Opinion
No. 4-102 / 03-0364
May 14, 2004.
Appeal from the Iowa District Court for Lee (North)County, Mary Ann Brown, Judge.
Appellants appeal the district court ruling claiming violation of the Iowa open meetings law and self-dealing. AFFIRMED IN PART; REVERSED IN PART.
Michael P. Short, County Attorney, for appellants.
Wm. Scott Power and Brent Ruther of Aspelmeier, Fisch, Power, Engberg Helling, P.L.C., Burlington, for appellee Green Bay Levee and Drainage District No. 2.
Charles J. Krogmeier and Kelly K. Helwig of Brown, Winick, Graves, Gross, Baskerville Schoenbaum, Des Moines, for individual appellees and appellee MEP CO, Inc.
Heard by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
Michael Short, Lee County Attorney, Anne Pedersen, Lee County Auditor, and Mary Hoenig, Lee County Treasurer, appeal a district court ruling ordering Lee County to pay an invoice for repairs and work completed by MEP CO., Inc. for the Green Bay Levee and Drainage District No. 2 during flood conditions in April and May 2001. We affirm in part and reverse in part.
Background Facts.
In April and May 2001, Lee County and specifically Green Bay Levee and Drainage District No. 2 (the District) experienced flood conditions that compared second only to the flood of 1993. The Board of Trustees for the District (the Board) during the flood were Michael Pieper, Brian Burk and Harry Mabeus. During April and May 2001, the Board met on fourteen occasions to make decisions regarding the flood conditions. The Board posted a public notice and agenda for only two of those meetings.
Craig Pieper replaced Mabeus on the Board of Trustees in October 2001.
In addition to serving on the Board for the District, Michael Pieper owns MEP CO., Inc. (MEPCO), a construction business. During the meetings in which no notice was posted, the Board decided to have MEPCO perform work for the District to help contain the flooding and protect the District. The Board and MEPCO did not discuss the cost of such work at the time. MEPCO later sent the District two invoices, dated July 12, 2001, for the work performed as a result of the flood, one for $16,043.75 and the other for $20,923.75, for a total of $36,967.50.
Michael Short, as Lee County Attorney, began an investigation into the expenditures of the District in July 2001 after speaking with a concerned landowner. Short informed the county auditor of his concerns. On November 19, 2001, the Board met and voted to approve the payment of the MEPCO invoices. The auditor did not approve the invoices for payment as a result of her communications with Short. The Board met again on January 21, 2002, and again voted to approve payment of the invoices, this time with Michael Pieper abstaining from the vote. Again, the auditor refused to make the payment to MEPCO.
On February 20, 2002, Short filed a petition alleging that the District violated Iowa Code chapter 21 (2001) (the Iowa open meetings law) and also alleged self-dealing by Michael Pieper for participating as a voting member of the Board in awarding his company contracts. Short sought to void the contracts with MEPCO. In response, the District filed a petition for writ of mandamus requesting the court to order the county auditor to issue a warrant in the amount of $36,967.50 to MEPCO and for the county treasurer to accept and pay the warrant.
The district court found that the meetings held by the Board in April and May 2001 did not violate the Iowa open meetings law because the flooding created an emergency situation, triggering the good cause exception under Iowa Code section 21.4(2), when public notice is either impossible or impractical. However, the court found the District's meeting held on November 19, 2001, did violate the Iowa open meetings law and ordered the three trustees, Michael Pieper, Craig Pieper, and Brian Burk, to each pay damages in the amount of $100. The court further found that any self-dealing by Michael Pieper was resolved at the January 21, 2002, meeting at which Michael Pieper abstained from the Board's vote to pay MEPCO for its service. The district court then issued a writ of mandamus commanding the county auditor to issue a warrant in the amount of $36,967.50 to MEPCO and the county treasurer to accept and pay the warrant. Short appeals.
The appellants, Michael Short, Anna Pedersen and Mary Hoenig, will collectively be referred to as Short.
Scope of Review.
Review of actions to enforce the open meetings statute are ordinary actions at law. Schumacher v. Lisbon Sch. Bd., 582 N.W.2d 183, 185 (Iowa 1998) (citing Telegraph Herald, Inc. v. City of Dubuque, 297 N.W.2d 529, 533 (Iowa 1980) (discussing the 1979 version of the open meetings law, chapter 28A); Gavin v. City of Cascade, 500 N.W.2d 729, 731 (Iowa Ct.App. 1993) (discussing chapter 21, the open meetings law). The trial court's findings are binding if supported by substantial evidence. Id. (citing Telegraph Herald, 297 N.W.2d at 533; Gavin, 500 N.W.2d at 731). This court's review is for errors at law. Iowa R. App. P. 6.4.
Open Meetings Law.
Short claims that the contracts entered into with MEPCO were in violation of the open meetings law and should therefore be voided. The District argues that the Board's actions were justified due to the emergency situation and as allowed under Iowa Code section 468.126(1)(a). In the alternative, the District asserts that the statute of limitations had run, barring the claim.
We agree with the District on both counts. First, the Board's actions in response to the flood conditions were allowed under Iowa Code sections 21.4(2) and 468.126(1)(a). Section 21.4(2) states,
Notice conforming with all of the requirements of subsection 1 of this section shall be given at least twenty-four hours prior to the commencement of any meeting of a governmental body unless for good cause such notice is impossible or impractical, in which case as much notice as is reasonably possible shall be given.
Section 468.126(1)(a) provides that "[t]he board at any time on its own motion, without notice, may order done whatever is necessary to restore or maintain a drainage or levee improvement in its original efficiency or capacity . . .". We concur with the district court that the Board had to act quickly to prevent possible disastrous flooding, had authority to act under section 468.126(1)(a), and therefore did not violate the notice provision of the open meetings law.
Second, even if the District had violated the open meetings law, the statute of limitations for Short to file an action had run. The alleged violations of the open meetings law occurred in April and May 2001 when the District held meetings without public notice and asked MEPCO to perform work. Short claims that the statute of limitations was tolled because the District did not file the minutes of those meetings until January 2002 or at the earliest at the November 19, 2001, meeting when the MEPCO claim was formally presented. An action claiming a violation of chapter 21, the Iowa Open Meetings Law, must be "brought within six months of the violation." Iowa Code § 21.6(3)(c). Assuming that the meetings held in April and May 2001 were in violation of the open meetings law, the statute of limitations would begin to run on May 12, 2001, the date of the last meeting held without public notice. Short filed the petition in this case on February 20, 2002, nearly nine months after the May 12 meeting. The statute of limitations would have run and there is no evidence in the record to toll the statute of limitations. We therefore affirm the district court's findings that the alleged contracts were not entered into in violation of the open meetings law and, even if they had been, the statute of limitations to assert the claim had run.
The district court did find that the District violated the open meetings law in regards to the November 19, 2001, meeting, when payment to MEPCO was approved and assessed damages of $100 against each trustee plus court costs. Both parties now agree that the November 19 meeting was in compliance with the open meetings law and Short was not seeking relief on this issue. We therefore reverse the district court's assessment of $100 fines plus court costs against each trustee.
Self-Dealing.
Short also contends that Michael Pieper's involvement in the award of business to his company was a conflict of interest in violation of Iowa law. The District argues that Pieper's abstention during the vote to approve the MEPCO payment on January 21, 2002, cured any conflict. The district court agreed with the District stating,
To prohibit a public entity from going back and correcting its mistake could tie the hands of that public entity from fulfilling its obligations and performing necessary duties. Generally, when a public entity would go back and redo their work, following the proper steps, the public would be given an opportunity to participate in the process. Just such a thing happened with the action of the Board in this case on January 21, 2002. Public notice was posted in advance of the meeting. If any member of the public wished to object or challenge the action of the Board in approving payment to MEPCO, the opportunity to do so was provided. Based upon the record before the Court, no member of the public appeared to challenge this action.
Short asserts, however, that the conflict did not lie with the Board's vote to pay MEPCO but rather stems from the April and May 2001 meetings when the Board, with Pieper present, asked MEPCO to perform the work. Short asserts the contracts should therefore be voided.
Iowa Code section 331.302(13) provides,
A measure voted upon is not invalid because a supervisor has a conflict of interest, unless the vote of the supervisor was decisive to passage of the measure. If a majority or unanimous vote of the board is required by statute, the majority or vote shall be computed on the basis of the number of supervisors not disqualified by reason of conflict of interest.
However, in Wilson v. Iowa City, 165 N.W.2d 813 (Iowa 1969), our Supreme Court took a more restrictive position when asked whether city council members were prohibited from voting on urban renewal resolutions because of an alleged conflict of interest. Wilson, 165 N.W.2d at 817. The court held that a vote by a member of the council working on the urban renewal project, if in the member's personal interest, "is void and that the result reached by the council in such a matter is also void, whether such vote determined the issue before the council or not." Id. at 820. (emphasis added).
Under Wilson it would appear that the agreements between the Board and MEPCO to perform work during the flood of April and May 2001 would be voided due to Michael Pieper's involvement even though he was only one of three votes to employ MEPCO. However, Wilson, while discussing the general evils present when public duty and personal interests conflict, does not address the impact a conflict may pose under an emergency situation such as the District trustees faced when the rising flood waters threatened their land and the land of their neighbors.
As discussed above regarding the Iowa open meetings law, Iowa Code section 468.126(1)(a) provides that a levee and drainage district, "at any time on its own motion, without notice, may order done whatever is necessary to restore or maintain a drainage or levee improvement in its original efficiency or capacity. . . ." Subsection (1)(c) provides,
If the estimated cost of repair exceeds ten thousand dollars, or seventy-five percent of the original total cost of the district and subsequent improvements, whichever is the greater amount, the board shall set a date for a hearing on the matter of making the proposed repairs, and shall give notice. . . . If a hearing is required and the estimated cost of the repair exceeds twenty-five thousand dollars, an engineer's report or a report from the soil and water conservation district conservationist shall be presented at the hearing.
Iowa Code § 468.126(1)(c). There is no mention of what constraints would be present in an emergency situation. Trustee Brian Burke testified that at twelve of the fourteen meetings held during the flood, the Board decided to make eighteen immediate repairs resulting in an expenditure of District funds. The final billing however, does not reflect whether any of the meetings resulted in expenditures individually exceeding ten thousand dollars, only that after the fact MEPCO issued two invoices totaling $36,967.50. The invoices reflect work ordered for eighteen separate requests and performed on many dates during the two-month flood period and are not tied to specific meetings or agreements with the Board. There is no evidence that any of the eighteen individual work requests exceeded ten thousand dollars. The testimony further reflects that the trustees believed that the various repairs had to be performed immediately to prevent flooding and protect the surrounding farmland The Board did in fact contact other contractors about performing the work but they were not able to immediately handle the work or did not have adequate equipment to accomplish the results needed. The District had hired MEPCO on prior occasions and knew it was capable of doing the work and had the necessary equipment. Without a formal vote and, with Michael Pieper participating, the Board came to the consensus that MEPCO should perform the work.
The Board approved and the county treasurer paid two MEPCO bills for $5,807 and $8,100 from April and May 2001.
Other contractors were hired to perform support services.
Other than the to-be-compensated work that is involved in this appeal, we find it important to note that MEPCO donated 1,637 man hours and 277 equipment hours to the flood emergency in April and May 2001.
Because section 468.126(1)(a) allows the District to by-pass competitive bids for work in emergency situations and appreciating the severity of the possible flooding, we conclude the award of business to MEPCO was not the product of self-dealing but rather of emergency, with the knowledge MEPCO had the ability to immediately perform the work. Had it not been a situation of urgency and the broad authority granted under section 468.126(1)(a), we would agree with Short that even Pieper's participation in a "consensus," for work to be performed by his company would be a conflict of interest such that would void the alleged contract under Wilson. Under these circumstances however, we find no evidence to deny the payment on the grounds of self-dealing.
AFFIRMED IN PART; REVERSED IN PART.
Hecht, J., concurs; Vaitheswaran, J. concurs in part and dissents in part.
I respectfully dissent from the majority's conclusion that the board was empowered to award a contract to a company owned by one of the board members. Our statute on county governance prohibits county officers and employees from having "an interest, direct or indirect, in a contract with that county." Iowa Code § 331.342. City officers and employees are similarly prohibited from having "an interest, direct or indirect, in any contract or job of work or material or the profits thereof or services to be furnished or performed for the officer's or employee's city." Iowa Code § 362.5. In both instances, contracts entered into in violation of these sections are void. Iowa Code §§ 331.342, 362.5. There is no exception for emergencies, and no language in these particular provisions suggesting these contracts may be ratified by the unconflicted board members, in the absence of a public bidding process.
I would also note that Iowa Code section 468.126, which addresses repairs to levee or drainage districts, mandates notice to the public as well as a hearing where the estimated costs of repair exceed a specified amount. Iowa Code § 468.126(1)(c). The board did not comply with this provision.
As I believe the contract with MEPCO is void, I would reverse that portion of the district court decision commanding the county auditor to pay MEPCO for the services it rendered.