Small v. Federal Nat'l Mortgage Ass'n ( 2013 )

PRESENT: All the Justices
JEFFREY S. SMALL, AS CLERK OF
THE CIRCUIT COURT OF THE CITY
OF FREDERICKSBURG, VIRGINIA,
INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED
OPINION BY
v. Record No. 130317 CHIEF JUSTICE CYNTHIA D. KINSER
SEPTEMBER 12, 2013
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
A/K/A FANNIE MAE, ET AL.
UPON A QUESTION OF LAW CERTIFIED BY THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
The United States District Court for the Eastern District
of Virginia entered an order of certification requesting that
this Court exercise jurisdiction pursuant to Article VI, Section
1 of the Constitution of Virginia and Rule 5:40, and answer the
following questions of law:
1.) Under Virginia law, does a clerk of
court possess statutory standing to
initiate a lawsuit, in his official
capacity, to enforce the real estate
transfer tax on the recording of
instruments?
2.) If a clerk of court does possess
authority to bring suit in his official
capacity as described in Certified
Question No. 1, does Virginia law
authorize him to do so as a class
representative on behalf of all clerks
of court throughout the Commonwealth?
Because the ministerial duties of a clerk of court do not extend
to enforcing the state taxes at issue, we answer the first
certified question in the negative and accordingly do not
address the second certified question.
RELEVANT FACTS AND PRIOR PROCEEDINGS 1
Jeffrey S. Small, in his official capacity as clerk of the
Circuit Court of the City of Fredericksburg, filed a putative
class action in the United States District Court for the Eastern
District of Virginia (the federal district court) against the
Federal National Mortgage Association (Fannie Mae), and the
Federal Home Loan Mortgage Corporation (Freddie Mac). 2
Purporting to represent the class of all clerks of court in the
Commonwealth, Small alleged that Fannie Mae and Freddie Mac had
failed to pay the taxes imposed by Code §§ 58.1-801 and -802.
Code § 58.1-801 levies "[o]n every deed admitted to record,
except a deed exempt from taxation by law . . . a state
recordation tax." Code § 58.1-802(A) imposes an additional tax,
to be paid by the grantor, "on each deed, instrument, or writing
by which lands, tenements or other realty sold is granted,
assigned, transferred, or otherwise conveyed to, or vested in
1
The pertinent facts are taken from the certification order
in Small v. Federal National Mortgage Ass'n, No. 3:12CV487-HEH
(E.D. Va. Feb. 20, 2013).
2
The term "clerk of court" as used in the certified
questions and in this opinion refers to the position created by
Article VII, Section 4 of the Constitution of Virginia.
2
the purchaser, or any other person, by such purchaser's
direction." 3
Small further alleged that Fannie Mae and Freddie Mac had
improperly claimed exemption from paying the taxes as
governmental entities. Small requested that the federal
district court certify the class action and prayed for, among
other things, a declaratory judgment holding that the defendants
are not exempt governmental entities and are therefore required
to pay the real estate transfer taxes when recording
instruments.
Among other defenses, Fannie Mae and Freddie Mac asserted
that Small lacked the authority as clerk of court to bring an
enforcement action under Code §§ 58.1-800, et seq. The federal
district court ordered the parties to brief the issue and, after
reviewing the parties' arguments, determined that no controlling
authority on the question exists. The court stated:
Clearly, a clerk of court is vested with the
ministerial duty to assess and collect Virginia's
recordation tax whenever he records a deed. But,
he is not explicitly authorized to initiate an
enforcement action under Virginia law. . . . This
Court has found no controlling authority
interpreting the applicable statutes, one way or
the other.
Pursuant to Rule 5:40(a), a certified question must be
"determinative in any proceeding pending before the certifying
3
In this opinion, we will refer to both taxes collectively
as the "real estate transfer taxes."
3
court." The certified questions in this case are determinative
because if Small does not have standing to bring the action
against the defendants to enforce collection of the real estate
transfer taxes, the case will be dismissed. Accordingly, we
accepted the certified questions of law by order entered
February 28, 2013.
ANALYSIS
The first certified question asks whether Small has
"statutory standing." Under federal law, the concept of
statutory standing "applies only to legislatively-created causes
of action and concerns whether a statute creating a private
right of action authorizes a particular plaintiff to avail
herself of that right of action." CGM, LLC v. Bellsouth
Telecomm., Inc., 664 F.3d 46, 52 (4th Cir. 2011) (internal
quotation marks omitted). "[T]he statutory standing inquiry"
addresses "whether the plaintiff 'is a member of the class given
authority by a statute to bring suit.'" Id. (quoting In re
Mutual Funds Inv. Litig., 529 F.3d 207, 216 (4th Cir. 2008)).
The inquiry at the heart of statutory standing is whether the
legislature "has accorded this injured plaintiff the right to
sue the defendant to redress his injury." Graden v. Conexant
Sys. Inc., 496 F.3d 291, 295 (3rd Cir. 2007); see Steel Co. v.
Citizens for a Better Env't, 523 U.S. 83, 97 n.2 (1998)
(statutory standing deals with "whether this plaintiff has a
4
cause of action under the statute"). Determining whether a
plaintiff has statutory standing is therefore "simply statutory
interpretation." Graden, 496 F.3d at 295; see also Washington-
Dulles Transp., Ltd. v. Metropolitan Washington Airports Auth.,
263 F.3d 371, 377 (4th Cir. 2001) ("[W]hether [the legislature]
intended to confer standing on a litigant . . . to bring an
action under [the statute at issue] is essentially one of
statutory construction.").
Although the term "statutory standing" does not appear in
this Court's jurisprudence, the concept does. "The purpose of
requiring standing is to make certain that a party who asserts a
particular position has the legal right to do so and that his
rights will be affected by the disposition of the case."
Goldman v. Landsidle, 262 Va. 364, 371, 552 S.E.2d 67, 71
(2001); see also Livingston v. Virginia Dep't of Trans., 284 Va.
140, 154, 726 S.E.2d 264, 272 (2012) (same). When a plaintiff
files an action under a particular statute, as Small has done
here, the standing inquiry does not turn simply on whether the
plaintiff has "a personal stake in the outcome of the
controversy," Goldman, 262 Va. at 371, 552 S.E.2d at 71, or
whether the plaintiff's "rights will be affected by the
disposition of the case." Livingston, 284 Va. at 154, 726
S.E.2d at 272 (quoting Westlake Props. v. Westlake Point Prop.
Owners Ass'n, 273 Va. 107, 120, 639 S.E.2d 257, 265 (2007)).
5
Rather, the plaintiff must possess the "legal right" to bring
the action, which depends on the provisions of the relevant
statute.
The Court's analysis in Concerned Taxpayers v. County of
Brunswick, 249 Va. 320, 455 S.E.2d 712 (1995), is illustrative.
There, the plaintiffs brought a suit to enforce provisions of
the Virginia Public Procurement Act, Code §§ 11-35 to -80 (the
Procurement Act). Id. at 330, 455 S.E.2d at 718. Because the
Procurement Act "provide[d] remedies for individuals or entities
who have been denied rights conferred by the [Procurement] Act,"
the Court examined those statutes to determine whether the
plaintiffs had standing. Id. The Court concluded that the
plaintiffs were "not among those afforded remedies" under the
Procurement Act and thus lacked standing to assert violations of
it. 4 Id.
Small asserts statutory standing in his capacity as clerk
of court. The position of clerk of court, among others, is
created by Article VII, Section 4 of the Constitution of
Virginia. Section 4 states that the "duties and compensation of
4
For examples of other statutes that confer "a legal right"
on a particular plaintiff to institute an action, see Code §§
8.01-50(C) (allowing personal representative of a deceased
person to bring an action for wrongful death); 15.2-2314
(conferring standing on certain aggrieved persons to appeal a
decision of a board of zoning appeals); 55-79.80(B) (permitting
condominium unit owners' association to litigate any actions
related to common elements); 59.1-204(A) (defining who may bring
a private action under Virginia Consumer Protection Act).
6
such officers," including clerks, "shall be prescribed by
general law or special act." Va. Const. art. VII, § 4. As is
true with other constitutional officers established by Article
VII, Section 4, the "duties of a clerk are prescribed by
statute." 5 First Virginia Bank-Colonial v. Baker, 225 Va. 72,
80, 301 S.E.2d 8, 12 (1983).
This Court has consistently characterized the duties of a
clerk of court as "ministerial" in nature. Town of Falls Church
v. Myers, 187 Va. 110, 119, 46 S.E.2d 31, 36 (1948); Harvey v.
Chesapeake & Potomac Tel. Co., 198 Va. 213, 218, 93 S.E.2d 309,
313 (1956); see also Patrick v. Commonwealth, 115 Va. 933, 935-
38, 78 S.E. 628, 629-30 (1913) (holding clerk of court acted
outside scope of express statutory authority by drawing and
placing more names on a venire facias than permitted by the
applicable statute); Page v. Taylor, 16 Va. (2 Munf.) 492, 498-
99 (1811) (holding clerk not liable for non-execution of a bond
because his duties did not extend to taking the bond, a judicial
act to be done in open court). By definition, ministerial acts
are non-discretionary. See Black's Law Dictionary 28 (9th ed.
2009); Moreau v. Fuller, 276 Va. 127, 135, 661 S.E.2d 841, 845-
46 (2008) ("A ministerial act is one which a person performs in
a given state of facts and prescribed manner in obedience to the
5
See Hilton v. Amburgey, 198 Va. 727, 729, 96 S.E.2d 151,
152 (1957) (sheriffs); McGinnis v. Nelson County, 146 Va. 170,
172, 135 S.E. 696, 697 (1926) (commissioners of revenue).
7
mandate of legal authority without regard to, or the exercise
of, his own judgment upon the propriety of the act being done.")
(internal quotation marks omitted).
According to Small, his authority to bring an action to
enforce the collection of unpaid real estate transfer taxes
derives from Code §§ 58.1-801 and -802 and other statutes
addressing those taxes. Whether those provisions impose a
ministerial duty to bring such an action, i.e., whether Small
has statutory standing, is thus a question of statutory
interpretation.
As with all issues of statutory interpretation, we are
bound by the plain language of the statutes at issue. Jenkins
v. Mehra, 281 Va. 37, 47, 704 S.E.2d 577, 583 (2011). "[W]e
examine a statute in its entirety, rather than by isolating
particular words or phrases." Cummings v. Fulghum, 261 Va. 73,
77, 540 S.E.2d 494, 496 (2001). "It is a cardinal rule of
construction that statutes dealing with a specific subject must
be construed together in order to arrive at the object sought to
be accomplished." Alston v. Commonwealth, 274 Va. 759, 769, 652
S.E.2d 456, 462 (2007) (internal quotation marks omitted). In
addition, "[o]ne of the basic principles of statutory
construction is that where a statute creates a right and
provides a remedy for the vindication of that right, then that
remedy is exclusive unless the statute says otherwise." School
8
Bd. of the City of Norfolk v. Giannoutsos, 238 Va. 144, 147, 380
S.E.2d 647, 649 (1989); see First Am. Title Ins. Co. v. Western
Sur. Co., 283 Va. 389, 397, 722 S.E.2d 637, 640 (2012) (holding
that the Virginia Consumer Real Estate Protection Act's express
remedies for violations of the statute did not include a private
cause of action against a surety and the surety bond).
Certain principles govern our review of the tax statutes at
issue here. "Taxes can only be assessed, levied and collected
in the manner prescribed by express statutory authority." City
of Richmond v. SunTrust Bank, 283 Va. 439, 442, 722 S.E.2d 268,
270 (2012) (internal quotation marks omitted). "'[A]n executive
officer who seeks to enforce a tax must always be able to put
his finger upon the statute which confers such authority.'" Id.
(quoting Commonwealth v. P. Lorillard Co., 129 Va. 74, 82, 105
S.E. 683, 685 (1921)). The General Assembly alone "determin[es]
what machinery shall be exercised in carrying out the provisions
of a law authorizing the imposition of taxes." P. Lorillard
Co., 129 Va. at 81, 105 S.E. at 685. Taxing statutes are
"construed most strongly against the government and are not to
be extended beyond the clear import of the language used." City
of Lynchburg v. English Constr. Co., 277 Va. 574, 583, 675
S.E.2d 197, 201 (2009) (internal quotation marks omitted).
Title 58.1 of the Code governs taxation in the
Commonwealth. Within that title, the General Assembly
9
separately addressed three types of taxes, each in its own
subtitle: "Taxes Administered by the Department of Taxation,"
(Subtitle I); "Taxes Administered by Other Agencies," (Subtitle
II); and "Local Taxes," (Subtitle III). 6 The real estate taxes
at issue in this case are found in Chapter 8 of Subtitle I,
titled "State Recordation Tax," Code §§ 58.1-800, et seq., and
are administered by the Department of Taxation (the Department).
As stated previously, Code § 58.1-801(A) levies a tax "[o]n
every deed admitted to record, except a deed exempt from
taxation by law," and Code § 58.1-802(A) imposes an additional
tax on each deed or other instrument by which realty is
conveyed.
Pursuant to Code § 58.1-812(A), "no deed, deed of trust,
contract or other instrument shall be admitted to record without
the payment of the tax imposed thereon by law" except as
otherwise provided in Chapter 8. The tax imposed under Code §
58.1-802(B) "shall be collected as provided in § 58.1-812 and
the clerk shall return taxes collected hereunder one-half into
the state treasury and one-half into the treasury of the
locality." With regard to the assessment and collection of the
real estate transfer taxes, Code § 58.1-812(B) states:
The tax on every deed, deed of trust,
contract or other instrument shall be
6
Title 58.1 also includes a fourth subtitle addressing the
State Lottery Tax.
10
determined and collected by the clerk in
whose office the instrument is first offered
for recordation. The clerk may ascertain the
consideration of the deed or of the
instrument, the actual value of the property
conveyed, and the qualification of the deed
or instrument for any exemption claimed by
inquiry, affidavit, declaration or other
extrinsic evidence acceptable to the clerk.
Clerks of court collecting taxes imposed under Code § 58.1-802
are "entitled to compensation for such service at five percent
of the amount so collected and paid." Code § 58.1-802(B); see
also Code § 58.1-3176.
Small contends his authority to file the enforcement action
arises from his affirmative duty, as clerk of court, to collect
the real estate transfer taxes. See Code §§ 58.1-802(B) and
-812(B). Small notes that clerks of court are compensated
according to the amount of real estate transfer taxes collected
and thus have "a personal stake" in their proper collection.
Because clerks of court cannot force the Department to bring
enforcement actions, Small argues, they cannot protect their
interests without the ability to file enforcement actions.
Finally, Small maintains that there is nothing inconsistent with
allowing both clerks of court and the Department to enforce
these tax statutes because, according to Small, the General
Assembly created a "multi-track system of tax collection." We
disagree with Small.
11
The General Assembly granted exclusive authority to the
Department to collect the real estate transfer taxes if they
remain unpaid for thirty days.
The Department may assess and collect any
tax imposed by this chapter[, i.e., Chapter
8,] which has remained uncollected for
thirty days. The Department, prior to
collecting such tax, shall give notice to
the clerk of court in whose office the tax
was to be collected. The Department may then
proceed to assess and collect the unpaid tax
in the same manner and by the same methods
used for the collection of any state tax
administered by the Department.
Any local tax collected hereunder in
conjunction with the collection of a state
tax by the Department shall be deposited
into the state treasury. The Comptroller
shall, by warrant drawn on the Treasurer of
Virginia, remit to the proper city or county
any amounts due to such city or county.
Code § 58.1-813. Thus, after notifying the clerk "in whose
office the tax was to be collected," the Department takes over
the collection of any unpaid taxes. Code § 58.1-813.
Moreover, the Department may assess and collect the unpaid
taxes "in the same manner and by the same methods used for the
collection of any state tax." Code § 58.1-813. The real estate
transfer taxes are state taxes. See Code §§ 58.1-800, et seq. 7
Chapter 18 of Subtitle I addresses the "Enforcement, Collection,
7
The General Assembly has authorized the governing body of
any city or county to impose "a city or county recordation tax
in an amount equal to one-third of the amount of state
recordation tax." Code § 58.1-814. This case does not involve
such a local recordation tax.
12
Refund, Remedies and Review of State Taxes." Code §§ 58.1-1800,
et seq. Under this Chapter, the General Assembly granted to the
Department and the Tax Commissioner numerous enforcement
mechanisms. Code § 58.1-1803 permits the Department to appoint
a collector in any jurisdiction to collect delinquent state
taxes that were "assessed at least 90 days" previously. The Tax
Commissioner is authorized to collect "by levy, by a proceeding
in court, or by any other means available . . . under the laws
of the Commonwealth" any tax imposed by Subtitle I. Code §
58.1-1802.1. Code § 58.1-1806 provides that
[t]he payment of any state taxes . . . may
. . . be enforced by action at law, suit in
equity or by attachment in the same manner,
to the same extent and with the same rights
of appeal as now exist or may hereafter be
provided by law for the enforcement of
demands between individuals. . . . Such
proceedings shall be instituted and
conducted in the name of the Commonwealth.
No provision in these or any other statutes expressly authorize
clerks of court to utilize such enforcement mechanisms to
collect unpaid real estate transfer taxes. See City of
Richmond, 283 Va. at 442, 722 S.E.2d at 270 ("Taxes can only be
assessed, levied, and collected in the manner prescribed by
express statutory authority.") (internal quotation marks
omitted).
Nevertheless, Small contends that the taxes at issue here
have a local character because the locality receives one-half of
13
the amount collected under Code § 58.1-802(A). See Code § 58.1-
802(B). Even so, the General Assembly specifically designated
the real estate transfer taxes as state taxes to be enforced by
the Department. Moreover, clerks of court are not authorized to
enforce local taxes either. Just as Chapter 18 of Subtitle I of
Title 58.1 addresses the enforcement of state taxes, Chapter 39
of Subtitle III provides for the enforcement and collection of
local taxes. Code §§ 58.1-3900, et seq. Mirroring Code § 58.1-
1806, Code § 58.1-3953 permits the use of "action[s] at law" to
enforce the payment of local taxes, and such proceedings "shall
be instituted . . . in the name of the county, city, or town in
which such taxes are assessed." Code § 58.1-3954. These
provisions bolster what is already apparent: the General
Assembly authorized the Department to enforce state taxes, and
localities to enforce local taxes. And in neither case is the
clerk of court authorized to collect unpaid real estate transfer
taxes by filing an enforcement action.
The statutory enforcement mechanisms for state and local
taxes also undercut Small's reliance on the word "collect[]" in
Code § 58.1-812. According to Small, Code § 58.1-812's command
that clerks of court "shall . . . collect[]" the real estate
transfer taxes is mandatory and encompasses the filing of an
enforcement action. Indeed, Small is compelled to construe Code
§ 58.1-812 in this manner in light of our holdings that the
14
duties of clerks of court are purely ministerial. See Harvey,
198 Va. at 218, 93 S.E.2d at 313. But, as the statutes for
collecting and enforcing state taxes make clear, filing an
enforcement action is necessarily discretionary. State
officials charged with enforcing the state taxes are given a
range of options for collecting unpaid taxes, including filing
enforcement proceedings. See Code §§ 58.1-1803 ("may appoint a
collector") (emphasis added); -1802.1 ("may be collected by
levy") (emphasis added); -1806 ("may . . . be enforced by action
at law . . . or by attachment") (emphasis added); see also
Harper v. Virginia Dep't of Taxation, 250 Va. 184, 194, 462
S.E.2d 892, 898 (1995) ("[T]he word 'may' is prima facie
permissive, importing discretion.") (internal quotation marks
omitted). Small asserts, therefore, that a clerk of court is
compelled to file an enforcement action for unpaid real estate
transfer taxes, while the Department has the discretion to do
so. This position is untenable as a matter of both statutory
interpretation and practicality.
Reading the statutory concept of "collect" in its entire
context, see Cummings, 261 Va. at 77, 540 S.E.2d at 496, we
conclude that to "collect" the real estate transfer taxes is a
purely ministerial act, as the federal district court noted.
When an instrument is offered for recordation, the clerk of
court "ascertain[s] the consideration of the deed or of the
15
instrument, the actual value of the property conveyed," and the
applicability of any exemption claimed. Code § 58.1-812(B).
The clerk of court then "determine[s] and collect[s]" the taxes.
Id. Under the statute, the clerk of court is prohibited from
recording the deed or instrument until the taxes have been paid
and no other action is authorized in the absence of payment.
Code §§ 58.1-802, -812(A). In contrast, Code § 58.1-813 directs
the Department to collect unpaid taxes, and expressly authorizes
the "manner and . . . methods" of enforcement outlined in
Chapter 18 of Title 58.1. See Newberry Station Homeowners Ass'n
v. Board of Supervisors, 285 Va. 604, 616, 740 S.E.2d 548, 554
(2013) ("[W]hen the General Assembly has used specific language
in one instance, but omits that language or uses different
language when addressing a similar subject elsewhere in the
Code, we must presume that the difference in the choice of
language was intentional.") (internal quotation marks omitted).
In sum, Small fails to "put his finger upon the statute"
which authorizes him to enforce the real estate transfer taxes.
See City of Richmond, 283 Va. at 442, 722 S.E.2d at 270
(internal quotation marks omitted). To imply from the word
"collect" the authority to file an enforcement proceeding would
"extend[] [Code § 58.1-812] by implication beyond the clear
import of the statutory language." Shelor Motor Co. v. Miller,
261 Va. 473, 478, 544 S.E.2d 345, 348 (2001). The General
16
Assembly "determin[ed] what machinery shall be exercised in
carrying out the provisions" of Code §§ 58.1-800, et seq. See
P. Lorillard Co., 129 Va. at 81, 105 S.E. at 685. That machine
is the Department. The Department's remedies for enforcing the
real estate transfer taxes are exclusive, and we will not imply
a power the General Assembly has not seen fit to grant. See
Giannoutsos, 238 Va. at 147, 380 S.E.2d at 649.
The first certified question asks whether "a clerk of court
possess[es] statutory standing to initiate a lawsuit, in his
official capacity, to enforce the real estate transfer tax on
the recording of instruments." For the reasons stated, we
answer that question in the negative. Because the second
certified question is premised on the first question being
answered affirmatively, we need not address the second certified
question.
Certified question one
answered in the negative.
JUSTICE McCLANAHAN, concurring in part and dissenting in part.
I agree with the majority's reasoning and conclusion with
respect to a clerk of court's statutory authority to sue to
collect alleged unpaid real estate transfer taxes. I disagree,
however, with the majority deciding that a clerk also does not
have statutory authority to file a declaratory judgment action
17
regarding a party's qualification for exemption from transfer
taxes, because that issue has not been put before the Court.
1
As the Court's opinion notes, "Small requested . . . among
other things, a declaratory judgment holding that the defendants
are not exempt governmental entities and are therefore required
to pay the real estate transfer taxes when recording
instruments." Indeed, Small's complaint contained three counts:
the first for defendants' alleged violations of Virginia's
statute imposing the real estate transfer taxes, the second for
unjust enrichment on the same basis, and the third for a
declaratory judgment "that the Defendants are not exempt from
payment of transfer taxes under state and/or federal law." In
the prayer for relief, Small separately requested "[t]hat the
Court enter judgment awarding the Plaintiff and the class
damages equal to the transfer taxes not paid" and a "judgment
declaring that the practice complained of herein is in violation
of law and that Defendants are subject to payment of the
transfer taxes and are not governmental entities or
1
Because the Court's holding with respect to a clerk's
standing to collect alleged unpaid transfer taxes is entirely
dispositive of that issue, the Court has the power under Rule
5:40(a) to answer the certified question. See Wyatt v.
McDermott, 283 Va. 685, 691, 691 n.1, 725 S.E.2d 555, 557-58,
557 n.1 (2012) (finding Rule 5:40(a) satisfied because the
certified question was "determinative" of plaintiff's one
tortious interference with parental rights claim among
plaintiff's "numerous" other pending claims, which included
conspiracy, fraud, and constructive fraud).
18
instrumentalities exempt therefrom or otherwise exempt therefrom
under law."
In its discussion framing the certified question to this
Court, 2 the federal district court focused on the collection of
taxes. Likewise, neither party argued to this Court whether a
clerk is or is not statutorily authorized to sue for a
declaratory judgment regarding a party's qualification for
exemption from the transfer taxes.
The majority's position is that its opinion decides this
unargued issue, because it believes that Small's declaratory
judgment count seeks a ruling that the defendants were not
exempt at the time the relevant deeds were recorded and that
therefore the declaratory judgment count is a part of, not a
separate claim from, Small's claims to collect the alleged
unpaid taxes. Thus, the majority's analysis subsumes and
decides the issue of whether Small has statutory standing to
pursue declaratory relief.
Small's counts seeking to collect the alleged unpaid taxes
and Small's count for a declaratory judgment ask a court to
consider the defendants' qualification for exemption; but their
similarity ends there. The issue in the collection counts is
2
The dispositive certified question asked: "Under Virginia
law, does a clerk of court possess statutory standing to
initiate a lawsuit, in his official capacity, to enforce the
real estate transfer tax on the recording of instruments?"
19
whether the defendants were exempt at the time they offered
instruments for recordation in the past. That determination, in
turn, would dictate whether the alleged unpaid taxes were
previously owed. In contrast, Small's declaratory judgment
count is future-looking by seeking to resolve the controversy
over defendants' exemption status that has not yet fully matured
into real injury. See Charlottesville Area Fitness Club
Operators Ass'n v. Albemarle Cnty., 285 Va. 87, 99, 737 S.E.2d
1, 7 (2013) (declaratory judgment proceeding is intended to
permit the declaration of rights before they mature).
Since success on his collection counts requires Small to
obtain a judgment that the defendants were not exempt in the
past, the majority's position that Small's declaratory judgment
count seeks the very same ruling renders that claim superfluous. 3
To the contrary, given the forward-looking nature of Small's
declaratory judgment count, as well as the high frequency with
which these defendants record instruments, the declaratory
judgment count seeks a separate ruling regarding the defendants'
3
For example, in a suit seeking damages for breach of
contract, plaintiffs are neither required nor permitted to file
a separate claim for a declaratory judgment that the defendant
breached the terms of the contract. Instead, plaintiffs simply
prove the breach as part of the legal claim for damages, and the
existence of a normal contract remedy makes declaratory relief
unavailable. USAA Cas. Ins. Co. v. Randolph, 255 Va. 342, 346,
497 S.E.2d 744, 746 (1998); Liberty Mut. Ins. Co. v. Bishop, 211
Va. 414, 421, 177 S.E.2d 519, 524 (1970); American Nat. Bank,
etc., Co. v. Kushner, 162 Va. 378, 386, 174 S.E. 777, 780
(1934).
20
exemption status going forward, so that the parties avoid the
almost certain disagreement that would spawn a new round of
litigation.
Moreover, while I agree with the Court's reasoning with
respect to a clerk's authority to file a claim to collect
alleged unpaid transfer taxes, that reasoning hardly yields the
majority's conclusion that a clerk does not have statutory
standing to file a declaratory judgment action regarding a
party's exemption status. The Court's opinion holds that a
clerk's statutory duty to "collect" transfer taxes under Code
§ 58.1-812(B) is ministerial and thus does not authorize the
discretionary act of suing to recover alleged unpaid taxes. In
the next sentence of the same statute, however, the General
Assembly provided that "[t]he clerk may ascertain . . . the
qualification of the deed or instrument for any exemption."
Code § 58.1-812(B) (emphasis added). As the Court's opinion
makes clear, where the General Assembly uses "may" it grants
discretionary authority. Since a clerk's duty to decide
exemption from the transfer taxes is discretionary, by the
Court's own reasoning, this discretionary authority arguably
empowers a clerk with statutory standing to file a declaratory
judgment action to determine a party's exemption. 4
4
Again, because this question was not before the Court, I
express no view on it.
21
Certainly, if Small were authorized to proceed on his two
collection counts, then his declaratory judgment count would be
rendered moot, since the issue of the defendants' exemption
would necessarily be decided on the merits as part of the
collection action. But because the Court today holds that Small
is without statutory standing to file such a collection action,
the issue of the defendants' qualification for exemption will
not be resolved in the course of those proceedings.
Despite Small's inability to obtain a decision regarding
defendants' exemption status through proving that they were not
exempt in the past, he seeks resolution of this issue going
forward through his declaratory judgment count. Of course, as a
clerk of court Small must have statutory standing to pursue this
form of action. Yet, this issue was not put before the Court,
and the reasoning in the Court's opinion does not logically
explain the majority's conclusion that a clerk is without such
statutory authority. Consequently, it remains an open question
whether a clerk is statutorily empowered to file a declaratory
judgment action regarding qualification for exemption and, in
turn, whether Small has statutory standing to litigate the
declaratory judgment count of his present federal action.
22