Procedural Posture

Defendant city council member sought review of the judgment from the Superior Court of Alameda County (California), that found defendant city council member had violated Cal. Gov’t Code § 1090 for his financial interest in a transaction between defendant corporation and defendant city, and ordered defendant city council member to forfeit the money he received as a result of the transaction.

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Overview

Defendant corporation entered into a contract for the donation of certain land to defendant city. Defendant city council member owned one of the parcels targeted for purchase. Defendant corporation bought defendant city council member’s land, along with other parcels, and donated the land. Plaintiff taxpayers brought suit and asserted that the contract was void for a violation of Cal. Gov’t Code § 1090. The trial court found that the agreement was affected by a violation of § 1090 and defendant city council member was liable to the city for the money he received, and that defendant city was to retain title to the land. Defendant city council member sought review. The appellate court found that the contract between defendant city and defendant corporation was void because defendant city council member had a financial interest in the contract in violation of § 1090. However, the appellate court reversed that portion of the judgment that required defendant city council member to forfeit the funds he received because he was not a party to the contract and did not conspire or commit fraud in the contract’s inducement, execution, or performance.

Outcome

The appellate court reversed the trial court’s order that defendant city council member forfeit the funds he received from the purchase of his land pursuant to the contract between defendant city and defendant corporation because although the contract was void inasmuch as defendant city council member had a proscribed financial interest in it, he was not a party to the contract and was absolved from any wrongdoing in connection with the contract.

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