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Author Archives: Harry Styron

Missouri’s Sunshine Law overrides confidentiality clause in settlement agreement and advice of counsel

On advice of its attorney, the Robinwood South Community Improvement District refused to provide a copy of a settlement agreement to John P. Strake, a member of the public who requested it.  Strake sued and filed a motion for summary judgment, stating that there was no fact question regarding whether the settlement agreement (relating to a personal injury suit) was a public record; Strake also wanted the imposition of a civil penalty and the recovery of his costs and attorney fees.

On November 10, 2015, a unanimous Missouri Supreme Court in Strake v Robinwood West Community Improvement District held that the District’s reliance on its attorney’s advice to not disclose the settlement agreement did not shield the District from being held liable for knowing and purposeful violations of the Sunshine Law.

The trial judge in St. Louis County ordered the District to provide a copy of the settlement agreement. But the trial judge also entered a judgment in favor of the District, denying the civil penalty, attorney fees and costs that were sought by Strake for the District’s knowing and purposeful violation of the Sunshine Law. The trial judge’s order did not explain why exactly she declined to impose the penalty and award costs and attorney fees, noting only that the District “was relying on the advice of counsel to avoid a lawsuit for breach of contract.”

When a city or other unit of local government enters into a settlement agreement to end a lawsuit,  officials often don’t want to encourage additional claims by disclosing how much was paid to make the plaintiff go away. Most settlement agreements contain a confidentiality clause, which may contain penalties for disclosure of the settlement terms, unless ordered by a court before the settlement is final.

Private corporations are no different, but governmental bodies in Missouri have to follow the Sunshine Law, which is Missouri’s body of statutes that require disclosure of most kinds of public records, as well as requiring that meetings of governmental business be conducted in public meetings. Some kinds of governmental records may properly be closed for a time–such as the details of negotiations to buy or sell real estate or terms of proposed settlement offers in litigation–but these records must eventually become public, unless a court determines that they should remain closed. The Sunshine Law specifies very limited grounds for keeping settlement agreements closed, not allowing courts to conceal the amounts paid by or to the governmental body.

A governmental body that knowingly violates the Sunshine Law may be penalized up to $1,000, plus paying the court costs and attorney fees of the party requesting the records. The penalty is up to $5,000 if the governmental body purposely violates the Sunshine Law, which requires proof that the governmental body had “a conscious design, intent or plan” to violate the law “with awareness of the probable consequences.” The District’s attorney had advised the District that “the most prudent course” was to refuse the request to produce the settlement agreement, while pointing out the statute that required the disclosure of the settlement agreement, apparently fearing that the consequences of breaching the confidentiality clause might be more serious than the consequences of violating the Sunshine Law.

The District’s attorney’s advice provided a basis for the Supreme Court to conclude that the District had actual knowledge of its obligations under the Sunshine Law to give the settlement agreement to Strake and the consequences of not doing so, such that its decision to withhold the settlement agreement was a purposeful violation.

The American Civil Liberties Union provided legal counsel to Strake. Those who criticize the ACLU for many of its activities should recognize that the ACLU’s action in this case was non-partisan and strongly in support in openness in government. The Missouri Press Association also participated in the appeal.



Indemnity clause in commercial lease does not allow recovery of attorney fees by tenant

A person who is fired up about filing a lawsuit believes he will win and will recover his attorney fees. Lawyers in Missouri and most of the United States have to throw cold water on the prospective client, because attorney fees are not generally recoverable unless provided for by a statute or a contract between the warring parties. This is called the American Rule, apparently because the general rule is different in other countries, where the rule is “loser pays.”

I was surprised to read today an imaginative litigant had been able to convince a trial judge that an indemnity clause in a lease of commercial property would support an attorney fee award. The case is Morris Branson Theatre v. Cindy Lee LLC.

The appeals court reversed the trial court’s judgment in favor of a tenant, finding that the landlord had failed to adequately repair the leased premises from tornado damage. The trial court also ordered the landlord to pay the tenant’s legal fees, on the basis of a clause in the lease that required each party “pay, protect, indemnify and save harmless” each other from liabilities arising out of the other party’s violation of the lease. This language is typical for an indemnity clause.

The appeals court sent the case back to the trial court for additional findings of fact, based on the appeals court having determined that the definition for “premises” applied by the trial court was too broad.

Because the trial court’s judgment in favor of the tenant was set aside by the appellate court, the attorney fee award was also reversed as being moot. Anticipating that the same issue would arise again when the trial court addressed the case again (unless the parties choose to settle), the court of appeals advised the landlord and tenant and trial judge that the indemnity clause is only to be applied when landlord or tenant is required to defend a claim made by another party. The indemnity clause does not apply to litigation between the landlord and tenant.

Even though people in the Ozarks sometimes think they are quite exceptional, the court of appeals let this landlord and tenant and a trial judge know that the American Rule still applies.

Missouri Court of Appeals upholds architectural committee’s ban on outbuildings

Stanley Sellers bought a home in Woodfield subdivision and wanted to build an outdoor kitchen. He applied to the Woodfield property owners’ association’s architectural committee, which approved his plans. Without asking for approval, he then built a storage building in his yard. The POA told him that the architectural committee had adopted a rule that prohibited storage and utility buildings. Sellers asked the POA and the architectural committee to change its rules or grant him a waiver, which did not happen.

(For clarification, the document that is referred to here as “covenants” is also referred to as a “declaration” or “subdivision restrictions” or “covenants, conditions and restrictions” or “master deed” or “subdivision indenture,” depending on where you are. An association of lot owners is called a property owners’ association (POA) or homeowners’ association (HOA). “Architecture committees” are sometimes called “architectural control committees (ACCs) or design review committees (DRCs), or some other variation.)

Sellers sued, arguing that the rule against storage buildings  was invalid, because Missouri law prohibits adoption of additional subdivision covenants (“new burdens”) without unanimous approval of all lot owners, unless the covenants permit addition of new burdens on real estate by less than unanimous consent. The trial court ruled for the POA, indicating that the covenants in place before Sellers’ purchase of a lot empowered the POA to regulate “accessory structures” and allowed the architecture committee to make “guidelines and policies for the development and [sic] a residential community which is harmonious and aesthetically pleasing.” Thus the prohibition of storage buildings was a burden within the scope of the recorded covenants rather than the imposition of a new burden.

The appeals court’s decision in Sellers v. Woodfield POA, upholding the trial court’s decision, makes a few points worth remembering:

  • A court reviewing the decision of an architectural committee reviews only for reasonableness and does not substitute its opinion (for the architectural committee’s opinion) as to harmony or disharmony.
  • It doesn’t matter whether the homeowner was aware of the requirements. Though the court of appeals didn’t explain this, a purchaser of a lot is deemed as a matter of law to have knowledge of subdivision covenants applicable to the lot, if the covenants are recorded.
  • If the covenants authorize the POA or the architecture committee to make additional rules not in the recorded covenants, the lot purchaser also is deemed to have notice of this rulemaking authority and should ask about the existence of additional rules.

Missouri appeals court reverses trial court, slaps down bank that manipulated HOA

The Missouri Supreme Court, on June 30, 2015, reversed much of this Court of Appeals decision discussed in this post, reinstating the judgment of the trial court, after determining that Jefferson Bank’s amendment of the covenants was proper. The amendment removed the requirement that the HOA’s board members be residents; the Supreme Court reasoned that unanimous consent of the lot owners was not required since the nature of the amendment was to remove rather than add a restriction.

After the real estate bubble burst, many Missouri banks ended up owning a majority of lots in subdivisions, standing in the shoes of the developers–the banks’ previous customers. Banks face many challenges in their effort to sell the lots that they had to take through foreclosure; not the least is high-end architectural standards imposed by the original developer that seem unworkable in this more austere era.

Jefferson Bank & Trust found itself in this fix after it became the owner of 13 of the 18 lots in the Arbors at Sugar Creek subdivision. In 2005, the developer had recorded covenants that gave the board of the homeowners’ association (HOA) approval rights over any new construction. The owners of the five existing homes  protested when the bank and its new partner proposed to build what the homeowners characterized as “tract houses.”

Because the original HOA had been dissolved by the Missouri Secretary of State for failing to file annual reports, the bank formed a new HOA and recorded a new declaration of covenants, since it had more than 67% of the voting power, as required by the old declaration for amendment. The new declaration eliminated the old declaration’s requirement that HOA board members be residents, and the bank appointed its executives to be the new board.

After a bunch of wrangling in court, the trial court ruled that the new HOA was legitimate, that the new board acted reasonably in approving the new building plans, asking that the HOA reimburse the bank for subdivision maintenance costs paid by the bank, and awarding other damages against the lot owners.

The appeals court in this October 28, 2014 decision, agreed that the new HOA was the successor to the old HOA, but threw out the rest of the trial court’s judgment, to find that the bank acted in bad faith, having

  • relied on its acquisition of majority voting power to unilaterally deny homeowners the benefit of self-governance that they received under the original declaration
  • used its command of the subdivision’s affairs to advance in own financial interest in redeveloping the subdivision in a manner contrary to the wishes of the newly disenfranchised residents
  • violated the implied covenant of good faith and fair dealing by amending the declaration and removing the residency requirement for board members so it could appoint its own executives to the board.

Having stacked the board of the new HOA, the appeals court ruled “all the board’s subsequent actions are null and void,” including the approval of development plans submitted by the bank’s partner.

The critical factor here is the requirement of the original declaration that the HOA board members be residents. The overreaching on this issue tainted everything else that the bank did.

It’s unusual to see a court roll over a bank in favor of homeowners. My guess is that the Missouri Supreme Court will be asked to review this decision.

Quitclaim deed to living trust can terminate title insurance coverage and trigger legal malpractice claim

When my clients discovered that a neighbor’s deed included a strip of land across their driveway, I advised them to make a claim on their title insurance policy. The claim was denied, not because it wasn’t real, but because my clients had inadvertently terminated their policy of title insurance by conveying their land to their living trust by quitclaim deed rather than by warranty deed.

Title insurance in the United States is usually issued on policy forms created by the American Land Title Association (ALTA), which are adapted for each state. Before the adoption of the 2006 ALTA title insurance form, when the insured conveys all its interest in the real estate without warranty, the owner’s policy of title insurance terminates.

The primary way of conveying title insurance without warranty is by quitclaim deed, which is a common way of conveying property when payment is not made. How this custom developed, I don’t know, but it can be devastating if there is an ownership dispute.

The 2006 ALTA owner’s policy form includes living trusts as insureds under the title insurance policy, but most owner’s policies of title insurance are made on pre-2006 forms.

A lawyer setting up a living trust–or preparing a conveyance of a gift of real estate to a relative, a church or another charity–has two choices to avoid potential malpractice liability:

  • review the existing owner’s policy of title insurance to make sure that the conveyance won’t leave the the client unprotected if an ownership dispute pops up.
  • avoid using quitclaim deeds except with respect to property that the client never owned and other very limited circumstances.


Damming the Osage

Damming the Osage: The Conflicted Story of Lake of the Ozarks and Truman Reservoir by Leland and Crystal Payton.
Published by Lens & Pen Press, 4067 Franklin, Springfield MO 65807, $25 postpaid.

dto-cover-720Leland and Crystal Payton, prolific authors of books with lots of photographs about the history and culture of the Ozarks and about American culture generally, have tackled the history of human use and transformation of the Osage River. Their focus is on the political and financial machinations which resulted in the construction of Bagnell Dam and Truman Dam and their impoundments in the along the northwestern boundary of the Missouri Ozarks. Their original photographs and reproductions of graphics from newspapers, maps, magazines and advertising materials, provide a collage of images of the area before and after its transformation, as well as the images created by promoters of how it might look.

The book covers the history of the residents of Osage basin, from prehistory to the present. From its origin in eastern Kansas to Bonnots Mill, the Osage flows through prairies along the northern Ozarks border into the Missouri River, at a point seven miles east of Jefferson City. Many and diverse primary sources, such as the writings of explorers and newspaper accounts, as well as the work of archaeologists, historians and other social scientists, make the book a rich trove.

The theme of book is consistent with my own take on the history of the development of North America over the past five centuries, which is that development has been driven by the opportunities created by government investment for private investors seeking wealth through the subdivision of real estate and exploitation of natural resources. George Washington was a land surveyor, as was Thomas Jefferson’s father Peter. The Washingtons, the Jeffersons and other promoters–working hand in hand with the government–used every public and private resource they could muster to carve up the Appalachian frontier and beyond into reservations, territories and states for private and public gain. Eventually, the whole country became subdivided. In the case of the valley of the Osage River, the land was divided into lake lots and condo units and multi-purpose reservoirs.

Bagnell Dam and Lake of the Ozarks

The Paytons identify Ralph Street, an “obscure Kansas City lawyer,” and Walter Craven, a mortgage banker also from Kansas City, as the fathers of Lake of the Ozarks. Street and Craven wangled a construction permit from the Federal Power Commission for the Bagnell Dam in 1924 and began acquiring options to buy land. The FPC and the Missouri Public Service Commission awarded permanent licenses for the project in 1926 to Craven, who transferred the licenses to Union Electric in 1929, after Craven failed to obtain construction financing.

Unlike other popular accounts of dam-building in the Ozarks, the Paytons pay careful attention to what existed at various times before the construction destroyed towns (Linn Creek) and roads that connected towns, cutting off neighbors from one another. The occupation by Osage Indians is described, as well as the vain attempts to modify the river to enhance navigation in the steamboat era. Later, the valley was the pathway of railroads, many of them unsuccessful. Some sites, such a Monegaw Springs in St. Clair County and Ha Ha Tonka in Camden County, were beautiful places that captured the dreams of real estate salesmen and promoters of tourism.Caplinger Mills

Once Bagnell Dam was completed in 1931, a particular flavor of tourist development was created around Lake of the Ozarks, remnants of which may be seen along the old parts of Missouri Highway 7 and US Highway 54 that have been bypassed by newer roads. The Paytons give us color and black-and-white reproductions of tourist pottery, wood carvings, fieldstone cabins, and garish billboards, as well as the intense condo development that came in the past two decades.

Truman Dam and Truman Lake

Though the Corps of Engineers had opposed the construction of dams, including Bagnell Dam, by private companies, the Corps did not have a clear legislative mandate to build dams for flood control, hydropower, and irrigation, though it had always been engaged in construction and maintenance of levees and drainage of wetlands. In 1926, Congress asked the Corps to study 180 rivers and their tributaries to examine the feasibility of federal construction of reservoirs. The Corps’ report on the Osage basin, delivered in 1933, proposed dams on Pomme de Terre, the Osage River above Osceola, and the Grand River just north of its confluence with the Osage. In 1944, FDR approved the Pick-Sloan Plan for development of the Missouri River basin, and the dams on the upper Osage were among the 107 dams authorized.

Pointing out that “Civic organizations in Warsaw, Clinton and Osceola were convinced that a dam, any dam, anywhere on the Osage would guarantee prosperity,” the Paytons designate Haysler A. Poague, a judge in Clinton, as the “stepfather” of the Truman Dam. Poague became an advocate of one large dam at Kaysinger Bluff near Warsaw, rather than the two smaller dams proposed by the Corps in 1933.

A massive flood in 1951 convinced Congress and the public that spending money to put people to work and to control and store water was worth doing; the Paytons do not point out that the most severe drought in recorded history followed the 1951 flooding, which surely added to the public support for a water project. However, funding of the project was delayed other priorities—the Vietnam War and the War on Poverty, according to the Paytons—but the land acquisition and construction began in the mid-1960s. In 1972, just as work was beginning on the dam, the Environmental Defense Fund, the Missouri chapter of the Wildlife Society, and several other organizations and citizens, including Leland Payton, filed suit in federal court seeking to stop the construction of the project.

The National Environmental Policy Act of 1969 (NEPA) required federally funded projects to be preceded by meaningful environmental impact statements, giving environmentalists a tool to challenge the adequacy of the investigation of ecological impacts of projects. In the case of the Truman Dam, the opponents were concerned about the fate of the paddlefish, among other issues, and could also point out that the cost-benefit analysis provided by the Corps strained to show net economic benefits.

The final third of Damming the Osage depicts the political and legal wrangling over whether Truman Dam and its impoundment would be completed.
Missouri’s congressional delegation led by Senator Stuart Symington, members of the state legislature, and virtually all local officials, as well as chambers of commerce, supported the project, even though biologists and many farmers opposed it.

While the town of Clinton seems to have held its own, most of the Truman Lake area has continued to decline. Missourians have had to cope with the negatives. The Missouri Department of Conservation learned to raise paddlefish in hatcheries, so that they would not be extirpated in the Osage basin. Engineering oversights resulted in fish kills below Truman Dam and massive erosion below Stockton Dam on the Sac River, a major tributary of the Osage, which required additional land acquisition and bank stabilization.

During the same era, the Corps of Engineers’ will and ability to marshal support for dam projects seems to have ended. The Endangered Species Act of 1973 provided environmentalists with stronger arguments. After tremendous fights, Congress deauthorized dam projects on the Meramec River in Missouri and the Buffalo River in Arkansas, as elected officials listened to a broader swath of their constituents and began to question the wisdom of destroying the last few free-flowing rivers.

The Paytons have captured the spirit of the times the book covered. The text is thorough and the images are vivid. While Leland Payton was clearly opposed to the construction of Truman Dam, the positions of the proponents are fairly explained. Damming the Osage is an essential chronicle of how dams and reservoirs gain momentum and get built, even though they make sense perhaps for only a minority.Truman Dam

Obtaining copies of Missouri surveys and plats online

Wilsons Lake plat

Getting a copy of an old subdivision plat or survey isn’t difficult, but it can require a visit to a county recorder’s office, which may or may not have the ability to print the plat or survey on one sheet of paper or to give it to you in electronic form.

Thanks to a website managed by the Missouri Department of Agriculture, called the “Land Survey Index,”, anybody with an internet connection can search for recorded surveys and plats of land anywhere in Missouri and download the documents for a dollar each, plus a one dollar processing fee.

If you need a certified copy, you will still need to visit with the county recorder.


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