March Newsletter (Issue 03-2021)

No Duty Owed To Invitee When Ice And Snow Are Falling And The Ice And Snow Are Left In Their Natural Condition:

grand-court-380x214Introduction: O’Donnell vs. PNK (River City) and Total Lot Maintenance, is a slip and fall case on private property where the Eastern District examined the Massachusetts Rule, which applies to municipalities, to determine if River City, who operated a casino, owed a duty of care to protect O’Donnell (Plaintiff who brought suit for injuries resulting from slip and fall) from naturally occurring ice accumulation as it fell at the time of her fall. In addition, the case involved a question as to whether or not River City voluntarily assumed a duty to remove the snow and ice by way of its conduct or by contract with Total Lot Maintenance (TLM). The Plaintiff in this case asked the Court to reexamine the Massachusetts Rule that brought a very interesting comment from the Eastern District, which brings us to why a case involving private property is of concern to local government. 

In 1954, when the Missouri Supreme Court adopted the Massachusetts Rule the Court harmonized the liabilities of landlords, municipalitiesinviters, and employers—all of which share the same general duty of care.  While the Eastern District, declined to take up the challenge to the Massachusetts Rule, as urged by the plaintiff, and generally expressed its support for the Rule as it applied to private property, it stated with respect to municipalities:

“In our view, if the Massachusetts rule were to be reconsidered as it applies to inviters, as in this case, such reconsideration should also include examination of the municipalities exception upon which the rule's adoption was based.” (My Emphasis)

The Court goes onto further note, that it had no authority to review the exception for municipalities as laid out in Walsh, 142 S.W.2d at 466, because we are bound by the pronouncements of our Supreme Court.” 

MML will need to be prepared in the event this case turns into a show down, before the Missouri Supreme Court, on the reexamination of the Massachusetts Rule, as applied to municipalities.  

Facts and Procedure – The facts giving rise to the underlying action in this case stem from a slip and fall at the River City Casino during a winter ice storm on December 16, 2016. That afternoon, O’Donnell, a River City customer, arrived before any frozen precipitation or accumulation had begun. After 2 or 3 hours at the casino, O’Donnell decided to leave. At approximately 4:13 p.m., she exited the north doors, took a few steps and then slipped and fell on a patch of ice on the sidewalk and sustained injuries. The freezing precipitation had not been shoveled, scraped, salted, or altered in any way. (It was in its natural state.)

O’Donnell then sued River City, alleging it knew or could have known of unreasonably dangerous condition of the premises and negligently failed to exercise ordinary care to remove or treat the ice accumulation, or to warn its invitees on the premises of the dangerous condition. After O’Donnell learned that River City had a contract with TLM to provide snow removal and surface treatment services for the premises, O’Donnell added TLM as a defendant alleging that TLM negligently breached its duty to keep the premises reasonably safe from ice and snow accumulation or to warn invitees of the dangerous condition of the premises.

River City moved for summary judgment, which was granted and Plaintiff appealed to the Eastern District. 

Analysis:

Duty owed by River City – The Eastern District, started with the current status of the law. It noted, that while premise liability principles typically govern slip and fall claims against owners and possessors of property, Missouri has adopted an exception to premise liability, commonly known as the Massachusetts Rule, that imposes “no duty to remove snow or ice that accumulates naturally and is a condition general to the community.”

O’Donnell slipped and fell on naturally accumulating ice on River City’s premises when she was leaving the casino while freezing rain was still falling; that the icy conditions were general throughout the community; and River City had taken any action to alter the physical condition of the ice. The Court concluded that these facts were sufficient to warrant imposition of the Massachusetts Rule; therefore, the Eastern District held trial court did not err in applying the Massachusetts Rule in sustaining the motion for summary judgment.

Assumption of duty by course of conduct – O’Donnell claimed that River City assumed a duty to her with respect to the dangerous condition caused by the falling and accumulating ice on its premises based on its course of conduct in the hours and minutes before she fell. The Court concluded that River City did not assume, by its conduct, the duty, even though River City closely monitored the approaching ice storm and was well-aware of the weather conditions; warned other patrons of the dangerous conditions; assisted some patrons to their vehicles; and twice summoned TLM to treat the ice. 

Under the Massachusetts Rule, River City did not take any action to alter the natural condition of the snow or ice on its premises; therefore, the Rule applied. 

Assumption of duty by agreement – The Court noted, that under the Massachusetts Rule, there is an exception when the defendant has voluntarily assumed a duty of care, pursuant to an agreement. The Court then examined the contract between River City and TLM for the removal of snow/ice to determine if River City has voluntarily assumed the duty to remove the ice/snow. In this case, River City had not triggered an event under the contract because there was no request by River City to remove the snow/ice. In addition, the Court concluded that since the record did not include a copy of the contract, therefore, it was impossible to tell if an event was triggered, under the contract, to determine if River City voluntarily assumed the duty by its agreement with TLM.  O’Donnell vs. PNK (River City) and Total Lot Maintenance, (ED108986, 03/09/21).  

Comment Howard: This is the first time, I have seen a history of the Massachusetts Rule.  Even though this case involves private property the same principles apply, since municipalities are working off of the Massachusetts Rule. This case has the potential to be a blockbuster, if the Missouri Supreme Court, takes the case and reconsiders the Massachusetts Rule as applied to municipalities.  I personally think the Rule is outdated because it encourages the property owner to take no action. After all, if you act and change the natural condition of the snow or ice you have created liability. I am interested in why the Eastern District liked the Rule for private property and not government property. What drove this distinction?

Comment Ragan: While I might feel sympathy for a person who was engaged in a necessary activity the plaintiff in this case went gambling during a storm. At some point regardless of the behavior of the property owner there is an assumption of risk by the invitee especially to natural conditions in my view.

Supreme Court Revolutionizes Civil Rights Litigation By Allowing Civil Rights Claims To Continue Even If No Actual Damages

prayerIntroduction: Surprisingly, the obscure doctrines of mootness and standing in federal court played a major role in shaping the most important local government civil rights case in years.  In Uzuegbunam v. Preczewski, the United States Supreme Court, in an 8 to 1 opinion, held that even though the original case was moot (parties agreed) and there were only “nominal damages” (parties agree – no actual damages), the Plaintiffs could proceed with their lawsuit. The implications of this are monumental, upending the firmly established doctrine of mootness and the “case or controversy” requirement in the United States Constitution. Until now there had to be an actual case or controversy in order to bring a lawsuit in federal court. 

What does this mean? From now on every civil rights lawsuit will include a prayer in its petition for nominal damages because this will allow the plaintiff to continue the lawsuit in order to get a declaration of the rights concerning the violation of law and attorney fees, even if the case is moot and there are no actual damages. As noted, this allows attorney fees to continue, while litigation continues in order to obtain a declaration concerning the violation of the civil rights law, allowing the plaintiff to pile up huge attorney fees to be paid by the government. When I learned that I won on the law, is when I swarmed the other side to increase my attorney fees. At times, I have seen ADA proponents descend (like a swarm of locust) on a city identifying every ADA violation in sight and putting government on notice of the violations on public and private property. In order to stop the clock, on accumulating attorney fees, these cases will require immediate attention. Best to pay attention and not let this happen. 

Facts and Procedure: Joseph Bradford and Chike Uzuegbunam, are former students of Georgia Gwinnett College, who wanted to exercise their religion by sharing their faith on campus, while enrolled at the College. In 2016, Chike Uzuegbunam talked with interested students and handed out religious literature on campus grounds. Uzuegbunam stopped distributing, after a campus police officer informed him that campus policy prohibited distributing written religious materials outside areas designated for that purpose. A college official later explained to Uzuegbunam that he could speak about his religion or distribute materials only in two designated speech areas on campus, and even then, only after securing a permit. But when Uzuegbunam obtained the required permit and tried to speak in a free speech zone, a campus police officer again asked him to stop, this time saying that people had complained about his speech. 

Campus policy at that time, prohibited using the free speech zone to say anything that “disturbs the peace and/or comfort of person(s).” The officer told Uzuegbunam, that his speech violated campus policy because it had led to complaints, and the officer threatened Uzuegbunam with disciplinary action, if he continued. Uzuegbunam, again complied with the order to stop speaking. Another student, Joseph Bradford, who shares Uzuegbunam’s faith, decided not to speak about religion because of these events.

Both Uzuegbunam and Bradford sued certain college officials charged with enforcement of the college’s speech policies, arguing that these policies violated the First Amendment. The students sought injunctive relief and nominal damages. The college officials ultimately chose to discontinue the challenged policies rather than to defend them, seeking dismissal of the suits on the ground that the policy change left the students without standing to sue because the case was moot (parties agreed that allowing distribution to continue rendered the students’ request for injunctive relief moot. Furthermore, they were no longer enrolled at Gwinnett College) The parties disputed whether the students had standing to maintain the suit based on their claim for nominal damages. Appealing to the Eleventh Circuit, which held that, while a request for nominal damages can sometimes save a case from mootness, such as where a person pleads but fails to prove an amount of compensatory damages, the students’ plea for nominal damages alone could not by itself establish standing. The United States Supreme Court granted cert to determine if a request for nominal damages would allow the Plaintiff to continue the lawsuit based on a claim of nominal damages.

Analysis: Justice Thomas, wrote the opinion for the Court, an 8 to 1 opinion, with Chief Justice Roberts being the sole dissenter. Thomas, reasoned that Uzuegbunam showed that he was injured, by the denial of his right to speak, and that the injury resulted from public officials. Since Gwinnett College had changed the policy and the plaintiffs were no longer students the case would have been moot applying existing law because the Plaintiff’s had no actual damages. The Plaintiff’s had pled nominal damages and the College had changed its policy now allowing for the free speech activity.   So, what was left? There was the allegation of nominal damages, leaving the question as to whether or not this would be sufficient for standing. Not so fast, Thomas reasoned that because nominal damages were available as a remedy in early English and American law, it followed that Plaintiff’s had a legal right to sue to vindicate their rights by getting a declaration, that the policy of the College was unconstitutional. 

Chief Justice Roberts dissented, noting that Uzuegbunam and Bradford were no longer students at the college and the challenged restrictions no longer existed. Furthermore, the petitioners had not alleged actual damages. Roberts, reasoned that this case was moot.  Uzuegbunam v. Preczewski, (U.S. 19–968, 03/08/21) 

Comment Howard: There is a whole industry of civil rights litigants cheering this case.  Come on in and sign up, it is free. We will vindicate your constitutional rights for free. No attorney fees. This case will be particularly hard on smaller communities that rely on part time attorneys and staff. One other factor is that it may take time to bring your city council along to accept the inevitable. In the meantime, attorney fees keep on rolling. One advantage of this case is that it may deter government officials from jacking around citizens, like happened in this case. 

For Scotus blog information on this case click here. For an analysis of what this may mean click here.

 8th Circuit Holds Anti-Israel Boycott Law Violated Free Speech

megaphone-clip-art-3A recent 8th Circuit Court of Appeals opinion held that an Arkansas law prohibiting boycotts of Israeli violated the Free Speech clause of the 1st Amendment.  This opinion is consistent with several other Circuit Court of Appeals opinions invalidating anti-Israeli boycott laws. The law prohibited public entities from contracting and investing with entities that boycott Israeli if the contract had a value of more than $1,000.  The 8th Circuit found that the law violated the Free Speech Clause of the First Amendment under the unconstitutional conditions doctrine that prohibit contractual provisions that deny a benefit to a person that infringes on his or her constitutional right of free speech even if that person has no entitlement to that benefit.  The 8th Circuit concluded that the law included some but necessarily all elements of free speech; therefore, the law was unconstitutional. There was a dissent in this case that would have upheld the Arkansas law.  Arkansas Times v. Waldrip, (8th Cir., 19-1378, 02/12/21)

Is Missouri Anti-Israel Boycott Law  Unconstitutional – In 2020, Missouri joined over 30 other states by adopting an anti-Israeli boycott law. Missouri law applies to businesses that have at least 10 employees and make more than $100,000 annually. The Missouri law would seem to be unconstitutional applying the analysis used by the 8th Circuit and other Circuits. Incidentally, the Missouri law has a non-severability provision, that prohibits severing unconstitutional parts from other provisions that are constitutional. It is hard to imagine that the Missouri law is constitutional, so kiss this law goodbye. I would be very hesitant to enforce the Missouri law without an opinion from the Missouri Attorney General. The larger issue, mentioned, in the Arkansas Times case, but not decided is that underlying actions to boycott Israeli are politically motivated. Therefore, it seems clear there is viewpoint discrimination, which would seem to ultimately doom efforts to revive anti-boycott laws. Nevertheless, expect major efforts to revise the law.

Basement Unit In Buildings Was Non-conforming Because Owner Failed To Meet Its Burden Of Proof By Establishing That The Seven-Unit Residential Apartment Building Had Been Lawfully Established; And That Such Lawful Use Had Been Continuous And Had Not Been Discontinued

colonadeFacts and Procedure: Larry Dade, is the owner of Parkview and Alma, which are colonnade-style “six-plex” apartment buildings in Kansas City, Missouri (I will refer to this ownership at times collectively as Wade). The original permits for these units were issued in 1913 and 1915. Each original permit authorized six apartment units. Each lot is approximately 0.15 acres. The properties are zoned R-1.5. Under current zoning Lot and Building Standards, a residential development in an R-1.5 zoning district must have a minimum of 1,500 square feet of lot area per unit. 

Dade, testified that he purchased the buildings in the late 1980s or early 1990s and rented the upper-floor units.  Dade testified that he started renovating the buildings in January 2018, and that due to the renovations all of the units in the Parkview unit were uninhabitable because the plumbing, wiring, heating and air conditioning had been removed. The six units in Alma building were rented except for the basement, which was vacant. 

Dade then filed an application with the Director of City Planning and Development Department (“Director”) for the City of Kansas City, (City) requesting a certificate of legal nonconformance, to allow a seven-unit apartment building. The Director denied each application and Wade appealed to the BZA, which held a hearing on the application. At the BZA hearing testimony showed that the basement units were never occupied by tenants because “[t]hey were never in a condition to rent. . .. [T]hey weren’t up to par to be part [of] our normal apartments by any means.” Dade testified that he did allow the basement units to be occupied by “art students that wanted a workplace that they could camp out from time to time [and] construction workers that . . . needed transitional housing.” He also had a “business arrangement” with a woman who provided cleaning services for his properties. She did not have a written lease agreement, but he allowed her to store furniture in the basement of one of the buildings and occasionally stay in the basement when she needed “a place to stay over the weekends when she stayed in Kansas City.” 

The BZA affirmed the Director’s decision, but ordered the Director to issue certificates of legal nonconformance to allow six-unit apartment buildings. On appeal, Wade argued that the certificate of legal nonconformance should have been granted for seven units. Dade appealed the BZA’s decisions to circuit court, which upheld the BZA decision.  Dade then appealed to the Western District. 

Analysis:

Nonconforming Use – Dade argued that the BZA erred in denying their requests to issue certificates of legal nonconformance for the basement units because the decision was not supported by competent and substantial evidence. 

The Court begins its analysis by defining the term “nonconforming use.” 

“The term ‘nonconforming use’ means a use of land which lawfully existed prior to the enactment of a zoning ordinance and which is maintained after the effective date of the ordinance even though not in compliance with the new use restriction.” 

The Court then explains that the purpose of the nonconforming doctrine is to avoid a taking claim by the property owner. It then focuses on how nonconformity is determined under the City Code. Of note, is that the Code puts the burden of proving nonconformity on the landowner. The Code stated that: 

“Evidence provided must be sufficient to show that the use or structure was lawfully established prior to annexation or prior to the adoption of the subject regulations and that the lawful use has been continuous and [has] not been discontinued.”  (Emphasis by the Court)

Furthermore, the Code provided that a “lawfully established” use or building is one that is “in compliance with all regulations in effect at the time of their establishment.” The purpose of the nonconforming regulations in the Zoning Code  “…is to diminish and decrease nonconforming uses.” 

Based on the evidence, presented to the BZA, Dade failed to meet its burden of proof by establishing that the seven-unit residential apartment building had been lawfully established; and that such lawful use had been continuous and had not been discontinued. Dade testified that, the basements in both buildings were never in a condition to rent to tenants in the thirty years that he owned the buildings. The Court concluded that the basement units in the buildings were never lawfully established and, therefore, they were not entitled to protection under the nonconformity regulations. 

Code Provided That Vacancy Does Not Result in Loss of Nonconformity – Dade claimed that the BZA’s decision was not authorized by law because “Kansas City Missouri ordinances governing loss of a nonconforming use provide that a vacancy of a portion of the units in a multi-unit building will not be deemed a discontinuance and loss of the nonconforming use of the building.” 

The Court, concluded that this provision applies only if a building has already gained nonconforming status and the nonconforming use is thereafter discontinued. Before Wade applied for certificates of legal nonconformance, he had not established that the building’s basement use had nonconforming status. 

Nonconformity Was Established When the Units Were Constructed In 1915/1917 because the zoning ordinances did not Prevent establishment of a 7th Unit in the basement – The Code provides that a “… use or structure is lawfully established when it is “in compliance with all regulations in effect at the time of their establishment.” (emphasis by the Court). Dade argued there were no zoning ordinances in effect when the buildings were originally constructed in 1915 and 1917, therefore, at the time the building permits were issued the use was lawful entitling it to nonconformity status. The Court rejected this argument because   Dade did not provide evidence to the BZA that basement residential units were actually resided in nor did he establish that they were used continuously for residential purposes. 

Dade next asserted that the trial court erred in upholding the BZA’s decision by considering a new argument for the first time by the BZA (in the Circuit Court) “that the buildings were not lawfully occupied” as seven-unit apartment buildings because lower level basement units were illegal and the building permits authorized only six units for each the entire building (all units) nonconforming; thereby, disqualifying all units for nonconforming status.” Furthermore:  

“The evidence before the BZA, including testimony from City staff and Mr. Dade, was that the original building permit for each building was for six units; the permits did not authorize a seventh basement unit. This evidence was not considered for the first time in the circuit court.”

The Court again turned to the Code noting that Dade had the burden of proof and that he failed to prove nonconforming status. The Parkview Vale and the Alma, (WD83729, 03/09/21)

Comment Howard: I was impressed with the clarity of the City Code Zoning Regulations on who had the burden of proof with respect to nonconformity, which was very useful in resolving the issues in the case. Most zoning codes put the burden on the person asserting the nonconforming status, which is usually the landowner.  

Threat To Kill Lawrence County Prosecutor Communicated Indirectly By Third Party To Prosecutor Was Crime

350105_lgIntroduction: In the December issue of the MMAA newsletter, we discussed what constitutes a “true threat.” Unfortunately, we have recently seen a raft of threats made against public officials.  In the subject case, a person charged with the murder of his son threatened to kill the Vernon County prosecutor, who had brought the charge and was handling the ongoing case.  The threat was communicated indirectly, by a third party.  Because many MMAA members may serve in the capacity of judicial officers, like a prosecutor, this case is of considerable interest.

Facts and Procedure: Richard Shields, the prosecuting attorney for Vernon County, (Prosecutor), brought charges against McNabb in relation to his third child’s death, which was still pending during the incident that generated a threat to the Prosecutor’s life.

On the evening of January 3, 2017, when step-father returned home for the evening, McNabb was upset about Shields, the County Prosecutor and was complaining about the Prosecutor to his Step-father.  McNabb stormed out of the house, where McNabb lived with his step-father and Meladie, his half-sister.

After McNabb left the house, Meladie came out of her room and asked Step-father where McNabb was. Step-father did not know where McNabb had gone.  Meladie had received a call from her sister Nicole, who lived in Pennsylvania. Nicole told Meladie that McNabb had called and told her that he was going to kill Shields and then kill himself.  This worried Nicole, and she asked Meladie to call 911 from her phone because when she tried to dial it from Pennsylvania, it went to the wrong law enforcement agency.  Meladie was worried that McNabb was in trouble and might hurt himself, so she called 911.

While Meladie was on the phone with 911, McNabb called Step-father.  McNabb told Step-father that he was going to kill Shields.  McNabb told Step-father that he had taken Step-father’s rifle from the home, and Step-father confirmed that the gun was missing.  Step-father noticed, however, that McNabb had failed to take the ammunition or the ammunition magazine for the rifle. McNabb told Step-father that he was going to Google Shields’s address to find out where he lived.  As Step-father spoke with McNabb, Meladie relayed the information to the 911 operator. The 911 operator told Meladie to call back if she heard anything else from McNabb.  Police were dispatched to Shields’s home and to McNabb’s home.

McNabb was later arrested, after exiting a window, while trying to run away, but was caught.  He was charged with attempted murder and tampering with Shields, the County Prosecutor, a judicial officer.  A jury found McNabb guilty of tampering with a judicial officer but acquitted him on the attempted murder charge.  McNabb appealed to the Western District.

Analysis: McNabb’s only challenge was the sufficiency of the evidence to support his conviction.  Section 575.095.1(1) declares that “[a] person commits the offense of tampering with a judicial officer if, with the purpose to harass, intimidate or influence a judicial officer in the performance of such officer’s official duties, such person [t]hreatens or causes harm to such judicial officer . . ..”

The Court first noted, that the Prosecuting Attorney is a judicial officer, therefore the statute applied.  In order to prove the charge, the State had to show that McNabb threatened Shields with the purpose to harass, intimidate, or influence him. The State was required to prove intent by showing that it was McNabb’s “conscious object . . . to cause” such harassment, intimidation or influence, equivalent of “specific intent.” In addition, the Court noted an additional barrier.  Because McNabb had no contact or communication with Shields regarding his plan to kill first Shields and then himself, the State’ was required to prove that McNabb intended to harass or intimidate Shields by telling his own family that he was going to kill Shields and then himself. Missouri case law holds that a person can violate section 575.095.1(1) by relaying threats against a judicial officer to a third party. In this case:

“The evidence did establish that the threats were in fact communicated to Shields as the prosecutor and his family were evacuating their home due to concerns for their safety in response to the threats. We find that a reasonable juror could have concluded that McNabb’s purpose in making the repeated threats against Shields was to cause the threats to be ultimately communicated to Shields and for him to be intimidated, harassed, or influenced.”

There was a vigorous dissent in this case on the grounds that it was “nothing but pure speculation” that McNabb intended to communicate his threat to the Prosecutor nor was there any evidence to show that McNabb was aware that his statements were being relayed to the Prosecutor. State of Missouri v. McNabb (WD83494, 03/02/21)

Comment Howard: It seemed to me that they wanted McNabb off the street and that the courts are going to go a long way to protect judicial officers. This case should be a warning to be careful with your language.

Comment Ragan: Based on the wording of the statute I do not believe the state statute would apply to city attorneys acting as city prosecutors.  Though you could argue that a county prosecutor  

Exigent Circumstances

Exigent circumstances justified a warrantless search to remove perishable material from genitals of alleged rapist.  Police happened upon the defendant in the process of raping the victim in this matter.  After observing the Defendant and the Victim fall from a vehicle, the victim crying for help, and the Defendant attempt to flee from the scene the police arrested and detained the defendant and conducted a search of his person by collecting DNA upon arrest.  The police did not obtain a warrant due to the warrant request taking at least 4 hours and the evidence could be destroyed or lost.  The facts in the matter justified a warrantless search.  State of Missouri v. Kirui, (WD83384, 03/02/21)

Driving On Suspended License Sufficient To Extend Traffic Stop

Discovery of suspended drivers’ license during a traffic stop justified extended lawful scope of a traffic stop. Police had probable cause to. believe that the vehicle contained evidence of drug trafficking and could therefore, search the vehicle without a warrant based on exigent circumstances. U. S. v. Soderman, (8th Cir., 19-2879, 12/21/20)  

Status Of Business Interruption Insurance Cases

There is an excellent article in the March 8, 2021 edition of Missouri Lawyer Weekly on business interpretation insurance relating to Corvid cases. Cases cut both ways, largely based on the terms of the policy. Some policies had virus exclusions due to the earlier SARS virus. Other policies are silent on whether or not it covers business interruption for a virus. According to the article, about 80% of the cases do not cover business interruption for a virus. Still, as the article points out, a lot of these cases are still being litigated.

Supreme Court Issues Caveats To Lawyers Engaged In Helping Clients With Legal Issues Involving Marijuana  

marijuana-dbc04668ba596d1d11bbfdcab899d5bdcf6b293a-s40-c85The February 22, 2021 edition of Missouri Lawyer Weekly lead article delves into concerns expressed by Dan Viets, a longtime  MMAA member, about ethics issues raised by the Rule 4-1.2 issued on July 1 that states a Missouri lawyer cannot do something that violates federal law or counsel or assist the client as to how to  perform an act that would violate federal law even if that conduct would be lawful under state statutory of constitutional law.  Currently federal law prohibits marijuana.

Obviously, many Missouri lawyers are now engaged in a practice that involves marijuana from assisting with licenses, zoning issues, interpreting the Rules and attempting to resolve or answer questions about banking are big roadblocks. Former Chief Justice of the Missouri Supreme Court Michael Wolfe, commented by saying “Watch out, because you might be violating this rule. And you have to assume, given when they did this, the Supreme Court meant what it said. There appears to be quite a bit of information online about this issue.  See ABA articles, which offer a deeper dive into these issues.

https://www.abajournal.com/magazine/article/do_ethics_rules_allow_lawyers_to_advise_clients_on_new_marijuana_laws

https://www.americanbar.org/groups/professional_responsibility/publications/professional_lawyer/26/1/ethical-issues-representing-clients-the-cannabis-business-one-toke-over-line/

Remedies For Violation Of Hancock Amendment

Facts and Procedure: Larry Blankenship, individually and on behalf of a certified class of owners of real estate and personal property (collectively, “Taxpayers”) in the Strain-Japan R-XVI (R-16) School District (“District”), sued to challenge the District’s operating funds tax levies for 2013, 2014, 2015, 2016, 2017, and 2018.  Taxpayers alleged the District erroneously determined the highest rate of tax it could levy without additional voter approval in each of those years.  Specifically, Taxpayers allege the tax levies for those years were improperly adjusted using Section 137.073.5(2).  This section may be used only if it is lower than the tax levy authorized by Article X, Section 22(a) of the Missouri Constitution (the “Hancock Amendment”).

Taxpayers requested an order declaring the District’s levies for 2013, 2014, 2015, 2016, 2017, and 2018 unlawful; enjoining the District from collecting taxes under the unlawful levies; refunding to Taxpayers any sums paid over the amount due on each Taxpayer’s respective tax bills when the lawful levy is used to compute the 2013, 2014, 2015, 2016, 2017, and 2018 tax bills; and awarding Taxpayers their costs and attorney’s fees.  The trial court found the District did not violate Section 22(a) of the Hancock Amendment or Section 137.073 and Taxpayers were entitled to no refunds.  The trial court entered judgment for the District. Taxpayers appealed to the Eastern District.

Analysis: The voters approved an increase of the levy to a levy ceiling of $3.1842 in 2012.  The District adjusted its levy, using Section 137.073.5(2), for 2013, 2014, 2015, 2016, 2017, and 2018 thereby exceeding the District’s November 4, 1980 tax levy of $3.50 and the District’s November 6, 2012 voter- approved tax levy of $3.5342.

The District’s tax levies for 2013, 2014, 2015, 2016, 2017, and 2018 yielded additional revenue to the District exceeding the revenue the District would have realized had the November 6, 2012 voter-approved rate of $3.5342 per $100 of assessed valuation been levied in 2012.  Specifically, the District’s levies resulted in $33,008 of additional revenue in 2013; $33,150 of additional revenue in 2014; $33,869 of additional revenue in 2015; $27,533 of additional revenue in 2016; $26,261 of additional revenue in 2017; and $30,126 of additional revenue in 2018.

Blankenship paid his 2013, 2014, 2015, and 2016 taxes but did not do so under protest.  He paid his 2017 and 2018 taxes under protest, submitted a written statement explaining the grounds on which his protests were based and filed suit as required by law.

Hancock Amendment Does Not Provide for Damages –

  1. CONST. art. X, sec. 22(a) (“Counties and other political subdivisions are hereby prohibited . . . from increasing the current levy of an existing tax, license or fees, above that current levy authorized by law or charter when this section is adopted without the approval of the required majority of the qualified voters of that county or other political subdivision voting thereon”)

Here, the voters approved no increase to the District’s tax levy ceiling since November 6, 2012.  It is undisputed the District’s tax levies for 2013, 2014, 2015, 2016, 2017, and 2018 exceeded the District’s November 4, 1980 tax levy of $3.50 and the District’s November 6, 2012 voter-approved tax levy of $3.5342.  The Hancock Amendment forbids such increases without voter approval; therefore, the District’s tax levies for 2013, 2014, 2015, 2016, 2017, and 2018 violated Section 22(a) of the Hancock Amendment.

 Even though the Hancock Amendment was violated, section 23 limits the Plaintiff’s recovery to his costs, including reasonable attorneys’ fees incurred in maintaining such suit. Missouri case law has “unequivocally” held:

“Section 23 does not, “by itself, “authorize[] courts to award money damages in the form of refunds (or otherwise) as a remedy for a political subdivision levying a tax without the prior voter approval required by section 22(a).”

“The principal relief authorized by Section 23 is . . . declaratory and not remedial.”

 

Section 139.031.1 is the Exclusive Remedy for Refund of Taxes – Section139.031.1 provides the exclusive remedy for taxpayers seeking refunds of taxes.  This procedure applies to refunds due for a violation of the Hancock Amendment.  In order to avail yourself of this section you must pay taxes under protest by filing a statement with the collector and submit a written statement setting forth the specific grounds on which the protest is based.  In addition, the statute requires “every taxpayer protesting the payment of current taxes under subsection 1 of [section 139.031] to shall file suit against the collector within ninety days in circuit court.” Failure “…to commence an action in the circuit court for the recovery of the taxes protested within the time prescribed in this subsection, such protest shall become null and void and of no effect.”

There is no dispute that Blankenship failed to pay his 2013, 2014, 2015, and 2016 taxes under protest. “Taxpayers who fail to protest property taxes under [section] 139.031 cannot obtain refunds.”  Therefore, Blankenship is not entitled to refunds of the unlawful taxes collected by the District in those years under section 139.031 because he did not file a protest.  It is also undisputed Blankenship paid his 2017 and 2018 taxes under protest, submitted a written statement explaining the grounds on which his protests were based and sued within ninety days of filing his protest.  Therefore, Blankenship is entitled to refunds of the unlawful taxes collected.  

No Class Action Since Each Taxpayer Must File their Own Protest- The Missouri Supreme Court has held that there cannot be a class action because there is no statutory provision for class actions.  Blankenship vs Franklin County Collector, (ED108824, 03/02/21)

Comment Howard: It has been a while since we have seeing a challenge to taxes based upon a violation of the Hancock law. It is important to remember that the definition of “levy” under the Hancock Amendment is different than the use of the word “levy” when determining the “levy” under Section 139.031.1