No. 95-579
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
HELENA PARENTS COMMISSION, et al.,
Plaintiffs and Appellants,
JUL 25 1996 ,j
v.
&J J&&J :
LEWIS AND CLARK COUNTY COMMISSIONERS, et al., CLERK OF SUPREME COURT, )
STAtE OF MOHTAA)* .
Defendants and Respondents
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey M. Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Lawrence G. Allen and William Wewer,
Wewer Law Firm, Helena, Montana
For Respondents:
Allen B. Chronister, Chronister, Moreen
& Larson, Helena, Montana
(for Lewis and Clark County Respondents)
P. Keith Keller, Keller, Reynolds, Drake,
Johnson & Gillespie, Helena, Montana
(for School District Respondents)
Submitted on Briefs: May 2, 1996
Decided: July 25, 1996
Filed: .
Justice Terry N. Trieweiler delivered the opinion of the Court.
Appellants, the Helena Parents Commission and several
individuals (HPC), filed a complaint in the District Court for the
First Judicial District in Lewis and Clark County in which they
sought a declaratory judgment against respondents, Lewis and Clark
County and Helena School District Number One, related to certain
investments of public funds made by them from 1991 to present.
Respondents filed motions to dismiss and after a hearing, the
District Court granted the dismissal. The Court dismissed a claim
against the County Attorney for failure to state a claim and
dismissed the other claims for lack of standing. HPC appeals the
court's order of dismissal. We affirm that part of the District
Court's order which pertains to the County Attorney and reverse the
remainder of the order in which the Court concluded that HPC did
not have the requisite standing.
Two issues are presented on appeal:
1. Did the District Court err when it dismissed HPC's claim
against both respondents for lack of standing?
2. Did the District Court err when it dismissed HPC's claim
against the County Attorney for failure to state a claim?
FACTUAL BACKGROUND
Appellants, Helena Parents Commission and several individuals
(HPC), brought a declaratory judgment action, in which they asked
the District Court to interpret relevant Montana statutes and
determine the parties' rights pursuant to those statutes. HPC
2
contends that Lewis and Clark County and Helena School District
Number One (respondents) illegally managed public funds from 1991
to the present. HPC asserts standing as property taxpayers
residing in Lewis and Clark County, as parents who have children
attending school in Helena School District Number One, or as
persons who receive benefits or services from local government
entities.
HPC's complaint consists of several counts:
Count I alleges that respondents illegally invested School
District and County funds in certain collateralized mortgage
obligations (CMOS) ; Count II alleges that Lewis and Clark County
illegally purchased the School District's illegal CM0 investments;
Count III alleges that Lewis and Clark County illegally invested
its own money in CMOS; Count IV alleges that there was an illegal
investment concerning the County's bond sinking funds in CMOS;
Count V alleges that the County Treasurer violated her statutory
duty to protect the investments of the County's bond sinking funds;
Count VI alleges that the Treasurer or Finance Officer made an
improper accounting of interest earned on bond sinking fund
investments; and Count VII alleges that the Lewis and Clark County
Attorney had an affirmative duty to pursue legal recourse and seek
recovery of the losses against such government officials but failed
to do so despite being informed by HPC prior to its filing of the
request for declaratory judgment. HPC contended that these
investments of public funds were not only illegal pursuant to
3
statute, but also resulted in a loss of more than $5.5 million of
property tax revenue intended to support taxpayer services provided
by the School District and the numerous local government entities
of Lewis and Clark County.
Respondents filed a motion to dismiss and after a hearing, the
District Court granted the dismissal. The court dismissed the
claim against the County Attorney for failure to state a claim and
dismissed the other claims for lack of standing. HPC appeals the
court's order of dismissal.
ISSUE 1
Did the District Court err when it dismissed HPC's claim
against both respondents for lack of standing?
The question of whether the District Court properly granted
the motion to dismiss is a conclusion of law. Common Cause v. Argenbright
(Mont. 1996), 917 P.2d 425, 427, 53 St. Rep. 386, 387. We review
a district court's conclusions of law to determine whether the
court's interpretation and application of the law is correct. Jim’s
ExcavatingSew V. HKMAssocs. (1994), 265 Mont. 494, 501, 878 P.2d 248,
252.
When it considers a motion to dismiss made pursuant to
Rule 12(b) (6), M.R.Civ.P, a court must view the allegations in the
light most favorable to the plaintiff and accept as true all facts
well pleaded. Lockwoodv. KR. Grace&Co. (1995), 272 Mont, 202, 207,
900 P.2d 314, 317. A complaint should not be dismissed for failure
to state a claim unless it appears beyond doubt that the plaintiff
4
can prove no set of facts in support of his claim which would
entitle him to relief. Farrisv. Hutchinson (1992), 254 Mont. 334, 336,
838 P.2d 374, 375.
The District Court concluded that HPC lacked standing and
dismissed HPC's complaint. "In essence the question of standing is
whether the litigant is entitled to have the court decide the
merits of the dispute or of particular issues." Worth v. Seldin ( 19 7 5 ) ,
422 U.S. 490, 498. In addition, "when standing is placed in issue
in a case, the question is whether the person whose standing is
challenged is a proper party to request an adjudication of a
particular issue and not whether the issue itself is justiciable."
Flastv. Cohen (19681, 392 U.S. 83, 99-100. We have stated that the
following criteria must be satisfied to establish standing:
(1) The complaining party must clearly allege past,
present or threatened injury to a property or civil
right; and (2) the alleged injury must be distinguishable
from the injury to the public generally, but the injury
need not be exclusive to the complaining party.
Sanders v. Yellowstone County (Mont 19 96 ) , 915 P.2d 196, 198, 53 St. Rep.
305, 306 (citing Stewartv. BoardofCountyComm’rs (1977), 175 Mont. 197,
201, 573 P.2d 184, 186).
As to the injury requirement, we have stated that a plaintiff
is required to allege "a personal stake in the outcome of the
controversy," Bowenv.McDonald (Mont. 1996), 915 P.2d 201, 206, 53
St. Rep. 343, 346 (citing Olsonv. DepartmentofRevenue (1986) , 223 Mont.
464, 469, 726 P.2d 1162, 1166 ) ; Western Litho v. Board of County Comm’rs
5
(1977), 174 Mont. 245, 247, 570 P.2d 891, 892 (quoting Bakerv. Cur
(19621, 369 U.S. 186, 204), and that 'l[ilt is not enough that
appellants allege an injury which others may have suffered by the
operation of some statute. They must allege an injury personal to
themselves as distinguished from one suffered by the community in
general." Olson, 233 Mont. at 470, 726 P.2d at 1166. But see Grossman
v.DepartmentofNaturalResources (1984), 209 Mont. 427, 439, 682 P.2d 1319,
1325 (holding that in special circumstances, presenting issues of
an urgent nature, this Court will accept original jurisdiction and
drape the taxpayer with standing). The requirement that a
plaintiff demonstrate an injury "is most easily satisfied if a
plaintiff alleges either a direct economic injury or alleges that
she is confronted with the prospect of criminal prosecution." Eric
J. Kuhn, Comment, Stood UQ at the Courthouse Door, 63 Geo. Wash. L.
Rev. 886, 891 (1995) (citing Pennelv.CityofSanJose (1988), 485 U.S. 1,
8 (concluding that the likelihood of enforcement of a rent-control
ordinance causing lower rents for landlords is sufficient to
constitute an injury-in-fact) and Virginia v. American Booksellers Ash
(1988), 484 U.S. 383, 392-93).
Here, plaintiffs alleged that the government will impose tax
burdens on them as it seeks to recoup losses and that the
investments will result in a lessening of governmental services.
These allegations of an economic injury satisfy the injury
requirement.
The District Court, however, did not conclude that HPC failed
to meet the injury requirement. Instead, it based its dismissal of
HPC's complaint on its failure to meet the second requirement for
standing--"the alleged injury must be distinguishable from the
injury to the public generally.'~ Sanders, 915 P.2d at 198, 53 St.
Rep. at 306. In dismissing HPC's complaint, the Court relied on
Chovanakv.Matthews (1948), 120 Mont. 520, 527, 188 P.2d 582, 585, and
stated that "the interest of a citizen, electorate, taxpayer, and
resident of Lewis and Clark County is not, alone, sufficient to
invoke the exercise of judicial power." In so holding, the court
failed to consider that "the injury need not be exclusive to the
complaining party," Sanders, 915 P.2d at 198, 53 St. Rep. at 306, and
failed to consider Leev.Siute (1981), 195 Mont. 1, 635 P.2d 1282.
In Lee, we discussed Chovanak and held that a plaintiff who
drove an automobile on Montana's highways had sufficient standing
to attack, via a declaratory judgment, the constitutionality of a
55 mile-per-hour speed limit proclaimed by the attorney general.
Lee, 195 Mont. 1, 7, 635 P.2d 1282, 1285. In Lee, the State claimed
that the plaintiff lacked standing because all members of the
driving public had an affected interest in the statute, and
attempted to dismiss the case on those grounds. We distinguished
Chovanak, rejected defendant's argument, and noted that such an
argument would render the Uniform Declaratory Judgment Act
meaningless. We stated:
7
In that case [Chovanakl Chovanak attacked a 1945 Montana
statute providing for the licensing of slot machines
owned and operated by religious, fraternal, charitable or
nonprofit organizations. He sued as a resident, citizen
and elector. This Court pointed out that he was suing
against gambling in general, and said that it appeared
from his complaint that slot machines, licensed or
unlicensed, were utterly anathema to him. This Court
found no controversy between him and the defendants in
that case.
On the other hand, Gary Lee is directlv affected by
the operation of the statute he attacks. . . . The
statute he attacks operates against him and all drivers
in Montana directly. All members of the driving public
have an affected interest under the statute attacked, but
that does not mean that no member of that driving public
can question the constitutional validity of the statute
without being arrested for a violation. The acts of the
legislature which directly concern large seqments of the
public, or all the oublic, are not thereby insulated from
judicial attack. Otherwise, the Uniform Declaratory
Judgment Act would become largely useless . . .
Lee, 195 Mont. at 7, 635 P.Zd at 1285 (emphasis added). Therefore,
we concluded that while the harm must be distinguishable from
injury to the public in general, it need not be an expressly unique
harm. See also O’Donnell Fire Serv. cf.! Equip. Co. Y. Billings ( 19 8 5 ) , 2 19 Mont . 3 17,
320, 711 P.2d 822, 824; Stewartv.BoardofCountyComm’rs (1977), 175 Mont.
197, 201, 573 P.2d 184, 186.
This case is similar to Lee in several respects. While Lee
asked for a declaratory ruling concerning the legality of the
Attorney General's action as measured by the 1972 Montana
Constitution, in this case, HPC asks for a declaratory ruling
concerning various government officials' actions pursuant to
relevant Montana statutes. Further, HPC alleges direct injury from
the conduct complained of. HPC alleges that those of its members
8
who pay property taxes will have them increased, that those of its
members who have children in school will see a reduction in
opportunities, and that those of its members who receive various
public services will see a reduction in those services as the
government seeks to recoup its alleged $5.5 million in losses. Not
everyone who claims they will be injured claims to have been
injured in the same way, and while each plaintiff claims a form of
harm in common with other members of a larger class of people, the
harm each claims is not common to all members of the general
public.
Not only have we held that the harm need not be exclusive to
the plaintiff, but the United States Supreme Court has also held
similarly. As one commentator noted:
The [United States Supreme] Court's refusal to serve "as
a forum in which to air . . . generalized grievances"
should be distinguished from situations in which a large
group of people share the same injury. In the former
situation the Court typically denies standing; in the
latter situation the Court has indicated a willingness to
adjudicate on the merits.
Kuhn, Stood Uo at the Courthouse Door, 63 Geo. Wash. L. Rev. at 895
(footnotes omitted).
The United States Supreme Court demonstrated this willingness
to invest large groups of people with standing when it upheld the
standing of a group of Georgetown law students to contest a
railroad rate increase approved by the Interstate Commerce
Commission. UnitedStatesv. SCRAP (1973), 412 U.S. 669. The students
argued that an increase in the cost of shipping would discourage
9
recyclable containers in favor of disposables and that some of the
disposables would be discarded in parks frequented by the students,
causing them aesthetic injury. The Supreme Court accepted this
contention. "To denv standinq to nersons who are in fact injured
simply because manv others are also iniured, would mean that the
most iniurious and widespread Government actions could be
questioned bv nobodv." SCRAP, 412 U.S. at 688 (emphasis added); see
also SierraClub V. Morton (1972), 405 U.S. 727, 734 (holding that "the
fact that particular environmental interests are shared by the many
rather than the few does not make them less deserving of legal
protection through the judicial process.").
For these reasons we reverse the order of the District Court
dismissing HPC's complaint for lack of standing.
ISSUE 2
Did the District Court err when it dismissed HPC's claim
against the County Attorney for failure to state a claim?
We review a district court's conclusions of law to determine
whether the court's interpretation and application of the law is
correct. Jim’s Excavating Serv. V. HKMAssocs. (1994), 265 Mont. 494, 501,
878 P.2d 248, 252. As stated above, in considering a motion to
dismiss made pursuant to Rule 12(b) (6), M.R.Civ.P., a court must
view the allegations in the light most favorable to the plaintiff
and accept as true all facts well pleaded. Lockwood v. W.R. Grace & Co.
(1995)r 272 Mont. 202, 207, 900 P.2d 314, 317
10
Count VII of HPC's complaint addresses the County Attorney's
duty to prosecute public officials for illegal investments.
Specifically, the complaint alleges that "the County Attorney has
refused to prosecute or otherwise pursue a course of legal action
against the governmental officials, officers, employees or agents
involved in the mismanagement of County, School District, and Local
Authority funds." The District Court dismissed HPC's complaint
against the County Attorney for failure to state a claim.
It is well established that a decision as to whether or not to
prosecute and what charge to bring against an individual is
entirely within the discretion of the county attorney. state v. Lemmon
(19841, 214 Mont. 121, 126, 692 P.2d 455, 457. Moreover, a county
attorney 'I is a quasi-judicial officer who enjoys common law
immunity from civil liability for conduct within the scope of his
duties." Ronekv. GallatinCounty (1987), 227 Mont. 514, 516, 740 P.2d
1115, 1116. See also State ex rel. Fletcher v. District Court ( 19 93 ) , 2 6 0 Mont . 4 10 ,
415, 859 P.2d 992, 995; Lemmon, 214 Mont. at 126, 692 P.2d at 457.
Therefore, the District Court correctly dismissed HPC's claim
against the Lewis and Clark County Attorney.
We affirm the District Court's dismissal of the complaint
against the County Attorney, reverse the court's dismissal of the
remainder of the complaint, and remand for further proceedings.
We concur:
Chief Justice
Justices
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Justice W. William Leaphart, specially concurring.
I concur with the Court's conclusion that the claim against
the county attorney was properly dismissed and that HPC has
standing. I specially concur, however, to note that § 20-3-332,
MCA, which was invoked by the plaintiffs and discussed by the
District Court, provides authority for HPC's standing to sue the
school district trustees. Section 20-3-332(2), MCA, provides that:
(2) The trustees of each district shall be
responsible for the proper administration and utilization
of all moneys of the district in accordance with the
provisions of law and this title. Failure or refusal to
do so shall constitute grounds for removal from office.
Those trustees consenting to illegal use of the moneys
shall be jointly and individually liable to the district
for any losses the district has realized. The county
attorney shall prosecute any proceeding arising pursuant
to this section, or a party seeking such action may
retain private counsel. The party commencing the action
shall be liable for the costs if the action fails.
[Emphasis added.]
Section 20-3-332(2), MCA, provides for trustee liability for
illegal use of monies. The statute also clearly envisions that, in
addition to the county attorney being able to file suit to impose
this liability on behalf of the public, other private parties may
retain counsel and seek to impose the liability as well. 1n
recognizing that parties may retain private counsel and file suit
pursuant to this statute, the legislature has acknowledged that
private parties too will be injured by the illegal use of monies
and that such injury is distinguishable from the injury to the
public generally. Stewart v. Board of County Commr's (1977), 175
Mont. 197, 201, 573 P.2d 184, 186. If plaintiffs, as parents and
taxpayers, do not qualify as such "parties," then it is difficult
13
to imagine who would. Accordingly, I would hold that HPC has
standing to sue the school district trustees based upon the narrow
provisions of 5 ZO-3-332(2), MCA.
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-” i
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
follqwing named:
Lawrence G. Allen, Esq. -.
William Wewer, Esq. -7
Box 555
Helena MT 59624-0555
Allen B. Chronister
Chronister, Moreen & Larson
P.O. Box 1152
Helena, MT 59624
Keith Keller
Keller, Reynolds, Drake, Johnson & Gillespie -
38 South Last Chance Gulch
Helena, MT 59601
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA
Deputy