Case Summary for November 28, 2012

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Case Summary for November 28, 2012

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9:30 a.m. Wednesday, Nov. 28, 2012

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SC92401
801 Skinker Boulevard Corp., Union Electric Co., and Laclede Gas Co. v. Director of Revenue
St. Louis County
Sales tax refund for utility services supplying common areas

Listen to the oral argument:

The corporation and utilities were represented during arguments by Ira M. Berkowitz of the Law Office of Marvin J. Nodiff PC in St. Louis, and the Director of Revenue was represented by Deputy Solicitor General Jeremiah J. Morgan of the attorney general's office in Jefferson City. Judge John J. Riley, a circuit judge with the 22nd judicial circuit (St. Louis city), sat in this case by special designation to fill the vacancy due to the retirement of Judge William Ray Price Jr.

801 Skinker Boulevard Corporation manages a group of 39 condominium units in St. Louis. The corporation sought a tax refund for state sales tax paid on gas and electricity supplied to common areas of the condominium units from June 2006 to May 2009. Laclede Gas and Ameren Electric also sought a refund for state sales tax paid on its sales to the corporation. The director of revenue denied all the refunds. All three parties then filed a complaint with the administrative hearing commission alleging the gas and electricity services were purchased for domestic purposes as defined in section 144.030.2(23), RSMo. The corporation, utilities and director filed motions for summary decision. The commission granted the director’s motion for summary decision and denied the corporation’s and utilities’ requests for refunds. The corporation and utilities appeal.

The corporation and utilities argue the administrative hearing commission incorrectly denied their motions for summary decision. They contend they were entitled to a refund of the sales tax because the subsections of section 144.030.2 provide sales tax exemption from certain utility costs used solely for domestic use. The corporation and utilities assert “domestic use” is defined in the subsections as non-business, non-commercial or non-industrial purposes. They argue they proved the services were for residential or domestic use, which would entitle them to a refund of the sales tax paid on the services. The corporation and utilities contend the commission’s decision that common areas are partly commercial is contrary to section 144.030.2 and public policy considerations. They assert it is the use of the specific utility service, and not the nature of the purchaser, that affects whether it is exempt from sales tax. The corporation and utilities argue the plain language of the statute merely requires use to be through a meter; therefore, a condominium unit or apartment is not required to have a single or master meter to qualify for the exemption. They contend the commission’s decision excludes all condominium units and apartments from the exemption. The corporation and utilities assert the commission should not have denied the utilities’ claims because they filed their claims pursuant to section 144.190.2 on behalf of the 801 Skinker apartments. They argue section 144.190.2 authorizes them as the proper parties to make these claims and legally obligates to repay the returned sales tax to the consumers.

The director responds that the administrative hearing commission correctly denied the utilities motion for summary decision. She argues that section 144.030.2(24) is subject to strict construction and that taxpayers are required to prove they fit the exemption requirements exactly. The director contends the exemption does not apply to condominium common areas. She asserts the common areas are used by every occupant of the condominium building and even the corporation. The director argues the common areas only would qualify for exemption if they were on a single or master meter. She contends the corporation has conceded that the meters supplying the common areas are separate from those supplying the condominium units, which have individual meters. The director asserts the utilities used for the common areas cannot be claimed as exempt for domestic use. She argues the state public service commission had not approved the common areas of the condominiums as residential for utility rate classification and the utilities themselves billed the common areas as commercial, non-exempt areas. The director contends the utilities never applied for a rate reclassification of the common areas. She asserts the statute’s use of the phrase “single or master meter” clearly shows that only service through such a meter qualifies for exemption under the statute.

SC92470
St. Louis County, Missouri v. River Bend Estates Homeowners' Association, et al.
St. Louis County
Challenge to compensation in eminent domain proceeding

Listen to the oral argument:

St. Louis County was represented during arguments by county counselor Patricia Reddington of the St. Louis County Counselor's office in St. Louis, and the River Bend Homeowner's Association was represented by Robert Denlow of Denlow & Henry in St. Louis.

The Novels owned 15 acres of undeveloped property in Chesterfield. St. Louis County obtained an order of condemnation for the property in February 2010. The condemnation commission awarded the Novels $320,000 as damages. The Novels filed exceptions to the commission’s award, requested a jury trial and filed for assessment of heritage value, which is consideration for a piece of property based on attachment and length of ownership. The commission applied section 523.039, RSMo, which sets forth the method to determine just compensation and includes heritage value, and section 523.061, RSMo, which sets forth the method to determine heritage value, to the case. Heritage value of $160,000 was added to the damages for a total of $480,000. The trial court granted the Novels’ motions to exclude prior statements made by Derek Novel and evidence referencing the addition of heritage value. The trial court also granted a motion to exclude the county’s evidence of potential development of the property. The Novels introduced testimony of an appraiser regarding fair market value and her opinion of the county’s evidence of a comparable sale. The jury returned a verdict of $1.3 million and the court added heritage value of $650,000 plus interest for a total of more than $1.6 million. The county filed a motion for a new trial and requested a transcript of the recorded proceedings but then learned the recording contains omissions and some inaudible portions. The county filed a motion to remand (send back) for new trial due to the incomplete transcript; that motion is pending. The original motion for new trial was overruled. St. Louis County appeals.

The county argues the trial court erred in overruling its motion for a new trial, awarding the Novels additional damages and upholding the jury’s verdict, which it deems excessive. It contends the entire trial should have been recorded because without full and complete transcripts it cannot prove that the trial court’s decision went against the weight of the evidence. The county asserts the trial court should not have admitted evidence of the Novels’ attachment to the property and should not have excluded evidence that the jury verdict included the property’s heritage value. It argues the evidence prejudiced the jury against the county because it appeared that the Novels deserved increased damages due to their attachment which they would not receive otherwise. The county contends Derek Novel’s testimony regarding value should have been admitted as evidence to impeach Novel’s later statements and as an admission against interest. It asserts the appraiser’s testimony regarding a comparable sale should not have been admitted because it was speculative. The county argues its rebuttal evidence regarding the comparable sale should have been admitted because it was not subject to the project influence doctrine. It contends its evidence regarding potential development of the property should have been admitted. The county asserts sections 523.039 and 523.061 violate article I, section 26 of the state constitution because they require the county to pay more than just compensation for the property. It argues sections 523.039 and 523.061 also violate article III, section 38(a) and article VI, sections 23 and 25 of the state constitution because they require the county to spend public funds without a public purpose. The county contends sections 523.039 and 523.061 take away the jury’s power to determine just compensation for the property by adding additional compensation to the jury’s verdict.

The homeowner’s association responds the trial court correctly overruled the county’s motion for a new trial, awarded the Novels additional damages and upheld the jury verdict. It argues the county had a duty to ensure the transcript was correct and it cannot prove it suffered prejudice due to omissions from the transcript. The association contends evidence of the property’s history was correctly admitted and evidence of the heritage value excluded because the trial court did not abuse its discretion. It asserts the county failed to preserve errors in evidence for appeal by objecting at trial and, therefore, it cannot appeal them now. The association argues Derek Novel’s prior out-of-court statement was excluded properly because it was made for settlement purposes, not valuation. It contends the appraiser’s testimony was admitted properly because the trial court did not abuse its discretion and the county did not object to the evidence at trial. The association asserts the trial court correctly excluded evidence of potential development of the property because it was beyond the scope for non-retailed expert testimony, failed to establish sufficient foundation and the county failed to preserve the evidence for appeal. It argues the jury verdict was not excessive and the trial court correctly awarded heritage value. The association contends sections 523.039 and 523.061 do not violate the state constitution. It asserts the statutes are an exercise of the legislature’s authority to allow for additional compensation to property owners. The association argues the county failed to raise objections to the heritage statutes at trial and, therefore, did not preserve this issue for appeal.

SC92388
In the Estate of Allen D. Austin, deceased, Randy Nolan v. Cathy Snead
Gentry County
Dismissal of minors’ claims against an estate

Listen to the oral argument:

The minors were represented during arguments by Benjamin S. Creedy of Murphy, Taylor, Siemens & Elliott PC in St. Joseph, and Snead was represented by David B. Parman, an independent practitioner from Albany.

Allen Austin died in August 2009, and Cathy Snead was appointed personal representative of the estate. Prior to his death, Austin had rented a home to a woman and her two minor children. Allegations of sexual abuse to both minors were filed against Austin in 2006 and 2008. Austin’s estate was opened Aug. 13, 2009. Snead did not provide notice of the estate to the minors or their family. Randy Nolan, the minors’ father, learned of the estate in April 2010 and filed this claim April 23, 2010. Snead filed a motion to dismiss, which the trial court granted. The trial court determined the minors were not entitled to notice of the estate because they were not known or able to be identified as creditors of the estate. The minors filed a motion to amend the judgment. The trial court did not rule on their motion. The minors appeal.

The minors argue the trial court erred in dismissing their claims against the estate. They contend applying section 473.360, RSMo, to bar their claims violated their rights to due process because they are known or able to be identified as creditors entitled to notice of the estate as well as of the time period for filing claims against the estate. The minors assert that their claims are valid and that their status as minors should be taken into consideration. They argue section 473.360 violates their right to open courts because it unreasonably restricts their cause of action. The minors contend that, as minors, they lack the capacity to protect their own rights. They assert that they are at the mercy of adults to protect their rights and file claims in their interest. The minors contend Snead was aware of the allegations and should have provided them actual notice.

Snead responds the trial court correctly dismissed the minors’ claims against the estate. She argues applying section 473.360 to bar the claims did not violate their rights to due process. Snead contends the claims were undetermined and, therefore, the minors were not entitled to actual notice as creditors. She asserts applying section 473.360 did not violate the open courts provision of article I, section 14 of the state constitution. Snead argues section 473.360 does not unreasonably restrict the minors’ cause of action due to their minority or capacity. She contends section 473.360 is a statute of limitation embodied with exceptions and the courts are not authorized to add further exceptions. Snead asserts she was aware of the minors’ allegations about Austin but believed they were unsubstantiated. She argues no complaints, suits or demands for money were filed against Austin or his estate.

SC92646
Bonzella Smith and Isaiah Hair, and Cheryl Nelson and Elke McIntosh v. City of St. Louis, Board of Aldermen for the City of St. Louis, TIF Commission for the City of St. Louis, and Northside Regeneration LLC
St. Louis city
Redevelopment plan application under Tax Increment Financing Act

Listen to the oral argument:

Northside Regeneration was represented during arguments by Paul J. Puricelli of Stone, Leyton & Gershman in St. Louis; St. Louis city was represented by Gerard T. Carmody of Carmody MacDonald PC in St. Louis; Nelson and McIntosh were represented by W. Bevis Schock of Schock Law in St. Louis; and Smith and Hair were represented by D.B. Amon, an independent practitioner from St. Louis.

St. Louis city’s board of aldermen passed two ordinances approving tax increment financing (TIF) to fund the Northside Regeneration TIF Redevelopment Plan for a blighted area of north St. Louis. A redevelopment agreement accompanied the project outlining initial redevelopment to be undertaken by the city in furtherance of the plan. Under the agreement, the city would issue TIF notes to the developer of the plan; the notes memorialize that revenues from the new development are to be used to reimburse the developer for the financing. Sections 99.800 through 99.865, RSMo, are recognized collectively as the TIF act and include requirements that must be met for a redevelopment plan to qualify for TIF funding. Section 99.805(14) states that a redevelopment project can be any project within a development area in furtherance of objectives of a redevelopment plan. Four residents of the blighted area – Bonzella Smith, Isaiah Hair, Cheryl Nelson and Elke McIntosh – filed this action against the city and Northside Regeneration, claiming the redevelopment plan did not comply with the requirements of the TIF act. The trial court found the ordinances did not meet one of the requirements of the TIF act because they lacked defined redevelopment projects and a cost-benefit analysis of those specific projects. Northside and the city filed motions for a new trial, which were overruled. Northside and the city appeal. The four residents cross-appeal.

Northside’s and the city’s appeal

Northside Regeneration argues the trial court erred in finding the redevelopment ordinances did not meet the TIF act because they lacked a redevelopment project. It contends the property owners failed to preserve this issue for appeal because they did not challenge the finding of a lack of redevelopment project at trial. Northside asserts the court’s definition of “project” conflicts with the definition and intent of section 99.805(14), which sets forth a broad definition of a redevelopment project. Northside argues the ordinances contained a redevelopment project as defined by the TIF act. Northside contends the TIF act does not require a cost-benefit analysis of the individual projects comprising the redevelopment plan. It asserts the ordinances did contain a cost-benefit analysis of the redevelopment plan as a whole. Northside argues the trial court abused its discretion by overruling its motion for a new trial. It contends the trial court should have admitted evidence of past redevelopment projects approved by the city board of aldermen. Northside asserts that the trial court is allowed to consider matters outside the ordinance in making its determination and that such evidence would have proved the viability of Northside’s redevelopment plan.

The city argues the trial court erred in voiding its TIF ordinances. It contends the trial court misapplied the definition of redevelopment project as it is used in the TIF act. The city asserts the TIF act does not dictate the content of a specific redevelopment project and the trial court’s finding, if upheld, would restrict future projects. It argues the residents did not meet their burden of proving the city did not comply with the TIF act. The city contends the taxpayers misinterpreted the definition of redevelopment project in claiming the city had not approved a proper redevelopment project. It asserts as a matter of public policy the trial court’s decision should not be upheld. The city argues the trial court’s decision would prevent urban cities from cleaning up blighted areas through large-scale redevelopment. It contends TIF financing is the most appropriate method for such redevelopment projects in urban cities.

Smith and Hair respond the trial court correctly found the redevelopment ordinances did not satisfy the requirements of the TIF act because they lacked a redevelopment project. They argue they did not waive their right to challenge the ordinances as lacking a redevelopment project because they raised the proper legal and factual challenges in their pleadings to preserve their claim. Smith and Hair contend the trial court properly defined redevelopment project as it is stated in the TIF act. They assert the trial court’s interpretation of “redevelopment project” is not contrary to the intent of the TIF act. Smith and Hair argue the redevelopment ordinances did not include cost-benefit analysis as required by the TIF act. They contend the trial court properly dismissed Northside’s motion for a new trial because evidence of prior approved projects would not have supported the current redevelopment project. Smith and Hair assert the city’s decision to approve the project was not debatable and the trial court properly applied the definition of “redevelopment project.”

Nelson and McIntosh respond the trial court correctly found the redevelopment ordinances did not satisfy the requirements of the TIF act because they lacked a redevelopment project. They argue that failure to mention the lack of a redevelopment project in the pleadings did not waive their right to bring a claim. Nelson and McIntosh contend the requirements in the TIF act are finite and Northside should have ensured the redevelopment complied with each requirement. They assert the redevelopment plan was required to have a specific project laid out in the plan and the city’s redevelopment plan did not have a project. Nelson and McIntosh argue the word “project” should be given its plain and ordinary meaning as it pertains to the current situation, not the various definitions set forth by the city. They contend the project was arbitrary as to the finances, cost-benefit analysis and the comprehensive plan. Nelson and McIntosh assert a cost-benefit analysis of the project was required under the TIF act. They argue the trial court correctly overruled Northside’s motion for a new trial.

Residents’ appeal

Smith and Hair argue the trial court erred in finding the redevelopment plan conformed to the city comprehensive development plan for the city because the statement of compliance is insufficient. They contend the TIF commission was obligated to deny the redevelopment plan because it did not conform to the TIF act. Smith and Hair assert the redevelopment plan cannot be considered to be a project because the plan does not set forth a specific project. They argue the ordinance was subject to TIF commission approval, which gave the commission a legislative authority that conflicts with the TIF act. Smith and Hair contend the trial court should have granted the residents’ request for attorneys fees because class action plaintiffs are entitled to attorney fees and the parties here are similarly situated. They assert prior decisions of the court of appeals should be applied to this matter.

Nelson and McIntosh argue the trial court abused its discretion in not granting the residents’ request for attorneys fees. They contend Northside and the city committed intentional misconduct because the application for TIF funding for the redevelopment project is deceptive and incompetent. Nelson and McIntosh assert the financing commitment for the redevelopment plan is not definitive. They argue the cost-benefit analysis contains an unknown accounting concept. Nelson and McIntosh contend there is no project contained in the plan and the TIF act requires a project.

In response to Smith and Hair, Northside states the redevelopment plan contained evidence of financing as required by the TIF act. It argues the court should consider the redevelopment agreement in determining whether Northside proposed a valid redevelopment project under the TIF act. Northside contends the redevelopment plan conforms to the city’s comprehensive plan for the development for the municipality as a whole as required by the TIF act. It asserts the TIF commission was not under an obligation to deny the redevelopment plan because the plan complies with the TIF act. Northside argues creation of the redevelopment ordinances did not authorize the commission to make legislative decisions that conflict with the TIF act. It contends the trial court correctly found the residents were not entitled to an award of attorneys fees because the taxpayers failed to provide a legal basis for their argument.

In responding to Nelson and McIntosh, Northside states the trial court correctly found that the redevelopment plan conformed to the portions of section 99.810.1, RSMo, regarding the costs of the proposed redevelopment plan. It argues the trial court correctly found the redevelopment plan conformed to the portions of section 99.810.1 regarding the financing for the project’s costs. Northside contends the cost-benefit analysis contained in the redevelopment plan met the TIF act requirements. It asserts the redevelopment plan was consistent with the city’s comprehensive plan for the municipality as a whole.

The city responds the TIF act does not contain a requirement for a specific project to be laid out in a redevelopment project. It argues the redevelopment plan contains multiple redevelopment projects. The city contends the redevelopment plan sets forth projects including infrastructure and demolition work in connection with the overall plan. It asserts the current case is not comparable to the court of appeals rulings regarding redevelopment plans under the TIF act.

SC92280
Jason Cohorst v. Nissan North America Inc, et al.
Christian County
Challenge to damages in product defect claim

This case was deleted from the Court's docket on November 27, 2012.