Full Opinion (html_with_citations)

                                          COURT OF APPEALS OF VIRGINIA
PUBLISHED

            Present: Judges Beales, Ortiz and Causey
            Argued at Richmond, Virginia


            MARY PAT MARTIN
                                                                                OPINION BY
            v.     Record No. 0971-22-3                                JUDGE DORIS HENDERSON CAUSEY
                                                                              DECEMBER 12, 2023
            RYAN S. LAFOUNTAIN, COMMISSIONER
             OF REVENUE FOR THE CITY OF ROANOKE


                              FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
                                            David B. Carson, Judge

                           Arthur P. Strickland (Strickland, Diviney, Segura & Byrd, on briefs),
                           for appellant.

                           Timothy R. Spencer, City Attorney (Douglas P. Barber, Jr., Assistant
                           City Attorney, on brief), for appellee.


                   Mary Pat Martin appeals the circuit court’s decision to dismiss her claim against the

            Commissioner of Revenue for the City of Roanoke (the “Commissioner”). Martin petitioned for

            declaratory relief to contest the Commissioner’s “arbitrary refusal” to impose business taxes on the

            owner and the lessee of a neighboring property. The circuit court denied the requested relief,

            finding that Martin failed to establish local taxpayer standing. She appealed to this Court, and for

            the following reasons, we affirm.
                                        BACKGROUND1

       In June 2020, CapGrow Holdings JV Sub V LLC (“CapGrow”), a venture capital firm

based in Chicago, purchased a residential property in the Oak Hill neighborhood of Roanoke,

Virginia. CapGrow subsequently leased the residence to Pinnacle Treatment Centers

(“Pinnacle”). Pinnacle opened and operated a for-profit halfway house in the residence.

Residents of the Oak Hill neighborhood unsuccessfully challenged the establishment of the

halfway house on the grounds that it operated in breach of a local zoning ordinance.2 Martin, the

taxpaying owner and resident of a nearby property, subsequently filed a petition in circuit court

against the Commissioner. She asked the circuit court for a declaratory judgment under Code

§ 8.01-184, stating that the business run by CapGrow and Pinnacle is subject to a yet unenforced

business tax that should be applied retroactively.

       The Commissioner filed a demurrer in response to the petition, arguing that Martin failed

to allege facts sufficient to establish local taxpayer standing. The circuit court heard arguments

from both parties and in a “purely advisory capacity,” acknowledged the appearance of “an

ongoing enterprise for which gross receipts tax should be paid.” But the court sustained the

demurrer and dismissed Martin’s petition with prejudice. This appeal follows.




       1
         “We apply well-established principles to guide our review of a circuit court’s judgment
sustaining a demurrer.” Dunn, McCormack & MacPherson v. Connolly,
281 Va. 553, 557
(2011). “A demurrer tests the legal sufficiency of facts alleged in pleadings, not the strength of
proof. Accordingly, we accept as true all properly pled facts and all inferences fairly drawn from
those facts. Because the decision whether to grant a demurrer involves issues of law, we review
the circuit court’s judgment de novo.”
Id.
 (quoting Abi–Najm v. Concord Condominium, LLC,
280 Va. 350, 356-57
 (2010)).
       2
         Martin was not a party to that action, which was dismissed on appeal based on the
petitioners’ failure to join the Roanoke City Council, a necessary party, as a defendant. See
Marsh v. Roanoke City,
301 Va. 152
 (2022).
                                                -2-
                                            ANALYSIS

                                      A. Standard of Review

        “A trial court’s decision sustaining a demurrer presents a question of law which we

review de novo.” Harris v. Kreutzer,
271 Va. 188, 196
 (2006). “A demurrer admits the truth of

all facts alleged in a motion for judgment but does not admit the correctness of the pleader’s

conclusions of law.” Chesapeake Bay Found., Inc. v. Commonwealth ex rel. Virginia State

Water Control Bd.,
46 Va. App. 104, 110
 (2005). “A demurrer tests the legal sufficiency of facts

alleged in pleadings, not the strength of proof.” Glazebrook v. Bd. of Supervisors of

Spotsylvania Cnty.,
266 Va. 550, 554
 (2003). “To survive a challenge by demurrer, a pleading

must be made with ‘sufficient definiteness to enable the court to find the existence of a legal

basis for its judgment.’” Eagle Harbor, L.L.C. v. Isle of Wight Cnty.,
271 Va. 603, 611
 (2006)

(quoting Moore v. Jefferson Hospital, Inc.,
208 Va. 438, 440
 (1967)). Here, the circuit court

sustained the demurrer. Accordingly, in reviewing the circuit court’s conclusion on standing,

“[w]e accept as true all facts properly pleaded in the [petition for appeal] and all reasonable and

fair inferences that may be drawn from those facts.” Glazebrook,
266 Va. at 554
.

                                            B. Standing

       The pivotal issue before this Court is whether Martin has standing as a local taxpayer to

challenge the Commissioner’s decision not to impose certain taxes against CapGrow and

Pinnacle. Martin contends that she has standing to challenge the Commissioner’s lack of

enforcement of taxes against Pinnacle and CapGrow pursuant to Roanoke City Code § 19.1-3(7)

and Virginia Code § 58.1-3703(7) because she is a local taxpayer. The Commissioner argues she

does not. We agree with the Commissioner.

       The Declaratory Judgment Act, Code §§ 8.01-184 to -184.1, authorizes circuit courts to

issue “binding adjudications of right” when presented with “cases of actual controversy.” To

                                                -3-
demonstrate an “actual controversy,” the plaintiff must have standing, which in the context of the

Declaratory Judgment Act, requires that the plaintiff establish “a ‘justiciable interest’ in the

subject matter of the proceeding, either in its own right or in a representative capacity.” W.S.

Carnes, Inc. v. Bd. of Supervisors of Chesterfield Cnty.,
252 Va. 377, 383
 (1996). This entails a

showing that the “[plaintiff’s] rights will be affected by the outcome of the case.” Deerfield v.

City of Hampton,
283 Va. 759, 764
 (2012) (alteration in original). In other words, there must be

an “‘antagonistic assertion and denial of right’—whether that right be derived from statutes,

common law, or constitutional law.” Lafferty v. Sch. Bd. of Fairfax Cnty.,
293 Va. 354, 362

(2017).

          Ordinarily, payment of taxes does not confer a general right to challenge any government

action alleged to be unlawful.
Id.
 It is well established, however, that “local taxpayers possess

the common law right ‘to challenge the legality of expenditures by local governments.’”
Id.
 at

363 (quoting Goldman v. Landsidle,
262 Va. 364, 372
 (2001)). This is so because of “‘the

peculiar relationship of the taxpayer to the local government that makes the taxpayer’s interest in

the application of municipal revenues direct and immediate,’ giving local taxpayers a personal

stake in the outcome of the controversy.”
Id.
 (quoting Goldman,
262 Va. at 372
). Local

taxpayer standing, however, “does not open the door to challenge any local government action,”
id. at 364
, and a plaintiff’s complaint “must do more than identify a policy that the plaintiff

disagrees with,” McClary v. Jenkins,
299 Va. 216
, 223 (2020) (citing Lafferty,
293 Va. at 364-65
). A challenge to government expenditures, moreover, cannot rely on wholly speculative

inferences about actual costs or expenditures of a challenged measure or on merely nominal costs

of implementation that do not implicate the special relationship between local taxpayers and

local revenue expenditures. Lafferty,
293 Va. at 364-65
).




                                                 -4-
       Here, Martin does not challenge the legality of an expenditure by a local government, but

simply the failure to impose a tax by a local government on a third party. A decision to refrain

from taxing an entity is not an expenditure. Martin has cited no authority establishing a

taxpayer’s right to challenge the non-imposition or non-collection of a tax, and we decline to

recognize such a right today. In addition, even if we were to treat such inaction as the potential

equivalent of an expenditure, Martin’s complaint also lacks express allegations of costs or

expenditures connected to the Commissioner’s determination about the property at issue. She

alleges that she, “along with all city taxpayers, is directly affected pecuniarily by the

Commissioner of Revenue’s failure to collect business taxes and transient taxes from CapGrow

and Pinnacle,” reasoning that “if substantial business and transient occupancy taxes are not

collected, then there is less money for the City to spend and either expenditures will have to

decrease or taxes increase to meet the City’s expenses.” Without more, the effects she imagines

are “wholly speculative.” “[V]ague, speculative, and conclusory allegations of a connection

between the expenditure of local funds and the policy or action the taxpayer seeks to prohibit do

not meet the requirements to establish local taxpayer standing.” See McClary, 299 Va. at 224.

       Martin has not alleged sufficiently definite facts that provide a justiciable interest to

survive demurrer. She has not alleged a specific statutory right to relief, nor has she alleged an

injury that is specific to her. Additionally, the allegations in the complaint are mere policy

disagreements with the Commissioner’s decision regarding whether the taxes apply in Martin’s

bare position as a taxpayer, lacking any connection to local government expenditure. Thus, we

hold that she may not claim local taxpayer standing.




                                                 -5-
                                         CONCLUSION

       For these reasons, we hold that the circuit court did not err in sustaining the

Commissioner’s demurrer and dismissing Martin’s claim with prejudice.

                                                                                         Affirmed.




                                                -6-