DUE PROCESS STRETCHED TO THE LIMIT

The Kroupa family breed, raised, and showed livestock.  Four of the children in the Kroupa family have successfully participated in 4-H and other livestock competitions in South Dakota and elsewhere.  B.K., the youngest child, joined 4-H when she was eight years old.  She won more than $20,000 in prize money from livestock shows, including $22,000 for showing the reserve champion steer at a livestock show in Louisville in 2009. B.K. saved that money for college and stopped participating in sports to devote her time to raising and training animals.  She hopes eventually to take over the family livestock business.

Beginning in April 2011, B.K. trained a belted barrow swine, which she named “Moe,” for entry in livestock shows. B.K. showed Moe at the Brule County Fair in August.  She qualified for the South Dakota State Fair from September 1 to 6.  Moe won reserve grand honors in the 4-H division followed by the champion market barrow prize at the Future Farmers of America show at the conclusion of the State Fair.

After the fair, several members of B.K.’s 4-H club accused her of cheating, claiming the pig she showed at the State Fair was not Moe but another belted barrow swine with a cauliflower ear that had come from another state fair (Moe also had a cauliflower ear). The repeated messages and emails were so abusive and distressing that B.K. deleted her Facebook page and complained to her parents.

Kroupa, the father of B. K., than contacted Geppert, the Extension Officer for Brule County, to discuss how to stop the abuse of his daughter.  Kroupa testified Geppert said he would talk to Nielsen and the two “would get back to me.” Nielsen did so and said “if I would help them with the problems, that I would be asked to be on the ethics committee, and to try to . . . stop the dishonesty that was going on at the fairgrounds.”  Kroupa said he responded to Nielsen, “A simple solution to your problem is implementing DNA” sampling of the champions, as is common in other States.

Next B. K.  received a letter signed by Nielsen as Assistant Director, 4-H Youth Development, for the South Dakota Cooperative Extension Service that stated:

“This letter is to inform you that you will no longer be allowed to participate in South Dakota 4-H exhibition programs. . . . After being shown pictures on September 9, 2011, your father, Mr. Greg Kroupa, admitted to Mr. Rod Geppert and then, to Mr. Peter Nielsen that you have not owned or cared for your recent swine entry for the project season.  He also admitted that your swine entry had been submitted and competed in this year’s Missouri State Fair.  The South Dakota 4-H Livestock Ethics Committee met on September 20, 2011, and concluded that you misrepresented the ownership of this animal and violated the code of ethics.”

Without notice or hearing based on the events surrounding the misrepresentation of ownership the State 4-H Office permanently removed B. K.  from the South Dakota 4-H exhibition program and any future eligibility or participation in such programs.  In addition, she was ineligible to receive any awards or premium monies from the 4-H Swine Project or 4-H Beef Project areas at the 2011 South Dakota State Fair.

Kroupa, on the behalf of B.K. asked for an opportunity to appeal the decision and after he was refused he commenced a 42 U.S.C. § 1983 action, against the unincorporated 4-H Association and two 4-H officials, Peter A. Nielsen and Rodney Geppert, who communicated the punishment to the Kroupas and refused their request that B.K. be allowed to appeal the adverse decision (South Dakota 4-H program is part of SDSU and controlled by its Board of Regents).  The trial court then granted B. K.’s preliminary injunctive relief from the claim denial of B.K.’s constitutional right to procedural due process by applying the well-recognized Dataphase preliminary injunction standards, which was appealed to the 8^th Circuit.  B.K. testified at trial that she was not provided notice of the ethics committee meeting, was never given an opportunity to respond to charges, that she had not cheated at the state fair or misrepresented animal ownership, and never spoke with the author of the letter before or after the letter was sent.

The central issue before the 8^th Circuit was whether or not the injury to B. K.’s reputation and banishment from 4–H competitions for the rest of her eligible years because she cheated at the state fair was an interest protected by the due process clause.  The taunting by B. K’s peers demonstrated how damaging the decision was to her reputation as a teenager starting a career in agriculture.  The 8^th circuit held that B.K. had an interest protected by the due process clause.  The dissent in this case argued that personal injury to reputation for honesty and integrity alone is not a protected liberty or property interest.  It must be coupled with the deprivation of a right or status recognized by state law.  The dissent argued that under the reasoning of the majority opinion intercollegiate athletes as well as other athletes would have an interest in being protected from damage to their reputation because of allegations they cheated damaging their reputation.  Koupa v. Nielsen, (8^th Cir., No. 12-2843, 09/24/13)

Comment Howard: The majority opinion in this case pushes the envelope with respect to what rights are protected under the due process clause.  On the other hand, the facts of this case seem particular compelling unless you believe that the admission of the father that his daughter was cheating should have ended the matter.  It also seemed pretty clear that the social media comments magnified the damage to B. K.’s reputation. 

LACK OF STATUTORY DIRECTION ALLOWS AMBULANCE DISTRICT TO ENHANCE BALLOT LANGUAGE

The Ambulance District Board of Directors (Board) voted on ballot language proposing a tax increase for the benefit of the Ambulance District. The Board approved the ballot initiative, entitled “Proposition Lifesavers,” which provided:

St. Charles County Ambulance District serves all of the municipalities and unincorporated areas of St. Charles County by providing paramedic-staffed ambulances that respond to the emergency medical needs of a growing and aging population.  In order to prevent significant reductions in staff, a decrease in the number of available ambulances, and delays in response times to 911 calls, shall the Board of Directors of St. Charles County Ambulance District be authorized to levy an additional general tax, for the first time since the District’s inception over 38 years ago, of not more than eleven cents per one hundred dollars assessed valuation, the revenues from which shall be deposited into the general fund?

Mr. Dienoff, a resident of St. Charles County, acting pro se, filed a petition alleging, among other things, that the language of “Proposition Lifesavers” was “slanted, tainted, misleading and confusing to the average voter” requesting that the trial court “rewrite the ballot Question so as not to be unfair and taint the voter in information that is not relevant to the question before the voter.” The trial court concluded that the ballot language read like a campaign flyer and was not a fair, impartial, and neutral summary.  The court could not find any statutory authority to rewrite the language although it stated that there had to be a provision to address unfair/inappropriate ballot language.  The court then rewrote the language that was submitted to the voters.  The voters turned down the proposed tax increase.  After the vote the Eastern District noted that while the matter was moot due to the intervening election it would exercise its discretion to consider the questions raised by the Ambulance District because of the public importance and public interest of a reoccurring nature that would otherwise escape review.

The Eastern District held that there is no “inherent authority” that can be substituted for the absence of statutory authority in the context of challenges to municipal election issues.  “Since the legislature, rightfully or wrongfully, has not enacted any statute pertaining to the matter, we cannot allow the instant contest simply on general principles.”  It is for the General Assembly to determine what provisions should be made for contesting elections of this character.  Applying ordinary rules of statutory construction the court concluded based on it’s review of a number of specific statutes pertaining to ballot questions proposing tax increases that there was no statute pertaining to the election ballot to increase taxes for an ambulance district; therefore the General Assembly simply left the ballot language. to the ambulance district.  State of Missouri ex rel. Dienoff vs. Galkowski and, St. Charles County Ambulance District, (ED 99832, 01/27/14)

Comment Howard: While this opinion allowed the ambulance district to write the ballot language to favor the tax increase the downside of the message in the opinion is that the courts analysis strongly supports strict deference to the language established by the General Assembly.

NO WAIVER OF SOVEREIGN IMMUNITY BY NOT PLEADING SOVEREIGN IMMUNITY AS AN AFFIRMATIVE DEFENSE

St. John’s settled a wrongful death case, then sued the Pulaski County Ambulance District (District) for contribution, alleging in part that “District had liability insurance in place that provides coverage for the loss and as a result the District had waived any sovereign immunity defense under § 537.610, RSMo.”  District moved, without success, to dismiss on grounds unrelated to sovereign immunity.  In answering the petition, District admitted that it carried liability insurance but denied it had waived sovereign immunity by purchasing insurance.  During discovery St. John’s requested information concerning the purchase by the District of liability insurance and was provided a declaration page that showed that the District had purchased a liability policy that did not include a provision stating the policy is not meant to constitute a waiver of sovereign immunity.

The District moved for summary judgment 22 months into the case, claiming that its liability policy did not waive of sovereign immunity having found the correct coverage that showed there was no waiver of sovereign immunity.  The trial granted the District’s motion for summary judgment and St. John’s appealed to the Southern District.  As it did below, St. John’s argues that the District waived its sovereign immunity by voluntarily appearing, submitting to the trial court’s jurisdiction, failing “to raise the defense of sovereign immunity or lack of personal jurisdiction” under Rule 55.27, and by participating in litigation activities.

The Southern District holds that: “Sovereign immunity is not an affirmative defense but is part of the plaintiff’s prima facie case.” St. John’s burden as plaintiff was “…to establish a sovereign immunity waiver as part and parcel of any pleaded theory against the District.”  St. John’s could not prove that the District waived this defense.

The dissent argued that a person may consent to the jurisdiction of the court and the consent may come about procedurally, as well as substantively.  Rule 55.27 provides some of those methods.  Whether the District purchased a liability policy and the terms of the policy were exclusively within the District’s knowledge, just as the knowledge whether the proper person had been served under Rule 55.27(g)(1)(B) and (C), is within the exclusive knowledge of the defendant; therefore, the better-reasoned policy is that sovereign immunity must be raised as a defense at the earliest opportunity.  St. John’s Clinic, Inc. vs. Pulaski County Ambulance District, (SD32739, 01/28/14).

COMMUNICATIONS BETWEEN CITY ATTORNEY AND INSURANCE BROKER/AGENT ARE PRIVILEGED

For another case involving whether or not a city insurance policy waived the defense of  sovereign immunity see White v. City of Ladue, (ED 99585, 12/17/13). This case presented two novel issues.  First, the fight over the production of the insurance policy resulted in a motion by the plaintiff to compel production of documents between the city attorney, insurance broker, and claims handler concerning sovereign immunity.  After making an in camera inspection the trial court ruled that the attorney-client privilege applied except for the timing of the request for production of the policy exclusion component as well as what efforts were made to look for this provision.  The Eastern District held that communications between the attorney for the City and its insurance broker, and claims handler concerning the sovereign immunity  defense relating  to the Plaintiff’s wrongful discharge claims, potential liability and the insurers duty to defend them were privileged.

A second novel issue was a request for documents under the Sunshine Law that included a request by the City’s for  advance payment to have an attorney review the documents ($2,500 at $250 per hour for 10 hours of estimated time and $3,000 at $150 per hour for estimated time of 20 hours). Section 610.026.1(1).  provides that:  A public governmental body is permitted to charge for copying costs for public records, the time spent by clerical staff duplicating the requested records, and the actual cost of research time related to the fulfilling of record requests.  The Plaintiff alleged in its petition the City’s request for payment to have an attorney to review the documents was a violation of the Sunshine Law.  The trial court concluded as a matter of first impression a request for advance payment that included estimated costs for review by a attorney violated the Sunshine Law although it was not done knowingly or purposefully, therefore sanctions were not warranted.  There was no appellate court ruling on this issue because there was no direct appeal of the trial courts ruling although it is mentioned as an interesting aside.  The issue was of sufficient interest to attract an amicus brief by the St. Louis Post Dispatch.  White v. City of Ladue, (ED99585, 12/17/13)

RED LIGHT CAMERA CASE

Another red light camera opinion was handed down by the Eastern District involving the validity of  speed cameras operated by the City of  Moline Acres (City).  Based on its earlier decision in Ellisville the court found that the City ordinance conflicted with state law because it sought to impose strict liability on the owner rather than on the driver of the vehicle for violating state traffic laws that applied to moving violations.  City of Moline Acres vs.  Brennan, (ED 99787, 01/28/14)

THIRD CLASS CITY DID NOT HAVE AUTHORITY TO CONDEMN PROPERTY UNDER SECTION 88.497 BASED ON BLIGHT

The City of North Kansas City (the City) caused a blight report to be prepared south of Armour Road and east of Interstate 35 that showed approximately 57 acres of land in this area was blighted.  The City acquired all of the property in the blighted area except for one tract of land owned by K.C. Beaton Holding Company, L.L.C., (K. C. Beaton), which operated a Burger King restaurant on the property.  The blight study did not find that the Burger King property had blighting factors but the study showed a preponderance of blight in the 57-acre area concluding that the entire area was blighted.

The City sought to purchase the Burger King property and after negotiations failed it filed a petition in condemnation to acquire this property against K.C. Beaton, which filed a motion to dismiss.  At the condemnation hearing, the city acknowledged it did not have an actual physical plan for the  redevelopment area nor did it have a developer for the area.  The area was not referenced in the City Master Plan as a redevelopment area but as a” planning area.”  The circuit court granted K.C. Beaton’s motion to dismiss finding that the City did not have the authority to condemn the Burger King property under Section 88.497, for the “public purpose” of eliminating blight.

The City appealed to the Western District asserting that the circuit court erred in dismissing its amended verified petition in condemnation on the grounds that the City lacked legal authority to condemn the property under Section 88.497.  The City contends that Section 88.497 granted the City the right to take property “for any other necessary public purposes” and that the elimination of blight is a public purpose.

Section 88.497 on which the city relies provides: “Private property may be taken by the cities of the third class for public use for the purpose of establishing, opening, widening, extending or altering any street, avenue, alley, wharf, creek, river, watercourse, market place, public park or public square, and for establishing market houses, and for any other necessary public purposes.” (Emphasis added)

Article VI, Section 21 of the Missouri Constitution, which first appeared in the 1945 Constitution, provides: “Laws may be enacted, and any city or county operating under a constitutional charter may enact ordinances, providing for the clearance, replanning, reconstruction, redevelopment and rehabilitation of blighted, substandard or insanitary areas…”

The Western District concludes that since Section 88.497 was enacted in the 1930’s before. Art. VI, § 21, was adopted in 1945 as part of the Missouri Constitution that the legislature did not intend to include the elimination of blight as a “necessary public purpose” when it enacted Section 88.497.  The court applies a strict rule of construction with respect to interpretation of the authority to take private property through eminent domain.  It also notes that the legislature has provided economic development tools that could be used to acquire the property based upon other provisions in state law. City of North Kansas City v. K. C. Beaton  Holding Company, LLC, et al., (WD76068 and WD 76110, 01/14/ 14)

Comment Howard: The court takes a narrow view of Section 88.497 to limit the authority of statutory cities to condemn property without specific authority from the General Assembly.   It is hard to measure the impact of this decision on the ability of local government redevelop areas that are blighted particularly since a lot of economic development is taken in conjunction with the use of economic development tools that provide authority to condemn property.

FAILURE TO SEND NOTICE TO OCCUPANT OF PROPERTY WAS FATAL TO TAX SALE

Since 2006 when the United States Supreme Court decided Jones v.  Flowers we have struggled with how to meet the due process requirements for notice when you are affecting a property interest under the constitution.  Since 2006 there have been a significant number of cases in Missouri that now provide a well-established body of case law.  The latest installment in this ongoing saga is In the Matter of Foreclosure of Liens for Land Taxes by Action in Rem: Collector of Revenue, by and through the Director of Collections for Jackson County v.  Holton,  (WD76280, 01/14/ 14).

In December 2004, Holton purchased a condominium unit located at 600 East 8th Street, Unit 11S, Kansas City, Jackson County, Missouri (Property).  There was no mortgage on the Property and Holton was the only named grantee.  Holton never lived at the Property, and it was always used as a rental unit.  Despite not living there, Holton listed the Property‘s address as his mailing address on the deed.  Since November 2006, Holton lived at the same residence in Overland Park, Kansas.  Holton acknowledged that the Property‘s address was never his mailing address.  Holton never attempted to provide the County with his current mailing address.

After 2007, Holton made no additional payments to the County, and the Property became tax delinquent.  The Collector proceeded under the Land Tax Collection Law to sell the Property for unpaid taxes.  As required by law notices to the property owner at the address shown on the property records were sent.  All notices provided were returned to the Collector marked as follows: ―RETURN TO SENDER – NOT DELIVERABLE AS ADDRESSED – UNABLE TO FORWARD.

In addition, approximately two months before the scheduled tax sale, two additional letters were mailed to Holton, notifying him of the upcoming sale, which were also returned as undeliverable.  The County attempted to post notice on the Property, but the County was unable to post notice because the doors to the condominium were locked. Notice was also published in The Pulse, a legal publication serving Jackson County, Kansas City, and Independence, for four consecutive weeks before the date of the sale.

On August 28, 2012, the Property was sold at the County‘s tax foreclosure auction to the highest bidder.  As of the date of the sale, the amount of unpaid taxes was $743.12.  On December 11, 2012, following a confirmation hearing, judgment was entered confirming the sale and ordering the Jackson County Court Administrator to execute and issue a deed to the buyer.

Holton first learned of the Property‘s delinquent tax status and the August 2012 tax sale in January 2013, when his tenant stopped payment on a rent check.  At that point, Holton‘s wife contacted the tenant who informed her that McIntosh purchased the Property and had instructed that rent be paid to her.  After receiving this information, Holton‘s wife went to the County‘s website and discovered that, as of the date of the August 2012 tax sale, the Property was tax delinquent for 2008, 2009, 2010, and 2011. On February 7, 2013, Holton filed a Verified Motion to Vacate Judgment and Set Aside Deed.  Holton does not dispute that notice was published, or that the taxers were delinquent but testified that he never received notice, published or otherwise, of the impending tax foreclosure sale.

Following a hearing, the trial court denied Holton‘s motion and issued findings related to the County‘s multiple attempts to notify Holton.  It found that the County complied with, and exceeded the notice requirements of the Missouri Land Tax Collection Law (Mo. Rev. Stat. § 141.440) by sending notification of the court-ordered sale for delinquent taxes to Holton at his address on the records of Jackson County via both certified and regular first class mail.  The court found further that Jackson County took additional reasonable steps by mailing all correspondence to the Record Owner via both certified and regular first class mail; searching the records of the State of Missouri and the Missouri Courts (Case.net) in an effort to find an address for the Record Owner; and, by attempting to post notice at the Property.  Holton appealed to the Western District.

In the Holton case the Collector of Revenue seemed to have done everything possible to provide notification to the property owner except for one small item. “In Jones, the Court recognized that mailing a notice letter addressed to occupant was a reasonable additional step available to the notifying party.  This step is inexpensive and simple to accomplish and, as the Jones Court recognized, it is an action that increases the likelihood that a property owner will receive notice of an impending tax sale.”  The court holds that the failure to send a notice letter to occupant of the delinquent taxes was fatal thereby denying Holton due process.

Comment Howard: If you get a return that the notice is non-deliverable your checklist should provide a notice to occupant.  Seems pretty simple but failure to provide notice was fatal.  Besides being good bedtime reading guaranteeing that you will fall into a deep sleep this case does provide a very good up-to-date summary of the Missouri law requiring notice under Jones v. Flowers.  In the Matter of Foreclosure of Liens for Land Taxes by Action in Rem: Collector of Revenue, by and through the Director of Collections for Jackson County v.  Holton,  (WD76280, 01/14/ 14).