Opinion ID: 1297862
Heading Depth: 1
Heading Rank: 2

Heading: the conflict of interest theory

Text: Abboud claims as error the district court's finding that Ralston Mayor Gerald Koch complied with § 18-301.01. Section 18-301.01(2), the statute in effect at the time of the filing of this case, has since been repealed and reenacted in Neb.Rev.Stat. §§ 49-14,103.01 and 49-14,103.07 (Reissue 1988). Section 18-301.01(2) prohibited any city officer from being directly or indirectly interested in any contract to which the city was a party. The statute also provided that an action may be brought within 1 year of the signing of the contract to have the contract declared void. The record indicates that Koch, a city officer, owned a 12½-percent share of Lakeview and was therefore interested in the contract between the City and Lakeview. We declared in Abboud's first appeal to this court that Abboud's action to declare the contract void under § 18-301.01(2) was barred by the 1-year statute of limitations. However, we also stated that his action for a permanent injunction preventing the City and Lakeview from exercising the purchase option agreement in the lease was not similarly barred. Abboud now argues that the contract between the City and Lakeview is voidable because Mayor Koch was a shareholder in Lakeview and a city officer. Abboud again attempts to have this court declare the contract between the City and Lakeview void under § 18-301.01(2) despite the fact he is barred from doing so by his failure to comply with the § 18-301.01(2) 1-year statute of limitations. The remedy provided by § 18-301.01(2) is not available to Abboud because he has failed to comply with the statute. Therefore, Abboud may not claim the district court erred by failing to afford him this remedy. We said in our opinion accompanying Abboud's first appeal that he may seek a permanent injunction prohibiting the City and Lakeview from exercising the purchase option in the lease. Abboud does not make it clear whether or not he seeks this remedy, but we will assume he does based on his continuing claim that the sales contract between the City and Lakeview was burdened with a conflict of interest. In other words, we believe Abboud seeks to have the execution of the purchase agreement between the City and Lakeview permanently enjoined because Mayor Koch was both a shareholder in Lakeview and an officer of the City. Since the sale has already taken place, this would involve reconveyance of the property to the City. The district court found that no conflict of interest existed. We agree. We will look to § 18-301.01(3) for guidance concerning the interested party's ability to cure the conflict. Section 18-301.01(3) provides that the remedy available under § 18-301.01(2) will not apply if the interested officer (a) Makes a declaration on the record to the governmental body responsible for approving the contract regarding the nature and extent of his or her interest, prior to official consideration of the contract; (b) Does not vote on the matter of granting the contract, except that if the number of members of the board declaring an interest in the contract would prevent the board, with all members present, from securing a quorum on the issue, then all members may vote on the matter; and (c) Does not act for the city or village which is party to the contract as to inspection or performance under the contract in which he or she has an interest. The record indicates that Koch was not the mayor in June 1984, when the city council declared the property surplus, and in November 1984, when the council passed the ordinance selling the property to Lakeview. Koch was sworn into office on December 3, 1984. Koch also testified that he revealed his ownership in Lakeview to the city council and that any time any business concerning Lakeview came before the council, he would declare his conflict and leave the council meeting. He also testified that he wrote a letter to the council or to the clerk of the City informing the City of his conflict. There is no evidence in the record that Koch attempted to influence anyone in any way relating to the contract. Therefore, Koch has complied with all the requirements of § 18-301.01(3) and has cured any conflict he may have had in the City-Lakeview transaction. No conflict existed, and therefore Abboud is not entitled to an injunction barring execution of the purchase option between the City and Lakeview. Abboud's claim that Koch had a conflict of interest because he was aware that certain condemnation proceeds would enure to Lakeview is so lacking in merit that we will not discuss it.