Court of Appeals Confirms Taxpayer Standing to Challenge Unlawful Government Spending but Clouds the Concept of Standing Under Maryland Law

By Alan Sternstein

An October 2018 post on this Blog covered the Court of Appeals’ decision to review two cases on the burgeoning and ever complex subject of taxpayer standing. On April 1, 2019, the Court decided Floyd v. Baltimore, and George v. Baltimore Co., adding those decisions to its lengthy and growing commentary on taxpayer standing.[1]  The Court’s decisions are clear that taxpayers do have standing to challenge government economic waste resulting from violations of law.  In so doing, however, the Court muddled the analytical construct it has been struggling to define for testing when taxpayer standing will be recognized in actions challenging unlawful government action.

In Floyd, taxpayers alleged that the procedures by which the city of Baltimore adopted comprehensive rezoning ordinances and a rezoning map were unlawful in several respects.  They alleged that because of this latent illegality in the ordinances and zoning map, subsequent administrative zoning actions based on the ordinances and the map, of which there would be many, would be subject to legal challenge in judicial review actions that the city would be required to defend in court.  The defense of such actions, according to the taxpayers, would, in turn, result in the substantial and wasteful expenditure of public funds, because such actions could be avoided, were the ordinances and laws invalidated and, then, properly reenacted.  In the end, therefore, the taxpayers alleged, city taxpayers would be required to pay more in taxes, in order to cover increased governmental litigation defense costs.  The potential tax increases were the interest, the taxpayers argued, that grounded their standing to challenge the legality of the zoning ordinances and zoning map.

In George, taxpayers alleged that laws governing the operation of Baltimore County’s animal shelter were being regularly and continuously violated in various ways, resulting in substantially increased costs in operating the shelter.  Unlike in Floyd, the George taxpayers did not rely on a hypothetical argument concerning possible but uncertain waste.  Instead, they specifically identified several areas where actual expenditures were being made that could have been avoided or would be avoided in the future, were applicable laws followed.  According to the Court of Appeals, Slip Op. at 2:

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.


These illegal actions had, the Court observed, Slip Op. at 4, consequences plainly resulting in waste, as follows:

[A]nimals had been left wet and sitting in pooled water, resulting in rashes, irritation, and bleeding…. [The shelter] 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.

These demonstrable losses, the taxpayers argued, grounded their standing to challenge the legality of the operation of the animal shelter.  The County maintained and showed, nevertheless, that even assuming the unlawful operation of the shelter and the attendant excessive expenditures, county property taxes had not been increased in 26 years and income taxes in 22 years, vitiating the grounds for standing that the plaintiff taxpayers alleged.

The Court of Appeals ruled that the Floyd taxpayers did not have standing but that the George taxpayers did, meaning, ultimately, that the Baltimore zoning ordinances and map remained unchallengeable in court by taxpayers, whereas the unlawful operation of the Baltimore County shelter was amenable to taxpayer challenge in court.  Though the Court reached the correct ultimate results, it did so for the wrong reasons, reasons that are a step backwards from the clarity gained for taxpayer standing with senior Judge Harrell’s opinion for the Court in State Center, LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451, 92 A.3d 400, 458 (2014).

More particularly, in George, which was decided below on summary judgment, the Court found that taxpayers had adequately plead and shown most of the grounds that State Center required for taxpayer standing.  In particular, there must be allegations that the plaintiff is a taxpayer, that the plaintiff taxpayer is bringing the lawsuit on the taxpayer’s behalf and the behalf of all similarly situated taxpayers, that there has been an illegal or ultra vires act by government, and that the unlawful act is reasonably likely to cause “pecuniary loss” or “an increase in taxes” to the taxpayers in a manner unique or “special” to the taxpayers, as opposed to the general public.  George, Slip Op. at 9-12.

As to challenging the rezoning procedures in Floyd, which was decided below on a motion to dismiss, the Court ruled that the taxpayers had satisfied most of their pleading requirements, except that they “failed to show a special interest in the subject matter of this case distinct from that of the general public by failing to show that the allegedly illegal or ultra vires acts by Respondent may reasonably result in a pecuniary loss or an increase in taxes.”  Floyd, Slip Op. at 27.  At a trial court hearing on the motion to dismiss, taxpayers’ counsel argued that the taxpayers suffered the necessary special interest distinct from the general public because “if the Zoning Map and ordinances stood as is, there would ‘be substantial litigation against the City or about the City’s action, and that is where the taxpayers will end up paying more taxes to support . . . an expanding law department[.]’”  Id. at 10.  According to the Court of Appeals, however, this “theory of pecuniary loss or increase in taxes is vague and not easily understandable.” Id. at 30.  Likewise, the Court explained, taxpayers “did not allege, with any explanation or particularity, the pecuniary losses or tax increases expected or how the new Zoning Map potentially would result in such harm.  [Taxpayers] simply stated that pecuniary loss and tax increases would occur.”  Id.

In George, there was actual evidence that the county’s operation of its animal shelter was already causing and would continue to cause the waste of public funds.  On the other hand, although Floyd was decided on a motion to dismiss, it is fairly indisputable that, unlike in George, the taxpayers in Floyd, who did at least have the benefit of a hearing on the motion to dismiss their action, did not and could not demonstrate injury beyond what the Court aptly described as a “theory.”  Indeed, this was the Court’s view, even though the Court noted that “’[t]he facts alleged need not lead necessarily to the conclusion that taxes will increase; rather, the taxpayer must allege that he, she, or it will suffer pecuniary damage potentially.’”  Floyd, Slip Op. at 16 (emphasis added), quoting Anne Arundel County v. Bell, 442 Md. 539, 578, 113 A.3d 639, 663 (2015).[2]  Likewise, according to the Court, “a taxpayer is ‘not required to prove an exact amount of pecuniary damage that he[,] she[, or it] will suffer.’”  Floyd, Slip Op. at 22, quoting State Center, 438 Md. at 580, 92 A.3d at 477.    

Although the basis offered in George to show potential injury was plainly more persuasive than in Floyd, still, it bears careful note that the standing deficiency in Floyd actually was not, despite what the Court of Appeals said, that the putative injury was not special to taxpayers but that the potential for injury, regardless of its character vis-a-vis taxpayers, was not adequately shown.  Nothing in either Floyd or George explains why pecuniary loss in the form of increased government expenditures was in George “special” to taxpayers, as opposed to something suffered by the public in general, but not “special” in Floyd.  Because undue government expenditures mean the loss of funds that could better be applied to any number of functions beneficial to the public in general, such expenditures harm everyone, not just taxpayers.  It may be fairly questioned, therefore, why unlawful government management that results in increased cost, but not increased taxes (as in George) is a harm “special” to taxpayers instead of a harm to the public in general.  In other words, it remains unclear why there was not standing in Floyd but there was in George.

One explanation for this apparent inconsistency between Floyd and George on the question of standing resides in the Court of Appeals’ observation in State Center that “the appellate courts in Maryland have adopted the ‘cause-of-action’ approach [to standing], which groups the traditionally distinct concepts of standing and cause of action into a single analytical construct, labeled as ‘standing,’ to determine whether ‘the plaintiff [has] show[n] that he or she “is entitled to invoke the judicial process in a particular instance.”’”  State Center, 438 Md. at 502, 92 A.3d at 429-30, quoting Kendall v. Howard Cnty., 431 Md. 590, 593, 66 A.3d 684, 685 (2013), quoting Adams v. Manown, 328 Md. 463, 480, 615 A.2d 611, 619 (1992).  The Court’s decisions in Floyd and George, however, demonstrate that this acknowledged conflation of “the traditionally distinct concepts of standing and cause of action” confuses rather than clarifies matters and allows the inconsistency exposed in the preceding paragraph here.  If, instead, those concepts are kept separate, the reconciliation of the inconsistency between Floyd and George readily emerges:  standing should have been recognized for the taxpayers in both Floyd and George, but in Floyd, the taxpayers failed to prove their cause of action, whereas, in George, the taxpayers proved theirs (or, at least, made the showing that summary disposition was not warranted in their case).[3]

The October 2018 post urged that, in assessing standing, that is, whether a plaintiff should be granted access to judicial resources, the consideration should not at all be on whether there is a cause of action.  Instead, the focus should be exclusively on the relationship between a plaintiff and the interest that the plaintiff seeks to vindicate and, more precisely, whether that relationship provides reasonable assurance to the court that there is a justiciable controversy before it.  If A sues B to collect damages for C’s injury caused by B’s negligence, the existence of a controversy between A and B , as opposed to between B and C, is quite dubious.  To be sure, A may be C’s friend and wants to do him a favor, but C, not A, has the clearest and least questionable interest in seeking compensation for C’s injury.  Whether the court recognizes that C is entitled to compensation for his injury (or interest) is the separate determination whether C has a cause of action against B, and, of course, the common law has developed to recognize that C has a cause of action in these circumstances.[4]

The reconciliation of the Court of Appeals’ decisions in Floyd and George, therefore, is this.  The Court has recognized, most clearly now in those cases, that “pecuniary loss,” in the form of wasteful use of public funds is an injury deserving of a remedy and, therefore, grounds for a cause of action.  Although such waste is an injury that, as noted, actually affects all citizens, not just taxpayers, the Court has decided that taxpayers, the persons who are required to fund public coffers, are best suited for bringing that cause of action.   The taxpayers in Floyd, as well as those in George, should have been granted standing.  The Floyd taxpayers, like the George taxpayers, sought to vindicate alleged fiscal waste.  Their allegations should have been sufficient for standing.[5]

The Floyd taxpayers’ allegations, however, were not prima facie sufficient to make out a cause of action.  The manner in which they alleged public funds would be wasted was too speculative to survive a motion to dismiss.  As the Court stated in Floyd, the “theory of pecuniary loss or increase in taxes is vague and not easily understandable,” and the complaint “did not allege, with any explanation or particularity, the pecuniary losses or tax increases expected or how the new Zoning Map potentially would result in such harm.” Floyd, Slip Op. at 30.[6]

The Court of Appeals’ concern that taxpayer “suits have the potential to substantially burden the time and treasure of local governments, impeding their efforts to serve the citizenry,” cannot be gainsaid.  George, Slip Op. at 1.  Lawsuits like that in Floyd amount merely to a challenge to government management policies and risk benefit analyses rather than showings of actual or likely fiscal waste occasioned by unlawful actions.[7]  Given, however, the Court’s prudent recognition that the “[t]axpayer standing doctrine encourages the highest good governance standards by empowering stakeholder oversight of local governments,” id., the approach to controlling access to precious judicial resources and preventing undue burden on local governments is not through adding to standing doctrine confusion and requirements that effectively narrow taxpayer standing.  Instead, what is required is untangling considerations of standing from the merits of causes of action[8] and, as the Court did but did not clearly say in Floyd, engaging in careful scrutiny at the pleading or summary judgment stage of the merits of taxpayer actions alleging fiscal waste.



[1] For the growing list of decisions on taxpayer standing, see Anne Arundel Co. v. Bell, 442 Md. 539, 113 A.3d 639 (2015); State Center, LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451, 92 A.3d 400, 458 (2014); 120 West Fayette St., LLP v. Mayor and City Council, 426 Md. 14, 43 A.3d 355 (2012); and 120 W. Fayette St., LLP v. Mayor and City Council, 407 Md. 253, 964 A.2d 662 (2009) (“Superblock I”).

[2] Compare State Center, 438 Md. at 485-86, 92 A.3d at 420, quoting Superblock I, 407 Md. at 266, 964 A.2d at 669 (“‘[T]he taxpayer plaintiff is not required to allege facts which necessarily lead to the conclusion that the taxes will be increased; rather, the test is whether the taxpayer reasonably may sustain a pecuniary loss or a tax increase [, that is,] whether there has been a showing of potential pecuniary damage.’” (emphasis in original)).

[3] Standing in federal courts has evolved from principles of both constitutional law and the common law of courts, unlike, as in Maryland, just the common law.  In early cases involving standing issues, when common law influence predominated, the Supreme Court, as the Maryland Court of Appeals still does, treated the preexistence of a cause of action or an interest previously recognized as legally protected as a required element of standing.  See Tennessee Elec. Power Co. v. TVA, 306 U.S. 118, 137 (1939) (“The appellants invoke the doctrine that one threatened with direct and special injury by the act of an agent of the government which, but for statutory authority for its performance, would be a violation of his legal rights may challenge the validity of the statute in a suit against the agent.  The principle is without application unless the right invaded is a legal right — one of property, one arising out of contract, one protected against tortious invasion, or one founded on a statute which confers a privilege.” (Emphasis added.)); Alabama Power Co. v. Ickes, 302 U.S. 464, 478-79 (1938) (“[C]ourts have no power to consider in isolation and annul an act of Congress on the ground that it is unconstitutional; but may consider that question ‘only when the justification for some direct injury suffered or threatened . . . is made to rest upon such an act.’  The term ‘direct injury’ is . . . used in its legal sense, as meaning a wrong which directly results in the violation of a legal right.  ‘[D]amage to one, without an injury . . . does not lay the foundation of an action; because, if the act complained of does not violate any of his legal rights, it is obvious, that he has no cause to complain. . . .  Where therefore there has been a violation of a right, the person injured is entitled to an action.’” (Emphasis added.)).  Today, Supreme Court cases, grappling more with constitutional standing, recognize the distinction and decouple the character of the interest a plaintiff alleges as distinct from whether or not the interest is or should allow a cause of action.  See Assoc. of Data Processing Serv. Orgs. V. Camp, 397 U.S. 150 (1970) (stating, in criticizing Tennessee Elec. Power Co., that “[t]he ‘legal interest’ test goes to the merits” but that “[t]he question of standing is different.”); Lujan v. Defenders of Wildlife, 504 U.S. 555, 566-67 (1992) (Scalia, J.) (holding that alleged injury of wildlife and environmental organizations was too speculative for standing to challenge the legality of regulations governing agency funding likely to jeopardize endangered or threatened species but suggesting that persons who observe or work with an endangered or threatened species would).

[4] As likewise noted in the October 2018 post:

[T]he nature of the interest that is the alleged basis for the plaintiff’s claim to judicial access is assessed in the light of whether that interest, with respect to the plaintiff, reasonably lends itself to belief that there is a bona fide controversy regarding the interest, the ticket for admission to the court.  That is to say, it is the nature of the interest asserted by which a court best determines whether, and assures itself that, there is a bona fide controversy before it.  Whether standing considerations are satisfied determines whether a putative plaintiff will be granted a “right to access to the judiciary system.”  State Center, 438 Md. at 517, 92 A.3d at 439.

[5] This Blog’s Manager suggested that the tension between Floyd and George may also be reflected in the difference between the lineups of the judges in those cases.  In Floyd, Judge Watts wrote the opinion for the Court, and Judges Barbera, McDonald and Adkins concurred only in the judgment of the Court.  In George, Judge Adkins wrote the opinion for the Court, and Judge Watts concurred in the opinion.  In other words, Judges Barbera, McDonald and Adkins were willing to concur in the judgment but not join in Judge Watts’ opinion for the Court in Floyd; whereas, in George, Judge Watts was willing to concur in but not fully join in Judge Adkins’s opinion for the Court.  Judge Adkins’s concurring opinion departed somewhat from Judge Watts’s majority opinion in Floyd out of concern that Judge Watts’s opinion for the court required, for standing, too substantial and specific a showing of potential pecuniary harm.  Adkins Concurring Opinion in Floyd,  Slip Op. at 4-5.

[6] Notably, the Court’s analysis and decision is in line with Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic vTwombly, 550 U.S. 544 (2007), Supreme Court decisions that enhanced the federal pleading standards required to be satisfied in order to surmount a motion to dismiss.  Those standards have some purchase in Maryland courts, but the Court of Appeals has yet to address their applicability to pleadings in Maryland courts.  See Baltimore County v. Baltimore County Sheriffs, No. 1498 (Md. App., Feb. 18, 2016) (unreported); Coleman v. Residential Credit Solutions, No. 0806 (Md. App., May 13, 2015) (unreported).

[7]Not only did the taxpayers in Floyd not show the requisite “potential” for “pecuniary loss” but also the taxpayers in Floyd were really challenging a governmental management decision to proceed with implementation and application of the challenged zoning legislation, at some risk of possibly having to spend legal and administrative resources to defend the legislation or to handle administrative burdens that might arise if the legislation were invalidated at some later time in judicial review of zoning actions.  Baltimore decided that the risk of subsequent litigation or invalidation was outweighed by the economic and other injuries that could occur were the City hamstrung in making zoning decisions because of the lack of a zoning ordinance and zoning mag.  Such a decision is like numerous decisions governments regularly make to move forward in the face of charges that some legislation is invalid or in the belief that an adverse judicial ruling is incorrect and will be reversed.  Requiring an adequate showing of potential pecuniary loss, as well as the illegality of its cause, protects against taxpayer suits becoming an unbridled means for disgruntled citizens to challenge what should be decisions consigned to administrative management discretion.

[8] Indeed, the Court of Appeals in State Center, despite acknowledging that it presently groups standing and cause of action together, nevertheless suggested that the emphasis in assessing standing is on the nature of the interest a plaintiff seeks to protect, as opposed to whether, a priori, there is a cause of action that protects the interest.  See State Center, 438 Md. at 516, 92 A.3d at 438 (“[W]hether a private right of action exists for Appellees to bring any [particular] claim to the Circuit Court is a different question than whether taxpayer standing doctrine permits Appellees to bring their . . . claims to the Circuit Court.” (emphasis in original)); id. at 556, 92 A.3d at 462, quoting Funk v. Mullan Contracting Co., 197 Md. 192, 196, 78 A.2d 632, 635 (1951) (stating that the taxpayer’s right “to invoke the aid of a court of equity to restrain the action of an administrative agency of the State . . . when such action is illegal and may injuriously affect the taxpayer’s rights or his property . . . does not depend upon the result; that is, he may be wrong in his contention, but nevertheless he has the right to invoke the aid of the courts to make it”). “So long as the plaintiffs allege, in good faith, an ultra vires or illegal act by the State or one of its officers, as was done here, such allegations are sufficient to confer taxpayer standing doctrine, so as to entitle the plaintiff to get its foot in the courthouse door and receive potentially a merits hearing.”  State Center, 438 Md. at 556, 92 A.3d at 462.


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