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Tag Archives: Missouri

Addressing water supply issues in the Western Ozarks

Imagine this headline:

Taneycomo trout die as officials refuse to release water from Table Rock Lake

It’s not far-fetched. Something similar happened in the fall of 2011 below Lake Tenkiller, in the Ozarks of eastern Oklahoma, where low water levels resulting from the prolonged drought left that reservoir with no unallocated water. You can get an idea of the reactions from this article in the Sequoyah County Times.  All the water in Tenkiller was spoken for, and the trout fishery suffered.

What’s this about allocation of water? In reservoirs managed by the Corps of Engineers and other federal agencies, the reservoir storage capacity is allocated to various uses. For example, some of the storage capacity in Table Rock Lake is allocated to the Southwest Power Administration, a government agency that sells electricity to private and public utilities. In some reservoirs, some of the capacity is allocated to municipal water supplies or industrial users of water, such as Sequoyah Fuels, mentioned in the article about Lake Tenkiller. The Corps of Engineers is also obligated to store and release water to meet statutory mandates relating to maintenance of adequate water levels for barge traffic downstream. In the western United States, a “recreational allocation” is made to support the whitewater rafting industry.

Water scarcity is moving east, and the pace seems to be accelerating. Jim Milton’s blog, Oklahoma Water Law, does a great job covering water supply issues in Oklahoma and neighboring states. On his blog, you can read about Oklahoma’s proposed comprehensive water plan and conflicts between rural water districts and municipalities, the Tenth Circuit Court of Appeals upholding Oklahoma’s statutes prohibiting the export of water to another state, and the fight over water in Sardis Lake, where Oklahoma City’s attempt to buy the water has been blocked, at least for now, by the assertion of federal power. In reviewing recent blog entries, I was struck by the intensity of the water disputes in eastern Oklahoma and Kansas; Missourians need to pay attention to what is occurring just over the state line.

The Tri-State Water Resource Coalition has been exploring the alternatives for future water supplies for the Western Ozarks. Its annual conference, Securing Our Water Future, will be held in Springfield on November 17 and 18. I’ ll be giving a short presentation at this conference to contrast Missouri’s lack of any allocation system with the ways that surface water and groundwater are allocated in Kansas and Oklahoma. A copy of the text of my presentation is here.

Missouri and Arkansas have had the luxury of pretending that water is free. Unfortunately, the supply is finite. The Tri-State Water Resource Coalition is providing leadership and a forum for discussion. We need wise leaders to learn from the experiences of Kansas and Oklahoma, so that we can be better stewards of the water we all need.

Missouri Supreme Court asked to re-evaluate law on calculating deficiencies after foreclosures

After a real estate foreclosure in Missouri, lenders often sue the borrower and any guarantors, seeking a “deficiency judgment,” which is the difference between the price paid at the foreclosure sale and the amount owed, which includes the costs of the foreclosure sale. Often there is no bidder at the buyer at the foreclosure sale, so whatever amount the lender bids is accepted without challenge.

Next, the lender sues the borrower (and any guarantors) for the difference between the lender’s bid and the amount owed. The borrower always wishes that the lender’s bid had been high enough to equal the amount owed, so that the amount of the deficiency would be eliminated. But the lender has no incentive to bid higher than the minimum amount needed to recover the property. A Missouri court, under existing judicial decisions,  cannot use its equitable power to adjust the amount of the deficiency unless the borrower proves the existence of fraud, unfair dealing or mistake in the conduct of foreclosure sale. There is no clear standard for determining the existence of “unfair dealing”; sales have been upheld when as little as 10% of fair market value has been offered.

In a recent case from the Eastern District of the Missouri Court of Appeals, First Bank v Fischer & Frichtel, Inc., the borrower acknowledged that the court had no power to adjust the amount of the deficiency, but asked the Court of Appeals to transfer this case to the Missouri Supreme Court, for consideration of adopting a different rule of law, such as the rule that allows court would be able to determine the foreclosed property’s fair market value, without the necessity of proof of fraud, unfair dealing or mistake in the sale proceedings. This alternate rule is applied in several other states.

Following Missouri Supreme Court Rule 83.02, the Court of Appeals ordered that this case be transferred to the Missouri Supreme Court “because of the general interest or importance of a question involved in the case or for the purposes of reexamining existing law.”

This question is important for several reasons, in my opinion:

  • There is no clear guidance in the law to assist foreclosing lenders in setting the amount that they will bid; this situation is an invitation for bids to be low, unless there are other bidders.
  • Because of the unprecedented number of properties being foreclosed, and the inability to quickly resell foreclosed property, there are relatively few bidders, whose bids would ordinarily establish the fair market value.
  • Lenders, facing the prospect of incurring expenses indefinitely for holding the foreclosed property (taxes, mowing, security, insurance, prevention of freezing pipes, etc.), bid low, and hope to collect on a deficiency judgment, maybe not now but at some future time when the borrower recovers financially. If courts have no power to determine whether a bid (from a lender or a third party) is in some sense fair, lenders have a clear incentive to bid less than the property is worth.

But does the absence of bidders mean that many foreclosed properties have no value? Perhaps not individually, but marginally. Most investors have all the property they need; nobody needs another vacant rent house or strip center. Investors and other potential buyers are content to let the foreclosing lenders hold the foreclosed properties until the market is ready to absorb them.

Why should the Missouri Supreme Court, rather than the legislature, address this issue? Rules of law in a representative democracy should be made by those elected to be lawmakers. The Missouri General Assembly has not addressed this issue, though the inequities of the present foreclosure statutes have been long apparent. Perhaps the General Assembly will take a look at a solution. The court or the legislature needs to hear from representatives of lenders, appraisers, consumer advocates, title insurers, and lawyers to create procedures that provide more fairness.

Appellate court reverses trial court to affirm ban of deer-dogging in Missouri

Last August, Judge Robert L. Smith of Ripley County, Missouri, declared some state regulations regarding deer hunting to be unconstitutional. Those regulations prohibited hunting deer with the aid of dogs and from vehicles. On July 15, 2011, in Turner and Jones v. Missouri Dept of Conservation, the Missouri Court of Appeals for the Southern District reversed Judge Smith’s rulings, holding that Neil Turner and Bobby “Shannon” Jones lacked standing to challenge the constitutionality of these regulations, which are enforced by the Missouri Department of Conservation.

Turner was among those identified in a federal investigation of a group in Southeast Missouri who in 2008 apparently traveled in ATVs and used dogs to drive deer to hunters in tree stands within the Mark Twain National Forest. The dogs were equipped with radio transmitters. Jones was never charged, but was questioned by a Missouri Department of Conservation (MDC) investigator.

Turner and Jones persuaded Judge Smith that the regulations prohibiting hunting deer with “a motor-driven conveyance” or with dogs were unconstitutionally vague, so vague that they couldn’t tell what was prohibited. In addition, they claimed that the regulations were defective because they were too broad. The vagueness and overbreadth deprived Turner and Jones (and MDC) of notice of what was legal, depriving Turner and Jones of the due process protection afforded by the federal and state constitutions.

In a footnote, the court of appeals indicated that Judge Smith was striking a blow for hunting rights, rather than following the law, quoting his judgment before trashing it:

Upon consideration of all evidence and arguments of the parties, the trial court recognizes that hunting is an important right. In our area, hunting is not only for recreation, but it is a part of our way of life and any infringement of this right must be constitutional.

Turner and Jones had a couple of points. The language of the regulations in questions seems to encompass use of vehicles that is not intended to be prohibited (such as traveling to a hunting area) and only uses the plural term “dogs” not the singular form “dog.” At trial, the attorneys for Turner and Jones asked hypothetical questions of MDC agents about interpretation of the regulations and obtained inconsistent answers. The attorneys argued that not even MDC knew the meaning of its regulations.

But the Court of Appeals had no need to slice-and-dice the hunters’ legal arguments. The appellate court ruled that neither Turner nor Jones had the proper standing to bring the constitutional questions to court in the first place, because the vagueness in the regulations didn’t pertain to the acts that Turner was charged with, and Jones wasn’t charged with anything.  Courts do not have jurisdiction to consider hypothetical questions, so the trial court erred by ruling on the petition of Turner and Jones. In other words, Turner made no claim that the federal prosecution of him would end if the regulations were declared void. Turner’s group had more than one dog, so he couldn’t argue that the regulation was vague about whether use of one dog was prohibited.  Jones was not prosecuted and had nothing at stake.

The idea that the regulations were overbroad received even less respect from the Court of Appeals. MDC successfully argued that the concept of a regulation being overly broad only applies in the context of the First Amendment to the United States Constitution. To be constitutional, a regulation that restricts speech or the freedom of people to associate with whomever they wish must be narrowly focused on achieving a legitimate legislative purpose.

Deer-hunting regulations were formulated when deer were much more scarce than now, though seasons and limits have been loosened up considerably. Hunting deer with dogs was considered sporting in the 19th Century and earlier, but ATVs and radio telemetry weren’t a part of the tradition.

New pages on Ozarks architecture

I’m fascinated with the way buildings are constructed, especially when they show techniques requiring imagination, unusual craftsmanship and great beauty. I also like the offbeat.

I’ve added two pages today under the Diversions heading.

One is about the stonework on Downing Street in Hollister, Missouri.

The other is about an unusual small building on Highway 160 south of Highlandville. This building is constructed in the manner of stovewood architecture, in which lengths of firewood are set in mortar.

Please take a look.

Missouri Supreme Court throws a lifeline to an HOA

If a homeowner association doesn’t have the power to impose liens to collect delinquent assessments for common expenses, the HOA is unable to perform its responsibilities. Often, no other entity has the legal authority to fill the gap in insuring, maintaining, repairing and replacing common properties such as streets, water and sewer facilities, clubhouses and pools, etc., which were the responsibility of the original HOA.

Many Missouri HOAs are dissolved by operation of law, having failed to file annual reports with the Missouri Secretary of State. Often a new HOA is formed, but a series of Missouri court decisions have made clear that the new HOAs lack any authority to perform the functions of the old HOA, unless there is an assignment of the old HOA’s powers to the new entity. I’ve summarized those court opinions here, including an update on Debaliviere Place Association v. Steven Veal, in which the Missouri Supreme Court reviewed a lower appellate court decision on April 12, 2011, changing the result and remanding the case for a new trial.

The Missouri Supreme Court’s opinion, written by Judge Michael A. Wolff, clarifies that a defunct HOA, even though it has been dissolved for more than 10 years, still has the power to assign its rights to collect assessments, impose liens and enforce covenants. This new opinion overruled a court of appeals opinion that had indicated that a defunct corporate HOA was a non-entity after it had been dissolved for 10 years, lacking the power to do anything. This new opinion is based on Missouri’s statute 355.691, which allows a dissolved non-profit corporation to “wind up and liquidate its affairs,” transferring its assets and liabilities.

Judge Wolff’s analysis limited the effect of a now repealed Missouri statute (section 355.507), which prohibited any non-profit corporation from coming back to life after it had been dissolved for at least 10 years, at which time its corporate charter is permanently forfeited. Even though the 10-year limit has been repealed, it still applies to many HOAs that had been dissolved before its repeal.

For new HOAs which need to establish their authority, the recording in the county land records of an assignment from the old HOA to the new HOA of the old HOAs powers will be effective, unless the objecting owner can prove that the assignment is made without authority, an a contention that Veal did not assert against Debaliviere.

Contract protects self-storage company from liability for roof leak

Surely, a self-storage company would be responsible for damage to stored goods if the storage company neglected its roof, allowing water leaks.

John Easley, who represented himself, found out that the not-so-fine print left him with damaged goods, a worthless insurance policy and a big disappointment.

When Easley placed his furniture in AAA Mini Storage, he signed the usual forms that state that the warehouse owner is not responsible for damages and that the tenant is responsible for insuring the stored goods against damage.

Two years later, Easley found that rain had leaked into the storage unit and puddled against the back wall of the unit, leaving his goods damaged by moisture and mold. He made a claim on his insurance policy. The insurance adjuster said that negligent maintenance of the roof caused Easley’s loss, which was an exclusion from coverage.

Easley sued AAA Mini Storage in small claims court in Cape Girardeau, Missouri, and lost. He then took advantage of the Missouri law that allows losers in small claims court to have a new trial in associate circuit court.

This time Easley won. The judge agreed that the release of liability that Easley signed did not excuse AAA Mini Storage’s implicit obligation to maintain its roof. AAA Mini Storage appealed to the Missouri Court of Appeals.

Easley didn’t file a legal brief in the appeal, which may have been a mistake. The appellate opinion, Easley v. Gray Wolf Investments, agreed with the storage company’s legal argument:

Missouri law recognizes that a contract may eliminate liability for future negligence if the release is clear, unambiguous, unmistakable, and in conspicuous language.

The appellate judges reviewed the release of liability and found it was clearly and simply written and that its language was conspicuous, since some of it was in all capital letters.

The appellate judges also found that Easley was “a relatively sophisticated party,” because “he was building a 2,613-square-foot home with a walk-out basement.” Is this wisdom or what? Wow, a walk-out basement!

Not all releases of future liability are enforceable. Lawyers, for example, are prohibited by the Code of Professional Conduct from entering into contracts that release them from liability for their future negligence.

According to the Court of Appeals, Missourians need to make sure that their self-storage contracts include a clause requiring the storage company to repair leaks in their roofs. If the storage company won’t agree to change its form just for you, you can haul your stuff to a different place, perhaps Illinois.

A couple of big firms start blogging about Missouri law

Most lawyers practice in small firms, which may be why most lawyers who write blogs are in solo or small-firm practices. Marketing consultants to the legal industry have been pushing blogging for several years, and now more attorneys from large firms are getting into the act. I’ve added three blogs written by large-firm lawyers to Read the rest of this entry

Hate unions, but love your occupational license?

The decline of union membership and public support for labor unions has corresponded rather precisely to the rise in the percentage of Americans who hold occupational licenses.

Occupational licensing would not have grown without broad support. Here’s an economist’s explanation of why:

Governmental officials benefit from Read the rest of this entry

Styron & Shilling’s new home in Ozark

After ten years at 301 West Pacific in Branson, Styron & Shilling has relocated its Branson office to a lovely old building at 302 East Church Street, in Ozark, Missouri, a half block east of the northeast corner of the Christian County courthouse square.

With this move, Styron & Shilling’s Branson and Ozark offices are consolidated to a new location that fits the nature of our firm’s evolving Read the rest of this entry

Offshore company loses assets, while hiding from liabilities


It’s great to be hard to find, but sometimes it causes you to lose stuff.

In the case of United Asset Management v. Clark, United lost its real estate in Cass County, Missouri, having failed to pay its taxes. If United hadn’t played hard to find, there’s a good chance that it would have received the notices from the county collector and from Clark, who bought the property at the collector’s sale.

This 40-page opinion of the Western District of the Missouri Court of Appeals adds detail to Missouri’s rapidly growing body of law that interprets the Jones-Munger Act, which is the collection of Missouri statutes that set out the procedure for collection of property taxes by counties through the advertisement and sale of delinquent real estate.

The Jones-Munger Act provides a period for a property owner to redeem property after somebody else has paid the taxes. The United States Constitution’s protection of property owners from confiscation without due process requires strict adherence to statutory procedures to assure that nobody loses their property without notice.

According to this opinion (and the precedents that it cites), when a county collector receives a tax statement that is stamped with “return to sender, undeliverable at this address, unable to forward,” the collector may be required to do more, rather than merely include the property in the collector’s sales, held in Missouri counties on the fourth Monday of each August.

Similarly, when the purchaser of a property at a tax sale applies for a collector’s deed, the purchaser must make a diligent effort to give notice to the property owner and any lienholders (such as those holding a mortgage on the property) that their redemption rights will expire.

Just what is required of the county collector and the tax sale purchaser depends on the circumstances, especially since the Jones v. Flowers decision of 2006, one of the first United Supreme Court opinions written by Chief Justice John Roberts. But Roberts wrote that the return of the envelope triggers a process that must be appropriate under the circumstances. For a tax collector or a purchaser of a tax certificate, it’s usually a good idea to:

  •  send a notice by regular mail, in addition to certified mail
  • send a notice addressed to “occupant”
  • knock on the door or post a notice, if there’s a building on the property
  • look in the phone book or call directory assistance
  • use an internet search engine
  • check property tax records (including vehicle records) for another address for the same party

I’ve been able to persuade courts to set aside collector’s deeds when the purchaser at tax sale couldn’t demonstrate diligence.

But United Asset Management Trust Company was too hard to find, which might be desirable for one wanting to avoid paying taxes and other debts. But United paid a price for being elusive.

United was the trustee for Coast to Coast Holding Company, which had no address in the United States, but was domiciled in Grand Turk, Caicos, British West Indies. Somewhere along the line, its Missouri post office box was cancelled, with no forwarding address. United Trust’s manager was in another state. The Cass County Collector was diligent, but couldn’t locate United, Neither could Clark, who bought the property at the collector’s tax sale. There was no building on the property and nowhere to post a notice.

The appellate court agreed with the trial court. The county collector and the purchaser at the tax sale did all that was reasonable and practical under the circumstances created by United. So United lost its real property for a few dollars in taxes.

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