Thomson v. Call

In Thomson v. Call (1985) 38 Cal. 3d 633, the owner (IGC) of a 36-acre parcel of land in the City of Albany proposed to build a large high-rise residential development on the land. There followed a lengthy period of discussions and negotiations between IGC, the city, and several other parties. It culminated in an agreement by which the city, as a condition for granting IGC a use permit, required IGC to acquire some small parcels of land adjacent to its 36 acres for use as a public park. One of these parcels belonged to Call, an Albany city councilman. As part of a complex sequence of transactions in escrow to carry out the agreement, IGC bought Call's property for what was arguably a generous price, and then conveyed it to the city. (Id. at pp. 638-643.) A group of taxpayers brought an action to invalidate the deal on the ground Call's involvement created a conflict of interest in violation of section 1090. The trial court agreed. It ordered Call to forfeit to the city the money he was paid for the property, but permitted the city to retain title to it. Call appealed from the forfeiture order. (Thomson v. Call, supra, 38 Cal. 3d at p. 638.) He maintained the purchase of his land by IGC was not a condition of the contract between IGC and the city. The Supreme Court disagreed. It held that, however complex the whole arrangement, it was all part of a single multiparty agreement. (Id. at p. 644.) The court found, in other words, that Call, in his capacity as a city councilman, had participated in the making of the contract that created the conflict of interest. "The prospect that performance of the contract would involve acquisition of the Calls' land and conveyance of that land to the city was contemplated by all parties." (Ibid.) The court also noted in any event that "the policy goals of section 1090 support the rule that public officers 'are denied the right to make contracts in their official capacity with themselves or to become interested in contracts thus made.' " (Id. at p. 645.) In sum, the city acquired a valuable parcel of land sold to it indirectly by a city council member in a complex transaction that had been cleared with the city attorney. After the sale was found to have violated section 1090, the city was allowed to retain the land and was awarded a money judgment against the council member for the full sale price of the land with interest, with no deduction even for the original price his family had paid for the land in 1970. (Thomson, at p. 652.) The trial court found, inter alia, that the city council member was interested in the transaction in violation of section 1090, that the city council member was liable to the city for the purchase price, and that the city was entitled to retain title to the parcel. (Thomson, supra, 38 Cal.3d at p. 637.) In affirming the trial court's judgment, the Supreme Court in Thomson explained that "the trial court's remedy--allowing the city to keep the land and imposing a money judgment against the the city council member--is consistent with California law and with the primary policy concern that every public officer be guided solely by the public interest, rather than by personal interest, when dealing with contracts in an official capacity. Resulting in a substantial forfeiture, this remedy provides public officials with a strong incentive to avoid conflict-of-interest situations scrupulously." (Id. at p. 650.) The Supreme Court stated that the facts of that case 'represent but one of endless permutations generated by the basic conflict-of-interest situation, and a different remedy could be tailored for each.' (Thomson v. Call, supra, 38 Cal.3d at p. 652.) The court emphasized that there must be a policy of strict enforcement to create 'a strong disincentive for those officers who might be tempted to take personal advantage of their public offices.' (Ibid.)" (Id. at pp. 550-551.) The Supreme Court observed that although the remedy was harsh, it was consistent with the policy of strictly enforcing conflict of interest statutes and provided a bright-line remedy and a strong disincentive for officeholders tempted to misuse their offices. (Ibid.)