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Category Archives: Missouri law

Missouri judges have discretion in creating private road maintenance plans


In 2012, the Missouri General Assembly gave circuit court judges the ability to create road maintenance plans over shared private roads under some circumstances, enacting what is now section 228.369 of the Revised Statutes of Missouri. I wrote about the promises of this legislation when it was enacted, pointing out some of its features and limitations. Now we have the first appellate decision concerning this statute, which indicates that judges in trial courts can exercise discretion in:

  • the manner in which assessments for road maintenance are allocated among the property owners who use the road
  • designating which portions of a road are to be maintained by particular classes of property owners.

The case is Stieren v.  Grothaus, which arose in Jefferson County, Missouri, where Sugar Mountain Road ran from a public road a distance of 713 feet to the Caress home. Later, Fordee Ridge Estates subdivision was created, and Sugar Mountain Road was extended another 3,207 feet to provide access to and from the lots in Fordee Ridge Estates.

The judge in the trial court ordered that the Caress property would be responsible only for the 713-foot portion of the road, (which the appellate opinion refers to as the “Entrance and Hill”) while the owners of lots in Fordee Ridge Estates would be responsible for the Entrance and Hill, plus the 3,207 portion of Sugar Mountain Road (referred to as the “Subdivision Road.”). Some Fordee Ridge owners were unhappy with the trial court’s order and appealed, claiming that:

  • the court erred in apportioning the maintenance costs for the Subdivision Road equally among the Fordee Ridge Estates owners, omitting the Caress property owners whose properties were not in the Fordee Ridge Estates subdivision, and
  • the court was without authority to divide Sugar Mountain Road into two sections (the Entrance and Hill section and the Subdivision Road section).

The appellate court pointed out that the language in section 228.369.2 gives the trial court the discretion to apportion the road maintenance costs “commensurate with the use and benefit to the residences benefitted by the access” by various methods, “including, but not limited to equal division, or proportionate to the residential assessed value, or to front footage, or to usage or benefit.” Thus the court’s apparent conclusion that Caress property outside the subdivision did not benefit at all from the Subdivision Road was justified on the basis of evidence of use and availability for use by mail trucks and emergency vehicles.

Even though the use by Fordee Ridge Estates owners was not equal, the appellate court noted that it “was reasonable for the the trial court to find that the very existence of a road providing access confers the same benefit to all properties: access.”

On the issue of whether the trial court was authorized to divide Sugar Mountain Road into to portions for the purpose of allocating the financial responsibility for maintenance, the appellate court looked at the evidence that the Entrance and Hill portion was built and used earlier and that the Caress properties did not use or benefit from the Subdivision Road, built later as an extension of the original Sugar Mountain Road. The appellate court concluded under these facts, “[t]he only way to apportion costs commensurate with these findings was for the trial court to establish a separate assessment for each portion of the road.”

The appellate decision should give trial judges confidence that they can take evidence and essentially force a maintenance contract on those who benefit from a private road that falls under section 228.369, with the method of allocating the costs to be based on the evidence, allowing the judge to divide the private road into sections as necessary under the circumstances.

While section 228.369 is intended to address a very real problem, it puts judges in a position of creating permanent, substantial financial relationships, which is much different from judges determining the extent of liability based on existing contracts or other relationships. Some judges will be comfortable with this expanded role, and others will wonder why the legislature would grant them a power that is in many cases beyond their expertise.

 

 

 

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Tesla slips the noose of regulatory capture in Missouri


A regulated industry sometimes is able to use a regulatory agency to restrict competition. In Missouri, licenses for dealers of new cars have been issued only to applicants which hold franchises granted by manufacturers, with the franchisees each maintaining a place of business within the state. The value of a dealership is strengthened if a manufacturer cannot open a competing dealership.

Under Tesla’s business model, purchasers buy directly from the manufacturer, not from a separate dealership. Tesla granted itself a franchise and was thus both franchisee and franchisor, sparing customers the cost of supporting a separate dealership.

The Missouri Automobile Dealers Association (MADA) sued the Missouri Department of Revenue and Tesla Motors, claiming that issuing the license to Tesla created “a non-level playing field.” The Cole County Circuit Court determined that MADA had a right to challenge the issuance of the license to Tesla and agreed with MADA that the issuance of the license to Tesla was unlawful.

The Missouri Court of Appeals reversed the Circuit Court, holding that MADA (as well as another car dealer and a motor vehicle manufacturer) had no right to challenge the issuance of the license to Tesla, lacking standing. The appellate court examined the motor vehicle licensing statutes and found that the statutes permitted an applicant to challenge the refusal of the Department of Revenue to issue a license, but said nothing about the right of a dealer to challenge the issuance of a license to a potential competitor. Moreover, a court could not order the Department of Revenue to revoke the license, because the Department’s power to do so depended upon the existence of specified acts or events that were deemed by the Department’s director to be a “clear and present danger to the public welfare.” The director had not made such a discretionary finding.

The appellate court characterized the MADA challenge as that of “competitors seeking to avoid competition and not as vindicators of the a larger public interest.” Thus Missouri follows several other states that have allowed Tesla’s business model to disrupt old ways of doing business.

Uber and Lyft, Airbnb and HomeAway, and Zillow are similarly changing the economy, taking advantage of internet and smartphone technology to be responsive to consumer preferences. Lobbyists will have plenty to do.

SB 656: Missouri’s New Statute on Carrying Concealed Firearms and Standing Your Ground


Springfield criminal defense attorney Shane Cantin has written a well-balanced article that examines Missouri’s new legislation, SB 656, “Missouri Concealed Carry & Castle Doctrine: What You Need to Know.”

SB 656 does away with the requirement of training and a permit for carrying concealed firearms. The business of concealed carry classes and permits will still go on, though perhaps with smaller enrollments.   Missourians carrying their weapons to states that require permits will need a permit from Missouri to carry a firearm in those states.

Because of the lack of necessity of attending a class and obtaining a permit, it is possible that more people will wish to buy handguns to carry. My guess, though, is that most of the people who wish to own handguns already have purchased them, and the new law will not boost sales. As young people turn 19 and thus fall under the new law, they may purchase handguns, and some of these may enjoy the hobby of collecting and trading guns. Events, such as the Orlando shooting and the election of candidates perceived as anti-gun, often spur gun sales, more than changes in state law. I wonder about how many people who once start carrying concealed firearms continue to do so.

The modification of the castle doctrine to a stand-your-ground law expands the scope of justification as a defense to the use of lethal force. The duty to first retreat and the requirement of being in one’s home or on one’s property are eliminated. While there may be an increase in shootings due to more people being armed and feeling empowered to use guns to resolve disputes and more opportunity for accidental shootings, I am not expecting there to be any substantial economic effect from the new law. The vast majority of people who lawfully carry guns will not display or use them.

 

 

 

 

Owner of philandering bull strictly liable but comparatively at fault for neighbor’s injuries


When Taylor’s bull crossed the fence, attracted by Coble’s heifers, Coble hopped on his ATV. The bull charged and the ATV flipped. The bull mounted–not the heifer–but the ATV, pinning Coble, who was seriously injured. In Coble v. Taylor, the Missouri of Appeals for the Southern District reviewed Missouri’s fencing laws to affirm that Taylor was liable for Coble’s injuries resulting from his attempt to drive the bull back home. The jury awarded damages for Coble’s injuries; however, the damage award was reduced, based on the jury finding that Taylor was 65% at fault and Coble was 35% at fault.

Under Missouri’s fencing laws, particularly section 272.030, an owner of livestock is liable for damages sustained if his animal trespasses by breaching a lawful fence.

Taylor (the owner of the bull) argued that the fence was not an “exterior” fence (one along a public road, not a fence that separates the land of two different owners), but a partition fence, and therefore was not the kind of fence that section 272.030 referred to. The appellate court stated that section 272.030 was a modern statute that didn’t follow the old common law that limited the livestock owner’s liability to injuries resulting only breaches of exterior fences, which was related to the 19th century concept of fencing out free-ranging animals, rather than fencing them in.

Taylor also argued that the he and his wife should not be strictly liable for injuries resulting from animal trespass, so that they should not be liable for injuries caused by Coble flipping his ATV. “Strict liability” essentially means liability without regard to the actions of the person who was injured. The appeals court reviewed the Restatement (Second) of Torts, section 518, which is a distillation of appellate court decisions of state and federal courts, with commentary, to find that “any trespassing bull may be expected to attack and gore any other animal or any person who gets in his way.” Thus it is reasonable to expect that people will try to control the bull and get hurt doing so, and the owner of the bull should be liable.

Coble argued that the jury should not have been instructed to determine that he was partly at fault for the way he drove the ATV, which led the jury to only compensate him for only 65% of the damages that he proved. The appeals court said that the jury was properly instructed to apply Missouri’s comparative fault statute, because the Missouri Supreme Court has determined that the legislature intended for comparative fault to be applied whenever possible (other than cases of intentional injury), even though the idea of strict liability and comparative fault seem incompatible.

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.

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