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Category Archives: Missouri law

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 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.

Workers’ comp reform requires judges to decide whether an injury was caused by work, not just while at work

Near the end of a workday, Jason Pope’s supervisor asked him to move a motorcycle to a showroom on an upper level of the dealership where Jason worked.  He moved the bike to the upper showroom, then tripped walking down the stairs in the dealer’s building. In the fall, he fractured his ankle, which required surgery. He was off work for nine weeks and needed physical therapy over seven months.

Jason filed a workers’ compensation claim, which was denied because Jason failed to prove to the workers’ comp judge that his injury arose (1) out of his employment and (2) in the course of his employment. Under Missouri workers’ compensation law prior to 2005, an employee injured while on the job was not obligated to prove these two factors. Under the old law, workers’ compensation was administered under “no-fault”  system, in which the employer was usually liable unless the employer could show that the injury was not real or was not related to employment.

After the denial of Jason’s claim, he appealed to the Missouri Labor and Industrial Commission, which is a special court that hears appeals of decisions of administrative law judges in Missouri’s workers’ compensation system. The Labor and Industrial Commission reversed the administrative law judge’s decision, ruling the injury to be covered by workers’ comp. The employer then appealed to the Western District of the Missouri Court of Appeals, which issued its affirming opinion in  Pope v. Gateway to the West.

The 2005 changes to Missouri’s workers’ comp statutes took away the presumption in favor of coverage of employee injury claims. Part of the target of the “reform” was to prevent employers from paying for injuries that may have happened at work but which were not caused by the job. For instance, when an employee was walking across a parking lot and a “pop” occurred in his knee, the injury might not be covered by workers’ compensation, since it occurred in a normal life activity–walking–not as the result of a hazard or risk associated with the job.

In another situation arising after 2005, an employee was injured in a fall as she made coffee in a breakroom at work. Her medical records indicated that the employee’s shoes caused her to fall; the court held that the employee failed to prove that her injury was caused by a risk related to her employment.

The Western District framed the issue this way:

we consider whether Pope was injured because he was at work as opposed to becoming injured merely while he was at work.

The court sifted the facts that Jason presented, noting that Jason was following instructions from his supervisor to move motorcycles into the upper showroom. When he fell, he was on his way to check with his supervisor to make sure that he was done for the day. He couldn’t reach the supervisor without walking down stairs. His boots didn’t cause him to fall. His own physiology did not cause his injury. The court concluded that these facts  (and some others)

reasonably support a finding that Pope’s injury was causally connected to his work activity, i. e., a risk related to his employment as opposed to a risk to which he was equally exposed in his normal, non-employment life.


Before the 2005 amendments to the workers’ compensation statutes, the cause of Jason Pope’s injury would not have been an issue. The employer’s insurance company would have paid the same claim that it would have ended up paying, sooner though and without two appeals.

Policy should not be made on the basis of an isolated anecdote, such as this true story about Jason Pope.  As the number of similar cases accumulates, the workers’ comp insurance industry will be in a position to determine whether the 2005 reforms save money for employers and are of a general benefit to the economy. For now, there can be no question that the burden of the reforms falls on injured employees, some of them unable to work, and health care providers which are awaiting payment.










A deed can be ambiguous, even when its words are clear

“When you come to a fork in the road, take it,” said Yogi Berra, supposedly.

Judge Perigo did something similar in a boundary dispute case,  McLallen v. Tillman, arising on the Elk River in McDonald County, which occupies the southwest corner of Missouri. Like all streams in the Ozarks, the Elk River meanders through its floodplain, splitting and recombining, with seasonal floods shifting the arrangement of channels.

Several deeds said that the boundary of the property was a part of a quarter-section “lying North and West of Elk River.” The trial judge, taking the whole fork,  said that these deeds were not ambiguous, sustaining a motion for summary judgment.

The McLallens weren’t happy, because they thought that the eight acres lying between the north and south fork of the Elk River was theirs. Their neighbors claimed the same land. The McLallens appealed, claiming that the deed may be clear enough on its face, but that this language ignored the reality about the Elk River.

At that point, the Elk River splits into two channels, one carrying more water than the other. In 1984, at the time of one conveyance, the southern channel carried the most water. Sometime in the 1990s, the northern channel began to carry the most water. It’s safe to guess that one of the channels may even go dry during droughts.

The Missouri Court of Appeals reversed the summary judgment, sending the case back for a trial. The basis of the reversal is that the appeals court thought McLallen’s deed, while plain on its face, had a latent ambiguity, one that could be discerned from facts outside the words of the deed. The trial court should have heard evidence about which fork of the Elk River constituted its northern boundary, to determine which of two plausible interpretations of the deed would prevail.



St. Louis firm handles $662 collection case in West Plains, loses there and again on appeal. Why?

As we all know by now, you can often follow the money to the answer. Sometimes the trail is faint.

A one-car accident in Howell County, which sits on Missouri’s border with Arkansas about halfway across southern Missouri, resulted in a 911 call and the summoning of the Brandsville Fire Protection District (FPD) and the Missouri Highway Patrol and an ambulance. FPD personnel arrived at the scene and assisted with first aid and loading Jerry and Nina Phillips into ambulances.

FPD personnel remained at the scene for a couple of hours, providing traffic control while the wrecker loaded the Phillips’ car.

The FPD sued the Phillipses for an unpaid bill of $662. The bill was issued under the FPD’s ordinance allowing it to charge non-residents of the FPD for services. These charges are authorized by Missouri statute. When the bill wasn’t paid Read the rest of this entry

Missouri governor signs HB1103, giving courts power to order maintenance of “private roads”

The Missouri General Assembly enacted HB 1103 in the past 2012 regular session, which explicitly grants circuit court judges the authority to impose financial responsibility for maintenance of certain “private roads” onto parcels of real estate that benefit from these roads. Governor Nixon signed the bill into law on July 12, 2012. There are many problems with rural roads in Missouri. Simple questions–such as determining who owns the road, whether it is a subject to property taxes, who has the right to use it, and who is obligated to pay for its maintenance–are often impossible to answer. HB 1103’s provisions regarding private road maintenance change section 228.368 RSMo and add three new sections to Chapter 228 of the Revised Statutes of Missouri. This legislation is an attempt to solve the problem of nobody stepping forward to pay for road maintenance in situations in which no provision was made when the road was created. But its definition of “private road” greatly limits its applicability. According to the new section 228.341, a “private road” means “any private road established under this chapter or any easement of access, regardless of who created, which provides a means of ingress and egress by motor vehicle for any owner or owners of residences from such homes to a public road. A public road does not include any road owned by the United States or any agency or instrumentality thereof, or the state of Missouri, or any county, municipality, political subdivision, special district, instrumentality, or agency of the state of Missouri.” Got that? Read the rest of this entry


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