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June 7, 1983


Appeal and Cross-Appeal from a judgment of the Circuit Court for Dane County: P. Charles Jones, Judge.

Petition to Review Denied.

Gartzke, P.j., Dykman, J. and W.l. Jackman, Reserve Judge. *fn1

The opinion of the court was delivered by: Gartzke

J.F. Ahern Co. and H&H Electric Co. brought this action for declaratory judgment, challenging the defendants' actions regarding construction of a state office building in Madison, General Executive Facility II, generally known as "GEF II." The complaint as amended, adds challenges regarding another state office building, GEF III, and six other buildings. The challenges center on the State Building Commission's waiver of the competitive bidding requirements in sec. 16.855, Stats. The defendants are the Building Commission, the Department of Administration, a former DOA secretary, Robert H. Dunn, and Paul L. Brown, director of the Bureau (now Division) of Facilities Management and secretary of the commission.

Plaintiffs claim that the defendants failed to follow state law and that the powers granted to the commission improperly delegate legislative authority to it and violate the constitutional principle of separation of powers. The trial court rejected plaintiffs' contentions and dismissed the complaint. Plaintiffs appealed. The defendants raise several procedural issues in their cross-appeal, which we discuss before reaching the plaintiffs' arguments. We reach plaintiffs' arguments, and because we find they lack merit, we affirm the trial court, except as to the court's failure to dismiss the claims against Brown and Dunn.

We treat the issues raised by the parties in the following order:

1. Did the trial court lack jurisdiction for plaintiffs' failure to serve legislative committees as required by sec. 806.04(11), Stats?

2. Should the trial court have dismissed the claims against Brown and Dunn for plaintiffs' failure to serve notice on the Attorney General as required by sec. 895.45, Stats. 1975?

3. Do plaintiffs have standing?

4. Did the court abuse its discretion by allowing the plaintiffs to amend their complaint a third time?

5. Did the commission and the DOA violate sec. 13.48(10), Stats. 1977, by entering contracts before final plans were completed?

6. Has legislative power been delegated to the commission with sufficient standards for its exercise?

7. Did the commission comply with sec. 13.48(19), Stats., when waiving the competitive bidding requirements of sec. 16.855, Stats?

8. Is the commission, a legislative committee, unconstitutionally vested with executive branch powers?

9. Are the individual defendants, Dunn and Brown, personally liable for unconstitutional and unlawful expenditure of public funds?

10. Are costs under sec. 814.04(2), Stats. 1979-80, allowable for copies of adverse examinations and a partial hearing transcript?


The Building Commission is a legislative committee, created under subch. II of ch. 13, Stats., entitled "Legislative Branch." The commission possesses various powers under sec. 13.48 over the construction and use of state buildings. Those powers include authority to waive the competitive bidding law contained in sec. 16.855, Stats., on the letting of state construction contracts. Sec. 13.48(19).

September 9, 1976 the commission approved the solicitation of "design/build proposals" to construct GEF II. The design/build process utilizes an architect or engineer and a construction contractor to design and construct a building within a maximum allowed cost. The design/build process differs from the conventional procedure by which a building is first designed and contractors then submit bids to construct it, based on the plans, as provided in sec. 16.855, Stats.

The design/build process used in the GEF II project consisted of two phases. In the first phase, interested persons submitted proposals to cover the design and construction of an office building in accordance with a "proposal document" prepared by the Bureau of Facilities Management. The submitted proposals were evaluated by the bureau on the basis of design/build "team" experience and qualifications, the initial building cost and land cost. Based on the number of phase one proposals, two or three of the proposals were to be selected for phase two evaluation. Five design/build proposals were submitted on the GEF II project. December 21, 1976 the commission selected two proposals, those submitted by Marshall Erdman and Associates and by J.H. Findorff and Sons, to proceed to phase two and authorized the release of $80,000 of surplus building trust funds for phase two design and for environmental impact statements. The commission formally waived the competitive bidding requirements of sec. 16.855, Stats., the same day.

Phase two of the GEF II design/build selection process called for the state to enter preliminary design contracts with the two finalists, Findorff and Marshall Erdman. Contracts for the preliminary design services were dated February 8, 1977. The governor signed and approved the contracts March 30, 1977.

Plaintiffs commenced this action December 24, 1976 to enjoin the DOA from entering contracts for the design and construction of GEF II unless awarded by competitive bidding and for a judgment declaring that the commission unlawfully and unconstitutionally exercised its authority. *fn2 In January 1977 plaintiffs amended the complaint to add a claim for damages against Dunn and Brown.

December 20, 1977 the commission authorized signing the contract for the construction of GEF II by Findorff. February 6, 1978 DOA informed Findorff by letter that the GEF II construction contract was approved and attached a copy of the contract, signed by the DOA secretary, defendant Brown, the governor and Findorff. A contract change order, authorizing the construction of two additional floors of office space, was accepted by Findorff April 12, 1978 and approved by defendant Brown April 24 and by the governor on May 12, 1978.

February 9, 1979 plaintiffs filed a second amended complaint adding a claim that the commission had executed or was seeking to execute other illegal construction contracts by waiving sec. 16.855, Stats., on the GEF III project and six other projects. The trial court permitted the claim as to GEF III. September 20, 1979 the trial court granted plaintiffs leave to file a third amended complaint which incorporated the claims as to the six other projects and added an allegation that sec. 13.48, Stats., violated the separation of powers doctrine of the Wisconsin Constitution.


1. Notice To Legislative Committees

The Declaratory Judgments Act requires service of a copy of the petition on the Joint Committee for Review of Administrative Rules if any part of ch. 227, Stats., entitled Administrative Procedure and Review, is placed in issue. Sec. 806.04(11), Stats. It also requires service on the Joint Committee on Legislative Organization if any provision of ch. 13, Stats., entitled Legislative Branch, or ch. 227 (or other chapters) is placed in issue. *fn3 This requirement was created by sec. 374, ch. 449, Laws of 1977, effective August 1, 1978. Plaintiffs filed their second and third amended complaints after that date, without serving either committee.

Amended complaints supersede prior complaints. Schweiger v. Loewi & Co., Inc., 65 Wis. 2d 56, 58, 221 N.W.2d 882, 884 (1974). Defendants therefore contend that the trial court lacked subject matter jurisdiction because plaintiffs failed to serve either joint committee with the second and third amended complaints. Failure to comply with the requirement of service on the attorney general in a declaratory judgment action in which a statute or ordinance is alleged to be unconstitutional has been held as fatal to the court's subject matter jurisdiction. O'Connell v. Bd. of Ed., Jt. Dist. #10, 82 Wis. 2d 728, 735, 264 N.W.2d 561, 564 (1978).

Even assuming that the requirement of service on the legislative committees is jurisdictional, plaintiffs' failure to serve the amended complaints on the committees did not result in a jurisdictional defect. Generally, a court's jurisdiction over a declaratory judgment action is determined as of the time the suit is filed, and matters occurring after such time are not considered. Forest Laboratories, Inc. v. Formulations, Inc., 299 F. Supp. 202, 212 (E.D. Wis. 1969). The circuit court acquired jurisdiction over the declaratory judgment action under sec. 806.04(11), Stats. 1975, when the action was commenced. There is no indication that the requirement of service on legislative committees imposed by sec. 374, ch. 449, Laws of 1977, was intended to apply to actions pending when that law became effective.

Because we determine jurisdiction as of the time an action is commenced, it is not necessary that an amended complaint comply with subsequently imposed jurisdictional requirements. The trial court correctly denied defendants' motion to dismiss for failure to serve the legislative committees.

2. Compliance With Sec. 895.45, Stats. 1975

Brown and Dunn argue that the complaints should have been dismissed as to them because the plaintiffs failed to give notice to the Attorney General. The amended complaints alleged that Brown and Dunn acted in excess of their statutory and constitutional authority. The plaintiffs, as taxpayers and on behalf of all taxpayers, propose to hold Brown and Dunn personally liable for unlawful expenditures with regard to GEF II. Notices of the claims against Brown and Dunn were never served on the Attorney General. Section 895.45, Stats. 1975, provides in substance that an action may not be brought against a state employee for an act committed in the course of the employee's duties, unless within ninety days of the event causing the damage giving rise to the action, the claimant serves the Attorney General with notice of a claim stating the time, date, location and circumstances of the event and the names of the persons involved. *fn4

If a plaintiff fails to comply with the notice requirement in sec. 895.45(1), Stats. 1975, and the defect is properly raised, the defendant is entitled to dismissal. Mannino v. Davenport, 99 Wis. 2d 602, 612, 299 N.W.2d 823, 828 (1981). Accordingly, we conclude that failure to serve the Attorney General with the notice required by sec. 895.45(1), Stats. 1975, requires dismissal of the action as to Brown and Dunn.

Even assuming, as the plaintiffs argue, that service of the pleadings on the Attorney General in an action against a state employee provides the notice required by sec. 895.45, Stats. 1975, timely notice was not given. The original complaint served on the Attorney General December 27, 1976 did not assert a claim against Brown or Dunn. The first amended complaint naming Brown and Dunn was served on the Attorney General January 21, 1977. The first GEF II contracts, the preliminary design/build contracts for phase two, were signed February 8, 1977 and approved by the governor on March 30, 1977. The damages, if any, caused by Brown and Dunn could only result from the GEF II design/build contracts and subsequent expenditures. If the first amended complaint purported to be a sec. 895.45, Stats. 1975, notice of claim, it was premature because the contracts had not been executed. The subsequent amended complaints repeated the claims against Brown and Dunn but were filed in 1979, far beyond the ninety-day limit.

We reject plaintiffs' view that a taxpayers' action to recover expenditures by state employees under unconstitutional statutes or in excess of their powers is exempt from the notice requirements of sec. 895.45, Stats. 1975. The exemption is claimed on the theory that a state employee acts as a private citizen under those circumstances, and that the notice provisions do not apply to the acts of private citizens. Section 895.45(1), Stats. 1975, however, requires notice on account of any act "growing out of or committed in the course of the discharge of such . . . employe's duties.' The statutory standard is broader than the "scope of employment test." Yotvat v. Roth, 95 Wis. 2d 357, 368, 290 N.W.2d 524, 531 (Ct. App. 1980). The statutory standard encompasses a good faith act performed by a state employee under color of right pursuant to unconstitutional statutes or in excess of statutory authority.

Plaintiffs argue that because Brown and Dunn had notice that their acts may be unconstitutional or in excess of their statutory authority, that they therefore issued GEF II construction contracts at their peril and that their acts consequently fall outside the "growing out of or committed in the course of" standard in sec. 895.45(1), Stats. 1975. We disagree. The statute is for the benefit of the state as well as for the benefit of the state employee. The purpose of the required notice is to give the state an opportunity to investigate claims while they are fresh. Mannino, 99 Wis. 2d at 609, 299 N.W.2d at 826. The state needs that opportunity, whether or not its agent acted pursuant to an invalid law or in excess of authority. Plaintiffs' argument would deprive the state of that opportunity.

We reject the contention that waiver or estoppel prevents defendants from asserting noncompliance with sec. 895.45, Stats. 1975. Plaintiffs rely on the delay in asserting noncompliance until long after the ninety-day period had expired, the pleadings were complete, and extensive discovery and trial preparation had occurred. The argument is persuasive, especially in view of the statute's investigative purpose on fresh claims. Failure to give the required notice may be asserted, however, even though it was not raised by the defendants' pleadings. "This rule is in accord with the general view that notice of injury requirements cannot be waived." Mannino, 99 Wis. 2d at 612, 299 N.W.2d at 828 (footnote omitted). No basis exists for the equitable doctrine of estoppel. The statute must be enforced even though it produces "harsh consequences." 99 Wis. 2d at 615, 299 N.W.2d at 829.

3. Plaintiffs' Standing

Wisconsin Construction Employers Council joined the plaintiffs in bringing this action. Defendants argue that the Council lacked standing. Because the Council has been dismissed as a party to this appeal, a determination of its standing will not affect this controversy. The Council's standing is therefore a moot issue. Milwaukee Police Asso. v. Milwaukee, 92 Wis. 2d 175, 183, 285 N.W.2d 133, 137 (1979). As a general rule, we will not review moot issues. Milwaukee Pro. Firefighters Local 215 v. Milwaukee, 78 Wis. 2d 1, 15, 253 N.W.2d 481, 488 (1977).

Defendants contend that Ahern and H&H lack standing because they have not shown that they, as taxpayers, have suffered an actual loss through defendants' actions, and because they joined this action as merely nominal parties at the Council's request. Ahern and H&H have standing. Wisconsin taxpayers have standing to contest the constitutionality of statutes which result in public expenditures. Tooley v. O'Connell, 77 Wis. 2d 422, 438-39, 253 N.W.2d 335, 342 (1977); Thompson v. Kenosha County, 64 Wis. 2d 673, 679-81, 221 N.W.2d 845, 849-50 (1974). How or why a taxpayer came to be a party is irrelevant to the standing issue.

4. Third Amended Complaint

Having begun this action in late 1976 and amended the complaint in early 1977, plaintiffs obtained leave for a second amendment in April 1979 and for a third amendment in September 1979. Defendants assert that the trial court abused its discretion by granting leave to file the third amended complaint. That complaint contained new theory: that the grant of authority to the building commission in ch. 13, Stats., offends the constitutional principle of separation of powers.

A trial court's decision to allow an amendment under sec. 802.09(1), Stats., will not be reversed in the absence of a clear or manifest abuse of discretion. Wiegel v. Sentry Indemnity Co., 94 Wis. 2d 172, 185, 287 N.W.2d 796, 803 (1980). If the record shows that discretion was exercised and a reasonable basis exists for the trial court's ruling, we will sustain it. Howard v. Duersten, 81 Wis. 2d 301, 305, 260 N.W.2d 274, 276 (1977).

The trial court's decision on the amendment is not part of the appellate record. The burden is on defendants to make it part of the record because they attack the ruling. Compare Austin v. Ford Motor Co., 86 Wis. 2d 628, 638, 273 N.W.2d 233, 237 (1979) (when no transcript furnished, appellate court compelled to accept discretionary Conclusion by trial court that there is no evidence to support a jury finding).

We can, however, infer the reason for the ruling from the record before us. When granting defendants' request for a continuance the same day it granted plaintiffs' motion to amend, the trial court noted that defendants had not yet answered the second amended complaint. The court said a hearing could be held within about sixty days and that full preparation was possible within that period. The court's comments entitle us to infer that it believed the defendants were not prejudiced by the amendment. We note in this connection that a constitutional issue had already been raised -- the sufficiency of the standards by which legislative authority ...

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