George v. Baltimore Co.

Adkins, J. Taxpayer standing doctrine encourages the highest good governance standards by empowering stakeholder oversight of local governments. Yet, these suits have the potential to substantially burden the time and treasure of local governments, impeding their efforts to serve the citizenry. Maintaining a balance between these competing forces has sometimes resulted in varied, complicated, and seemingly contradictory legal edicts. But our task, as we again address this topic, is eased by the recent and important decision in State Center, LLC v. Lexington Charles Ltd. Partnership , 438 Md. 451 , 92 A.3d 400 (2014), which did much to untangle the web of taxpayer standing in Maryland. 1 With State Center as our beacon, we resolve this case in favor of Petitioners, holding that they possess the requisite taxpayer standing to pursue their claim against Baltimore County.

This is despite the County's assertion that the "minor" harm alleged by the taxpayers will not cause an increase in taxes, especially considering it has not raised the property tax rate in 26 years or the income tax rate in 22 years. FACTUAL OVERVIEW AND PROCEDURAL POSTURE The present case involves three Baltimore County taxpayers, Anne George, Jody Kesner, and Jody Rosoff (collectively, "Petitioners" or "Taxpayers"), and their lawsuit against Baltimore County ("County") and various County administrators. Petitioners' suit revolves around the County's operation of the Baltimore County Animal Shelter ("BCAS") and alleged waste at the facility. In December 2014, Taxpayers filed a complaint in the Circuit Court for Baltimore County seeking preliminary and permanent injunctions, a declaratory judgment, and a writ of mandamus.

Taxpayers alleged they were entitled to bring suit under the taxpayer standing doctrine because they were "injured by the increased tax burden caused by [the County's] illegal acts, in addition to other pecuniary injuries from having to care for animals that have been harmed by [the County's] acts." They also claimed that various County actions resulted in over-expenditure on medical care and staffing and under-collection of fees. In their complaint, Taxpayers alleged that the County, in its management of BCAS, violated numerous provisions of Baltimore County Code, Article 12. Specifically, Taxpayers stated that the County failed to "[a]ppoint, train, and qualify" appropriate individuals to work in animal control, Balt. Cty.

Code § 12-1-103(2); maintain a program to assist volunteers, id. § 12-1-103(3); provide appropriate facilities and care for animals, id. § 12-1-103(4); attempt to locate owners of stray animals, id. §§ 12-1-202(a), 12-3-203(a); hold animals for four business days in a "humane manner," id. §§ 12-3-201(b), 12-3-202(b); put animals up for adoption only if they meet certain standards, id. § 12-3-204(d); and maintain holding facilities that meet the minimum standards of Article 12, id. § 12-6-103. 2 Taxpayers alleged that these regulations are routinely violated. The County responded with a motion to dismiss or, in the alternative, motion for summary judgment, claiming, among other things, that Taxpayers lacked standing to bring their claim. The County argued that Taxpayers "failed to adequately allege any illegality or ultra vires act that reasonably may result in a pecuniary loss or a tax increase to survive [the] motion." The motion was accompanied by an affidavit from the Director of Budget and Finance for Baltimore County, Keith Dorsey ("Dorsey Affidavit"). The Dorsey Affidavit asserted that Baltimore County property taxes had not been increased in 26 years, the income tax had not been increased in 22 years, and that BCAS constituted such a small fraction of the overall budget "that no taxes would be increased as a result of operation of the Animal Shelter." Taxpayers' response characterized the County's motions as merely alleging a failure to show that taxes will increase, not rebutting Taxpayers' charge of "other pecuniary loss." Relying mainly on their complaint, the County's motion to dismiss or for summary judgment, and the Dorsey Affidavit, the response asserted that Taxpayers suffered a pecuniary loss "from the illegal expenditure of taxpayer funds," which included the waste of tax-derived funds "on excess veterinary care and medications, food and other necessities, euthanasia, and employees." Moreover, with fewer animals suitable for adoption, Taxpayers asserted a loss of revenue from adoption and licensing fees.

Taxpayers also alleged other pecuniary losses, separate from those involving the waste of tax-derived funds, caused by veterinary expenses they incurred caring for three different animals adopted from BCAS and allegedly mistreated while in the County's care. Significantly, on the same day that Taxpayers filed their response, they also filed a separate motion for preliminary injunction and request for hearing. Attached to the motion were 18 separate affidavits. We summarize the motion and affidavits as follows.

After adopting animals from BCAS, numerous individuals discovered that their pets were "severely underfed." There were allegations that animals had been left wet and sitting in pooled water, resulting in rashes, irritation, and bleeding. Several affiants claimed that BCAS routinely failed to provide veterinary care, "isolate contagious animals from other animals," or scan for identification microchips. These failures resulted in deteriorating health conditions, unnecessary euthanasia, and animals being held in the shelter without their owner's knowledge. BCAS also failed to sterilize animals before they were offered for adoption.

Additionally, affiants claimed that employees and volunteers were improperly trained and inadequately supervised. At the hearing, the judge denied the motion to dismiss and focused on summary judgment. On two occasions, the parties pointed the judge to the complaint and the preliminary injunction motion and attached affidavits for additional details regarding Taxpayers' alleged injury. There was significant debate, and some confusion, regarding the type of harm required to grant taxpayer standing under State Center , a leading taxpayer standing case authored by Judge Glenn T. Harrell, Jr. for this Court.

The debate was twofold. First, there was disagreement regarding the requirement that "the taxpayer must allege ... a special interest distinct from the general public ," State Center , 438 Md. at 556 , 92 A.3d 400 (emphasis added). The dispute centered around the interpretation of the word "taxpayer" as a subset of "general public"-i.e., whether such a relationship compared specific taxpayers in a political subdivision to taxpayers generally in the same subdivision, or specific taxpayers in the political subdivision to residents generally. Second, the parties disagreed about whether the Dorsey Affidavit, stating that taxes had not and would not be raised, foreclosed Taxpayers' argument that illegal County actions could reasonably be expected to result in "pecuniary loss or an increase in taxes," id. at 557 , 92 A.3d 400 (emphasis removed).

In a written opinion, the hearing judge concluded that, while Taxpayers pled sufficient facts to withstand the motion to dismiss, the alleged pecuniary injury must be more developed to survive summary judgment. The judge ruled that Taxpayers did not "specifically allege 'waste of tax dollars' in their Complaint." In the court's view, Taxpayers' argument centered entirely around the question of a potential tax increase or decrease. Significantly, the court determined that Taxpayers never rebutted the Dorsey Affidavit, which "established that any alleged illegal acts have not and will not result in increased taxes or pecuniary loss to [Taxpayers]." For these reasons, summary judgment was granted. In an unreported decision, the Court of Special Appeals affirmed the Circuit Court.

See George v. Balt. Cty. , No. 47, Sept. Term 2016, 2018 WL 2948204 (Md. Ct. Spec. App. June 12, 2018). The intermediate appellate court held that "the County's actions were not reasonably likely to result in a pecuniary loss to [Taxpayers] because the County's actions were not likely to affect [their] taxes." Id. at ⁵.

In dissent, Senior Judge Harrell, sitting by designation, stated that the majority erred when it "reduce[d] the disjunctive standard of potential pecuniary loss or tax increase into a single category," one entirely about taxation. Id. at ⁶. DISCUSSION Standard of Review In Maryland, a court shall grant summary judgment only if "there is no genuine dispute as to any material fact and ... the party in whose favor judgment is entered is entitled to judgment as a matter of law." Maryland Rule 2-501(f). "Whether summary judgment was granted properly is a question of law." Lightolier, a Division of Genlyte Thomas Grp.

LLC v. Hoon , 387 Md. 539 , 551, 876 A.2d 100 (2005). Consequently, these determinations are made without deference to the deciding and reviewing courts. See id. "We review the record in the light most favorable to the non-moving party and construe any reasonable inferences that may be drawn from the well-pled facts against the moving party." Barclay v. Briscoe , 427 Md. 270 , 282, 47 A.3d 560 (2012).

Summary Judgment and Pleadings To determine whether a genuine dispute of material fact exists, we must first decide which evidence in the record can be reviewed to make such a determination. Taxpayers maintain that a material dispute exists as to whether Baltimore County wasted government funds through the various actions described above. The County, on the other hand, asserts that Taxpayers' response to the motion for summary judgment was insufficient, as their arguments are unsupported and "speculative at best." Taxpayers' response, according to the County, did not contain the admissible evidence required under Md. Rule 2-501 and, therefore, failed to sufficiently rebut the Dorsey Affidavit. Under Maryland Rules, "[a]ny party may file a written motion for summary judgment of all or part of an action on the ground that there is no genuine dispute as to any material fact and that the party is entitled to judgment as a matter of law." Md. Rule 2-501(a).

This motion must be supported by affidavit if it is: "(1) filed before the day on which the adverse party's initial pleading or motion is filed or (2) based on facts not contained in the record." Id. The County filed such an affidavit-the Dorsey Affidavit-purporting to establish that taxes had not and would not be raised, even if the alleged violations were occurring. If the opposing party chooses to reply, it must answer, in writing, "identify[ing] with particularity each material fact as to which it is contended that there is a genuine dispute ...." Md. Rule 2-501(b). Additionally, as to these alleged material facts, the opposing party must "identify and attach the relevant portion of the specific document, discovery response, transcript of testimony (by page and line), or other statement under oath that demonstrates the dispute." Id.

"A response asserting the existence of a material fact or controverting any fact contained in the record shall be supported by an affidavit or other written statement under oath." Id. We have yet to interpret the word "supported," above, as meaning "attached to the responsive filing, only." "[F]acts alleged in pleadings are not, by that means alone, before the court as facts for summary judgment purposes. Ordinarily, mere allegations neither establish facts, nor show a genuine dispute of fact." Vanhook v. Merchants Mut. Ins.

Co. , 22 Md. App. 22 , 27, 321 A.2d 540 (1974) (citation omitted). Still, courts should look to the "pleadings, depositions, and admissions on file , together with the affidavits, if any" to determine whether a dispute exists. Cox v. Sandler's, Inc. , 209 Md. 193 , 197, 120 A.2d 674 (1956) (emphasis added). This means that courts should review any filing that shows, "in detail and with precision, by facts admissible in evidence," Mullan Contracting Co. v. IBM Corp. , 220 Md. 248 , 257, 151 A.2d 906 (1959) (citations omitted), that there is a genuine dispute.

We have before deemed it appropriate to consider supplemental affidavits filed separately from the plaintiff's response and prior to a hearing on a motion for summary judgment. See Lynx, Inc. v. Ordnance Prods., Inc. , 273 Md. 1 , 20, 327 A.2d 502 (1974). The Circuit Court opinion granting summary judgment states that Taxpayers "did not provide a counter-affidavit or an affidavit pursuant to Md. Rule 2-501(d)," allowing for "affidavits of defense not available." Whether or not this is strictly true, Taxpayers submitted 18 affidavits with their motion for preliminary injunction, which was filed on the same day as the response to the motion to dismiss or for summary judgment. These affidavits were referenced in the motions hearing, but never mentioned in the judge's final opinion.

So long as these affidavits meet the standard set forth in the Maryland Rules, 3 they should be factored into the overall summary judgment determination. Keeping in mind the filings that the Circuit Court had at its disposal at the point of the hearing, we must determine whether they create a genuine dispute of material fact. Specifically, we must decide whether Taxpayers' allegations satisfy the specific injury requirement, discussed in detail below. We turn to that question now.

Taxpayer Standing Doctrine Taxpayer standing doctrine permits a taxpayer to "invoke the aid of a court of equity to restrain the action of a public official, which is illegal or ultra vires and may injuriously affect the taxpayer's rights and property." Inlet Assocs. v. Assateague House Condominium Assn. , 313 Md. 413 , 440-41, 545 A.2d 1296 (1988) (citation omitted). Such a distillation has come to seem oversimplified, as the doctrine has grown and become "disorganized" and, "at times, seemingly contradictory ...." State Center , 438 Md. at 540 -41 , 92 A.3d 400 . In State Center , Judge Harrell, writing for this Court, clarified some aspects of taxpayer standing that we discuss further below. In his words, "[T]he conceptual basis of the doctrine is that the action is brought by complainants, as taxpayers and on behalf of all other similarly situated taxpayers." Id. at 547 , 92 A.3d 400 (emphasis omitted).

The taxpayers, in essence, are asserting the rights of their government against local administrators. Thus, we have likened the taxpayer suit to a derivative shareholder suit, the shareholders of a government being the taxpayers. See id. at 541 , 92 A.3d 400 . In this way, Maryland has "gone rather far in sustaining the standing of taxpayers" to sue for illegal or ultra vires acts, compared to other jurisdictions.

Inlet Assocs. , 313 Md. at 441 , 545 A.2d 1296 (citation omitted). There are two broad requirements to successfully assert taxpayer standing. The first requirement is taxpayer status. To establish eligibility to bring the suit, the plaintiff must demonstrate that: (a) "the complainant is a taxpayer," and (b) "the suit is brought, either expressly or implicitly, on behalf of all other taxpayers." State Center , 438 Md. at 547 , 92 A.3d 400 .

In this case, the parties do not contest that Taxpayers have sufficiently pled this element. The second broad requirement is that parties must assert a "special interest," alternatively referred to as the "special damage" requirement. Special interest requires a taxpayer to allege: "[ (1) ] an action by a municipal corporation or public official that is illegal or ultra vires [;] and [ (2) ] that the action may injuriously affect the taxpayer's property, meaning that it reasonably may result in a pecuniary loss to the taxpayer or an increase in taxes." Kendall v. Howard Cty. , 431 Md. 590 , 605, 66 A.3d 684 (2013) (citation omitted). These are known as the (1) "illegal or ultra vires act" prong, and (2) the "specific injury" prong.

See State Center , 438 Md. at 555 -56 , 92 A.3d 400 . The illegal or ultra vires act prong "has been applied leniently and seems rather easy to meet ...." Id. at 556 , 92 A.3d 400 . Plaintiffs must simply "allege, in good faith, an ultra vires or illegal act by the State or one of its officers ...." Id. The County does not contest that Taxpayers have successfully met this element of taxpayer standing.

Taxpayers have made good faith claims of illegality by enumerating several alleged violations of Article 12 of the Baltimore County Code. The specific injury prong is more opaque, and often proves a "stumbling block." Id. at 572 , 92 A.3d 400 . Plaintiffs establish specific injury by demonstrating the appropriate type of harm, a nexus between the illegal or ultra vires act and the alleged harm, and some modest showing regarding the degree of harm. See id. at 560 , 92 A.3d 400 .

Type of Harm The heart of both parties' substantive arguments lies in the "type of harm" alleged. Taxpayers argue that the Court of Special Appeals erred in conflating "pecuniary loss" and "increase in taxes" by ignoring the disjunctive, "or." They characterize State Center , when read as a whole, as supporting the idea that "a waste of already-collected funds can 'affect' taxes just as much as an ensuing rate hike." Treating an increase in taxes as a necessary element to establish taxpayer standing, Taxpayers argue, would unduly limit the doctrine. The County retorts that Taxpayers failed to present any well-pleaded facts of taxpayer waste. They assert that Taxpayers' allegations are generalized, not based on personal observation, and fail to allege any pecuniary loss.

To support this position, the County argues that only three of the animals identified in the complaint had any direct personal contact with Petitioners. Thus, according to the County, Taxpayers' harms also were not distinct from those of the general public. To demonstrate the type of harm necessary for specific injury, plaintiffs must show, first, that they "reasonably may sustain a pecuniary loss or a tax increase," Inlet Assocs. , 313 Md. at 441 , 545 A.2d 1296 (citation omitted), and, then, that they have a "special interest distinct from the general public," State Center , 438 Md. at 556 , 92 A.3d 400 . Taxpayers have been consistently required to establish "that the action being challenged results in a pecuniary loss or an increase in taxes." Id. at 556-57 , 92 A.3d 400 (citation omitted).

We agree with Judge Harrell's dissent in the Court of Special Appeals, as it reinforces the importance of the disjunctive "or" in the foregoing standard. Yet, in assessing standing, we have never asked for more than a "potential" showing of such harms, id. at 559 , 92 A.3d 400 , and have "exhibited great leniency in [our] interpretation of 'potential pecuniary loss,' " id. at 561 , 92 A.3d 400 (citations omitted). Thus, a reasonable possibility of either pecuniary loss, or a tax increase, must be shown. Moreover, "[t]his Court has recognized repeatedly that taxpayers have the right to bring a lawsuit in this State to prevent waste or unlawful use of public property and funds." Id. at 560 , 92 A.3d 400 (emphasis removed).

We have stated that an illegal or ultra vires act can cause pecuniary harm in the form of "an assessment of property or ... the levy, collection, expenditure, appropriation, or diversion of public taxes." Ruark v. Int'l Union of Operating Eng'rs , 157 Md. 576 , 590, 146 A. 797 (1929). Consequently, raising taxes is not the only valid type of harm that can be alleged. We have spilled much ink delineating the line between sufficient allegations of waste resulting in potential pecuniary loss, and those that are too speculative. Early on, in Sun Cab Co. v. Cloud , 162 Md. 419 , 427, 159 A. 922 (1932), we held that "taxpayers interested in avoiding the waste of funds derived from taxation" could bring suit to enjoin a "void referendum." This case has been described as among the more "lenient interpretations" of potential pecuniary loss.

State Center , 438 Md. at 563 , 92 A.3d 400 . Again, in James v. Anderson , 281 Md. 137 , 142, 377 A.2d 865 (1977), we decided that allegations of decreased efficiency resulting from an ultra vires act were enough to maintain a suit. Yet, in Floyd v. Mayor and City Council of Baltimore , 463 Md. 226 , 257-58, 205 A.3d 928 , 946-47, 2019 WL 1434574 (2019), we reined in any speculation that a potential need to fend off charges of illegality is sufficient to confer standing. Instead, we decided that to allow the threat of lawsuit, itself, to provide the necessary pecuniary loss would be circular and insufficiently concrete.

Floyd , 463 Md. at 258 -59 , 205 A.3d at 947 -48 . Thus, we narrowed the universe in which waste results in an adequate claim of pecuniary loss. The County claims that Taxpayers inadequately raise the issue of taxpayer waste. We disagree.

In their response to the motion to dismiss or for summary judgment, Taxpayers specifically allege that "the County wastes taxpayer derived funds through numerous specific violations of law ...." Examples of such waste include excess expenditures on veterinary care, food, and medications; the cost of maintaining animals that, if cared for properly, would be eligible for adoption; lost revenue due to these non-occurrent adoptions; and excessive staffing resulting from an inadequate volunteer program. Taxpayers' complaint also specifically alludes to "other pecuniary injuries," beyond increased taxes, and claims that various County actions result in over-expenditure on medical care and staffing and under-collection of fees-i.e., waste. The County points us to the line in State Center providing that "the issue is not what 'type' of harm is sufficient necessarily, but rather a much more forgiving question of whether the type of harm is one that may affect the complainant's taxes." 438 Md. at 565 , 92 A.3d 400 . They argue that this demonstrates that a tax increase, or threat of one, is required for taxpayer standing.

Our interpretation of State Center differs somewhat, as we view the term "affect" in a slightly broader context. To limit the type of harm that can "affect" taxes only to harms that actually result in tax increase is to ignore the statement-ten words earlier-that the standard elucidated is a "much more forgiving" one. It is sufficient for a given harm to affect taxes by increasing them. But, such an effect is not necessary.

We are willing to recognize substantial waste in government operations, even without potential tax increase, as a pecuniary loss sufficient to confer standing. This is because taxpayers, as "shareholders," are reasonably entitled to a sound and careful use of funds. This analysis sheds light on why the Circuit Court erred in placing almost total reliance on the Dorsey Affidavit, concluding that it "established that any alleged illegal acts have not and will not result in increased taxes or pecuniary loss to [Taxpayers]." The Dorsey Affidavit certainly establishes that Baltimore County has not raised the property tax rate in 26 years and has not increased the income tax rate in 22 years. The affidavit also appears to appropriately contextualize the "Animal Services Program" within the broader County budget. 4 Yet, it does not address whether the government expenditure was wasteful.

Taxpayers' 18 affidavits, on the other hand, relate to the issue of waste. Upon review, the affidavits state the following facts, at least for the purposes of a summary judgment motion. First, affiants attested that multiple animals were not sterilized, and any record of sterilization was inadequate. Multiple affiants also alleged personal knowledge of animals that BCAS never scanned for microchips, and, at least one animal is alleged to have been euthanized as a result of this failure.

Many allegations related to generally inadequate veterinary care, food, and water supply. Specifically, water appeared to have been inaccessible to many animals. Many affiants stated that animals recovered or adopted from BCAS were ill. Moreover, others observed that BCAS failed to separate sick animals from healthy ones.

Numerous individuals observed damp conditions and sitting water on the floors of the shelter. Finally, affiants claim that there were too few qualified staff and an inadequate volunteer program. Consequently, Taxpayers contend, the County has wasted taxpayer funds. They claim that the County's actions "increase the number of animals that must be housed at BCAS and therefore impose increased maintenance costs." Such actions allegedly are wasteful in that they impose expenses on the public purse "for materials like medications for animals that avoidably fall ill and euthanizing agents for animals that are unnecessarily euthanized." Finally, Taxpayers assert, with fewer animals suitable for adoption, the County lost revenue from adoption and licensing fees.

These allegations of waste amount to substantial inefficiency and unlawful misuse of public property and treasure, regardless of whether they are likely to cause an increase in taxes. Taxpayers have successfully alleged that, because BCAS's ineffectual management resulted in the provision of more expensive shelter services and decreased revenue, its use of taxpayer funds was wasteful. As discussed previously, Taxpayers must also establish a "special interest" in the