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Category Archives: Missouri

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.



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.


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.



Skills gap leaves Missouri manufacturing jobs unfilled

Manufacturing in the United States and the export of manufactured products from the United States is growing. If jobs could be filled, production and exports could rise. Nobody is opposed to products being manufactured in the US for domestic use and for export.

According to an article in St. Louis Today, citing a study by the Manufacturing Institute, with results confirmed by St. Louis area businesses, thousands of manufacturing jobs are going unfilled because of lack of qualified applicants. And technical colleges have additional capacity to provide the needed training.

After World War II, manufacturers of shoes, clothing, furniture and other products moved into the small towns and cities of the Ozarks, taking advantage of a surplus of mostly non-union, low-skilled workers. Manufacturers later arranged for their products to be made in Mexico and elsewhere in Latin American, then in Asia, seeking lower labor costs and less environmental and worker-safety regulation. Most towns in the Ozarks have vacant manufacturing facilities, even though transportation systems and location with respect to markets have never been better.

Universities and colleges are everywhere, offering all kinds of courses in residence programs and at satellite campuses, with opportunities for online education for students of all ages.

Where are the students who want to learn practical mathematics and how to operate computer-controlled design and manufacturing equipment? Some of them are in the military services. Others are working in unskilled jobs, never having become aware of their own potential to learn and earn. Others are in the gray-collar world of retail and services, where hours are long and wages and benefits skimpy.

While the St. Louis Today article blames the shortage of trainees for modern manufacturing jobs on the widespread acceptance of the value of a college education–as though the college credential had value even without skills to go with it–I’d place part of the lack of interest in manufacturing on the bad experience with manufacturing in the Ozarks. In the 50s, 60s, 70s and 80s, the manufacturing workers in the Ozarks experienced low wages and benefits, workplace injuries, frequent layoffs, and union-busting, ending with their abandonment (I am not forgetting that these low-wage jobs were better than no jobs and sometimes were the best jobs ever available in some communities for many people).

Manufacturers locating plants in the Ozarks asked poor communities for subsidies in the form of property tax abatement and general-obligation bond issues to for construction of facilities. Some plants polluted streams or left toxic wastes.

The manufacturing of today is much different. It’s cleaner and safer. Workers with training and skills can earn as much or more than many people who have college degrees and obtain as much or more job security. Here’s hoping that Missouri’s technical schools will be seen as the gateways to the good life, rather than an undesirable alternative to college.

Branson seeks advice on how to revitalize Highway 76; will designers study the market?

For a decade, the first mile or two of State Highway 76 west of US 65 in Branson has languished. In this section of the Strip, most of the construction of restaurants, motels and retail strip centers took place 30 t0 40 years ago, under the economic conditions and design sensibilities of the time. For most of a year, the City of Branson’s leadership has been working toward a vision for the revitalization of this portion of the Strip.

The City has followed the usual path of soliciting proposals from firms with expertise in land-use planning, incorporating the disciplines of engineering, architecture and design. The City is nearing the point of awarding a contract for producing a plan with design standards that will to some extent dictate the look of this part of the Strip, much of which was heavily damaged by the February 29, 2012 tornado.

Design standards have another effect, which is to set constraints on the returns on investment in land and building. Real estate appraiser Skip Preble takes a critical look at how land-use planners often neglect to evaluate real estate markets when they formulate design standards in “How Marketing Could Boost Land Development,” published on the New Geography web magazine.

Can land-use planners can be expected to examine real estate market data and translate what they learn into practical design standards? How would a governmental body, in adopting regulations incorporating the new design standards, know whether they will work well with the realities of future real estate markets?



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