# VIRGINIA: In the Court of Appe als of Virginia on Tuesday 

### the 20th 

### day of February, 2018

.
Tesla, Inc., Appellant, against Record No. 1180-17-2 Circuit Court No. CL17-283 Virginia Automobile Dealer s Association, Appellee. Richard D. Holcomb, Commissioner, Department of Motor Vehicles, Commonwealth of Vir ginia, Appellant, against Record No. 1181-17-2 Circuit Court No. CL17-283 Virginia Automobile Dealer s Association, Appellee.

From the Circuit Court of the City of Richmond Judges Petty, Beales and AtLee Charles C. Lifland (John D. McGav in; Daniel M. Petrocelli; Rand y Oppenheimer; Anne E. Huffsmith; Bancroft, McGavin, Horvath & Ju dkins, P.C.; O’Melveny & Myers, LLP, on br iefs), for appellant Tesla, Inc. Jeffrey R. Allen, Senior Assistant Attorney General (Mark R. He rring, Attorney General; Eric K.G. Fiske, Speci al Counsel; Christian A. Parrish , Assistant Attorney General, on briefs), for appellant Richard D. Holcomb, Commissioner Department of Motor Vehicles , Commonwealth of Virginia. Brad D. Weiss (Michael G. Chara pp; Barrett C. Beaty; Charapp & Weiss, LLP on briefs), for appellee.

The Commissioner of the Virgini a Department of Motor Vehicles and Tesla, Inc. filed appeals with this Court challenging the circu it court’s order overruling the ir demurrers. The appellants argue that the circuit court erred in finding the appellee, Virginia Automobil e Dealers Association (VADA), has standing to file an appeal in the circuit co urt challenging a case decision by the Commissioner. VADA filed with this Court a motion to dismiss alleging t hat the order of the circui t court overruling the demurrers was not anPUBLISHED-2- appealable order and, thus, this Court lacks juri sdiction to re view the order. We conc lude this Court lacks jurisdiction to hear the appeal s, and we grant VADA’s motion to dismiss.
B ACKGROUND Tesla requested an evidentia ry hearing by the Commissioner to determine if it qualified under Code § 46.2-1572(4) to open a manufacture r-owned dealership in Richm ond, Virginia. A hearing officer appointed by the Commissioner granted VADA’s request to intervene in the proceeding. After a hearing, the hearing officer recommended that Tesla’s request for a dealership in Ri chmond be denied. Tesla requested review by the Commissioner. The Commissi oner ruled that Tesla qualified under Code § 46.2-1572(4) to open a dealership. Pursuant to C ode § 2.2-4026 of the Virginia Admini strative Process Act, VADA filed an appeal with the circuit court from the Commissioner’s case decision; t he appeal named the Com missioner and Tesla as appellees. The Commissioner a nd Tesla filed demurrers to th e action, arguing that VADA had no standing to appeal the Commissioner’s decision. In a June 26, 2017 orde r, the circuit court overruled the demurrers and ruled that VADA has standing as an aggrieved party to appea l the Commissioner’s decision. The order also granted VADA leave to ame nd the petition for appeal to inc lude two individual dealerships as petitioners. The circuit court did not reach the merits of VAD A’s claims of error. The Commissioner and Tesla filed an appeal of the circuit court’ s June 26, 2017 orde r pursuant to the Virgi nia Administrative Process Act. See Code 17.1-405(4).
A NALYSIS “The Court of Appeals of Virgini a is a court of limited jurisdi ction.” Commonwealth v. Lancaster, 45 Va. App. 723, 730, 613 S.E.2d 828, 831 (2005) (quoting Canova Electric C ontracting v. LMI Ins., 22 Va. App. 595, 599, 471 S.E.2d 827, 829 (1996)). “As a court of limited jurisdiction, ‘we have no jurisdiction over appeals except that grant ed us by statute.’” Id. (quoting Polumbo v. Polumbo, 13 Va. App. 306, 307, 411 S.E.2d 229, 229 (1991)). Pursuant to Code § 17.1-405(1) an d (4), the Court of A ppeals has appellate jurisdiction over “[ a]ny final decision of a circuit court on a ppeal from a decision of an administrative agency . . . [and] any interlocutor y decree or order . . . adjudicatin g the principles of a cau se.” Id. at 731, 613 S.E.2d-3- at 831. “[A] ‘final order’ is an order ‘that is dispositive of the entire case.’” Id. at 731, 613 S.E.2d at 831-32 (quoting Black’s Law Dictiona ry 1130 (8th ed. 2004)). Our juri sdiction to consider an i nterlocutory order is limited to those orders that adju dicate the principles of the c ause. Adjudicating the principles of a cause “mean[s] that the rules or met hods by which the rights of the p arties are to be finally worked out have been so far determined that it is only necessary to apply these rules o r methods to the facts of the case in order to ascertain the relative rights of the parties with regard to the subject matter of the suit.” Lewis v. Lewis, 271 Va. 520, 526, 628 S.E.2d 314, 317 (2006) (quoting Lancaster v. Lancaster, 86 Va. (11 Hans.) 201, 204-05, 9 S.E. 988, 990 (1889)). Thus, an interlocutory order adjudica ting the principles of a cause “must address ‘the chief object of the su it.’” de Haan v. de Haan, 54 Va. Ap p. 428, 439, 680 S.E.2d 297, 303 (2009) (alteration omitted) (quoting E rikson v. Erikson, 19 Va. App. 3 89, 391, 451 S.E.2d 711, 713 (1994)). An order adjudicating the principl es of the cause must address the merits of the suit. Generally, preliminary rulings, such as overruling demurrers and determini ng standing, do not address the merits and therefore cannot be orde rs that adjudicate the principles of th e cause. 1 Thrasher v. Lustig, 204 Va. 399, 403, 131 S.E.2d 286, 289 (1963). In Thrasher, T hrasher argued in th e lower court that Lus tig was not “a real party in interest,” i.e. did not have standing, to bring the underlyi ng suit and that a necessary party had not been joined. Id. at 401, 131 S.E.2d at 288. The lower court ruled Lustig did have standing to sue and gave Lustig leave to amend the complaint. Thr asher appealed the interlocut ory order; Lustig filed a motion to dismiss the appeal. Id. Holding that “the interlocutory decree under revi ew in no sense adjudicates the principles of the cause of this suit and it is not a ppealable,” the Supreme Court dismissed the appeal. Id. at 403, 131 S.E.2d at 289. The Court noted that “as a gene ral rule interlocutory dec rees or orders overruling motions as to joinder of parties, or a substitution of parties, are not appealable.” Id.; Richardson v. Bowcock, 213 Va. 141, 142, 191 S.E.2d 238, 238 (1972) (“An order overruling a demurrer is not one which adjudicates the principles of a

1 Of course, if the circu it court had found VADA did not have standing, and accordingly sustained the demurrer and dismissed the case , then the order would have been appealable as a final, rather than interlocutory, order . See Code § 17.1-405(1).-4- cause.”). The interlocutory d ecree regarding standing “settled none of the allegations in the bill of complaint.” Thrasher, 204 Va. at 403, 131 S.E.2d at 289. Furt hermore, “[t]he subject matter of the suit was still in the breast of the cour t and appellant was granted leav e to file his answer.” I d. The Court reasoned that the lower court’s preliminary or der merely determined that the case could proceed at that time and “merely deferred action until the evidence could be heard. . . . [A]t a ny stage of the cause as the ends of justice may require” the court could rec onsider its decision. Id. at 402-0 3, 131 S.E.2d at 289. 2 Here, the Commissioner and Tesla agree that the circuit court’ s June 26, 2017 order was not a final order, and it clearly i s not. Therefore, this Court has jurisd iction to hear appellants’ i nterlocutory appeals only if the circuit court’s orde r adjudicates the principles of the cause. Code § 17.1-405(4). The merits of VADA’s administrative appeal cen ter on its contention that the Commissioner committed error by finding Tesla qualifies for a dealer ship pursuant to Code § 46.2-1572(4 ). The circuit court’s June 26, 2017 order addressed VADA’s right to proceed with an appeal of the Commiss ioner’s decision and to amend its petition for appeal; it clearly did not a ddress, let alone adjudicate, V ADA’s assertion that the Commissioner erred. The circuit court’s decision tha t the VADA has standing merely determines that the case may proceed at this time. The subject matter of VADA’ s administrative appeal is st ill in the breast of the circuit court, and the court “as the ends of justice ma y require” may reconsider its d ecision. See Thrasher, 204 Va. at 403, 131

2 In evaluating appellants’ demurre rs, the circuit court here wa s required to accept as true the allegations in the VADA’s peti tion for appeal. See Desetti v. Chester, 290 Va. 50, 53, 772 S.E.2d 907, 908 (2015) (“For purposes of evaluati ng a demurrer, a court assumes that all material fac ts, implied facts[,] and reasonable inferences from thos e facts that are properly allege d in the [pleading] are tru e.” (first alteration in original) (quoting B rown v. Jacobs, 289 Va. 209, 212 n.2, 768 S .E.2d 421, 423 n.2 (2015))). Rule 2A:3 requires the agency secretary to “transmit the record to the cl erk of the court named in the notice of appeal” after the circuit “court has entere d an order overruling any motions , demurrers and other pleas filed by the agency.” Here, the circuit cour t did not have the agency recor d before it when it determined that the VADA was an aggrieved party for purposes of the Virginia Administrat ive Process Act. After the circuit court has reviewed the agency record a nd heard additional arguments on th e merits, it may reconsider whether VADA is an aggrieved party. Thrasher, 204 Va. at 403, 131 S.E.2d at 289. See also Chaplain v. Chaplain, 54 Va. App. 762, 770, 682 S.E.2d 108, 112 (2009) (“[A]ppeals from interlocutory orders are not favored in the law. ‘By their nature, interloc utory appeals are disruptive, t ime-consuming, and expensive. . . . They invite inefficiency, redundancy, and de lay.’” (quoting de Haan, 54 Va. App. at 441, 680 S.E.2d at 304 (internal citations omitted))).-5- S.E.2d at 289. Because the order clearly does not address the merits of the administra tive appeal, it does not adjudicate the principles of the cause. See id. Appellants, however, urge this Court to deny VADA’s motion to dismiss these appeals, to reverse the circuit court’s overruling of t heir demurrers, and to dismiss V ADA’s appeal of the Commissioner’s decision. They argue that if VADA is not a n aggrieved party then sovereig n immunity prevents VADA from challenging the Commissioner’s decision. While the legal princ iple is correct, the argument is circular because the argument prevails only if we reverse on the merits the circuit court’s or der. However, this is precisely what this Court doe s not have jurisdiction to do beca use here the circuit cour t’s interlocutory order regarding standing did not adjudi cate the principles of the cau se. Thus, even if we agreed with appellants that the circuit court er red in concluding VADA is an aggrieved part y for purposes of the Virginia Administrative Process Act, we simply have no sta tutory jurisdiction to review the trial court’s order at this point in the litigation. Lancaster, 86 Va. ( 11 Hans.) at 203-04, 9 S.E. at 989 (“It thus plainly appear s that the first, and perhaps, the only question we have to decide, is whether an app eal lies from such a decree. For unless this inquiry can be determined affi rmatively, the court has no elect ion, although, if it were permitted to examine the bill, it might be of opini on the bill was multifarious, or demurrable for misjoinder of parties, or that it should have been dismissed for wan t of jurisdiction, but must d ismiss the appeal.”).
C ONCLUSION The circuit court’s order overruling the demurrers filed by th e Commissioner and Tesla and granting leave for the Virginia Automob ile Dealers Association to amend its petition for appeal did not adjudicate the principles of the cause; it was thus not an appealable interloc utory order, and this Cour t has no jurisdiction to consider it. Accordingly, w e dismiss these appeals. This order shall be published a nd certified to th e circuit cou rt. A Copy, Teste: Cynthia L. McCoy, Clerk original order signed by a deputy clerk of the By: Court of Appeals of Virginia at the direction of the Court Deputy Clerk