Eastern District Upholds Challenge To Residency Of Candidate
Representative Schroer testified that he and his wife had lived in O’Fallon, Missouri within the 107th district since 2013. Representative Schroer was elected in 2016 and began serving his first term as Representative of the 107th district in 2017. Representative Schroer and his wife have two daughters, one of whom needs special education services. Representative Schroer testified that he and his wife attempted, but were unable, to acquire the needed services at a school within the 107th district. Therefore, they decided to sell the house in O’Fallon and, in April of 2020, started the process of purchasing a house in Defiance, Missouri which is outside the 107th district where Representative Schroer’s daughter could receive the services she needs. Defiance is approximately 15-minutes by car from the 107th district.
Representative Schroer testified it was never his intent for the Defiance house to be his primary residence. The plan was that his wife and daughters would live in the Defiance house and he would rent an apartment within the 107th district so that he could maintain his residence there and continue as its representative. On May 20, 2020, he entered a lease agreement with his family friend Mary Gerst to rent space in the house where she lived with her mother, Elizabeth Gerst, in O’Fallon within the 107th district. The lease expired at the end of 2022, which is when Representative Schroer’s third term would end if he were to be reelected this November 2020.
On May 21, 2020, Representative Schroer and his wife closed on the purchase of the Defiance house. Both his wife as the borrower and Representative Schroer as co- borrower signed for the loan to purchase the house and each checked the box next to their names indicating their intent to occupy the house as their primary residence. Representative Schroer explained that, although he had no such intent to make the Defiance house his primary residence, he believed based on his reading of the application instructions that if one of the borrowers was going to live there, they both had to check that box. He testified he did not intend to mislead anyone by checking that box.
Representative Schroer spends some amount of time at both the Defiance house and the Gerst house and keeps personal belongings in each place. Representative Schroer testified that when he is not traveling, he tries to be in Defiance when his daughters go to bed, sleep at the Gerst house and then go back to Defiance in the morning to take the girls to school. He also spends time on the weekends with his family in Defiance.
Representative Schroer has listed the Gerst house as his address on his candidate committee form, his campaign bank account, his driver’s license, his voter registration card and his case.net account. Representative Schroer testified that he receives his mail at the Gerst house. The Defiance house is listed as the address of Representative Schroer and his wife on the declaration page of an automobile insurance policy and as Representative Schroer’s address on a car loan application.
The trial court expressly found Representative Schroer credible and determined that leasing the Gerst house manifested his “intention to remain a resident of the 107th [district] in order to serve the constituents” of that district. The court concluded that Datt failed to meet her burden of proving a basis to remove Representative Schroer from the ballot, and entered judgment in Representative Schroer’s favor. Datt appealed to the Eastern District.
Analysis: The Eastern District began it analysis by noting that the Missouri Constitution requires that each representative shall be, “a resident of . . . the district which he [or she] is chosen to represent for one year” before the day of his or her election. The Court further noted that residency is difficult to determine. It is largely a question of fact although it is important to note that declarations made before or after the time the domicile is disputed is very important.
Next, the Court explored the meaning of the word “residence or domicile” noting that these terms are identical and that it uses in its opinion these terms interchangeably. Residence or domicile is generally defined as the place where a person has “his true, fixed and permanent home and principal establishment, and to which whenever he is absent he has the intention of returning.” Furthermore, a person can have only one residence, which “once established, continues until he renounces it and takes up another in its stead.” You maintain your residency until you intend to abandon the old and establish a new.
The Court framed the question as:”… whether Representative Schroer intended to abandon his original residency in the 107th district, without any intent to return, and instead make Defiance his new permanent or indefinite residence.”
The trial court concluded that Representative Schroer did not intend to abandon his residence in the 107th district by leasing the Gerst house for a two year term to end when his term as a state representative ended. The Western District deferred to the trial courts finding that Representative Schroer testimony was credible. Schroer entered a two-year lease at essentially the same time he purchased a house in Defiance, which was certainly probative of whether he intended to abandon the 107th district without any intent to return. Furthermore, the conflicting facts gave rise to the strong presumption in favor of the original domicile, which the trial court properly applied in assessing these facts and reaching its conclusion that Representative Schroer was still a resident of the 107th district. Datt vs. Schroer, (ED109243, 10/30/20)
Comment Howard: I am uncomfortable with this case because it seems to be extremely weak. After all, Representative Schroer stated in an application for the house loan, a car loan and car insurance that his primary residence was the Defiance location, where his family was domiciled. I assume he was required in order to get the loans and the car insurance to tell the truth, otherwise he could be guilty of fraud. While the opinion cited the Kit Bond case, State ex rel. King v. Walsh, the leading case in this area of law, (construing residency requirement for governor in Article IV, Section 3) several times it seems to me that the better analysis would have been the dissent in the Kit Bond case.
Comment Ragan: It is problematic to have a situation where politicians can shop for a political jurisdiction. Some people might be concerned about the ethical or moral implications that arise when an elected representative’s family moves out of a district because the representative’s own district does not provide sufficient educational resources to support his family. What about the families that live in that district who need those type of resources but don’t have the ability or resources to move? An elected official isn’t the same as a voter shouldn’t we require a strict scrutiny standard for representatives to reside in a jurisdiction to ensure the best representation.
Employer Violated the Public Duty Doctrine By Retaliation Against Doctor For Whistleblowing Of Violation Of Federal Law Related To Staffing Of Emergency Rooms
Facts and Procedure: Brovont v. KS-1 Medical Services and MO-1 Medical Services, is a complex and interesting opinion, some 48 pages long, dealing with choice of law and the public duty doctrine related to the staffing of emergency rooms. This claim involved employer retaliation against a doctor who reported violations of federal law and medical standards of care for the emergency room. This is also a big money case with tens of millions of dollars at stake, depending on whether or not the Court of Appeals found Missouri or Kansas law applied to the claim. The case is also interesting because it showed how the profit motive led to blatant disregard for patient care.
HCA, Inc. (“HCA”) contracted with EmCare Holdings, Inc. (“EmCare”) to provide physician staffing at hospitals that HCA owned and operated in the Kansas City area, in both Missouri and Kansas. EmCare, publicly traded on the NYSE, is the nation’s largest physician management company, with nearly 16,000 clinicians providing patient care in more than 4,600 hospitals and other healthcare facilities nationwide.
Dr. Brovont specialized in the practice of emergency medicine. In 2010, when Dr. Brovont came to the Kansas City area, he signed a contract with MO-I to work in the emergency department at Centerpoint Medical Center in Independence, Missouri (“Centerpoint”). In 2012, Dr. Brovont was asked if he would be willing to transfer to Overland Park Regional Medical Center in Overland Park, Kansas (“Overland Park”). Dr. Brovont agreed and signed a contract with KS-I to work as Medical Director of Overland Park’s emergency department, in charge of the twenty-two physicians who worked in the emergency department at Overland Park as well as all of the emergency department’s support staff. One of his duties as Medical Director was to act as the physician liaison between the emergency medicine staff and the rest of the hospital system.
Since 1993, Overland Park had a policy in place setting forth the guidelines for the initiation, management, and evaluation of a Code Blue procedure and for treatment of the patient. At Overland Park, a Code Blue was an urgent distress call, when staff discovered a patient who had stopped breathing or whose heart had stopped functioning, to bring necessary assets to the location to help resuscitate the patient. While Dr. Brovont was the Medical Director of the emergency department at Overland Park, the only doctor assigned to the Code Blue team under the policy was the emergency room doctor. However, for eighteen hours out of each day, Overland Park normally only had one doctor in the emergency room. Between the hours of 3:00 p.m. and 5:00 p.m. and then between 9:00 p.m. and 1:00 a.m. there would usually be two physicians covering the emergency department. All other times of the day there was only one doctor in that department, although there was ancillary help from the nursing staff and physician assistants.
One of Dr. Brovont’s responsibilities as the Medical Director was to review the Code Blue policies and determine their appropriateness. The emergency room physicians expressed concerns to Dr. Brovont that the increased number of patients in the hospital as a whole due to a major expansion, the recent increased size of the emergency department specifically, and the number of patients requiring emergency treatment, all combined with the requirement that doctors leave the emergency department for Code Blue calls in other parts of the hospital resulted in the endangerment of patients. Because there was single coverage in the emergency department eighteen hours of each day, whenever the covering physician had to leave for Code Blues in other parts of the hospital, which occurred quite frequently, the emergency room was left unstaffed by a physician. Dr. Brovont represented other physicians in the group, who came to him with their concerns about the requirement that they leave the emergency department for Code Blues, which essentially required them to physically be in potentially three places at the same time. Doctors had to cover the main emergency room, somewhere else in the 343-bed hospital, and in the pediatric emergency room which left the emergency department unattended by a doctor.
In addition to patient safety concerns, Dr. Brovont was concerned about the Overland Park Code Blue policy’s compliance with federal law, which he reported to Dr. McHugh who was, both the Executive Vice President of EmCare and directly responsible for all hospital subsidiary contracts in the Kansas City metropolitan area, on both sides of the state line, including MO-I and KS-I. Overland Park’s emergency department was designated as a Level II trauma center. As part of his written contract as Medical Director, Dr. Brovont was required to educate and maintain an emergency department that complied with federal law. The Emergency Medical Treatment and Labor Act (“EMTALA”) is a federal law that requires that an emergency room physician be available to make a medical screening exam promptly whenever someone presents to the emergency department, regardless of their insurance status or ability to pay. In the summer of 2016, Dr. Brovont believed that Overland Park was violating EMTALA by not having an emergency room physician available in the emergency department to do a medical screening exam in a timely manner, because the physician was required by the Code Blue policy to be out of the department to respond to a Code Blue in as many as three places at once.
In addition, the American College of Surgeons (“ACS”) set forth guidelines to guide the care for traumatically injured patients. A Level II trauma center was required to have a physician in the emergency department at all times.
Dr. Brovont again expressed these concerns to Dr. McHugh, In response, Dr. McHugh informed Dr. Brovont that the staffing decisions for the emergency department were financially motivated but that he was aware if the staffing model resulted in a bad outcome for a patient, the cost of the bad outcome may exceed the savings. Dr. Brovont agreed to support Dr. McHugh’s initial staffing decision, to have emergency room doctors cover both the main emergency room and the pediatric emergency room for the following 90 days. However, near the end of the 90-day period, no staffing policy changes had been made for the main emergency department, the pediatric emergency department, or the Code Blue policy. On July 28, 2016, Dr. Brovont organized a meeting between Dr. McHugh and all of the physicians in the emergency department at Overland Park. At that meeting, he specifically brought up the physicians’ concerns about being responsible for responding to Code Blue patients throughout the hospital, requiring them to be in potentially three places at once, the anxiety it was creating for the physicians, and the potential safety issues it was creating with patient care, all of which he expressed were untenable. He specifically discussed the violation of federal law due to the policy.
Following this meeting Dr. McHugh sent an e-mail to all of the emergency department physicians stating in part that “HCA is a for-profit company traded on the New York Stock Exchange. Many of their staffing decisions are financially motivated. EmCare is no different.” These statements contained hyperlinks to web sites of each company’s stock market and financial information. Following that it stated, “Profits are in everyone’s best interest.” At the end of the e-mail it stated, “Thank you as well for respecting my request to refrain from publicly voicing your concerns/objections until we are given a fair opportunity to address them.”
Dr. Brovont then composed a letter expressing his and the rest of the physician group’s discomfort with the Code Blue policy and their concerns regarding patient safety issues created by the continued use of the current policy. All twenty-two of the physicians expressed their agreement with the content of the letter. Dr. Brovont then sent the letter to Dr. McHugh and Dr. Lindsey Bailey (“Dr. Bailey”) communicating that the entire group of physicians who provide emergency services at Overland Park were very concerned about the Code Blue policy affecting their ability to provide safe, timely care to their emergency room patients because they were required to be in potentially three places at once.
This ultimately resulted in the termination of Dr. Brovont from the Overland Park Regional Medical Center and being blackballed from working at any of the other EmCare facilities in Kansas and Missouri. Dr. Brovont then filed a one-count petition for damages in Missouri for wrongful discharge in violation of public policy against KS-I and MO-I, alleging that the reason he was terminated as Medical Director and emergency room physician was because of his complaints of dangerous and illegal understaffing of the Overland Park emergency department due to the decision to use a single emergency room physician to also cover the responsibilities at the pediatric emergency room as well as to respond to Code Blue incidents throughout the hospital.
A jury returned a verdict for compensatory damages in the amount of $2,817,045 in economic damages, and $6 million in non- economic damages jointly and severally against KS-I and MO-I. The jury found that both KS-I and MO-I were liable for punitive damages and awarded $10 million against each defendant. Applying Kansas law, the trial court reduced the amount of certain sums awarded by the jury and entered judgment in favor of Dr. Brovont and against KS-I and MO-I to comport with Kansas law.
The parties filed post-trial motions, which were overruled and they appealed to the Western District.
Analysis: Conflicts of Law – Personal Jurisdiction: Normally we are not concerned with conflict of law questions, nevertheless this case seems useful because of its analysis of minimum contacts and the reasoning that led the Court to conclude Missouri had jurisdiction, even though the vast majority of the contacts were in Kansas. First, the Court had to resolve whether or not it had personal jurisdiction in Missouri. After all the case involved primarily the Overland Park hospital. Nevertheless, actions taken by Dr. McHugh affected the employment of Dr. Brovont in Missouri because prior to his dismissal he was eligible for reemployment at EmCare hospitals in Missouri. The Court noted that the Missouri long-arm statute applied if there was the commission of a tortious act in Missouri. In this case, Dr. McHugh was the agent of both KS-1 and Mo-1 and was acting on behalf of EmCare when he fired Dr. Brovont and blacklisted him from working for EmCare facilities in Missouri, thereby committing a tortious act.
"Further, Missouri courts may still assert personal jurisdiction over a non-domiciliary defendant corporation without violating due process if that entity has at least one contact with this state and the cause of action being pursued arises out of that contact."
The Western District reasoned that Missouri was the more compelling choice over Kansas because it was unlikely that Kansas had personal jurisdiction over the Missouri claim. If Kansas was the choice of forum over Missouri, the Missouri claim would have to be tried separately in different forums. Allowing both claims to tried together made sense because they involved similar facts since the claims were interwoven.
The Western District concluded that KS-I’s benefit from Dr. McHugh’s termination of Dr. Brovont from MO-I in Missouri supported the conclusion that McHugh was acting on behalf of both KS-I and MO-I when Dr. Brovont’s contract with MO-I was terminated, and this single tortious act is a sufficient minimum contact of KS-I with the State of Missouri to support the trial court’s exercise of personal jurisdiction over KS-I in this case.
Wrongful Discharge Claim – The Court begins its analysis by stating the fundamentals of the public duty doctrine. An at-will employee may not be terminated for reporting wrongdoing or violations of law to superiors or public authorities. The wrongful discharge exception to the at-will employment doctrine protects reporting violations of public policy, also known as “whistleblowing.” If this occurs the employee has a cause of action in tort for wrongful discharge based on the public policy exception. The wrongful-discharge doctrine applies to both at-will and contract employees.
A whistleblower must demonstrate that: “(1) he reported serious misconduct that constituted a violation of the law and of well- established and clearly mandated public policy to his superiors; (2) the employer terminated his employment; and (3) there is a causal connection between his reporting and his termination.” In addition: “The whistleblowing need only be a contributing factor and need not be the exclusive cause of the termination.” Brovont v. KS-I and Mo-1 Medical Services, (WD82544 Consolidated with WD82552, 10/13/20)
Comment Howard: This was a very interesting case providing insights to how some medical services are poorly delivered, based on the profit motive. What really surprised me was the flagrant disregard for patient care when weighed against the drive for profits.
Restrictive Covenant Limiting Use In The Subdivision To “Residential Purposes” Includes Rental Of Property
Facts and Procedure: Owner of residential home in the Golf Club of Wentzville moved out and rented the property, which was challenged by the home owners Association as violating home owners’ restrictive covenants, which they alleged prohibited the rental of property. The restrictive covenant read as follows:
“(A) No Lot shall be used for any business or commercial purpose, and each Lot shall be used solely for residential purposes except (i) for use pursuant to home occupations not in violation of any zoning ordinances affecting the Subdivision, …”
The trial court found that the restrictive covenants prohibited the rental of the property and issued an injunction prohibiting the rental, which was appealed to the Eastern District.
The Eastern District held that restrictions built around the term’s ‘residence’ or ‘residential purposes,’ without more, merely limited the use of the property to living purposes and does not exclude apartment houses. The Court concluded that absent express language within the restrictive covenant indicating otherwise, the rental of residential property to tenants for living purposes constitutes a “residential purpose.” The Golf Club of Wentzville v. Real Homes Inc. (ED108554, 10/20/20)
Asserting Defense Of Sovereign Immunity, Official Immunity, Or Public Duty Doctrine Are Different
Facts and Procedure: Plaintiff, (Student) asked to leave class due to an urgent restroom need, but Teacher refused contrary to school policies, causing Student to wet himself in the classroom in front of his peers. Student sued the school district (District) and the teacher (Teacher) in tort.
Without answering or conducting discovery, Defendants immediately sought summary judgment asserting the sovereign immunity of the District and official immunity and asserting the public-duty doctrine covered the Teacher. Their one-fact summary asserted that District’s liability insurance expressly excluded claims “barred by … sovereign immunity … and nothing in this Document shall constitute any waiver of whatever kind of the defense of sovereign immunity.”
After briefing and argument, the trial court granted Defendants’ motion, entering summary judgment as requested for District based on sovereign immunity and for Teacher based on official immunity or the public-duty doctrine. The Student appealed to the Eastern District.
Analysis: Sovereign Immunity The Court started its analysis by citing black letter law. The “District, a public entity, enjoys sovereign immunity except as waived,” and Plaintiff “must plead and prove such waiver as part of his case in chief.” In this case, the policy, attached to its answer, specifically provided that the District did not waive sovereign immunity by securing the policy. Furthermore, in order to show a waiver of sovereign immunity the Plaintiff must plead and prove such waiver, which plaintiff failed to do. Point ruled against Student.
Official Immunity: Citing, Southers v. City of Farmington, the leading case on official immunity and the public duty doctrine the Court noted that this is an affirmative defense that must be plead and proved, which teacher failed to do in her motion for summary judgment. The key to this defense is whether or not the action of the Teacher was discretionary or ministerial, which depends on the degree of reason and judgment required to perform the act. The Teacher failed to show in her motion for summary judgment facts to support her claim that her actions were discretionary, therefore, the trial court erred in granting the teachers motion for summary judgment.
Public Duty Doctrine: The public duty doctrine states that a public employee is not civilly liable for the breach of a duty owed to the general public, rather than a particular individual. It is not an affirmative defense, but rather “negates the duty element required to prove negligence, such that there can be no cause of action for injuries sustained as the result of an alleged breach of public duty to the community as a whole. Its protections are subject to exceptions, including actions taken in bad faith or with malice, or “when injury to a particular, identifiable individual is reasonably foreseeable as a result of a public employee’s breach of duty,” with liability in the latter situation dependent on the facts of each case.
As with official immunity, Teacher did not prove a right to judgment because a bare assertion that the public-duty doctrine applied. Without factual support, mere allegation does not satisfy Teacher’s burden to make the prima facie case. John Doe v. Camdenton RIII School District, (SD36665, 10/26/20)
Comment Howard: I think it would be pretty easy for a lawyer who does not practice local government law to fail to recognize the difference with respect to asserting the defense of sovereign immunity, which is an absolute defense versus official immunity, a defense that has exceptions or defense of public duty doctrine.
Sixteen Years Of Paying Charges For Sewer Service Without A Dispute Constituted Basis For Interpretation Of Contract
In 1998 the City of Malden (City) and the Dunklin County Reorganized Common Sewer District (District) entered into an interlocal governmental agreement for the treatment of the District’s wastewater for a term of 35 years. Under the agreement the District agreed to pay the City a minimum user fee of $1,000 per month for up to 250 customers and an additional charge of $4 per month per customer above 250. The Agreement provided that the amount charged to the District could be raised or lowered by the same percentage that the sewer rates were raised or lowered for residents of the City.
In July 2010, the City passed an Ordinance, which sets forth the formula established by the city council to calculate the wastewater rate for all customers, including the District. The Ordinance calculated the wastewater rate by setting a monthly customer charge and adding monthly charges for wastewater services, based on a monthly water usage. For those customers located inside the City limits, the Ordinance required that the rates be adjusted each year based on the cost of operations of the previous year.
In 2014 (some 16 years after the inception of the agreement) a dispute arose concerning the amount of the payment. The City and the District entered into a one page Mediated Settlement of this dispute, which did not modify the terms of the original agreement. Instead the Mediated Settlement set forth the amounts the District agreed to pay in user fees and the amount the City agreed to charge. All claims for underbilling or over billing were abandoned. When the payments were not made in accordance with the Agreement the City filed a petition to collect the unpaid balance. The trial court after conducting a bench trial entered a judgment for the City and the District appealed to the Southern District.
Analysis: On appeal the District argued that the trial court erred because the judgment was not supported by substantial evidence and the trial court should have only looked to the terms of the language of the Agreement and erroneously considered the Ordinance and the Mediated Settlement. The District claimed that the trial court erred by admitting parol evidence construing the intent of parties with respect to the Agreement.
The Southern District determined that it was not error to admit parol evidence because the Agreement was ambiguous, as noted by the fact that the parties disagreed as to its interpretation. The Southern District resolved the case based on the interpretation placed on the Agreement for 16 years.
We “take note of the well- established principle that the interpretation placed on a contract by the parties before it becomes a matter of controversy is entitled to great weight in ascertaining their intent and understanding, and the courts will generally follow the parties’ own practical interpretation of the agreement.” Here, the “course of conduct” between the parties established the billing method for at least 16 years, from the Agreement’s inception in 1998 to the dispute that arose in 2014.
The City interpreted the Agreement as providing a single per-customer usage fee and automatically adjusted the District rate by the same percentage as that of City residents. The City billed the same, and the District paid accordingly for 16 years. It was only when the District decided not to follow that settled course of conduct and challenge the billing method under the Agreement that the present controversy arose. The trial court’s decision merely required the District to pay what it had been paying without dispute for 16 year. In addition, the Court concluded that it would have been unreasonable to adopt the interpretation proposed by the District, since the language of the Agreement contemplated that the rates would be changed periodically. City of Malden v. Dunklin County Reorganized Common Sewer District, (SD36182, 10/27/20)
Comment Howard: I liked the very practical way the Court resolved this case.
RLUIPA In The Age Of Covid
There is an excellent article in the November/December edition of the Municipal Lawyer on RLUIPA: Basic Principles and Minimizing Liability by Gregory Aker and Thomas Brown. My take on the title is that this really about RLUIPA in the age of Covid. Of course, the usual RLUIPA principles apply, which the article reflects. Before drafting a law impacting religious services or limiting the group exercise of religious services I would want to read and apply the principles in this article. More than well worth the read.
Narrow Tailoring To Meet Free Speech Concerns
In the same edition of the Municipal Lawyer, there is an excellent article on Intermediate Scrutiny: The Art of Narrow Tailoring by Eric Shytle. There is nothing more difficult than drafting a law that impacts free speech. If asked to draft an ordinance impacting free speech before jumping out the window please read this article. The author suggests that when you are drafting an ordinance that impacts the First Amendment, Free Speech clause you build a record to defend the ordinance if challenged in court. The article also focuses on the question of whether or not the U. S. Supreme Court has recently modified the evidentiary standards with respect to narrow tailoring, discussing the split in the Circuits including the 8th Circuit. Very interesting and useful article.
Analysis Of The 20 IRS factors In Determining Independent Contractor Or Employee Status
Periodically, I have had to determine whether or not a person is an employee or independent contractor. Seems to me that this question is more prevalent today in this strange world of the gig economy. In 417 Pet Sitting v. Division of Employment Security, the Western District examines the 20 factors, based on an IRS Revenue Ruling to determine if persons who are engaged on behalf Pet Sitting are employees or independent contractors.
After an extensive statement of facts the Court used IRS’s Rev. Rul. 87-41, 1987-1 C.B. 296, as a template in which the IRS identifies twenty factors “for determining whether sufficient control is present to establish an employer-employee relationship.” These factors are:
“(1) instructions; (2) training; (3) integration; (4) services rendered personally; (5) hiring, supervising, and paying assistants; (6) continuing relationship; (7) set hours of work; (8) full time required; (9) doing work on employer’s premises; (10) order or sequence set; (11) oral or written reports; (12) payment by hour, week, month; (13) payment of business and/or traveling expenses; (14) furnishing of tools and materials; (15) significant investment; (16) realization of profit or loss; (17) working for more than one firm at a time; (18) making service available to general public; (19) right to discharge; and (20) worker’s right to terminate.”
The Court considered the facts listed in the statement of facts above to evaluate whether or not the persons providing pet services are employees or independent contractors. After going through all of the factors challenged by Pet Sitting the Court added up the number of factors supporting employee status or independent contractor status. In this case 19 of the factors were relevant to the inquiry (one factor was considered to not be relevant). Some 13 of the factors supported employee status and 5 supported independent contractor status and 1 was neutral, leading to the conclusion by the Court that the individuals were employees. For the sake of brevity I did not go through the Court’s analysis of the factors. 417 Pet Sitting v. Division of Employment Security, (WD83833, 10/27/20)
Comment Howard: Comments to IRS’s Rev. Rul. 87-41, 1987-1 C.B. 296, state that the 20 factors are significant in determining whether sufficient control is present to establish an employer- employee relationship. The degree of importance of each factor varies depending on the occupation and the factual context in which the services are performed. The twenty factors were designed only as guides for determining whether an individual is an employee; special scrutiny is required to assure that formalistic aspects of an arrangement do not obscure the substance of the arrangement. The Court in Pet Sitting did not indicate in its opinion that one factor or another was more significant. Still considering this is not a particularly close case weighing of the relative importance of the factors would seem to be immaterial to the outcome. Seems like the damages regarding back payroll taxes would be enormous suggesting an extra careful review and caution is warranted.
No Qualified Immunity For Officers Who Housed Prisoner In A Jail Cell That Was Covered With Human Feces And Cell That Had Only A Clogged Drain For Disposing Of Human Waste
Facts and Procedures: Trent Taylor an inmate in the custody of the Texas Department of Criminal Justice filed a civil right complaint alleging that, for six full days in September 2013, correctional officers confined him in a pair of shockingly unsanitary cells. The first cell was covered, nearly floor to ceiling, in “‘massive amounts’ of feces”: all over the floor, the ceiling, the window, the walls, and even “‘packed inside the water faucet.’” Fearing that his food and water would be contaminated, Taylor did not eat or drink for nearly four days. Correctional officers then moved Taylor to a second, frigidly cold cell, which was equipped with only a clogged drain in the floor to dispose of bodily wastes. Taylor held his bladder for over 24 hours, but he eventually (and involuntarily) relieved himself, causing the drain to overflow and raw sewage to spill across the floor. Because the cell lacked a bunk, and because Taylor was confined without clothing, he was left to sleep naked in sewage.
The Fifth Circuit Court of Appeals held that the conditions described violated the Eight Amendment (cruel and unusual punishment) but granted the officers qualified immunity since the law had not been clearly established.
In a per curiam opinion the United States Supreme Court held that the officers were not entitled to qualified immunity noting that “…no reasonable correctional officer could have concluded that, under the extreme circumstances of this case, it was constitutionally permissible to house Taylor in such deplorably unsanitary conditions for such an extended period of time.” In remanding, the Supreme Court noted that an officer by officer review would be required but that “…the record suggests that at least some officers involved in Taylor’s ordeal were deliberately indifferent to the conditions of his cells.” Justice Alito after grousing about why the Court took this case ultimately concurred in the judgment and agreed that the Officers were not entitled to qualified immunity. Taylor v. Riojas, (19-1261, 11/02/2020).
Comment Howard: The big question is whether the Court was sending a bigger message than just the result in this case. In my mind the likelihood that a conservative Supreme Court would abolish qualified immunity seems unlikely. Nevertheless, chipping away at the doctrine of qualified immunity puts lower courts on notice that they have more leeway on denying qualified immunity. Seems like the Court did not want the opinion of the Fifth Circuit granting qualified immunity to be on record in a matter that was so egregious.
CID Assessments Survive Tax Sale
Facts and Procedure: In 2006 the City of Branson (City) created the CID as a political subdivision of the State with the power to levy special assessment. To finance certain improvements, the District authorized the issuance of the District’s Special Assessment Revenue Bonds, in the principal amount of $18,405,000. The Resolution stated the Bonds were “obligations of the District payable from the proceeds of the Special Assessments and to levy special assessments against real property in the District to pay debt service on the Bonds, make any required trust indenture payments, and pay the District’s administrative costs. The Resolution adopted by the City in issuing the bonds stated that the Special Assessments levied in each year by the District constituted a perpetual lien against each tract, unit, lot or parcel of property from which it is derived, and may be foreclosed in the manner described in the CID Act.
The CID assessments were not paid and the Taney County Collector’s (“the Collector”) conducted a post-third offering for delinquent community improvement district (“CID”) assessments levied by the District against the Parcels, which RER purchased at the offering. RER subsequently filed a petition to quiet title. Thereafter, RER and the District both filed motions for summary judgment. RER argued that, pursuant to the Community Improvement District Act (the “CID Act”) and the Jones-Munger Act, RER’s Collector’s Deeds terminated all District special assessments as to the Parcels. The District also relying on the Jones-Munger Act and the CID Act argued that the sale did not impair the District’s power or authority to impose and levy “future . . . special assessments” within the boundaries of the District, and that either RER’s Collector’s Deeds were invalid or RER owed the delinquent 2015 assessment amount, as RER was required (and failed) to pay that sum before receiving its Collector’s Deeds. The trial court entered summary judgment in favor of the District, and against RER, which was appealed by RER to the Southern District.
Analysis: The Southern District teed up the sole and narrow question: “Whether—in light of the controlling provisions of the CID Act and the Jones-Munger Act—assessments levied or imposed by the District against the Parcels after the post–third-offering sale survive, such as to impose a continuing lien on the Parcels (and a corresponding obligation on RER to remit payment for such subsequently levied or imposed assessments).”
The Court determined that the issue was one of statutory construction discussing the background of the Community Improvement District Act (CID) and the Jones-Munger Act.
The Community Improvement District Act – In 1998, the legislature adopted the CID Act for the purpose of the establishment, proper governance, and operation of CIDs. The CID Act directs the manner by which real property owners within a specified area may form a CID as either a not-for-profit corporation or a political subdivision. Once formed, these entities are granted powers enabling them to carry out numerous fiscal initiatives, primarily facilitated by the ability of those entities to raise funds through special assessments and taxes for the provision of public infrastructure. CIDs may be used to fund, among other things, the installation of public infrastructure improvements (such as roadways, sidewalks and sewers), the creation of parks, the operation of buses and other modes of transportation, the provision of security personnel, the promotion of tourism and cultural events, and the remediation of blighted conditions on private property.
The CID Act requires that the county collector “shall collect the real property taxes and special assessments made upon all real property within that county and district, in the same manner as other real property taxes are collected.” Furthermore, upon certification by the district for collection, the collector may add each special assessment to the annual real estate tax bill for the property and collect the assessment in the same manner the collector uses for real estate taxes. Any special assessment remaining unpaid on the first day of January annually is delinquent and enforcement of collection of the delinquent bill by the county collector shall be governed by the laws concerning delinquent and back taxes. The statute goes on to provide that the lien may be foreclosed in the same manner as a tax upon real property by land tax sale under Chapter 140 [the Jones-Munger Act] or, if applicable to that county, chapter 141.” § 67.1521.5. “Each special assessment which is due and owing shall constitute a perpetual lien against each tract, lot or parcel of property from which it is derived.”
In addition: “The CID Act designates the specific requirements and procedures for the removal of real property from a CID in Sections 67.1441 and 67.1442. Neither section, nor any other provision of the CID Act, provides that collection (or partial collection) of delinquent assessments via the procedures set out in the Jones-Munger Act removes the subject property from a CID, or removes from a CID the power or authority to impose or levy future assessments on that property.” See §§ 67.1401-1571.
The Jones-Munger Act –“ Since 1935, the Jones-Munger Act has governed tax sales in Missouri. Generally, the provisions of the Jones-Munger Act direct the manner and effect of certain (potentially) successive tax sale offerings, whereby the collector attempts to sell “[a]ll lands . . . on which taxes or special assessments are delinquent and unpaid[.]” § 140.150.1. Among other requirements, the Act provides that the collector “publish for three consecutive weeks” a list of the delinquent properties subject to the collector’s offering of sale, including “in the aggregate[,] the amount of taxes, penalty, interest and cost due thereon, each year separately stated.” § 140.170.1&.2, RSMo. For the first three of these successive offerings, the collector may not sell the subject property unless in receipt of a bid “equal to the delinquent taxes thereon[,]” along with the associated “interest, penalty and costs[.]”
Thereafter, and as occurred in the instant matter, the collector may at its discretion, attempt to sell the property at one or more post-third offerings. As long as the collector performs such offering at least once every five years, the statute of limitations will not bar enforcement of the lien attendant to the subject property, and the collector may continue offering the property. § 140.250.3&.4. There is “no period of redemption from such post-third[-]year [offering] sales[.]” § 140.250.4. In a post-third offering, the collector may, subject to certain exceptions not applicable here, offer and sell the subject property “at any time and for any amount.” § 140.260.8. Notably, however, “before any purchaser at [a post-third-offering] sale to which this section is applicable shall be entitled to a collector’s deed it shall be the duty of the collector to demand, and the purchaser to pay, in addition to his bid, all taxes due and unpaid on such lands or lots that have become due and payable on such lands or lots subsequent to the date of the taxes
Alleged Error – RER argued that the trial court erred in granting summary judgment because the District’s assessments did not survive the post-third-offering sale at which RER purchased the Parcels relying on the language in the Jones-Munger Act to the effect that a successful purchaser receives the property in “fee simple,” and that the Collector’s Deed received by such purchaser has “priority over all other liens or encumbrances on the property sold except for real property taxes.
The District and the MML argued that the plain language of CID Act and the Jones Munger Act support the trial court’s judgment by relying on and distinguishing numerous cases running the gamut from the 1930s all the way back to the mid-19th century. The Court did not rely on this history noting that the cases relied on do not control as to the current issue before us in light of the current statutory regime relying instead on statutory construction and not stare decisis.
The Court noted that the goal of statutory construction is to give effect to the General Assembly’s intent as reflected in the plain language of the statute. Provisions of a legislative acts must be construed together and, if possible, all provisions must be harmonized and every clause given some meaning. The legislature is presumed not to enact meaningless provisions. Here, in pari materia requires the relevant portions of the CID Act (where the statutory authority initially derives) to be construed in accord with those of the Jones-Munger Act.
RER argued that Sections 140.250 and 140.420.4 of the Jones-Munger Act regulated the issue. Section 140.250.4, governing third and post-third offerings states: “The collector’s deed or trustee’s deed shall have priority over all other liens or encumbrances on the property sold except for real property taxes.” RER attempts to rely on this the last sentence of this subsection (emphasized above) in arguing that since the District’s assessments are not “real property taxes,” Therefore, RER’s Collector’s Deeds must have priority over the District’s future assessments.
The Court noted that as the District correctly indicates, if real estate “taxes” meant real estate taxes only (per the CID Act’s utilization of the Jones-Munger Act) and not CID assessments, the entire legislative framework for the collection of delinquent CID assessments would be rendered utterly nonsensical and fail.
Furthermore, under [RER]’s analysis, in districts where the sole source of revenue is special assessments, the Jones-Munger tax sale process and inability to impose future special assessments would render such districts as lifeless liabilities, potentially unable to afford to operate in compliance with Missouri law and unable to pay any fines associated with non-compliance. . . . Essentially, [RER] was asking the Court to determine that the property owners within a community improvement district, by not paying dues and owing special assessments and ultimately subjecting their respective properties to the Jones-Munger tax sale process could cause community improvement districts to functionally, but not legally, terminate, and incur significant fines in the process, all of which would never be paid. Such an outcome stands in contrast to the orderly process described in RSMo § 67.1481 [in the CID Act] for the legal termination of a community improvement district. RER LLC vs. Branson Hills Facility Infrastructure Community Improvement District, (SD36349, 10/14/20)
Comment Howard: The Court noted with approval and praise on several occasions the MML amicus brief of the MML. Congratulations to the authors of the MML amicus brief for an exceptional job in this very important case.