1

Filed 5/2/17 Certified for publication 5/31/17 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

CALIFORNIA TAXPAYERS ACTION 

NETWORK,

Plaintiff and Appellant,

v.

TABER CONSTRUCTION, INC., et al.,

Defendants and Respondents.

 A145078

 (Contra Costa County

 Super. Ct. No. MSC1400996)

Education Code section 17406 authorizes school districts to use lease-leaseback 

agreements in contracting for construction or improvement of school facilities. Under a 

lease-leaseback agreement, the school district leases its own real property to a contractor

for a nominal amount, and the contractor agrees to construct school facilities or improve 

existing facilities on the property and lease the property and improvements back to the 

school district. At the end of the lease-leaseback agreement, title to the construction 

project vests in the school district. (Ed. Code, § 17406, subd. (a); Davis v. Fresno 

Unified School District (2015) 237 Cal.App.4th 261, 277 (Davis).) 

This case is the latest in a line of cases challenging the propriety of school 

districts’ use of lease-leaseback agreements. (See Davis, supra, 237 Cal.App.4th 261; 

McGee v. Balfour Beatty Construction, LLC (2016) 247 Cal.App.4th 235 (McGee); Los 

Alamitos Unified School District v. Howard Contracting, Inc. (2014) 229 Cal.App.4th 

1222 (Los Alamitos).) Plaintiff California Taxpayers Action Network brought a reverse 

validation action (Code Civ. Proc., § 863), raising various legal theories to challenge a
2

lease-leaseback agreement between defendants Mount Diablo Unified School District 

(the School District) and Taber Construction, Inc. (Taber). Defendants demurred, and the 

trial court sustained the demurrers without leave to amend. 

We uphold the trial court’s ruling on the demurrers as to all of the lease-leaseback 

related claims that attempt to engraft requirements on the transaction that are not part of 

the applicable Education Code. However, we conclude plaintiff has stated a claim of 

conflict of interest against Taber sufficient to withstand a demurrer. 

Accordingly, we reverse the judgment with respect to plaintiff’s fourth cause of 

action for conflict of interest and otherwise affirm.

1

 

FACTUAL AND PROCEDURAL BACKGROUND

A “lease-leaseback” agreement under Education Code section 17406 has been 

described as a “method for financing and delivery of new school facilities.” (Davis, 

supra, 237 Cal.App.4th at p. 276). It is an alternative to the traditional “design-bidbuild” method, which involves hiring an architect to design the project, requesting 

competitive bids based on the design, and having the winning bidder build the project. 

(Ibid.)2

 

1 We granted the applications of five organizations—Construction Employers 

Association, California Association of School Business Officials, California School 

Boards Association’s Education Legal Alliance, Coalition for Adequate School Housing, 

and Association of California Construction Managers—to file briefs in support of 

defendant as amici curiae. We also granted plaintiff’s request for judicial notice of 

documents filed on July 23, 2015, and we granted Taber’s request for judicial notice of 

documents filed October 22, 2015. 

2

The Legislature first authorized lease-leaseback agreements in 1957. (Davis, 

supra, 237 Cal.App.4th at p. 276.) We note that a third project delivery method known 

as “design-build” was approved by the Legislature in 2001. (Id. at p. 279, fn. 10.) 

“Under the design-build delivery method, both the design and construction work is let to 

a single entity, which centralizes responsibility for both aspects of the project. ([Ed. 

Code,] § 17250.15, subd. (b) [definition of design-build]; see 10 Miller & Starr, Cal. Real 

Estate [(3d ed. 2010)] § 27:27, p. 27-143 [(rel. 9/2010)].) Design-build contracts are not 

subject to the competitive bidding requirements in Public Contract Code section 20110, 

but the school district must (1) invite competitive sealed proposals, (2) award the contract 

to the responsible bidder whose proposal is determined to provide the “ ‘best value’ ” to 
3

In this case, the School District and construction firm Taber entered into a leaseleaseback agreement for Taber to complete a construction project, which involved 

heating, ventilation, and air conditioning (HVAC) modernization of five elementary 

schools and three middle schools owned by the School District. The agreement 

comprised a master site lease and a master facilities lease. Under the master site lease, 

the School District agreed to lease the “Project Sites,” which are portions of the eight 

school sites, to Taber for one dollar. (This is the “lease” of the lease-leaseback 

agreement.) Under the master facilities lease, Taber agreed to construct the project for 

the “Guaranteed Project Cost” of $14,743,395. The master facilities lease included 

general construction provisions and construction schedules for each project site. The 

School District was to pay Taber $13,269,057 in “Tenant Improvement Payments” prior 

to “taking delivery or occupancy of the Project.” Later, six “Lease Payment Amount[s]” 

of $245,723 plus interest would be paid at 30-day intervals starting 35 days after the 

filing of a notice of completion of the project. (This is the “leaseback” of the leaseleaseback agreement.)3

Plaintiff initiated a reverse validation action against Taber and the School District

under California Code of Civil Procedure section 863.

4

 In its first amended complaint 

 

the school district, and (3) comply with the other requirements in [Education Code] 

section 17250.25. This selection method has been described as competitive selection.” 

(Ibid.)

3 Although the master site lease and master facilities lease were ostensibly separate 

contracts, the master site lease included a term that the project sites would be leased back 

to the School District pursuant to the master facilities lease, and the master facilities lease 

provided that it was executed at the same time as the master site lease. When we refer to 

“defendants’ lease-leaseback agreement,” we mean the master site lease and the master 

facilities lease together.

4 Code of Civil Procedure section 863 is part of the validation statutes (Code Civ. 

Proc., §§ 860-870), which “ ‘provide an expedited process by which certain public 

agency actions may be determined valid and not subject to attack.’ ” [Citations.] The 

validation statutes apply to a matter when ‘any other law’ authorizes their application, 

and the statutes provide for a 60-day period during which an action may be brought to 

‘determine the validity of such matter.’ (Golden Gate Hill Development Company, Inc. 
4

(FAC), the operative pleading, plaintiff asserted seven causes of action: (1) failure to 

comply with Education Code sections 17400 et seq., (2) breach of fiduciary duty, (3) 

failure to comply with Education Code section 17417, (4) contractor conflict of interest, 

(5) improper use of Education Code sections 17400 et seq., (6) improper delegation of 

discretion, and (7) declaratory relief. 

Plaintiff alleged, among other things, that the Education Code requires “genuine 

lease-leaseback agreements,” which “provide for financing of the school facility project 

over time,” but defendants’ lease-leaseback contracts were “sham leases”; that the leaseleaseback contracts were illegal because a public bidding process is required for school 

construction projects; and that Taber was precluded from being awarded the contracts due 

to conflicts of interest that arose from Taber providing professional preconstruction 

services to the School District regarding the construction project prior to entering the 

lease-leaseback contracts. 

The School District filed a demurrer to the FAC and a motion to strike portions of 

the FAC, and Taber filed a demurrer. The School District and Taber each requested the 

court take judicial notice of 57 documents, including a written opinion of the Attorney 

General from 1973, documents filed in pending cases raising the same issues (and 

brought by plaintiffs represented by Kevin Carlin, the attorney representing plaintiff in 

this case), Assembly Bill Number 1486 from 2004, and the Governor’s veto message on 

the bill.5 

 

v. County of Alameda (2015) 242 Cal.App.4th 760, 765-766.) “While [Code of Civil 

Procedure] section 860 authorizes a public agency to bring an action to validate matters 

to which the validation statutes apply, the public is also authorized to bring actions. 

Thus, section 863 provides that if the relevant public agency does not initiate validation 

proceedings, ‘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.’ ” (Id. at p. 766.)

5 Among the documents listed in the defendants’ requests for judicial notice were 

many default validation judgments involving various California school districts dating 

back to 2001. These were apparently intended to show that lease-leaseback construction 

agreements are commonly used by school districts throughout the state. 
5

The trial court issued a tentative decision on the demurrers and the School 

District’s motion to strike, no party requested argument, and the tentative decision

became the court’s final ruling. The trial court sustained defendants’ demurrers without 

leave to amend.6 It granted defendants’ request for judicial notice of the published 

opinion of the California Attorney General but denied their requests as to the remaining 

56 documents. 

DISCUSSION

A. Standard of Review

“In reviewing the sufficiency of a complaint against a general demurrer, we are 

guided by long-settled rules. ‘We treat the demurrer as admitting all material facts 

properly pleaded, but not contentions, deductions or conclusions of fact or law. 

[Citation.] We also consider matters which may be judicially noticed.’ [Citation.] 

Further, we give the complaint a reasonable interpretation, reading it as a whole and its 

parts in their context. [Citation.] When a demurrer is sustained, we determine whether 

the complaint states facts sufficient to constitute a cause of action. [Citation.] And when 

it is sustained without leave to amend, we decide whether there is a reasonable possibility 

that the defect can be cured by amendment: if it can be, the trial court has abused its 

discretion and we reverse; if not, there has been no abuse of discretion and we affirm. 

[Citations.] The burden of proving such reasonable possibility is squarely on the 

plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

Issues of statutory construction are questions of law subject to independent review. 

(MacIsaac v. Waste Management Collection and Recycling, Inc. (2005) 134 Cal.App.4th 

1076, 1082. (MacIsaac).) 

 

6

The trial court found the School District’s motion to strike moot in light of the 

ruling on the School District’s demurrer. 
6

B. First, Third, and Fifth Causes of Action: Claims Based on the Education Code

Education Code sections 17400 through 17429 (article 2) govern leases and 

agreements relating to real property and buildings used by school districts.7 Plaintiff’s 

first, third, and fifth causes of action are expressly premised on the allegation that the 

lease-leaseback agreement in this case (consisting of the master site lease and the master 

facilities lease) does not comply with article 2 and, in particular, sections 17406 and 

17417. As will be seen, section 17417 imposes competitive bidding requirements for 

school construction projects, but section 17406 exempts lease-leaseback agreements from 

the requirements of section 17417. Plaintiff contends defendants’ lease-leaseback 

agreement is not a genuine lease-leaseback agreement under section 17406, and, 

therefore, defendants’ agreement is illegal because the School District did not comply 

with section 17417 and obtain competitive bids. In addition, plaintiff contends that, as a 

matter of statutory interpretation, section 17406 does not exempt school districts from the 

competitive bidding requirements of section 17417. We conclude plaintiff has failed to 

state any claim based on asserted violation of article 2. 

1. Relevant Education Code Statutes

Section 17417 generally requires competitive bidding for school construction 

projects and sets forth the procedures for soliciting and reviewing sealed bids.

8

Section

 

7

Further undesignated statutory references are to the Education Code. Because 

sections 17400 through 17429 are at title 1, division 1, part 10.5, chapter 4, article 2 of 

the Education Code, we refer to this set of statutes as “article 2.”

8

Section 17417 provides: “After the governing board of a school district has 

complied with Section 17402, it shall, in a regular open meeting, adopt a resolution 

declaring its intention to enter into a lease or agreement pursuant to this article. The 

resolution shall describe, in any manner to identify it, the available site upon which the 

building to be used by the district shall be constructed, shall generally describe the 

building to be constructed and state that the building shall be constructed pursuant to the 

plans and specifications adopted by the governing board therefor, shall, if that is the case, 

state the minimum yearly rental at which the governing board will lease real property 

belonging to the district upon which the building is to be constructed, and shall state the 

maximum number of years for which the school district will lease the building or site and 

building, as the case may be, and shall state that the proposals submitted therefor shall 
7

17406 offers an exception to section 17417. The version of section 17406, subdivision 

(a), in effect in 2014 provides: “Notwithstanding Section 17417, the governing board of 

a school district, without advertising for bids, may let, for a minimum rental of one dollar 

($1) a year, to any person, firm, or corporation any real property that belongs to the 

district if the instrument by which such property is let requires the lessee therein to 

construct on the demised premises, or provide for the construction thereon of, a building 

or buildings for the use of the school district during the term thereof, and provides that 

title to that building shall vest in the school district at the expiration of that term. The 

instrument may provide for the means or methods by which that title shall vest in the 

school district prior to the expiration of that term, and shall contain such other terms and 

conditions as the governing board may deem to be in the best interest of the school 

district.” (Former § 17406, subd. (a), added by Stats.1996, ch. 277, § 3.)9

 

designate the amount of rental, which shall be annual, semiannual, or monthly, to be paid 

by the school district for the use of the building, or building and site, as the case may be. 

The resolution shall fix a time, not less than three weeks thereafter for a public meeting 

of the governing board to be held at its regular place of meeting, at which sealed 

proposals to enter a lease or agreement with the school district will be received from any 

person, firm, or corporation, and considered by the governing board. Notice thereof shall 

be given in the manner provided in Section 17469.” 

“At the time and place fixed in the resolution for the meeting of the governing 

body, all sealed proposals which have been received shall, in public session, be opened, 

examined, and declared by the board. Of the proposals submitted which conform to all 

terms and conditions specified in the resolution of intention to enter a lease or agreement 

and which are made by responsible bidders, the proposal which calls for the lowest rental 

shall be finally accepted, or the board shall reject all bids. The board is not required to 

accept a proposal, or else reject all bids, on the same day as that in which the proposals

are opened.” 

Section 17402 requires the governing board of a school district to “have available 

a site upon which a building to be used by the district may be constructed” and to prepare 

and adopt “plans and specifications for the building . . . approved pursuant to Sections 

17280 to 17316 [governing the construction of school buildings]” before it may enter into 

a lease. 

9

Section 17406 has since been amended, as we discuss post at footnote 18. The 

parties do not dispute that the version of section 17406 in effect in 2014 applies to 
8

2. First Cause of Action: Defendants’ Lease-Leaseback Agreement Meets the 

Requirements of Section 17406

Plaintiff contends it has properly alleged a violation of section 17406 because, 

even though defendants’ lease-leaseback agreement meets the express requirements of 

section 17406, the agreement is a sham and subterfuge to avoid the competitive bidding 

requirements of section 17417. We disagree.

Our conclusion is based on the plain language of section 17406. The statute has 

three requirements: “[1] the real property belong[s] to the school district, [2] the lease is 

for the purposes of construction, and [3] the title shall vest in the school district at the end 

of the lease term.” (McGee, supra, 247 Cal.App.4th at p. 244; § 17406, subd. (a)(1).)10

Here, the lease-leaseback agreement between the School District and Taber, as alleged by 

plaintiff, meets these three statutory requirements. The School District owns the project 

sites, the agreement requires Taber to complete the construction project (HVAC 

modernization), and title vests in the School District at the end of the lease term. Nothing 

more is required.

11

Plaintiff premises its contention that section 17406 imposes additional 

requirements on City of Los Angeles v. Offner (1942) 19 Cal.2d 483 (Offner), but the case 

 

determining the requirements of a lease-leaseback agreement. Further references to 

section 17406 are to the 2014 version of the statute unless otherwise specified. 

10 Los Alamitos, supra, 229 Cal.App.4th 1222 also recognized three requirements 

for a lease-leaseback agreement under section 17406. The court determined the school 

district established the necessary elements of its validation action where the district 

showed “[1] it owns the land to be leased; [2] Byrom-Davey, the contractor for the 

Project, agreed to construct the Project for a guaranteed maximum price; and [3] title to 

the site and all improvements made by the Project will vest in the District at the end of 

the lease term.” (Id. at p. 1227.) 

11 We note that Taber identifies four requirements under section 17406: (1) the 

school district owns the property, (2) the school district lets the property to the contractor 

for a minimum rent, (3) the agreement requires the contractor to provide construction 

services, and (4) title to the improvements vests with the school district at the expiration 

of the lease term. The lease-leaseback agreement in this case meets the minimum lease 

requirement. 
9

has nothing to do with section 17406 and is inapposite. In Offner, the city of Los 

Angeles proposed a lease-leaseback agreement under which the city would lease its real 

property to a contractor, the contractor would build a rubbish incinerator on the property, 

and the contractor would lease the property with the incinerator back to the city for 10

years. (Id. at p. 484.) The city’s proposed lease-leaseback agreement was challenged “on

the ground that [the proposed agreement] would violate the constitutional provision 

[former article 11, section 18 of the California Constitution] which prohibits a city from 

incurring an indebtedness or liability in any year in excess of the income and revenue 

provided for that year without the assent of two-thirds of the qualified electors of the 

city.” (Id. at p. 485.) 

In Offner, the California Supreme Court framed the question for consideration as 

“whether the city in entering into the proposed leases and contract will incur an 

indebtedness or liability for the rentals for the entire term or whether such action will 

create an indebtedness or liability in that year for such rentals only as will become 

payable during that fiscal year.” (Offner, supra, 19 Cal.2d at p. 485.) The court observed 

that the general rule from case law is “no violence is done to the constitutional provision”

“if the lease or other agreement is entered into in good faith and creates no immediate 

indebtedness for the aggregate installments therein provided for but, on the contrary, 

confines liability to each installment as it falls due and each year’s payment is for the 

consideration actually furnished that year.” (Id. at p. 486.) On the other hand, if “the 

instrument creates a full and complete liability upon its execution, or if its designation as 

a ‘lease’ is a subterfuge and it is actually a conditional sales contract in which the 

‘rentals’ are installment payments on the purchase price for the aggregate of which an 

immediate and present indebtedness or liability exceeding the constitutional limitation 

arises against the public entity, the contract is void.” (Ibid.) Our Supreme Court in

Offner concluded the city’s proposal did not violate the Constitution: “In view of the 

admitted fact that the amount of rentals that the city may be required to pay in any single 

fiscal year, together with its other debts and liabilities will not exceed its income and 
10

revenue for such year, it cannot be said that the proposed agreements violate the debt 

limitation provision of the Constitution.” (Id. at p. 487.) 

Borrowing language from Offner, plaintiff argues that a lease-leaseback agreement 

under section 17406 must be entered into in “good faith” and must not be a “subterfuge”

to avoid the competitive bid requirements of section 17417. Offner, however, is not 

authority for plaintiff’s argument. The case addressed the constitutional prohibition 

against a local government entity incurring indebtedness in excess of its income and 

revenue for the year; the Offner court did not purport to impose additional requirements 

on a “lease” whenever the term is used in a statute. To the extent Offner may be applied 

in this case, it means only that defendants’ lease-leaseback agreement cannot be a 

“subterfuge” to avoid the constitutional provision on indebtedness, but plaintiff in this 

case makes no claim that the School District is in violation of the debt limit provision of 

the state Constitution. 

We also note that the arguments plaintiff raises here have been considered by two 

courts in previous cases challenging school districts’ use of lease-leaseback construction 

agreements under section 17406. (See Davis, supra, 237 Cal.App.4th at pp. 284-287; 

McGee, supra, 247 Cal.App.4th at pp. 243-244.) In both cases, attorney Carlin 

represented the plaintiffs, and the appeals followed successful demurrers by the defendant 

school districts and construction firms. (Davis, at pp. 269, 271; McGee, at pp. 238-239.) 

In McGee, supra, our colleagues in the Second District rejected the suggestion that 

Offner imposed additional requirements for lease-leaseback agreements beyond the three 

required elements set forth in section 17406. (McGee, supra, 247 Cal.App.4th at p. 244.) 

The McGee court reasoned that the plaintiffs’ “efforts to engraft additional requirements

. . . are not based on the plain language of the statute.” (Ibid. [noting that, in contrast to

Offner, the plaintiffs’ claims did “not involve a contract that potentially violated the 

constitutional provision on indebtedness”].) 

But the Court of Appeal in the Fifth District reached a different result in Davis, 

supra, 237 Cal.App.4th 261. There, the court held, “[O]ur review of the entire legislative 

scheme, the ostensible objects it seeks to achieve, the evils to be remedied, and the 
11

underlying public policies lead us to conclude the word ‘lease’ refers to the substance of 

the transaction and means more than a document designated a lease by the parties. 

Moreover, to fulfill the primary statutory purpose of providing financing for school 

construction, the arrangement must include a financing component.” (Id. at p. 284.) 

The Davis court explained how it would determine whether a leaseback is a “true” 

(or genuine) lease as follows: “We conclude the true legal effect of the leaseback in 

question is based on all the terms of the document. [Citation.] Provisions in the 

document that are significant include those that define (1) who holds what property rights 

and when those rights and interests are transferred between the parties and (2) the amount 

and timing of the payments. [Citation.] The payment provisions, particularly the length 

of the period over which payments are made, are important in this context because the 

primary purpose of the legislation was to provide a source of financing for school 

construction and the payment provisions will show whether the project is being financed 

through the contractor or whether the school district is paying for the project by using 

funds from other source.” (Davis, supra, 237 Cal.App.4th at p. 285.) The court 

concluded the challenged “Facilities Lease” in that case was “not a true lease that 

provided financing for the project.” In reaching its conclusion, the Davis court relied on 

its determination that “the substance of the payment terms in the Facilities Lease is that 

of compensation for construction, not payment for a period of use of the facilities” and 

the fact that “[the] Contractor did not provide any financing to [the school district] under 

the Facilities Lease.” (Id. at p. 286.)

We decline to follow Davis, which went far beyond the language of section 17406 

in adopting ill-defined additional factors to determine whether the leaseback portion of a 

lease-leaseback agreement is a “true” lease and imposing a requirement that the 

contractor provide financing for the project. Instead, we agree with McGee, which 

rejected Davis and declined to read additional requirements into section 17406. The 

Davis court relied on what it determined to be the intended purpose of section 17406 to 

impose requirements not expressed in the statute, but, as McGee observed, “our role is to 

interpret the language of the statute, not to rewrite the statute.” (McGee, supra, 247 
12

Cal.App.4th at p. 244.) “We may not, under the guise of interpretation, insert qualifying 

provisions not included in the statute.” (Estate of Griswold (2001) 25 Cal.4th 904, 917.) 

In its first cause of action, plaintiff alleged defendants’ lease-leaseback agreement 

violated article 2 because it was not genuine and it failed to provide financing. Based on 

the foregoing discussion, we conclude the trial court correctly sustained defendants’ 

demurrers as to this cause of action. 

3. Third Cause of Action: Section 17406’s Exemption from Competitive 

Bidding Requirements Applies to the Lease and the Leaseback

Section 17406 allows school districts to enter lease agreements, 

“[n]otwithstanding Section 17417” and “without advertising for bids.” Plaintiff contends

the exemption from competitive bidding applies to a school district’s agreement to lease 

its property to a contractor, but does not apply to the associated agreement contemplated 

by section 17406 that the contractor lease the property with improvements back to the 

school district. In other words, plaintiff argues, the exemption from section 17417’s 

competitive bidding requirements applies to the lease, but not to the leaseback, of a leaseleaseback agreement. 

“We give the words of the statute ‘a plain and commonsense meaning’ unless the 

statute specifically defines the words to give them a special meaning. [Citations.] If the 

statutory language is clear and unambiguous, our task is at an end, for there is no need for 

judicial construction.” (MacIsaac, supra, 134 Cal.App.4th at p. 1083.) We are not the 

first court to consider plaintiff’s interpretation of section 17406. Three appellate courts 

have addressed and rejected it. (Los Alamitos, supra, 229 Cal.App.4th at pp. 1229-1230; 

Davis, supra, 237 Cal.App.4th at pp. 280-282; McGee, supra, 247 Cal.App.4th at p. 246.) 

We agree with our sister courts.

“[T]he ordinary meaning of the word ‘notwithstanding’ is ‘in spite of.’ [Citation.] 

It is well established that the phrase ‘notwithstanding any other provision of law’ is a 

term of art that expresses a legislative intent to have the specific statute control despite 

the existence of other law that might govern. [Citation.] Therefore, . . . the phrase 

‘[n]otwithstanding Section 17417’ means the bidding procedures set forth in section 
13

17417 do not apply to agreements covered by section 17406(a)(1). The phrase ‘without 

advertising for bids’ provides a further indication that competitive bidding is not required 

for agreements falling within section 17406(a)(1).” (Davis, supra, 237 Cal.App.4th at pp. 

281-282.)

Section 17406 applies to a lease of real property by a school district “if the 

instrument by which such property is let [also] requires the lessee therein to construct on 

the demised premises, or provide for the construction thereon of, a building or buildings 

for the use of the school district during the term thereof, and provides that title to that 

building shall vest in the school district at the expiration of that term.” (§ 17406, subd. 

(a).) Thus, section 17406 contemplates a single instrument that provides for both a lease 

(of real property by the school district) and a leaseback (of constructed facilities to the 

school district).12 As to such an instrument, section 17417’s competitive bidding 

requirements do not apply. We agree with the Davis court’s reasoning on this question. 

“The reference to an instrument that requires the lessee under a site lease ‘to construct on 

the demised premises . . . a building or buildings for the use of the school district’ clearly 

encompasses the construction services provided by a contractor to a school district under 

a facilities lease. [Citation.] Therefore, a facilities lease that specifies the terms of 

construction is eligible for the exception [from section 17417’s competitive bidding 

requirements].” (Davis, supra, 237 Cal.App.4th at p. 282.)

We believe the language of section 17406 is clear and unambiguous, and no 

further analysis is needed. But we also observe that lease-leaseback agreements have 

long been understood to be exempt from competitive bidding as demonstrated by, first,

 

12 As we have mentioned, the School District and Taber entered into two separate 

contracts (the master site lease and the master facilities lease), which, together, we refer 

to as a lease-leaseback agreement. These two contracts together also constitute a single 

“instrument” for purposes of section 17406. (Plaintiff does not claim defendants’ leaseleaseback agreement is invalid because it is composed of two contracts instead of a single 

instrument.) The master site lease required the parties to enter into the master facilities 

lease, which was incorporated by reference and referred to throughout the master site 

lease. The master facilities lease provided that it would take effect only if executed by 

the School District and Taber within three days of execution of the master site lease. 
14

an Attorney General’s opinion from 1973 and, second, legislative action in the 2003-2004 

session. 

First, “[t]he Attorney General interpreted an earlier version of Education Code 

section 17406 and concluded it exempted school district lease-leaseback arrangements 

from the competitive bidding process.”

13

 (Los Alamitos, supra, 229 Cal.App.4th at p. 

1227.) “In 1973, the Attorney General interpreted Education Code former section 15705 

as follows: ‘There is no question but that the Legislature has plainly, unambiguously, and 

explicitly imposed notice and bid requirements with respect only to construction 

authorized by [Education Code former] section 15706 and not to that authorized by 

section 15705. Considerations of wisdom, expediency, or policy suggest a contrary 

conclusion but such factors may be effectuated only by amendment through the 

legislative process rather than judicial construction. Such judicial restraint prevents 

inadvertently invalidating such construction, without notice or bids, as may have 

occurred pursuant to the provisions of section 15705. [¶] It is concluded that the 

Legislature excluded an arrangement entered into under section 15705 from the notice 

and bid requirements. Because a school district is not required to obtain bids for lease 

arrangements under section 15705, it may lease its property for the purpose of permitting 

the construction thereon of school buildings which the district will lease at such rental 

rates as the governing board deems in the best interests of the district without reference to 

 

13 “The predecessor of section 17406 provided: ‘The governing board of a school 

district may let, at a minimum rental of one dollar ($1) a year, to any person, firm, or 

corporation any real property which belongs to the district if the instrument by which 

such property is let requires the lessee therein to construct on the demised premises, or 

provide for the construction thereon of, a building or buildings for the use of the school 

district during the term thereof, and provides that title to such building shall vest in the 

school district at the expiration of such term. Such instrument may provide for the means 

or methods by which such title shall vest in the school district prior to the expiration of 

such term, and shall contain such other terms and conditions as the governing board may 

deem to be in the best interest of the school district.’ (Ed. Code, former § 15705; 

Stats.1959, ch. 2, § 1, pp. 595, 1086-1087.)” (Los Alamitos, supra, 229 Cal.App.4th at p. 

1227.)
15

competitive bidding.’ (56 Ops.Cal.Atty.Gen. 571, 581 (1973).)” (Id. at p. 1228, italics 

added.)

Second, the Legislature’s subsequent action on section 17406 bolsters the 

Attorney General’s opinion. During the 2003-2004 session, the Legislature passed a bill 

that would have amended section 17406 to add “the following provision: ‘ “(a) In order 

to enable school districts to let real property for the purpose of acquiring, financing, or 

constructing facilities, and notwithstanding Section 17417, the governing board of a 

school district, through the competitive proposal process set forth in Article 2.2 

(commencing with Section 17429.1), may let, for a minimum rental of one dollar ($1) a 

year, to any person, firm, or corporation any real property that belongs to the district if 

the instrument by which the property is let requires the lessee therein to construct on the 

demised premises . . . .” (Legis. Counsel’s Dig., Assem. Bill No. 1486 (2003-2004 Reg. 

Sess.).)’ ” (McGee, supra, 247 Cal.App.4th at pp. 244-245.) However, this bill was 

vetoed by Governor Schwarzenegger.14 Los Alamitos and McGee agreed that this 

“attempt to amend section 17406 to delete reference to the language ‘without advertising 

for bids’ implies that section 17406 as it reads now does not require competitive 

bidding.” (Los Alamitos, supra, 229 Cal.App.4th at p. 1229; McGee, supra, 247 

Cal.App.4th at p. 245 [quoting Los Alamitos].)

Plaintiff’s arguments for a contrary interpretation of section 17406 are not 

persuasive. Plaintiff argues that section 17417’s competitive bidding requirements apply

whenever a construction project involves real property owned by the school district. But 

section 17406 also involves real property owned by the school district since it requires a 

 

14 The governor “explained: ‘ “I am supportive of using a competitive process for 

public works projects and understand that this bill is needed to clarify that process. 

However, this bill imposes restrictions on lease-leaseback contracts that could limit 

competition, inadvertently limit schools[’] flexibility, and drive higher administrative 

costs; thereby potentially increasing the overall cost of school facility construction. 

[¶] For this reason, I cannot sign this measure.” (Governor’s veto message to Assem. on 

Assem. Bill No. 1486 (2003-2004 Reg. Sess.) (Sept. 24, 2004).)” (McGee, supra, 247 

Cal.App.4th at p. 245.) 
16

lease of the property to the contractor, and yet it expressly provides for agreements 

“without advertising for bids,” “[n]otwithstanding Section 17417.” Plaintiff relies on the 

maxim of statutory interpretation that the specific controls the general, claiming that

section 17406 is the more general statute and section 17417 is more specific on the 

subject of competitive bidding. We disagree. “Nothing supports the application of this 

principle to the statutes in this case. To the contrary, section 17406, subdivision (a) 

begins with the language, ‘[n]otwithstanding Section 17417,’ which shows section 17406 

provides an exception to the more general section 17417.” (Los Alamitos, supra, 229 

Cal.App.4th at pp. 1229-1230 [rejecting argument that section 17417 is more specific and 

section 17406 is more general].) 

Plaintiff asserts that interpreting section 17406 as exempting lease-leaseback 

agreements from section 17417’s competitive bidding requirements would “lead[] to 

mischief” because it would enable “the evils of fraud, favoritism and corruption that exist 

with subjective contractor selection criteria rather than objective contractor selection 

criteria.” But, as the Los Alamitos court noted in response to a similar policy argument 

for imposing competitive bidding requirements on lease-leaseback agreements, “ ‘absent 

a statutory requirement, a public entity is not bound to engage in competitive bidding.’ ” 

(Los Alamitos, supra, 229 Cal.App.4th at p. 1229.)15 While there may be policy reasons 

for requiring competitive bidding for all school construction projects, we have “ ‘no 

 

15 Taber further counters that the law provides many exemptions from competitive 

bidding. Among other statutes, Taber cites various sections of the Public Contract Code, 

including sections 10187 et seq. (allowing certain state agencies to procure design-build 

contracts using “best value procurement methodology” or lowest cost method), sections 

22160 et seq. (same for certain local agencies), sections 6700 et seq. (providing “for an 

alternative procurement procedure for certain transportation projects”), section 20111, 

subdivision (c) (exempting from competitive bidding requirements “professional services 

or advice, insurance services, or any other purchase or service otherwise exempt from 

this section, or to any work done by day labor or by force account pursuant to Section 

20114”), and section 20113 (allowing school districts to make emergency repairs or 

improvements “without advertising for or inviting bids”). These exemptions show the 

Legislature purposefully exempts government agencies from competitive bidding 

requirements in various circumstances. 
17

power to rewrite the statute so as to make it conform to a presumed intention which is not 

expressed.’ ” (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist.

(1997) 14 Cal.4th 627, 633.) 

Next, plaintiff claims an interpretation of section 17406 that exempts leaseleaseback agreements from competitive bidding requirements renders section 17417’s 

competitive bidding requirements a nullity. We follow Los Alamitos, which rejected this

argument. “[The plaintiff] contends that if Education Code section 17406 applies to the 

entire series of agreements that form a lease-leaseback arrangement between a school 

district and a contractor, Education Code section 17417 would be rendered a nullity ‘as 

there is no scenario under which Section 17417 would then apply.’ Section 17417 

applies generally to ‘a lease or agreement pursuant to this article.’ Title 1, division 1, 

part 10.5, chapter 4, article 2 of the Education Code applies even more generally to 

leasing property. There would appear to be many ways in which section 17417 would be 

used, even if lease-leaseback arrangements are excluded from it.” (Los Alamitos, supra, 

229 Cal.App.4th at p. 1230.) As the School District responds, a lease-leaseback delivery 

method under section 17406 “is just one of the contemplated lease arrangements” under 

article 2, which governs “leases and agreements relating to real property and buildings to 

be used by the school district” generally. (§ 17400, subd. (a).) 

Finally, plaintiff relies on a report of the executive officer of the State Allocation 

Board (SAB) prepared for a board meeting on January 28, 2004 (2004 SAB report).16 In 

the 2004 SAB report, the executive officer observed, “The use of Education Code (EC) 

Section 17406 as a project delivery method for public school construction is growing. 

Increasingly, districts are interpreting this code section to allow the award of a public 

works project without competitive bid.” The report described the growing use of lease-

 

16 The State Allocation Board implements and administers California’s school 

facilities construction program; its duties include “apportioning money from a state fund

and determining which schools are eligible to receive funding.” (Davis, supra, 237 

Cal.App.4th at p. 291, fn. 16.) Plaintiff incorporated the 2004 SAB report by reference in 

the FAC.
18

leaseback agreements (without competitive bidding) and arguments in favor of, and 

concerns about, the use of this delivery method.

17

The 2004 SAB report then provided the staff’s opinion of the school districts’ use 

of lease-leaseback agreements without competitive bidding under section 17406. “It is 

the opinion of staff and SAB counsel that [the] . . . interpretation [that section 17406 

exempts lease-leaseback agreements from competitive bidding requirements] expands the 

meaning of [section] 17406 beyond its simple intent and ignores other requirements in 

the same article regarding competitive bid requirements for leases ([section] 17417).

There is no disagreement that [section] 17406 is clear in allowing districts to lease a 

district-owned site to a person, firm or corporation when the lessee agrees to construct 

buildings for the use of the school district. However, the exemption from public bidding 

allowed in this section applies only to the property lease from the district to the 

developer. It does not address how the contract for the construction of the buildings is 

procured nor does it provide an exemption to competitive bidding for that contract.” 

“If the building to be constructed on the property let to the developer using 

[section] 17406 is to be leased to the district, Staff believes the provisions of [section]

17417 . . . must be followed. [¶] . . . [¶] Nothing in [section] 17406 provides an 

exemption from this requirement or, when applicable, from the [Public Contract Code] 

requirements. Instead, [section] 17406 provides exactly what it states: a simple manner 

to transfer district property without competitive bid to a developer who has been 

previously selected by competitive bid to construct a building for the use of the district.” 

The 2004 SAB report concluded with suggested issues the SAB might wish to 

consider including, among others, whether construction projects that were not subject to 

public bidding “should continue to be presented for funding,” whether state policy 

 

17 School districts cited guaranteed price, a “[t]eam approach,” and the ability to 

select a known contractor “on the basis of their record of success, recommendations from 

previous clients and financial strength” as reasons to use lease-leaseback agreements 

rather than “the traditional design, bid, and build approach.” However, the 2004 SAB 

report identified the concern that construction projects were “not being subjected to the 

checks and balances of the competitive bid process.” 
19

makers should investigate school districts’ claims that they “need better tools to deliver 

quality public facilities,” and “[w]hether legislation is necessary to clarify the appropriate 

use of . . . Section 17406 and to clarify, if necessary, the relationship of that section to the 

entire article on leases . . . .” Notably, the SAB did not accept this report, although 

legislative board members did express interest in proposed legislation to address the 

issues raised. 

We find the 2004 SAB report unpersuasive on the matter of statutory 

interpretation. It did not address the language of section 17406 specifying that the 

leasing “instrument” must also require the lessee to provide construction services. 

(§ 17406, subd. (a); see Davis, supra, 237 Cal.App.4th at p. 282.) Instead, we view the 

report as raising policy concerns, which the SAB staff recognized might be addressed 

through legislation. In fact, the Legislature did attempt to amend section 17406 in the 

2003–2004 session, but the proposed amendment was vetoed. (McGee, supra, 247 

Cal.App.4th at p. 245.)18 

In sum, a lease-leaseback agreement under the 2014 version of section 17406 is 

exempt from the competitive bidding requirements of section 17417. Therefore, the trial 

court properly sustained defendants’ demurrers as to plaintiff’s third cause of action, 

 

18 In 2016, the Legislature amended section 17406 to require a “best value” 

method for selecting a contractor. (Stats. 2016, ch. 521, § 2.) The current version of 

section 17406 provides, in part, that a lease-leaseback construction agreement “shall be 

awarded based on a competitive solicitation process to the proposer providing the best 

value to the school district, taking into consideration the proposer’s demonstrated 

competence and professional qualifications necessary for the satisfactory performance of 

the services required. Before awarding an instrument pursuant to this section, the 

governing board of the school district shall adopt and publish required procedures and 

guidelines for evaluating the qualifications of proposers that ensure the best value 

selections by the school district are conducted in a fair and impartial manner.” (Current 

§ 17406, subd. (a)(2).) Thus, under the current version of section 17406, a construction 

project must be open to bidding, but the school district is not required to use the lowest 

bidder. Section 17417, in contrast, requires the school district to select the lowest 

responsible bidder.
20

which was based on the claim that the School District was required to comply with 

section 17417 before entering into a lease-leaseback agreement under to section 17406. 

4. Fifth Cause of Action: Section 17406 Does Not Require a School District 

to Engage in “Genuine ‘Financing’”

In its fifth cause of action, plaintiff claimed the School District was barred from 

using a lease-leaseback agreement under section 17406 as a project delivery method 

because the School District has sufficient funds available to cover the immediate costs of 

construction of the project, and section 17406 requires “genuine ‘financing.’ ” Following 

Davis and McGee, we reject this claim. (Davis, supra, 237 Cal.App.4th at p. 292; 

McGee, supra, 247 Cal.App.4th at pp. 242, 246 [implicitly rejecting the plaintiffs’ claim 

that section 17406 only applies when the school district does not have sufficient funds to 

finance the cost of construction].)

Plaintiff begins with the premise that article 2 is intended as a method for 

financing school construction.19 From this premise, plaintiff takes the position that a 

school district is prohibited from utilizing section 17406 if the district has sufficient funds 

to pay for the construction (and therefore does not need financing). But plaintiff’s 

position does not follow from its premise. Section 17406 does not expressly require that 

a school district lack funds in order to enter a lease-leaseback agreement (Davis, supra, 

237 Cal.App.4th at p. 292), and plaintiff offers no authority for a general rule that a 

statutorily-provided financing option should be deemed unavailable merely because the

entity seeking to use the option has the funds to pay in cash. 

Plaintiff again cites the 2004 SAB report as support for its position. In the 2004 

SAB report, the executive officer observed that a previous version of article 2 “is about 

financing.” The report continued: “Staff believes that virtually none of the projects 

currently using lease-leaseback arrangements actually have financing provided by the 

developer. If a ‘lease agreement’ other than the site lease exists at all, it serves no 

 

19 Plaintiff cites Morgan Hill Unified School Dist. v. Amoroso (1988) 204 

Cal.App.3d 1083, 1086, in which the court observed, “The Education Code creates the 

following method for financing school construction.” 
21

significant purpose other than as a construction contract. The full cost of the project is 

borne by the district using normal funds it has available for capital projects. . . . [¶] Since 

no financing exists in the lease lease-back arrangement (or there is no lease agreement at 

all), the use of Article 2 appears to be inappropriate.” 

The 2004 SAB report does not support plaintiff’s position. As the Davis court 

explained in rejecting an identical argument: “[T]he views expressed in the SAB Report 

do not actually include the interpretation advocated by [the plaintiff]. Specifically, the 

SAB report does not state that the legislation restricts the availability of the leaseleaseback method to situations where other funding is not available. In other words, the 

report’s reference to a case stating the ‘Education Code creates the following method for 

financing school construction’ (Morgan Hill Unified School Dist. v. Amoroso, supra, 204 

Cal.App.3d at p. 1086) does not imply that method is allowed only if other methods of 

financing are not available.” (Davis, supra, 237 Cal.App.4th at p. 293.) 

Consequently, the trial court properly sustained defendants’ demurrers as to 

plaintiff’s fifth cause of action.

C. Second Cause of Action: Breach of Fiduciary Duty, Breach of Trust

In the second cause of action against the School District only, plaintiff alleged the 

members of the board of the School District breached the fiduciary duty imposed upon 

them by their position, oath of office, and law. Plaintiff relied on the following seven 

acts or omissions, alleged in paragraph 34 of the FAC: (1) failing to consider less 

expensive proposals, (2) failing to consider whether the price for the work was 

reasonable, (3) failing to exercise due diligence to determine whether the price paid could 

be lower, (4) knowing the price paid could have been lower, (5) failing to solicit 

alternative bids for the work, (6) failing to proceed in a manner that would secure the best 

price, and (7) failing to proceed in a manner required by law. Plaintiff sought an order 

that Taber return “all money paid” under the lease-leaseback agreement by the School 

District. 

The plaintiff in Davis asserted a claim of breach of fiduciary duty based on 

precisely the same allegations and seeking the same relief. (Davis, supra, 237 
22

Cal.App.4th at p. 293.) The plaintiffs in McGee similarly claimed breach of fiduciary 

duty based on the failure to obtain competitive bids. (McGee, supra, 247 Cal.App.4th at 

p. 242.) In both cases, the appellate courts concluded the allegations failed to state a 

claim. (Davis, at p. 294; McGee, at p. 246.) The Davis court explained: “When a claim 

for breach of fiduciary duty is asserted against a public official by the Attorney General 

or a taxpayer, the damage element can be satisfied by alleging the official obtained 

profits from the unauthorized act. [Citation.] In these cases, the relief available is 

restitution, which can include the disgorgement of profits obtained by the public official. 

[Citation.] [¶] . . . Here, the [the operative complaint] requests that Contractor return all 

money paid to it under the Lease-leaseback Contracts, but does not allege Contractor was 

subject to a fiduciary duty. As to the persons who allegedly breached their fiduciary duty 

(i.e., Fresno Unified’s board), the [operative complaint] does not allege they profited 

from the transactions and does not request restitution or the disgorgement of profits. 

Furthermore, the relief sought for the alleged breach of fiduciary duty is against 

Contractor, a party that did not have a fiduciary duty. Accordingly, the second cause of 

action failed to allege facts sufficient to state a claim for breach of fiduciary duty.” 

(Davis, at pp. 293-294.) 

Plaintiff’s second cause of action fails for the same reasons the claim failed in 

Davis. On appeal before us, plaintiff does not dispute the Davis court’s analysis, now 

acknowledging its original claim of breach of fiduciary duty was “was off the mark.” 

Instead, plaintiff argues its allegations support a claim for breach of trust. This argument

also lacks merit. 

Plaintiff quotes Terry v. Bender (1956) 143 Cal.App.2d 198, 206-207, in which 

the court wrote: “A public office is a public trust created in the interest and for the 

benefit of the people. Public officers are obligated, virtute officii, to discharge their 

responsibilities with integrity and fidelity. Since the officers of a governmental body are 

trustees of the public weal, they may not exploit or prostitute their official position for 

their private benefits. When public officials are influenced in the performance of their 

public duties by base and improper considerations of personal advantage, they violate 
23

their oath of office and vitiate the trust reposed in them, and the public is injured by being 

deprived of their loyal and honest services. It is therefore the general policy of this state 

that public officers shall not have a personal interest in any contract made in their official 

capacity. . . . A transaction in which the prohibited interest of a public officer appears is 

held void both as repugnant to the public policy expressed in the statutes and because the 

interest of the officer interferes with the unfettered discharge of his duty to the public. 

The public officer’s interest need not be a direct one, since the purpose of the statutes is 

also to remove all indirect influence of an interested officer as well as to discourage 

deliberate dishonesty. Statutes prohibiting such ‘conflict of interest’ by a public officer 

are strictly enforced.” 

Plaintiff asserts that nothing prevented the School District from soliciting sealed 

bids for the project. That may be. But, “ ‘absent a statutory requirement, a public entity 

is not bound to engage in competitive bidding.’ ” (Los Alamitos, supra, 229 Cal.App.4th 

at p. 1229.) 

Plaintiff also relies on Proposition 39, enacted in November 2000, which amended 

the state Constitution to allow the issuance of bonds for the construction of school 

facilities if specified conditions are met and if approved by 55 percent of a school 

district’s voters. (See San Lorenzo Valley Community Advocates for Responsible Educ. 

v. San Lorenzo Valley Unified School Dist. (2006) 139 Cal.App.4th 1356, 1396, fn. 9.) 

Generally, a local government entity must obtain approval of two-thirds of the voters of 

the entity in order to incur indebtedness in the form of general obligation bonds. (Ibid.; 

Cal. Const., art. XVI, § 18, subd. (a).) Plaintiff argues, “Implicit in Proposition 39’s 

reduction of the passage rate from 66% to 55% for school construction bonds is an 

obligation on the part of [the School] District’s to maximize the amount of facilities that 

can be obtained with those bond dollars. By [failing to consider less expensive proposals, 

and the acts and omissions alleged in the FAC, paragraph 34)], [the School] District’s 

decision to award [Taber] $14.7 million dollars worth of construction contracts was 

arbitrary and capricious and in breach of their duty of care owed relative to the [School] 

District’s expenditure of its limited . . . school construction bond proceeds.” Plaintiff 
24

offers no authority for its position that Proposition 39 imposed additional duties on 

school districts, which are not expressly provided for in either the proposition or section 

17406. 

Returning to plaintiff’s theory of breach of trust, “the general policy of this state 

[is] that public officers shall not have a personal interest in any contract made in their 

official capacity.” (Terry v. Bender, supra, 143 Cal.App.2d at p. 206.) But plaintiff does 

not allege any member of the Board of the School District has a personal interest in the 

lease-leaseback agreement in this case. As a result, plaintiff’s allegations do not state a 

claim for breach of the public trust. 

D. Fourth Cause of Action: Conflict of Interest

Plaintiff’s fourth cause of action for conflict of interest was asserted against Taber 

only. Plaintiff alleged Taber was “employed” by the School District “to provide 

professional preconstruction services” relating to the project at issue (HVAC 

modernization) and other potential projects, and in providing these services, Taber 

“performed the functions and filled the roles and positions of officers, employees and 

agents of [the School] District who would ordinarily perform and provide . . .

professional, design, and financial functions and advise the [School] District relative to 

same.” Plaintiff further alleged that in providing these services, Taber “was in a position 

to advise and provide considerable influence upon [the School] District’s school board 

and staff as to what actions they should take relative to the Project.” Plaintiff claimed 

conflicts of interest arose “under the common law conflict of interest doctrine” and 

Government Code section 1090 when Taber was subsequently awarded the leaseleaseback agreement to construct the project at issue. 

The trial court sustained Taber’s demurrer as to the fourth cause of action, 

explaining, “plaintiff cites no legal authority supporting the proposition that defendant 

Taber’s alleged provision of ‘preconstruction services’ created an actionable conflict of 
25

interest.”20 We disagree, and conclude plaintiff may go forward on the claim of conflict 

of interest. 

1. Statutory and Common Law Conflict of Interest

Government Code section 1090 provides in relevant part, “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.” (Gov. Code, § 1090, subd. (a).) The 

statute “codifies the long-standing common law rule that barred public officials from 

being personally financially interested in the contracts they formed in their official 

capacities.” (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1072 (Lexin).) “The 

common law rule and section 1090 recognize ‘[t]he truism that a person cannot serve two 

masters simultaneously. . . .’ [Citations.] ‘The evil to be thwarted by section 1090 is 

easily identified: If a public official is pulled in one direction by his financial interest and 

in another direction by his official duties, his judgment cannot and should not be trusted, 

even if he attempts impartiality.’ ” (Id. at p. 1073.) 

Government Code section 1092 provides a remedy for violation of Government 

Code section 1090: “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. 

No such contract may be avoided because of the interest of an officer therein unless the 

contract is made in the official capacity of the officer, or by a board or body of which he 

or she is a member.” (Gov. Code, § 1092, subd. (a).) 

2. Standing

Defendants belatedly argue that plaintiff lacks standing to bring a claim of conflict 

of interest. Although defendants did not make this argument in their demurrers, we 

consider it because standing may be raised for the first time on appeal. (Horn v. County 

of Ventura (1979) 24 Cal.3d 605, 619.) Defendants contend only a “party” to the contract 

at issue has standing under the language of Government Code section 1092, and plaintiff 

 

20 Davis and McGee had not been decided at the time of the trial court’s ruling. 
26

cannot rely on taxpayer standing because the School District has no mandatory duty to 

bring a lawsuit to avoid the lease-leaseback agreement. Defendants rely solely on San 

Bernardino County v. Superior Court (2015) 239 Cal.App.4th 679 (San Bernardino). 

But, as we discuss, cases before and after San Bernardino have recognized that an action 

under Government Code section 1090 may be brought by a taxpayer, and San Bernardino

is distinguishable. 

A taxpayer may bring suit against government bodies pursuant to Code of Civil 

Procedure section 526a and based on common law. (Los Altos Property Owners Assn. v. 

Hutcheon (1977) 69 Cal.App.3d 22, 26 (Hutcheon).) Section 526a permits “ ‘[a]n action 

to obtain a judgment, restraining and preventing any illegal expenditure of, waste of, or 

injury to, the estate, funds, or other property of a county, town, city or city and county of 

the state, . . . against any officer thereof, or any agent, or other person, acting in its 

behalf.’ ” A common law taxpayer suit is limited to the “grounds [of] fraud, collusion, 

ultra vires, or a failure to perform a duty specifically enjoined.” (Hutcheon, at p. 26.) 

“The primary purpose of [section 526a], originally enacted in 1909, 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.’ [Citation.] [¶]

California courts have consistently construed section 526a liberally to achieve this 

remedial purpose.” (Blair v. Pitchess (1971) 5 Cal.3d 258, 267-268.) 

For example, in Gilbane Building Company v. Superior Court (2014) 223 

Cal.App.4th 1527 (Gilbane), a taxpayer association brought an action under Government 

Code section 1090, based on allegations that construction firms, including the defendant 

Gilbane, provided gifts to officials of a high school district in exchange for construction 

contracts worth several million dollars. (Id. at p. 1530.) In a demurrer, Gilbane argued 

the taxpayer association lacked standing, but Division One of the Fourth District Court of 

Appeal rejected this argument. The court explained: “Taxpayers may sue under section 

1090 in order to have improper contracts declared void. [Citations.] These lawsuits may 

be against the public agency as well as the private parties who entered into the improper 

contract with the public agency.” (Id. at p. 1532.) 
27

The Gilbane court acknowledged the long-standing rule that “ ‘[a] taxpayer may 

not bring an action on behalf of a public agency unless the governing body has a duty to 

act, and has refused to do so. If the governing body has discretion in the matter, the 

taxpayer may not interfere.’ ” (Gilbane, supra, 223 Cal.App.4th at p. 1532.)21 But 

“[w]here the public agency has expended funds illegally or for an unlawful purpose and 

its management is in the hands of the persons accused of the wrongdoing, a taxpayer is 

not required to make a demand on the public agency as it would be unavailing.” (Id. at p. 

1533.) The court concluded that, if the taxpayer association’s allegations were true, the 

high school district “expended funds illegally and the subject [construction] contracts are 

void, not merely voidable. Whether the contracts are void is not a matter within the [the 

high school] District’s discretion.” (Ibid.) Accordingly, the court held the taxpayer 

association had standing to challenge the construction contracts between Gilbane and the 

high school district under Government Code section 1090.

The Davis court also recognized that a taxpayer has standing to bring a claim 

under Government Code section 1090. In Davis, as here, the defendants did not argue in 

the trial court that the plaintiff lacked standing, but the court observed in passing, “The 

term ‘any party’ [in Government Code section 1092] is not restricted to parties to the 

contract. Defendants did not base their demurrer on the ground [the plaintiff] Davis 

lacked standing to bring the 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 

 

21 The court explained the rule: “ ‘ “The rule is that the municipality, through its 

governing body, has control of the property and general supervision over the ordinary 

business of the corporation; and there would be utter confusion in such matters if every 

citizen and taxpayer had the general right to control the judgment of such body, or usurp 

the office. Where the thing in question is within the discretion of such body to do or not 

to do, the general rule is that then neither by mandamus, quo warranto, or other judicial 

proceeding, can either the state or a private citizen question the action or nonaction of 

such body; nor in such cases can a private citizen rightfully undertake to do that which he 

thinks such body ought to do. It is only where performance of the thing requested is 

enjoined as a duty upon said governing body that such performance can be compelled, or 

that a private citizen can step into the place of such body and himself perform it.” ’ ” 

(Gilbane, supra, 223 Cal.App.4th at pp. 1532-1533.) 
28

a violation of section 1090. (E.g., Thomson v. Call (1985) 38 Cal.3d 633, [taxpayer suit 

successfully challenged validity of land transfer from city council member through 

intermediaries to city]; see Kaufmann & Widiss, The California Conflict of Interest Laws 

(1963) 36 So.Cal. L.Rev. 186, 200.)” (Davis, supra, 237 Cal.App.4th at p. 297, fn. 20.)22 

A month after Davis was decided, Division Two of the Fourth District Court of 

Appeal decided San Bernardino, the case upon which defendants now rely. In San 

Bernardino, a land owner and San Bernardino County (County) reached a settlement 

agreement in an inverse condemnation matter in 2006. The County then brought a 

validation action and obtained a judgment declaring the settlement agreement and the 

bonds issued to satisfy the inverse condemnation judgment valid in 2007. Five years 

later, taxpayer organizations sued the County and the landowner, seeking to void the 

settlement agreement under Government Code section 1090 based on allegations that a 

County supervisor received bribes from the landowner in exchange for his vote to 

approve the settlement agreement. (The supervisor pleaded guilty to bribery-related 

charges in 2011 and was no longer a County supervisor at the time the lawsuit was filed.) 

(San Bernardino, supra, 239 Cal.App.4th at pp. 681-683.) The San Bernardino court 

held that only a party to the challenged contract has standing to bring a claim for 

violation of section 1090. (Id. at p. 684.)23 

 

22 The Davis court cited Thomson v. Call, a California Supreme Court case from 

1985, and there are examples of taxpayers bringing claims under Government Code 

section 1090 as far back as 1946. (See Raymond v. Bartlett (1946) 77 Cal.App.2d 283, 

284-285.) 

23 While the Davis court observed the phrase “any party” in Government Code 

section 1092 was “not restricted to parties to the contract” (Davis, supra, 237 

Cal.App.4th at p. 297, fn. 20), the San Bernardino court reached the opposite conclusion. 

The court reasoned, “Nothing in the plain language of either section 1090 or section 1092 

grants nonparties to the contract, such as plaintiffs, the right to sue on behalf of a public 

entity that may bring a claim as provided in section 1092, but has not done so. Indeed, 

the Legislature's choice of the word ‘party’ in section 1092—as opposed to, say, 

‘person’—suggests the Legislature intended only parties to the contract at issue normally 

to have the right to sue to avoid contracts made in violation of section 1090.” (San 

Bernardino, supra, 239 Cal.App.4th at p. 684.) 
29

The San Bernardino court further held that neither Code of Civil Procedure 

section 526a nor common law conferred standing to taxpayers to bring claims under

Government Code section 1090. (San Bernardino, supra, 239 Cal.App.4th at pp. 685-

688.) The court explained its reasoning: “[U]nder either Code of Civil Procedure section 

526a or the common law, ‘[t]axpayer suits are authorized only if the government body 

has a duty to act and has refused to do so. If it has discretion and chooses not to act, the 

courts may not interfere with that decision.’ [Citation.] ‘It is the general rule that a 

taxpayer cannot maintain an action in behalf of [a government entity] to enforce a claim 

or demand inuring to the [government entity].’ [Citation.] ‘It has long been held that a 

government entity's decision whether to pursue a legal claim involves the sort of 

discretion that falls outside the parameters of waste under section 526a and cannot be 

enjoined by mandate.’ [Citation.] And because deciding whether to pursue a legal claim 

is generally an exercise of discretion, rather than ‘a duty specifically enjoined,’ the 

common law too does not normally provide the taxpayer a cause of action to pursue a 

legal claim on behalf of the government entity.” (Id. at pp. 686-687.)24 

The plaintiffs in San Bernardino “argue[d] that ‘compliance with [Government 

Code] Section 1090 is a nondiscretionary duty specifically enjoining [the County] from 

making the $102 million settlement agreement in exchange for bribes. . . .’ ” (San 

Bernardino, supra, 239 Cal.App.4th at p. 687.) The court was not persuaded: “This 

argument would be more to the point if plaintiffs were seeking to enjoin the County from 

entering into such a settlement agreement. But that ship has long since sailed. The issue 

now is the County’s decision (or lack thereof) with respect to bringing suit on the basis of 

the alleged violation of section 1090, and whether this decision is an exercise of 

discretion or a mandatory duty that County—so far, at least—has failed to perform. For 

 

24 In the passage quoted, the San Bernardino court cited three cases: Daily 

Journal Corp. v. County of Los Angeles (2009) 172 Cal.App.4th 1550, Elliott v. Superior 

Court (1960) 180 Cal.App.2d 894, 897, and Silver v. City of Los Angeles (1961) 57 

Cal.2d 39. (San Bernardino, supra, 239 Cal.App.4th at pp. 686–687.) However, none of 

these three cases involved a taxpayer attempting to bring a conflict of interest claim under 

Government Code section 1090. 
30

the reasons stated above, it is an exercise of discretion.” (Ibid.) The court noted that the 

taxpayer associations made no allegations “that any present County official was involved 

in the alleged bribery scheme leading to [the former County supervisor]’s guilty plea, or 

is otherwise engaged in fraud or collusion.” (Id. at p. 688.) 

McGee was decided after San Bernardino, and the Second District declined to 

follow it. Instead, the McGee court, citing Davis, held the plaintiffs had standing to 

challenge lease-leaseback construction contracts under Government Code section 1090. 

(McGee, supra, 247 Cal.App.4th at pp. 247-248.) The court explained: “Davis is closer 

to this case than San Bernardino. As in Davis, this case involved a validation action in 

which the court had authority to set aside void contracts. A contract in violation of 

section 1090 is void. [Citation.] In contrast, in San Bernardino, [the] plaintiffs’

challenge to the agreement was barred by a prior validation judgment. [Citation.] 

Additionally, in contrast to San Bernardino, this case did not involve a decision by 

former school board members, but was brought shortly after the District approved the 

contracts. [Citation.] Further, in contrast to the San Bernardino court, we find Thomson 

v. Call, supra, 38 Cal.3d 633, apposite as our high court could not have concluded a 

contract was invalid in violation of section 1090 without implicitly concluding that the 

taxpayers challenging it had standing to challenge it.” (McGee, at p. 248.) 

We conclude that Davis and McGee are more like this case than San Bernardino, 

and the weight of authority supports permitting a taxpayer to bring a claim under 

Government Code section 1090 under the circumstances here. If the lease-leaseback 

agreement in this case violates section 1090, then it is void, not merely voidable. 

Whether the lease-leaseback agreement is void is not a matter within the School District’s 

discretion. (Gilbane, supra, 223 Cal.App.4th at p. 1533.) And, even assuming San 

Bernardino was correctly decided under its facts, the case is distinguishable (as it was in 

McGee). First, in San Bernardino, a prior, validation action had concluded long before 

the plaintiffs sued; here, plaintiff’s action is itself a reverse validation action. Second, in 

San Bernardino, the person with the alleged conflict of interest was no longer a County 

supervisor at the time the taxpayer lawsuit was filed, and there were no allegations 
31

“showing that any present County official was involved in the alleged” conflict of 

interest. (San Bernardino, supra, 239 Cal.App.4th at p. 688.) But in the present case, the 

party with an alleged conflict of interest, Taber, is still allegedly involved in the 

challenged transaction. 

In short, we hold plaintiff has standing to bring a claim of conflict of interest.25

3. Analysis

We also follow Davis and McGee on the analysis of whether allegations such as 

plaintiff’s state a claim of conflict of interest. As we have described, Government Code 

section 1090’s proscription applies to “[m]embers of the Legislature, state, county, 

district, judicial district, and city officers or employees.” (Gov. Code, § 1090, subd. 

(a).)26 Such individuals are barred from being “financially interested in any contract 

made by them in their official capacity, or by any body or board of which they are 

members.” (Ibid.) Yet, despite the reference to “ ‘officers or employees’ ” and “ ‘any 

contract made by them,’ ” it has been held in the civil context that Government Code 

section 1090 may apply to a corporate independent contractor to a government body if 

the contractor serves a public function and advises the government body on the making of 

 

25 Taber further argues on appeal that plaintiff lacks standing to bring any of its 

claims, citing San Bernardino, supra, 239 Cal.App.4th 679. Given our conclusion that 

plaintiff has standing to bring a claim of conflict of interest, this argument obviously 

fails. We note the contractor-defendant in McGee also argued that San Bernardino stood 

for the proposition that the plaintiffs lacked standing even to bring their claims under the 

Education Code, but McGee rejected the argument because San Bernardino “consider[ed] 

only a cause of action for conflict of interest.” (McGee, supra, 247 Cal.App.4th at p. 

248, fn. 4.) Moreover, Taber acknowledges that “any taxpayer who feels the public 

entity has entered a contract contrary to the law, may bring a timely action under Code of 

Civil Procedure section 863 [reverse validation] . . . or a timely action under Code of 

Civil Procedure section 526a [taxpayer suit].” Here, plaintiff alleged that the action was 

being brought under Code of Civil Procedure section 863 and Code of Civil Procedure 

section 526a. 

26 Similarly, the common law rule on conflicts of interest applies to “public 

officials.” (Lexin, supra, 47 Cal.4th at p. 1072.) 
32

the contract. (McGee, supra, 247 Cal.App.4th at p. 249; HUB City Solid Waste Services, 

Inc. v. City of Compton (2010) 186 Cal.App.4th 1114, 1124-1125 (HUB City.)

First, it has long been recognized that “[a] person merely in an advisory position to 

a city is affected by the conflicts of interest rule.” (Schaefer v. Berinstein (1956) 140 

Cal.App.2d 278, 291.) Second, “ ‘[t]he fact that someone is designated an independent 

contractor is not determinative; the statute applies to independent contractors who 

perform a public function.’ ” (California Housing Finance Agency v. 

Hanover/California Management and Accounting Center, Inc. (2007) 148 Cal.App.4th 

682, 690 [approving quoted statement as a jury instruction] (Hanover).) In HUB City, the 

court explained the determination of whether an individual is considered an officer or 

employee for purpose of the statute “turns on the extent to which the person influences an 

agency’s contracting decisions or otherwise acts in a capacity that demands the public 

trust.” (HUB City, supra, 186 Cal.App.4th at p. 1125.) In HUB City, the defendant 

Aloyan advised the city of Compton’s assistant city manager on establishing an in-house 

waste management division. Compton then entered into a management agreement with 

Aloyan’s shell company, under which Aloyan’s company was designated “an 

independent contractor but assumed many of the city’s waste management needs” by 

“ ‘providing the private management’ of the city’s in-house waste operation.” (Id. at p. 

1119.) At trial, evidence showed “Aloyan had discretion over which vendors to solicit, 

and influenced the city’s staffing decisions. He assisted Compton with the acquisition of 

insurance, and discussed the possibility of outsourcing waste hauling operations to a

private contractor. Under the agreement Aloyan acted as the director of the in-house 

waste division, working alongside city employees, overseeing day-to-day operations of 

Compton’s waste management division, and taking responsibility for public education

and compliance with state mandated recycling and waste reduction efforts.” (Id. at p. 

1120.) Rejecting Aloyan’s argument that he was not a public official or employee under 

Government Code section 1090, the Court of Appeal held, “A person in an advisory

position to a city may fall within the scope of section 1090. In particular, independent 

contractors whose official capacities carry the potential to exert considerable influence 
33

over the contracting decisions of a public agency may not have personal interests in that 

agency’s contracts.” (Id. at pp. 1124-1125.)

Third, in Davis (reviewing the sufficiency of allegations following a successful 

demurrer), the Court of Appeal held that Government Code section 1090 could apply to 

corporate consultants. Considering a claim of conflict of interest based on a 

preconstruction services agreement, the Davis court reasoned: “[A]s to whether the word 

‘employees’ should be interpreted to exclude corporate consultants, we conclude that 

corporate consultants should not be categorically excluded from the reach of Government 

Code section 1090. Such a statutory interpretation would allow the use of the corporate 

veil to insulate conflicts of interest that otherwise would violate the prohibition against 

local government officers and employees from making contracts in which they are 

financially interested. A corporate consultant is as capable of influencing an official 

decision as an individual consultant. Because the statute’s object is to limit the 

possibility of any influence, direct or indirect, that might bear on an official’s decision 

[citation], we conclude the allegations that Contractor served as a professional consultant 

to Fresno Unified and had a hand in designing and developing the plans and 

specifications for the project are sufficient to state that Contractor (1) was an ‘employee’ 

for purposes of Government Code section 1090 and (2) participated in making the Lease–

leaseback Contracts.” (David, supra, 237 Cal.App.4th at pp. 300-301.) 

Likewise, McGee concluded the plaintiffs stated a claim of conflict of interest 

sufficient to withstand demurrer based on similar allegations. The court explained: 

“[The] plaintiffs allege that [contractor-defendant] Balfour ‘filled the roles and positions 

of officers, employees and agents of [the District.].’ At this early stage in the 

proceedings, the allegation must be credited. [Citation.] As in HUB City, ‘[a] person in 

an advisory position to a city may fall within the scope of section 1090.’ (HUB City, 

supra, 186 Cal.App.4th at p. 1124.) The trial court therefore should have overruled the 

demurrer to McGee’s fourth cause of action.” (McGee, supra, 247 Cal.App.4th at p. 

249.)
34

Here, plaintiff alleged Taber “performed the functions and filled the roles and 

position of officer, employees and agents of [the School] District who would ordinarily 

perform and provide” and, further, Taber “was in a position to advise and provide 

considerable influence upon [the School] District’s school board and staff as to what 

actions they should take relative to the Project.” Under Davis, McGee, HUB City, and 

Hanover, these allegations are sufficient to state a claim of conflict of interest. 

Disagreeing with Davis and McGee, defendants and amici curiae rely on People v. 

Christiansen (2013) 216 Cal.App.4th 1181 (Christiansen), which refused to extend 

Government Code section 1090 to independent contractors in the criminal context. (The 

trial court also relied on Christiansen. Because “employees” is not defined in the statute, 

the Christiansen court applied the common law test of employment. “Under the common 

law test, independent contractors are not employees.” (Id. at p. 1189.) The court 

declined to extend Hanover and HUB City to a criminal prosecution. “We express no 

opinion on the soundness of those opinions in the civil context, but we hold that their 

expansion of the statutory term ‘employees’ to apply to independent contractors does not 

apply to criminal prosecutions for violation of section 1090. At least for purposes of 

criminal liability under section 1090, an independent contractor is not an employee.” 

(Ibid.) Declining to follow Hanover, the Christiansen court explained: “First, it fails to 

follow the Supreme Court’s guidance concerning interpretation of the undefined statutory 

term ‘employees.’ [Citation.] Second, it is a civil case, and the matter before us is a 

criminal case. Third, none of the cases cited in [Hanover] provides any support for the 

proposition that an independent contractor can be an employee within the meaning of 

section 1090.” (Ibid.) The court declined to follow HUB City, which adopted Hanover’s 

broad interpretation of “employees,” for the same reasons. (Id. at p. 1190.)27 

 

27 The issue whether an individual who performs work for a public entity and 

qualifies as an independent contractor for purposes of tort liability at common law may 

be subject to criminal liability under Government Code section 1090 is currently pending 

before the California Supreme Court in People v. Superior Court (Sahlolbei), review 

granted April 13, 2016, S232639. The court heard oral argument in Sahlolbei on April 4, 

2017.
35

Davis harmonized Christiansen, Hanover, and HUB City, concluding that 

Christiansen’s narrow definition of the term “employees” “is appropriate in the context 

of criminal prosecution, but is not appropriate in the context of civil actions seeking to 

invalidate a contract with a public entity.” (Davis, supra, 237 Cal.App.4th at p. 300.) “In 

Stigall [v. City of Taft (1962) 58 Cal.2d 565], a civil action, the Supreme Court 

interpreted the statutory terms broadly to implement the objectives of the conflict of 

interest statute and did not rely on technical definitions or rules to limit the reach of the 

statute. Similarly, we conclude that technical definitions of the term ‘employee’ taken 

from other areas of law should not be used to limit the scope of Government Code section 

1090. Therefore, we join the courts in Hanover and Hub City in concluding that, in civil 

actions, the term ‘employees’ in Government Code section 1090 encompasses 

consultants hired by the local government.” (Ibid.) McGee followed Davis and HUB 

City, while recognizing Christiansen reached a different result in the criminal context. 

(McGee, supra, 247 Cal.App.4th at p. 249 and fn. 5.) We also conclude that, in the civil 

context, an independent contractor who serves a public function may be subject to 

Government Code section 1090.

Defendants and amici curiae also cite Public Contract Code section 10365.5, 

enacted in 1990. This statute applies to contracts made by state agencies, not local 

government entities. (Pub. Contract Code, § 10335.) It provides in part: “No person, 

firm, or subsidiary thereof who has been awarded a consulting services contract may 

submit a bid for, nor be awarded a contract for, the provision of services, procurement of 

goods or supplies, or any other related action which is required, suggested, or otherwise 

deemed appropriate in the end product of the consulting services contract.” (Pub. 

Contract Code, § 10365.5, subd. (a).) Taber argues this statute demonstrates that 

Government Code section 1090 does not apply to consultants who later contract to 

perform related work because, if it did, the Legislature would not have needed to enact 

Public Contract Code section 10365.5 in 1990. Amicus curiae California Association of 

School Business Officials (CASBO) points to the “ ‘settled rule of statutory construction 

that where a statute, with reference to one subject contains a given provision, the 
36

omission of such provision from a similar statute concerning a related subject is 

significant to show that a different legislative intent existed with reference to the different 

statutes.’ ” (In re Jennings (2004) 34 Cal.4th 254, 273.) CASBO argues that the fact 

Legislature enacted Pubic Contract Code section 10365.5 but did not amend Government 

Code section 1090 shows that the term “employees” in Government Code section 1090 

should not be expanded to include independent contractors who provide consulting 

services. 

The Court of Appeal in McGee responded to the identical argument as follows: 

“If anything, Public Contract Code section 10365.5 suggests that the Legislature 

recognized the potential conflict inherent in the same entity serving as a consultant that 

plans a construction project and the contractor who carries out the project. The fact that 

Public Contract Code section 10365.5 applies specifically to consultants does not show 

that Government Code section 1090 cannot also apply to consultants as the two statutes 

are not mutually exclusive. In a proper case, arguably both could apply, but here the 

District is not governed by Public Contract Code section 10365.5.” (McGee, supra, 247 

Cal.App.4th at p. 250.)

The fact that the Legislature passed Public Contract Code section 10365.5, which 

applies only to contracts with state agencies, but failed to provide a similar law for 

contracts with local government entities suggests that there is no blanket prohibition 

against consultants contracting with local government entities for work related to their 

consulting services (as there clearly is in the context of state contracting under Public 

Contract Code section 10365.5). But we fail to see how Public Contract Code section 

10365.5 could mean that an independent contractor working for a local government entity

could never be deemed an employee for purposes of Government Code section 1090. In 

other words, the existence of Public Contract Code section 10365.5 does not suggest to us 

that Hanover, HUB City, Davis, and McGee were wrongly decided. 

Finally, on the request of Taber, we have taken judicial notice of the legislative 

history of Assembly Bill No. 1059 (2013-2014), which died in the Assembly. This bill 

proposed amending Government Code section 1090 to apply to “independent contractors 
37

who perform a public function.” It further proposed adding a new statute providing that 

an independent contractor employed by government agency “has a financial interest in a 

subsequent contract” with that agency if he or she “participates in the making of the 

subsequent contract.” The existence of this bill does not change our analysis. As the 

McGee observed, “The legislative history provided to us does not suggest the Legislature 

intended to modify the statute to overrule the analysis in Hub City, which was decided 

prior to the proposed amendment.” (McGee, supra, 247 Cal.App.4th at p. 250, fn. 6.) 

In sum, plaintiff’s allegations are sufficient to state a claim of conflict of interest. 

Therefore, we reverse the trial court’s ruling as to plaintiff’s fourth cause of action.

E. Remaining Issues

1. Sixth and Seventh Causes of Action

Plaintiff does not challenge the trial court’s ruling with respect to the sixth cause 

of action (improper delegation of discretion). Plaintiff’s seventh cause of action was for 

declaratory relief. This claim is dependent upon the preceding causes of action in the 

FAC, all incorporated by reference, and does not allege an independent basis for relief. 

The trial court determined that the seventh cause of action was “superfluous, because the 

validity of the subject leases is an issue that is already ‘fully engaged’ by plaintiff’s other 

causes of actions,” citing Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324, and 

General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470-471. The court 

denied declaratory relief, citing its statutory discretion under Code of Civil Procedure 

section 1061. We find no reversible error in this ruling.

2. Requests for Judicial Notice

As mentioned in footnote 1, we granted requests for judicial notice filed by 

plaintiff and Taber. Three additional requests for judicial notice were taken under 

submission. We deny the pending requests. In a motion filed November 30, 2015, 

plaintiff requests we take judicial notice of the first amended complaint filed in San 

Bernardino, supra, 239 Cal.App.4th 679, cited by defendants. This document is not 

necessary to resolve the standing issue raised by San Bernardino. (See Jordache 

Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6 
38

[denying request for judicial notice where items were not necessary, helpful, or 

relevant].) In a motion filed December 14, 2015, amicus curiae Association of California 

Construction Managers requests we take judicial notice of Assembly Bill No. 1486 

(2003-2004), Assembly Bill No. 1097 (2005-2006), and a report prepared by the San 

Diego Taxpayers Educational Foundation. We have already taken judicial notice of 

Assembly Bill No. 1486, and the Governor’s veto message is described in McGee, supra, 

247 Cal.App.4th at page 245. The remaining documents are unnecessary to decide this 

appeal. Finally, in a motion filed on February 4, 2016, in response to the amicus curiae 

briefs, plaintiff asks us to take judicial notice of 10 documents. These materials are not 

necessary, helpful, or relevant to the issues presented in this appeal. 

DISPOSITION

The judgment of dismissal is reversed. The trial court is directed to enter a new 

order sustaining defendants’ demurrers without leave to amend as to all causes of action 

except the fourth cause of action for conflict of interest. The parties shall bear their own 

costs on appeal. 

_________________________

Miller, J.

We concur:

_________________________

Kline, P.J.

_________________________

Richman, J.
1

Filed 5/31/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

CALIFORNIA TAXPAYERS ACTION 

NETWORK,

Plaintiff and Appellant,

v.

TABER CONSTRUCTION, INC., et al.,

Defendants and Respondents.

 A145078

 (Contra Costa County

 Super. Ct. No. MSC1400996)

 ORDER CERTIFYING OPINION

 FOR PUBLICATION

BY THE COURT:

The opinion in the above-entitled matter filed on May 2, 2017, was not certified 

for publication in the Official Reports. For good cause and pursuant to California Rules 

of Court, rule 8.1105, it now appears that the opinion should be published in the Official 

Reports, and it is so ordered.

Dated: _______________________ ________________________________

Kline, P.J.
2

Trial Court: Superior Court of Contra Costa County

Trial Judge: Hon. George V. Spanos

Attorney for Appellants Kevin R. Carlin

Carlin Law Group, A.P.C.

Attorneys for Respondent Jason R. Thornton

Taber Construction Louis J. Blum

Finch, Thornton & Baird, LLP

Attorneys for Respondent Glenn N. Gould

Mt. Diablo Unified School Dist. Deepika S. Saluja

Dannis Woliver Kelley

Attorneys for Amicus Curiae Harold M. Freiman

California Association of School Business Devon B. Lincoln

Officials in support of Respondents Travis E. Cochran

Lozano Smith

Attorneys for Amicus Curiae Paul G. Thompson

California School Boards Association’s James Traber

Education Legal Alliance in support of Fagen Friedman & Fulfrost, LLP

Respondent Mt. Diablo Unified School Dist.

Keith Bray

Joshua R. Daniels

California School Boards Association/

Education Legal Alliance

Attorneys for Amicus Curiae Martin A. Hom

Coalition for Adequate School Housing Jennifer D. Cantrell

In support of Respondent Atkinson, Andelson, Loya, Ruud & 

Mt. Diablo Unified School Dist. Romo

A145078, California Taxpayers Action Network v. Taber Construction, Inc., et al.
3

Attorney for Amicus Curiae Martin A. Hom

Association of California Construction Atkinson, Andelson, Loya, Ruud &

Managers in support of Respondent Romo

Mt. Diablo Unified School Dist.

Attorney for Amicus Curiae Lawrence H. Kay

Construction Employers Association Law Office of Lawrence H. Kay

in support of Respondent

Taber Construction, Inc.