Opinion ID: 2600267
Heading Depth: 1
Heading Rank: 2

Heading: The Tal Opinions

Text: ¶ 29 Phillips and the Corporation Commission argue that dismissal of the taxpayers' qui tam action is required because of this Court's holdings in City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, 988 P.2d 901 ( Tal I ), State ex rel. Tal v. Norick, 1999 OK 85, 991 P.2d 999 ( Tal II ), and related opinions. They argue that taxpayers had no right to prosecute an action on behalf of the state because the Corporation Commission brought a declaratory judgment action testing the validity of its agreement with Phillips. Taxpayers respond and argue that the Corporation Commission and Phillips are seeking to uphold the agreement via the declaratory judgment proceeding, and arguments against the agreement have not been advanced by the Corporation Commission for judicial review. Taxpayers argue that they should be allowed to intervene in the Commission's declaratory judgment proceeding and be allowed to prosecute a qui tam remedy. ¶ 30 In five recent opinions the Court discussed a taxpayer's demand upon a public body, the public body's response thereto by filing a declaratory judgment action, a taxpayer's response by seeking to intervene in the declaratory judgment proceeding, and the taxpayer's subsequent qui tam proceeding filed as a separate action. [18] Therein, although the parties to the declaratory judgment proceeding agreed that the public contracts at issue were lawful, such agreement did not deprive the declaratory judgment proceeding of its justiciable character when the issues presented were not feigned or collusive by those seeking to uphold the public contracts. State ex rel. Moshe Tal v. City of Oklahoma City, 2002 OK 97, ¶ 8, 61 P.3d 234, 241 ( Tal IV ), citing City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, ¶ 29, 988 P.2d 901, 907 ( Tal I ). ¶ 31 In State ex rel. Moshe Tal v. Norick, 1999 OK 85, 991 P.2d 999 ( Tal II ), we concluded that a taxpayer qui tam proceeding was filed prematurely because a pending declaratory judgment proceeding was filed in response to the taxpayers' written demand. The Corporation Commission and Phillips make a similar argument. However, our conclusion in Tal II was based upon more than the mere fact that declaratory judgment proceeding had been filed. The record showed that the same claims of allegedly wrongful conduct were presented for adjudication in both the declaratory judgment proceeding and the subsequent qui tam proceeding. Tal II, 1999 OK 85, at ¶¶ 8-9, 991 P.2d at 1001. ¶ 32 In the Tal cases, we examined whether the facts and applicable law of the controversy were before the trial court for it to consider when adjudicating the merits of the controversy. The taxpayers argued that the facts and law were not before the trial court in the declaratory judgment proceeding and that they should be allowed to intervene and press for qui tam relief. In Tal I the taxpayers claimed that the city's suit was non-responsive to the taxpayers' demand because the city failed to support the taxpayers' claims. 1999 OK 71, ¶ 18, 988 P.2d at 906. We held, correctly we think, that the city was not required to do so. Id. However, we distinguished between the taxpayers' factually unsupported conclusions which the city need not follow and facts material to the controversy that were required for the trial court to have before it to adjudicate the controversy. ¶ 33 When we rejected the taxpayers' argument that the city's suit was non-responsive, we relied upon State, Bd. Com'rs Pontotoc County ex rel. Braly v. Ford, 1941 OK 270, 116 P.2d 988. Tal I, at ¶ 17, 988 P.2d at 906. In Braly the taxpayers alleged that a county treasurer expended money from a sinking fund in an allegedly unlawful manner for certain securities. Braly, 116 P.2d at 989. The same day that the taxpayers' demand was made to the board of commissioners the board directed the county attorney to institute suit against the treasurer, and the county attorney immediately ordered an audit. Id. Prior to completion of the audit the taxpayers sued, and then upon the audit's completion the county attorney filed an action against the treasurer. Id. 116 P.2d at 989. ¶ 34 We stated that diligence on the part of the proper officials in prosecuting the action after the statutory demand is a matter of defense against the taxpayer's [ qui tam ] action. Braly, 116 P.2d at 990. We also explained that public officials are presumed, in the absence of any showing to the contrary, to be ready and willing to perform their duties. Id. We affirmed the dismissal of the qui tam claim because The evidence fully supports the court's finding that the officers had not failed to act diligently in instituting and presenting the suit on behalf of the county. Braly, 116 P.2d at 992. In Braly the taxpayers' lack of a qui tam remedy was based upon the character of the officials' actions as shown by the evidence before the trial court. ¶ 35 In Tal I we also distinguished State ex rel. Lockhart v. Board of Com'rs of Lincoln County, 1946 OK 291, 173 P.2d 725, because in Tal I certain facts were before the trial court when it adjudicated the merits of the controversy, and no contrary facts were raised in the trial court in support of certain conclusory allegations raised in the written demand letter. Tal I, at ¶ 19, 988 P.2d at 906. For example, our discussion includes the following: Here the issue is much different from the issue involved in Lockhart. The case has been tried and the record developed supports the trial court's finding that the property at issue was sold at its fair market value and that the protections for the public to safeguard its interests spelled out in the Agreements were adequate. This ends the inquiry and T.A.R.'s [taxpayers'] expression of a contrary opinion in its Demand, without factual support, does not change the result. Tal I, 1999 OK 71, ¶ 19, 988 P.2d 901. In Tal I the taxpayers' possessed no right to intervene in the declaratory judgment proceeding where the controversy and the facts material to that controversy were before the trial court in a form that the trial court could consider when making its decision on the merits. ¶ 36 In explaining that a controversy was before the trial court, although the parties sought the same relief, we cited opinions from Wyoming, Idaho, and New Jersey. Tal I, at ¶¶ 25 -28, 988 P.2d at 907. In Brimmer v. Thomson, 521 P.2d 574 (Wyo.1974), although the actual litigants before the trial court held a similar view on the controversy, the opposing view was before the trial judge in the form of a previous attorney general's opinion, and the issue did not turn on an issue of fact. Tal I, at ¶¶ 25-26, 988 P.2d at 907. See Brimmer, 521 P.2d at 577, where the court stated that the matter of the controversy and adversity is presented by the attachment of Exhibit A, a copy of the [attorney general's] opinion, to said complaint. . . . Similarly, in State ex rel. Miller v. State Board of Education, 56 Idaho 210, 52 P.2d 141 (1935), the controversy did not turn on an issue of fact, but on three questions of law. Id. 52 P.2d at 142. In Whelan v. New Jersey Power & Light Company, 45 N.J. 237, 212 A.2d 136, 139 (1965), the appellate court required the services of an amicus curiae at the expense of one of the parties to assure that that all recesses of the problem will be earnestly explored in presenting the issues. Id. 212 A.2d at 139. ¶ 37 The Tal opinions indicate that when a public body receives the written demand letter, one of the appropriate responses may be to bring a declaratory judgment proceeding to adjudicate the legality of the issues raised by the demand letter. The declaratory judgment proceeding may be deemed, as a matter of law, to be an appropriate response because officials are entitled to the presumption that their action in seeking declaratory judgment is in good faith. State ex rel. Moshe Tal. v. City of Oklahoma City, 2000 OK 70, ¶ 4, 19 P.3d 268, 271, cert. denied, 534 U.S. 814, 122 S.Ct. 40, 151 L.Ed.2d 13 (2001). In State, Bd. Com'rs Pontotoc County ex rel. Braly v. Ford, supra , one of the issues was the diligence of the officials in bringing an action after receiving a demand letter. Braly, 116 P.2d at 990-992. A recurring issue in the Tal opinions is similar, but not identical; i.e., the diligence of the officials' representation of the alleged illegal official acts in the declaratory judgment proceeding. In the Tal cases, the taxpayers failed to show that the facts material to the legality of the issues were not presented to the trial court for it to consider when adjudicating the merits of the claimed legality or illegality. Tal I and Tal II, supra. For additional example, we specifically noted in Tal IV that the taxpayers failed to assert that the public body failed to raise any substantive issue arising from the allegations of the taxpayers' written demand upon the public body that related to the lawfulness of the challenged acts of the public body. Tal IV, 2002 OK 97, at ¶ 8, 61 P.3d 234, at 241. ¶ 38 The same diligence required of public officials we recognized in Braly is equally applicable when the action brought by officials is seeking declaratory judgment in response to a demand letter. Of course, the officials may seek to judicially validate the conduct challenged by the taxpayers, and they are not required to repeat factually unsupported conclusory allegations from the taxpayers' demand letter. Tal I, 1999 OK 71, ¶ 18, 988 P.2d at 906. However, the officials' declaratory judgment proceeding must put before the trial court the substance of the taxpayers' material factual allegations showing illegality. ¶ 39 In the matter before us, whether Taxpayers' qui tam proceeding was premature is based upon the appropriateness of the officials' actions in response to the written demand. Braly, supra. Clearly, a declaratory judgment proceeding brought by officials in response to a demand letter is one of many procedurally appropriate responses. Tal II, supra. While officials are not required to adopt all of taxpayers' arguments and seek judicial invalidation of their previous actions, the officials' declaratory judgment proceeding must present the material facts of the controversy and applicable law before the trial court in a judicially cognizable form. ¶ 40 The Commission's petition for declaratory judgment states that a Settlement Agreement was reached with Phillips. It also states that a written demand letter was delivered to the Commission and the Commissioners and that the letter alleges that the Settlement Agreement permitted the transfer of state environmental funds for claims which were `. . . known to be fraudulent or void, or in pursuance of any unauthorized, unlawful or fraudulent contract or agreement.' 62 O.S. § 372. The petition states that the taxpayers demanded that the Commission rescind the Settlement Agreement. The petition states that the demand letter raised certain questions which need resolution and an actual controversy has arisen because of the demand letter. The petition does not identify these questions. The Settlement Agreement is attached to the petition as an exhibit. ¶ 41 The declaratory judgment petition contains many allegations for the purpose of showing that the Settlement Agreement should not be rescinded. The petition cites several statutes for the purpose of showing the Settlement Agreement is not invalid. It cites case law and statutes for an argument that the Indemnity Fund contains no state funds and that taxpayers' threatened qui tam action is improper. The petition contains allegations relating to circumstances leading up the Settlement Agreement, and why the Settlement Agreement should be considered advantageous to the state. ¶ 42 None of the facts relied upon by the taxpayers for showing illegality are in the declaratory judgment petition. The petition does not mention the allegation that the State Auditor and Inspector performed an audit of Phillips' claims, and that of the initial 3.9 million dollars paid approximately one million dollars was questioned by the State Auditor and Inspector as an overpayment. The petition does not mention the allegation that Phillips did not submit claims with statutorily required information for payment from the Indemnity Fund. The petition does not mention that many of the claims by Phillips had been previously denied by the Commission acting through certain employees, after which Phillips resubmitted these claims to different Commission employees who approved their payment via a settlement agreement. ¶ 43 Taxpayers make several allegations relating to ex parte meetings between representatives of Phillips and one of the Commissioners while administrative claims were pending, change in employees of the Commission, meetings of Phillips' representatives and a state senator, and other allegations all for the purpose of showing bad motives, or at least a motive other than one for payment of legitimate claims. An official's declaratory judgment proceeding need not put forward allegations of motive where motive is not an element of the taxpayer's alleged action showing an unauthorized, or unlawful, or fraudulent contract. But, as here, where taxpayers allege facts in support of statutory violations pertaining to payment of public funds, and allege facts from an audit by a government official charged with making audits of public funds, the officials must put those facts before the trial court in a manner sufficient to give the defendant and the trial court fair notice of the nature of the controversy raised by a demand letter. ¶ 44 Two reasons require this result. First, a matter is proper for declaratory relief only when an actual justiciable controversy is presented for adjudication. Cherokee Nation v. Nomura, 2007 OK 40, n. 9, 160 P.3d 967. Second, the procedure for presenting a justiciable controversy is to present material facts and law to the trial court by pleading and evidence. For example, we recently stated the following. We have stated that declaratory relief is based upon the existence of a justiciable controversy. City of Oklahoma City v. Oklahoma City Urban Renewal Authority, 1999 OK 71, ¶ 28, 988 P.2d 901, 907; Ethics Commission v. Cullison, 1993 OK 37, 850 P.2d 1069, 1073. The term justiciable refers to a lively case or controversy between antagonistic demands. Lawrence v. Cleveland County Home Loan Authority, 1981 OK 28, 626 P.2d 314, 315. When a party presents antagonistic demands that are merely speculative a prohibited advisory opinion is being requested. State ex rel. Oklahoma Capitol Imp. Authority v. E.A. Cowen Const. Co., 1974 OK 4, 518 P.2d 1264, 1266; Post Oak Oil Co. v. Stack & Barnes, P.C., 1996 OK 23, 913 P.2d 1311, 1314. House of Realty, Inc. v. City of Midwest City, 2004 OK 97, ¶ 12, 109 P.3d 314, 318. The material facts and law relied on by the taxpayers in their written demand provide the antagonistic demands that are before the trial court in an officials' declaratory judgment proceeding, although the actual relief sought may be to judicially validate the officials' prior action that is challenged by the taxpayers. These antagonistic demands show that the officials' declaratory judgment request is not a prohibited advisory opinion. ¶ 45 The material facts in the written demand may be, but are not required to be, quoted verbatim in the officials' petition for declaratory relief. This is so because notice pleading does not require pleading every fact upon which a claim is based, but merely a short and plain statement of the claim that will give fair notice of what the plaintiff's claim is and the grounds upon which it rests. [19] Merely pleading that a controversy exists without mentioning any of the facts relied on by the taxpayers in alleging an unlawful agreement does not provide the trial court with sufficient facts to identify an actual controversy to adjudicate. Where the legality of officials' conduct turns on a question of law, as in Brimmer v. Thomson, supra , the officials are to inform the trial court of the nature of that dispute; and when the legality of officials' conduct turns on a question of fact, those facts must be before the trial court in such form that the trial court can consider them when adjudicating the merits of the petition for declaratory judgment. [20] ¶ 46 In summary, officials may use a declaratory judgment proceeding for the purpose of testing the legality of their prior actions after they have been challenged by a taxpayer's written demand. However, the procedural vehicle of declaratory relief has a substantive standard as well; it must include, at a minimum, a short and plain statement of the taxpayer's challenge that will give fair notice of the nature of the controversy that the trial court is being requested to adjudicate. In the matter before us the declaratory judgment petition and answer did not contain the taxpayers' demand letter or otherwise plead the nature of the taxpayers' challenge to the settlement agreement. The declaratory judgment request by the officials is insufficient to make taxpayers' qui tam petition premature. Tal I, supra, and Tal II, supra.