pay back the monies. These statements and 

prayer for relief unequivocally demonstrate Davis was seeking a remedy that is not 

available in a validation action but is available in a taxpayer’s action. In Ontario, supra, 

2 Cal.3d 335, our Supreme Court stated a typical validation proceeding “seeks a 

declaratory judgment that the bonds, assessments, etc., of the agency are or are not 

valid.” (Ontario, supra, 2 Cal.3d at p. 344.) The plaintiff in Ontario prayed for a 

declaration invalidating agreements for the creation and operation of a speedway and 

related bonds. (Ibid.) The plaintiff also sought two other kinds of relief: (1) an 

injunction restraining the parties from spending funds or doing any other acts to further 

the project and (2) an order compelling restitution to the city of all money unlawfully 

paid in connection with the project. (Ibid.) As to the injunctive relief, the Supreme Court 

concluded it was not authorized under the validation statutes but remained available in a 

taxpayer action. (Id. at pp. 344–345.) As to the restitution of public funds, the court 

stated: “Nothing in the general validating statute contemplates such an in personam
26.

cause of action for repayment of public money unlawfully expended, and again no reason 

appears to deny plaintiffs their normal remedy in this regard.” (Id. at p. 345.) This 

statement about a normal remedy refers to the relief available in a taxpayer action and 

comports with the principle that a validation action may be combined with taxpayer 

action in a single lawsuit. 

Based on Ontario and the contents of the FAC, we conclude an objectively 

reasonable person would construe the FAC as pursuing (i.e., attempting to assert) both a 

validation action and a taxpayer action. Accordingly, the trial court’s conclusion that this 

lawsuit should be characterized solely as a reverse validation action cannot be upheld 

based on our interpretation of the FAC and the claims it attempted to assert. 

4. Dual Nature of the Lawsuit Was Not Abandoned

The dual nature of Davis’s lawsuit means the FAC’s remaining legal theories or 

causes of action—specifically, the alleged violations of California’s competitive bidding 

laws and Education Code sections 17406 and 17417 and the conflict of interest claims—

were intended to perform a double duty. First, looking at the FAC as a reverse validation 

action, those theories of illegality set forth the grounds for invalidating the Construction 

Contracts. Second, examining the FAC as a taxpayer’s action, those theories of illegality 

adequately allege a basis for requiring Contractor to return (i.e., repay, refund, restore or 

disgorge) the public funds paid under the Construction Contracts. In other words, in the 

taxpayer’s action, Davis is attempting to establish public funds were illegally expended 

by proving the Construction Contracts (1) violated California’s competitive bidding laws 

and Education Code sections 17406 and 17417, (2) violated the prohibition on conflicts 

of interest set forth in Government Code section 1090, or (3) violated the common law 

principles governing conflicts of interest.12 (See San Diegans, supra, 8 Cal.5th at p. 746 

12 These claims, which also can be referred to as theories of liability, are described in 

Davis I, supra, 237 Cal.App.4th at pages 271, 290 (pt. II.E., summary of competitive 
27.

[“violations of section 1090 can be challenged ... by taxpayers under Code of Civil 

Procedure section 526a where appropriate”].) 

The foregoing interpretation of the FAC is supported by the arguments Davis 

made in opposing the motion for judgment on the pleadings and the arguments he raised 

on appeal. For example, Davis’s opposition to the motion asserted his taxpayer’s 

complaint was not moot (1) because the conflict of interest claims were not subject to the 

validation statutes, (2) the court could grant effectual relief by ordering disgorgement 

even though the contracts were fully performed, and (3) the Construction Contracts were 

not the kind of contracts that are subject to the validation statutes. Davis argued the cases 

relied upon by defendants were distinguishable because the plaintiffs in those cases did 

not seek disgorgement of monies paid under void contracts—a remedy not available in a 

reverse validation action. On appeal, Davis’s opening brief cites Regus for the principle 

that a validation action and a taxpayer’s action under section 526a are not mutually 

exclusive. Furthermore, that brief requests this court to reverse the judgment and remand 

the matter with directions to “immediately proceed with trial on the merits of [Davis’s] in 

person[a]m taxpayer claims against [Contractor].” The brief also states Davis “expressly 

seeks a judgment against [Contractor] for disgorgement of all money paid by [Fresno 

Unified] to [Contractor] under the challenged contracts that are void on account of one 

or more of Appellant’s causes of action.” (Italics added.) Consequently, Davis’s 

opposition to the motion for judgment on the pleadings and his appellate briefing cannot 

be construed as abandoning or forfeiting the taxpayer’s action portion of this lawsuit. 

III. AVAILABLE REMEDIES AND MOOTNESS

Based on our conclusion that Davis is pursuing both a validation action and a 

taxpayer action, our application of California’s mootness doctrine considers what 

bidding allegations), 299 to 301 (pt. IV.B.3., analysis of statutory conflict of interest 

claim), and 301 (pt. V.C., common law conflict of interest claim). 
28.

remedies are available in each type of action and whether any available remedy would 

constitute “effectual relief.” (Wilson, supra, 191 Cal.App.4th at p. 1574.)

A. Validation Action

The relief granted in a validation action is a declaratory judgment stating the 

subject of the lawsuit is or is not valid. (Ontario, supra, 2 Cal.3d at p. 344.) Here, the 

Site Lease and the Facilities Lease have been fully performed and they are no longer in 

effect. Accordingly, the question presented is whether a declaratory judgment stating the 

leases are invalid would constitute effectual relief. Based on existing case law, we 

conclude a declaratory judgment invalidating the fully performed leases would not be 

effectual relief. 

In Jennings v. Strathmore Public Utility Dist. (1951) 102 Cal.App.2d 548 

(Jennings), the plaintiff filed a lawsuit against a public utility district and two contractors 

seeking an injunction and a declaration that certain construction contracts were void. (Id. 

at p. 548.) The injunction sought to stop further construction of a sewage disposal plant 

and distribution lines. (Ibid.) The plaintiff alleged the contracts had been made in 

violation of the Labor Code prevailing wage rate requirements. (Jennings, supra, p. 549.) 

The utilities district filed a motion to dismiss, contending (1) the remedies in the Labor 

Code were exclusive and (2) the plaintiff was not a taxpayer and, therefore, lacked the 

requisite interest to maintain the action. (Jennings, supra, at p. 549.) The trial court 

granted the motion to dismiss and the plaintiff appealed. While the appeal was pending, 

“the work, which was in the process of completion at the time of trial, [was] fully 

completed, all contractors and workmen [were] paid in full, and notice of completion 

[was] filed and recorded in June 1950.” (Ibid.) 

The utilities district argued on appeal that the matter had become moot and the 

appeal should be dismissed. (Jennings, supra, 102 Cal.App.2d at p. 549.) The appellate 

court agreed. First, the court concluded the issue of enjoining or restraining the district 
29.

from proceeding with the work had become moot because the work had been completed. 

Second, the court concluded the question of the invalidity of the two contracts was moot 

because “a declaration that the contracts were void would not afford plaintiff any relief.” 

(Id. at p. 550.) In other words, “a decision as to the validity of the contracts, at this time, 

after the work has been completed and after the payments have been made and where no 

relief under the complaint could be afforded plaintiff, would be purely academic and 

would serve no useful purpose.” (Id. at p. 551.) 

Although Jennings is distinguishable from the present case because Jennings did 

not include a taxpayer action, we conclude it establishes the precedent that a declaratory 

judgment as to the validity of completed contracts is not effectual relief. Based on this 

precedent, we conclude Davis’s request for a declaratory judgment stating the Site Lease 

and the Facilities Lease are invalid is moot because such a judgment provides no 

effectual relief. (See Daily Journal Corp. v. County of Los Angeles (2009) 172 

Cal.App.4th 1550, 1557 [county contract in question had expired]; County Sanitation 

Dist. No. 2 v. County of Kern (2005) 127 Cal.App.4th 1544, 1628–1629 [certain 

environmental claims were moot because they challenged acts taken under a contract that 

was no longer in effect]; Giles v. Horn (2002) 100 Cal.App.4th 206, 227 [challenge to 

county contracts was moot where contracts had been fully performed and had expired].) 

Accordingly, dismissal of the validation portion of Davis’s lawsuit is appropriate on 

grounds of mootness. (See Wilson, supra, 191 Cal.App.4th at p. 1574; Connerly v. 

Schwarzenegger, supra, 146 Cal.App.4th at p. 752 [proper remedy for mootness is 

dismissal rather than rendering judgment for one side or the other].)

B. Taxpayer Action

Next, we consider whether disgorgement of monies received by Contractor is a 

remedy that continues to be available in Davis’s taxpayer’s action. In the taxpayer’s 

action, Davis alleges the expenditure of funds under the Construction Contracts was
30.

illegal because of (1) violations of California’s competitive bidding laws and Education 

Code sections 17406 and 17417 and (2) conflicts of interest. As described below, 

restoration of illegally expended public funds is an available remedy and, therefore, 

Davis’s taxpayer action is not moot.

1. Disgorgement in Taxpayer Actions

In Ontario, supra, 2 Cal.3d 335, the Supreme Court discussed the scope of the 

validation statutes and their relationship to taxpayer actions under section 526a. 

(Ontario, supra, at pp. 344–345.) The court determined (1) the validation statutes did not 

repeal section 526a by implication, (2) restitution of public funds paid for unlawful 

purposes was a remedy available in a taxpayer action, and (3) no reason appeared to 

justify denying taxpayers the normal remedy of restitution in an in personam cause of 

action for repayment of public monies unlawfully expended. (Ontario, supra, at pp. 344–

345; see Miller v. McKinnon, supra, 20 Cal.2d at p. 96 [cause of action exists for 

taxpayer to, on behalf of public agency, recover illegally paid money from person 

receiving such funds].) 

More recently, in San Diegans, supra, 8 Cal.5th 733, the Supreme Court noted, 

but did not decide, the question of whether the plaintiff taxpayer organization’s claim of a 

conflict in interest brought as a taxpayer action could seek disgorgement of payments 

received. That question was remanded to the Court of Appeal. (Id. at p. 747.) In San 

Diegans, the main issue addressed and resolved by the Supreme Court was whether the 

plaintiff had standing under Government Code section 1092 to raise the conflict of 

interest claim and seek invalidation of the contracts. The court concluded that 

Government Code section 1092 “does not provide plaintiff a private right of action 

because it was not a party to the contracts.” (San Diegans, supra, at p. 736.)13 In its 

rationale, the court stated:

13 In footnote 20 of Davis I, supra, 237 Cal.App.4th at page 297, we stated 

“Defendants did not base their demurrer on the ground Davis lacked standing to bring the 
31.

“Because violations of section 1090 can be challenged by contractual 

parties under section 1092, by taxpayers under Code of Civil Procedure 

section 526a where appropriate, and by the Attorney General, district 

attorneys, and the [Fair Political Practices] Commission, there is no 

compelling reason to conclude that section 1092 creates a private right of 

action for nonparties to sue to avoid public contracts.” (San Diegans, 

supra, 8 Cal.5th at p. 746, italics added.)

Our Supreme Court’s statement that violations of Government Code “section 1090 

can be challenged ... by taxpayers under ... section 526a where appropriate” (San 

Diegans, supra, 8 Cal.5th at p. 746, italics added) raises the question of whether, in the 

circumstances presented, Davis’s conflict of interest claims and his other statutory claims 

are “appropriate” for a taxpayer’s action under section 526a. 

2. Contracts Subject to Validation

For purposes of this appeal, we assume without deciding that the taxpayer’s action 

is not “appropriate” if the specific contracts in question fall within the scope of the 

validation statutes and therefore could be successfully validated. (See generally, § 869.) 

We frame the appropriateness issue in this manner for two reasons. 

First, we stated earlier that after identifying the claims Davis attempted to pursue, 

we would address whether those claims “fall[] within the boundaries of a particular 

legislative declaration that the validation statutes apply” (Abercrombie, supra, 240 

Cal.App.4th at p. 308) and identified the “particular legislative declaration” as 

Government Code section 53511, subdivision (a). (See pt. II.A., ante.) We noted such 

conflict of interest claim under Government Code section 1090 since it is recognized that 

either the public agency or a taxpayer may seek relief for a violation of section 1090.” 

We supported this statement by citing Thomson v. Call (1985) 38 Cal.3d 633 and 

Kaufmann & Widiss, The California Conflict of Interest Laws (1963) 36 So.Cal. L.Rev. 

186, 200 (“Either the public agency itself or a taxpayer may seek the relief afforded under 

Section 1092 by way of having the contract declared void, or seek restitution of any 

amounts paid out by the public agency”). In dictum contrary to the statutory 

interpretation later adopted in San Diegans, we stated Government Code section 1092’s 

“term ‘any party’ is not restricted to parties to the contract.” (Davis I, supra, at p. 297, 

fn. 20; see San Diegans, supra, 8 Cal.5th at p. 744.) 
32.

an inquiry involves an assessment of the gravamen of the complaint and the nature of the 

right sued upon. (Ibid.; see Abercrombie, supra, at p. 308.)

Second, the defendants’ contentions suggest a taxpayer’s action is not 

“appropriate” in the circumstances of this case. Specifically, Contractor argues this case 

is moot because (1) disgorgement is not an available remedy and (2) disgorgement is not 

available because the Construction Contracts fall within the ambit of Government Code 

section 53511 and the validation statutes. Varying this contention slightly, Fresno 

Unified argues that Davis’s conflict of interest claims are subject to validation and, 

therefore, he cannot obtain effective relief through disgorgement. 

Defendants support their arguments by citing McGee II, a case in which the 

Second District concluded “section 526a taxpayer claims alleging violations of 

[Government Code] section 1090 may still fall within the validation statutes.” (McGee II, 

supra, 49 Cal.App.5th at p. 826, italics added.) The court determined McGee’s conflict 

of interest claims relating to lease-leaseback agreements in that case were subject to 

validation and, therefore, “McGee cannot obtain effective relief through disgorgement.” 

(Id. at p. 828.) 

In McGee II, the parties disputed whether the lease-leaseback agreements between 

a school district and construction contractor were subject to the validation statutes. 

(McGee II, supra, 49 Cal.App.5th at p. 823.) The court stated “the applicable law is 

Government Code section 53511, which declares the validation statutes apply to “ ‘an 

action to determine the validity of [a local agency’s] bonds, warrants, contracts, 

obligations or evidences of indebtedness.’ (Gov. Code, § 53511, subd. (a), italics 

added.)” (McGee II, supra, at p. 823.) McGee argued the lease-leaseback agreements 

were not “contracts” for purposes of Government Code section 53511. (Ibid.) 

Government Code section 53511’s reference to “contracts” is construed narrowly. 

(Kaatz, supra, 143 Cal.App.4th at p. 35; see Ontario, supra, 2 Cal.3d at pp. 343–344.) 

“Although ‘contracts’ could be read to reach all contracts, the courts have defined it by 
33.

reference to the clause in which it has been used, and thus to reach only those contracts 

‘that are in the nature of, or directly relate to a public agency’s bonds, warrants or other 

evidences of indebtedness.’ (Kaatz, supra, 143 Cal.App.4th at pp. 40, 42[.)]” (Castaic 

Lake, supra, 1 Cal.App.5th at p. 1099.) Thus, only contracts “involving financing and 

financial obligations fall” within subdivision (a) of Government Code section 53511—the 

relevant validation statute for purposes of this appeal. (Friedland, supra, 62 Cal.App.4th 

at p. 842.)

The court in McGee II analyzed whether the lease-leaseback agreements in that 

litigation were involved in financing and financial obligations by stating (1) it previously 

determined Education Code section 17406 authorizes lease-leaseback agreements without 

competitive bidding, (2) that statute had been characterized as providing a method of 

financing school construction, and (3) the use of validation actions was a common 

practice for school construction projects structured as a lease-leaseback arrangement. 

(McGee II, supra, 49 Cal.App.5th at p. 824.) Based on these statements and its earlier 

determination that McGee had failed to state a claim for a violation of the Education 

Code,14 the court concluded “the lease-leaseback agreements involved the District’s 

financial obligations and were inextricably bound up in the District’s bond financing, 

bringing them within the scope of ‘contracts’ covered by Government Code section 

53511.” (McGee II, supra, at p. 824.) This determination led to the further conclusion 

that, “[b]ecause his conflict of interest claims [we]re subject to validation, McGee cannot 

obtain effective relief through disgorgement.” (Id. at p. 828.) 

14 In McGee v. Balfour Beatty Construction, LLC (2016) 247 Cal.App.4th 235, the 

court concluded the trial court properly sustained demurrers to McGee’s causes of action 

alleging violations of competitive bidding requirements and provisions of the Education 

Code. (McGee, supra, at p. 249.) In contrast, the court concluded the demurrers should 

have been overruled as to the conflict of interest cause of action. (Ibid.) 
34.

Based on the parties’ arguments and cases such as McGee II, Friedland and 

Ontario, we consider whether the Construction Contracts between Fresno Unified and 

Contractor constitute “contracts” for purposes of Government Code section 53511, 

subdivision (a). Our analysis of this issue is short because of our detailed discussions and 

conclusions in Davis I. In part II.A.2. of that opinion, we addressed the lease-leaseback 

method of financing for the delivery of new school facilities. (Davis I, supra, 237 

Cal.App.4th at pp. 276–280.) We concluded the primary purpose of the lease-leaseback 

provisions in Education Code sections 17400 through 17425 was to authorize a new 

source of school financing. (Davis, supra, at p. 280.) We also considered the variation 

of the lease-leaseback arrangement used by Fresno Unified and Contractor in this case—a 

variation in which “the school district pays for the construction (using local bond funds) 

as it progresses, with the final payment being made when construction is completed. As 

a result, the school district does not occupy and use the new facilities as a rent-paying 

tenant for a set length of time.” (Ibid., italics added.) Based on our interpretation of the 

Construction Contracts, we concluded that “[b]ecause the school district pays for the 

construction as it is completed, this alternate approach cannot be characterized as a 

method of financing the construction of new school facilities.” (Ibid.)15 In short, we 

held that the Construction Contracts were not true leases, only a construction contract

with no element of financing included. We also held the leased property was not used by 

15 This opinion’s earlier description of the Facilities Lease quotes its provisions 

characterizing Fresno Unified’s obligation to make the lease payments as “a current 

expense” and stating the lease payment “shall not in any way be construed as a debt of 

[Fresno Unified] in contravention of any applicable constitutional or statutory limitations 

or requirement concerning the creation of indebtedness of [Fresno Unified].” 

For a detailed analysis of Education Code section 17406 and its application to 

Davis’s allegations (including the terms of the Construction Contracts, which were 

attached to the FAC), see Parts II.B. through II.E of Davis I, supra, 237 Cal.App.4th at 

pages 281 through 291. 
35.

the district during any portion of the lease period as required by Education Code section 

17406, subdivision (a)(1). 

Based on our conclusion that “the [Construction] Contracts did not include a 

financing component” (Davis I, supra, 237 Cal.App.4th at p. 291), which is consistent 

with the terms of the Facilities Lease stating Fresno Unified’s obligations must not in any 

way be construed as debt or creating an indebtedness, it follows that the Construction 

Contracts are not “in the nature of, or directly relate[d] to a public agency’s bonds, 

warrants or other evidences of indebtedness.” (Kaatz, supra, 143 Cal.App.4th at p. 42.) 

Consequently, the Construction Contracts are not “contracts” for purposes of 

Government Code section 53511, subdivision (a) and, thus, are not subject to the 

validation statutes. Because the Construction Contracts are not subject to the validation 

statutes, it is “appropriate” for Davis to challenge their legality in a taxpayer’s action 

under section 526a. (San Diegans, supra, 8 Cal.5th at p. 746.) Stated another way, the 

gravamen of the FAC and the nature of the rights and obligations being pursued by Davis 

fall outside the boundaries of the validation statute relied upon by defendants. (See 

Abercrombie, supra, 240 Cal.App.4th at p. 308.)

Consequently, we conclude Davis may pursue a taxpayer’s action alleging the 

illegal expenditure of public funds based on conflicts of interest and violations of 

California’s competitive bidding laws and Education Code sections 17406 and 17417.16 

Disgorgement of public funds is a remedy available under these theories asserted in a 

taxpayer’s action and, therefore, Davis’s lawsuit is not moot. 

16 Our analysis of the Construction Contracts is distinguishable from that adopted by 

the court in McGee II. There, the court determined financing was a purpose of the leaseleaseback agreements before it and, therefore, the court was “satisfied the lease-leaseback 

agreement fell within Government Code section 53511, bringing them within the 

validation statutes.” (McGee II, supra, 49 Cal.App.5th at p. 825.) 
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C. Other Arguments

1. Contractor’s Interpretation of Davis I

Contractor interprets our opinion in Davis I as already deciding Davis’s lawsuit 

was a reverse validation action. Contractor’s argument implies that this court’s earlier 

opinion decided the FAC asserted only a reverse validation action and, moreover, 

necessarily determined the Construction Contracts constitute “contracts” under 

Government Code section 53511. Contractor’s interpretation is based on footnote 4 of 

Davis I, which states in full:

“Defendants could have avoided the uncertainty and risk associated 

with completing the project while this taxpayer challenge was pending by 

bringing a validation action under Code of Civil Procedure section 860 

prior to starting construction. ‘A validation action ... allows a public 

agency to obtain a judgment that its financing commitments are valid, legal, 

and binding. If the public agency has complied with statutory 

requirements, the judgment in the validation action binds the agency and all 

other persons.’ (Friedland v. City of Long Beach (1998) 62 Cal.App.4th 

835, 838 ....) The record in this case shows that the use of validation 

actions is a common practice for school construction projects structured as 

a lease-leaseback arrangement. (See fn. 5, post.)

“Davis’s taxpayer suit is a timely ‘reverse validation’ action because 

it was filed within 60 days of the adoption of the resolutions authorizing the 

execution of the [Construction] Contracts. (See Code Civ. Proc., §§ 860, 

863.) Besides being a taxpayer, Davis is the president of Davis Moreno 

Construction, Inc., a general contractor that has handled construction 

projects for school districts. [Citations.]” (Davis I, supra, 237 Cal.App.4th 

at p. 273, fn. 4.)

First, our statement that the record showed school districts commonly used 

validation actions for construction projects structured as a lease-leaseback arrangement is 

a statement of historical fact, not a conclusion of law about the nature of the specific 

contracts at issue in the case. The fact that other lease-leaseback agreements have been 

validated does not mean the particular variation of the lease-leaseback arrangement 

adopted by Fresno Unified and Contractor qualifies for validation.
37.

Second, our statement that Fresno Unified and Contractor could have brought a 

validation action simply means such a proceeding could have been filed. It does not 

mean they would have been successful and obtained a judgment validating the 

Construction Contracts or, more specifically, that the variation of the lease-leaseback 

arrangement set forth in the Construction Contracts qualified for the exception to 

competitive bidding contained in subdivision (a)(1) of the Education Code section 17406

or was untainted by a conflict of interest. Given our conclusions that the terms of the 

Construction Contracts did not satisfy that provision of the Education Code, it is not 

reasonable to interpret our statement as implying defendants would have been successful 

in a validation proceeding. 

Third, our statement that Davis’s lawsuit is a timely reverse validation action—

when read in context of the issues and arguments presented in the first appeal—does not 

imply that his lawsuit is exclusively a reverse validation action. It simply means Davis 

asserted a reverse validation action and had done so in a timely manner. Whether the 

Construction Contracts were subject to validation and, more specifically, whether they 

were “contracts” for purposes of Government Code section 53511, was not raised,17

addressed or resolved in Davis I. Had we foreseen the arguments now raised, the first 

17 Apparently in response to Davis I, the Legislature in 2016 amended Education 

Code section 17406 to limit the amount of payments disgorged by construction 

contractors in certain situations. (Stats. 2016, ch. 521, § 2.) An added provision stated 

construction contractors who entered instruments determined to be invalid for failing to 

fall within the requirements of Education Code section 17046, subdivision (a)(1) “may be 

paid the reasonable cost, specifically excluding profit, of the labor, equipment, materials, 

and services furnished” if specified conditions were met. (Ed. Code, § 17406, subd. 

(d)(1).) As drafted, this provision appears to allow the disgorgement of profits and, 

therefore, has not entirely eliminated disgorgement as a remedy. Consequently, the 

discussion of mootness in the appellate briefing did not raise any issues about the 

interpretation and application of the amendment to the facts pleaded in this case. 

Accordingly, our analysis of mootness need not discuss it further. 
38.

sentence of the second paragraph of the footnote would have replaced “is” with 

“includes.” 

2. Delay and Public Policy

Contractor contends Davis’s argument that disgorgement remains an available 

remedy overlooks the policies underlying the validation statutes and, like the plaintiff in 

McGee II, Davis did nothing to stop the construction even though injunctive remedies 

were available. 

This argument might have been relevant if Davis’s lawsuit was exclusively a 

reverse validation action. However, in the context of a taxpayer’s action, “the fact that 

[the plaintiff] could have enjoined the illegal expenditure does not prevent [him] seeking 

to recover on behalf of the [local agency] monies illegally expended.” (59 Cal.Jur.3d, 

supra, Taxpayers’ Actions, § 7, pp. 192–193 [restoration of public funds], citing Osburn 

v. Stone, supra, 170 Cal. 480.) Here, we have determined the Construction Contracts (1) 

“did not include a financing component” (Davis I, supra, 237 Cal.App.4th at p. 291); (2) 

are not “contracts” for purposes of Government Code section 53511; and (3) are not 

subject to validation under the validation statutes. Consequently, the policy concerns 

applicable to contracts subject to validation do not apply to the Construction Contracts. 

(Cf. Wilson, supra, 191 Cal.App.4th at pp. 1580–1581.) As a result, defendants’ 

criticism of Davis for failing to obtain an injunction stopping construction of the middle 

school is not a ground for concluding the remedy of disgorgement is unavailable in the 

taxpayer’s action.18

D. Summary

The FAC sets forth both a reverse validation action and a taxpayer’s action. 

Davis’s taxpayer action consists of several legal theories or counts alleging funds were 

18 Based on this conclusion, we do not reach Davis’s argument that he had an 

adequate remedy at law (i.e., disgorgement) and, therefore, he could not have obtained 

injunctive relief if he had tried. 
39.

illegally paid by Fresno Unified to Contractor. (See Osburn v. Stone, supra, 170 Cal. at 

p. 486 [various “counts” in taxpayer’s complaint alleged illegal expenditure of public 

funds].) The counts assert violations of California’s competitive bidding laws and 

Education Code sections 17406 and 17417 along with conflicts of interest prohibited by 

Government Code section 1090 and common law principles. The remedy of 

disgorgement is available under these counts asserted in Davis’s taxpayer’s action even 

though the Construction Contracts are fully performed. Consequently, the counts in 

Davis’s taxpayer’s action seeking disgorgement are not moot. 

DISPOSITION

The judgment is reversed. The trial court is directed to (1) vacate its order 

granting the motion for judgment on the pleadings, (2) enter a new order granting the 

motion as to the reverse validation portion of this lawsuit and denying the motion as to

the taxpayer action and its underlying counts or legal theories, and (3) conduct further 

proceedings consistent with this opinion. Davis shall recover his costs on appeal. 

FRANSON, J.

WE CONCUR:

DETJEN, Acting P.J.

PEÑA, J.