Missouri Municipal Attorneys Association

1727 Southridge Drive, Jefferson City, MO  65109                                                           

573-635-9134, Fax: 573-635-9009

Editor Howard C. Wright 
Asst.  Editor Ragan Wright                                    

February 08, Issue #2/08

KIRKWOOD CITY COUNCIL MEETING.  Our thoughts and prayers go out to the citizens and public officials of Kirkwood, Missouri, where five people were killed at a City Council meeting and the mayor critically wounded. You can expect this horrific event will focus everyone’s attention on security and how we provide for civil debate in our society.  

APOLOGY TO O’KEEFE? Last month, we reported that our Kevin O’Keefe was selected for inclusion in The Best Lawyers of America 2008, in the field of municipal law. Unfortunately, some Newsletters were mailed with a typo that said he was included in The Best Layers Of America. Although we called to apologize, Kevin assured us that our typo resulted in several new clients.

STATE MINIMUM WAGE AND OVERTIME LAWSUIT.  On February 21, at the MML Legislative Conference, Attorney General Jay Nixon announced that he would not appeal the Cole County Circuit Court decision in Wright v. Missouri that held that Missouri municipalities were exempt from the state minimum wage and overtime law. Missouri municipalities will continue to be covered by the federal FLSA. Congrats to Paul Martin and Kevin O’Keefe.

MML MUNICIPAL LABOR RELATIONS PUBLICATION. The MML has revised Municipal Labor Relations In Missouri in light of the Missouri Supreme Court decision in Independence NEA v. Independence School District. The publication was written by Ivan Schraeder, counsel, of the Lowenbaum Partnership and will be a useful guide to city officials who deal with public employee labor issues. The publication is available at League headquarters.

CASE OUTLINES (MISSOURI)

CONTESTED CASE REQUIRES FORMAL PROCESS FOR EVIDENCE.  In 2004, the city of Valley Park (City) submitted its request to annex property to the Boundary Commission of St. Louis County (Commission).  The General Assembly in 1991, created the Commission granting it the power to review all proposed annexations in St. Louis County and to approve or disapprove as being in the best interest or not of the proposing entity, the area to be annexed, and St. Louis County.  The statute sets forth specific factors to be considered by the Commission in making its decision.  If the Commission approves the proposal it is voted on by the affected areas but if the Commission rejects the proposal, the proposal is not submitted to the voters.  The Commission held a public hearing on the proposal and thereafter issued its ruling denying the proposal and the right to proceed with a vote of the electorate in the two areas.  The City filed a two-count petition in circuit court seeking review of the Commission’s decision as a non-contested case or in the alternative as a contested case.  The circuit court heard the case as a non-contested case and based on the record in circuit court, entered its judgment finding the Commission’s decision as arbitrary, capricious, unreasonable, and permitted the election.  The Commission appealed alleging that the circuit court erred by not sustaining its motion to dismiss the count alleging the matter was a non-contested case because it failed to state a cause of action.  The Commission also alleged that the circuit court erred because the decision was not supported by substantial evidence.  The Commission alleged that the undisputed evidence was that the annexation would result in an elongated protrusion into St. Louis County; that the area would suffer from an increase in taxes, without a significant increase in services, and that St. Louis County would lose $122,000.  The Eastern District held that while a “public hearing” was required it lacked the formalities contemplated in a contested case where testimony and evidence is taken, there is a right of cross examination and a record is made.  In a noncontested case, the court reviews the record denovo in which it hears evidence on the merits, makes a record, and decides if the agency’s decision is unconstitutional, unlawful, capricious, or otherwise involves an abuse of discretion.  In deciding this case, the court considered some 11, specific statutory factors.  The Eastern District held that based on the record made in circuit court the decision was supported by competent and substantial evidence and as such the City can proceed with a vote.  The court further states that the “legal rights, duties, or privileges” of specific parties involved were not determined after the public hearing because none of the parties had any legal right in the determination of a City’s boundaries.  The City of Valley Park, v. Armstrong, (ED89230, 01/22/08).

     Comment Howard.  Of interest to all local governmental lawyers was the court’s analysis of when a matter is a contested or noncontested case.  It seems clear that since there was no formal process for taking evidence therefore, this was not a contested case.  Troubling however, is the court’s statement that the decision of the Commission did not determine “rights, duties, and privileges” of any party since no one had an interest in the boundaries of the City citing a Michigan case as authority for this point, which it called a matter of first impression in Missouri.  I am not sure what to make of this statement but it seems to me that this was not necessary to the decision and it will be tossed around a lot before we know what it really means.  The Michigan case on which the court relies on makes the point that the right to incorporate, annex, and consolidate comes from the state, and citizens do not have rights except as set forth therein.  In other words, you have no constitutional right to live in a particular area and the method of annexation or consolidation is controlled by the state. In my mind, the decision of the Commission did determine “rights, duties, and privileges” of parties under the County Boundary Law, like the right to vote on the annexation, pass laws, or tax but not in the context of a contested case.  This case drew a lot of interest with a major, one half-page article in the January 28, 2008, edition of Missouri Lawyers Weekly suggesting that this decision could lead to municipal land grabs in St. Louis County.

REASONABLENESS OF ANNEXATION PLAN OF INTENT IS AFFIRMATIVE DEFENSE.  The city of Peculiar (City) initiated an involuntary annexation of a sparsely populated area by adopting an ordinance authorizing the annexation.  After the City filed its petition for declaratory judgment under Section 70.015 RSMo, the circuit court authorized the annexation, finding that all of the statutory requirements of Section 71.015 RSMo, had been fulfilled.  Landowners, defendants in the declaratory judgment, appealed from the judgment to the Western District.  Landowners claimed that the City failed to prove an adequate plan of intent as required by statute.  The court concluded that this defense was an affirmative defense that was not raised by the landowners in its pleadings.  Since the City was not required to plead as part of its case the adequacy of the plan of intent, the landowners were required under Rule 55.08 to plead this as an affirmative defense. While the plan was somewhat lacking in specificity, there was no need to reverse under the plain error rule.  With respect to the level of services that the City must provide, the City only needs to show that it will within a reasonable time furnish the “same” level of services that it is furnishing to its existing populace.  The court reviewed some 12, non-exclusive factors used in analyzing whether or not an annexation is reasonable. The City’s evidence was sufficient to prove that the reasonableness of the annexation was fairly debatable and is therefore upheld.  Consideration of “protection of boundaries” by the circuit court was not a proper justification although this was a harmless error.  City of Peculiar v. Effertz Bros. Inc., et al., (WD67554, 01/22/08). 

     Comment Howard.  This is a good case on the elements a court will consider in reviewing the reasonableness of an annexation proposal.  The opinion also characterizes the role of the court in reviewing annexation proposals as limited because they are legislative in nature.  The holding that the City does not have to plead adequacy of the plan of intent, may be turned on those opposing annexation if they do not raise this as an affirmative defense.

MUST SPECIFICALLY PLEAD STATUTE OR CONSTITUTIONAL PROVISION IN WHISTLEBLOWER CLAIM.  Police officer filed complaint with the Missouri Ethics Commission alleging that the mayor acted unethically in settling a case involving the arrest of a citizen.  After the Ethics Commission dismissed the complaint; the City fired the police officer.  Failure to specifically plead in a whistleblower case that the employer violated any specific constitutional provision, statute, regulation, or clear mandate of public policy is fatal to cause.  Grimes v. City of Tarkio et al., (WD67953, 01/22/08).

COUNTY MUST CONTINUE TO PAY AMOUNT EQUAL TO ROAD AND BRIDGE TAX.  Special road districts and municipalities (Districts) located in Clay County sued Clay County (County) requesting a declaratory judgment alleging that the County failed to provide full funding for roads and bridges as mandated by Section 67.548 RSMo.  The Districts alleged that Clay County was required to distribute not less than the amount of the road and bridge taxes collected prior to the vote in 1988 on a countywide sales tax.  The parties stipulated to the facts and the case was submitted to the court on cross motions for summary judgment.  The circuit court ruled for the Districts and the County appealed.  The Western District held that the statute mandates a minimum level of funding equal to the road and bridge tax funding prior to the vote on the sales tax.  The County’s argument that the funding of the road and bridge tax continued forever failed.  Gladstone Special Road district No. 3 of Clay County, et al., v. County of Clay, (WD67977, 01/22/08).

DEFENDANT CAN APPEAL MUNICIPAL COURT VERDICT OF GUILTY EVEN IF DEFENDANT STIPULATES TO THE FACTS.  Stipulation of record for the purpose of trial before the municipal court in which the defendant pled not guilty and was found guilty, does not prohibit an appeal and trial denovo in circuit court.  City of Kansas City v. Dudley, (WD67675, 01/22/08).

CONTRIBUTION CLAIM IS A COUNTER CLAIM.  For those involved in personal injury claims, Ingram v. Missouri Highways & Transportation Commission involved some interesting legal issues and fascinating questions of non-disclosure of a settlement of a claim with a joint tortfeasor and potential conflict of interest.  Ingram was driving an automobile when she lost control of the car on a turn resulting in serious injuries to her and the passengers.  Sharing an attorney, the driver and two of the passengers (Plaintiffs) filed a suit against Missouri Highways & Transportation Commission (MHTC), alleging negligence for failure to post warning signs and to take reasonable steps to correct the design, construction, or maintenance.  MHTC filed a general denial and several affirmative defenses including comparative fault, and sought contribution it might have to pay on behalf of any joint tortfeasor characterizing this as an affirmative defense instead of a counter-claim.  Plaintiffs filed an application for arbitration and the arbitrators awarded the driver $300,000 reducing it by the amount of the driver’s comparative fault of 75 percent to $75,000.  The arbitrator’s award for the two passengers was $17,700 and $56,000 respectively.  MHTC sought to reduce these amounts by 75 percent, the amount of the comparative fault of the driver, which was denied by the circuit court.  MHTC appealed. And at oral argument before the Western District, the driver’s attorney mentioned that the two passengers had settled with the drivers insurance company before the lawsuit was ever filed and that this information had not been revealed to MHTC despite interrogatories apparently requesting this information.  The Western District expressed concern about a potential conflict of interest by the attorney who represented both the driver and the passengers and whether or not he truthfully answered the interrogatory about whether or not there had been a settlement with a joint tortfeasor.  The case was remanded to determine if MHTC was entitled to contribution under Section 537.060 RSMo, that allowed contribution and suggested that the court should feel free to take whatever action it deemed appropriate to more fully inquire into the conflict of interest and whether or not the interrogatories were answered truthfully.  Ingram v. Missouri Highways & Transportation Commission, (WD67623, 01/22/09)

     Comment Howard.  Even though this case was remanded, the opinion is useful in that it offers guidance on several key legal issues.  The Western District noted that it reviewed arbitration awards under the standard set forth in Murphy v. Carron, and that an Eastern District’s standard of review that it “will accept the trial court’s findings of fact unless they are clearly erroneous,” was different and probably in error since it was based on a Western District case that followed federal law.  In addition, a claim for contribution under the statute is not an affirmative defense but a counterclaim.

WITHOUT WRITTEN CONTRACT YOU PROCEED AT YOUR OWN PERIL.  Contractor went to work without a signed contract.  He sought and obtained a signed change order from the fire chief.  City terminated contractor and he sued.  Fire Protection District’s motion to dismiss on grounds that there was no signed contract, was sustained and contractor appealed.  On appeal, the Eastern District upheld decision on grounds that 432.070 RSMo, requires a fully executed written contract. ORF Construction, Inc. v. Black Jack Fire Protection District, (ED89502, 12/04/07).

Tax Increment Financing:  The city of Shelbina (City) created a tax increment financing commission (Commission) in early 2003.  In March of 2003, the Commission sent letters to taxing jurisdictions informing them that the Commission would hold a public meeting on April 28, 2003, to consider a TIF plan and district within the City.  The public meeting was held on the plan, and the Commission at its meeting of May 13, 2003, adopted Ordinance No 1094 purporting to designate a portion of the City as a redevelopment area, approving the plan, and making related findings.  Ordinance No. 1095 was also adopted purporting to approve the redevelopment plan and area, a redevelopment project area, adopt a TIF within this area, and set up the City’s special allocation fund.  The City submitted annual reports to the Missouri Department of Economic Development for 2003, 2004, and 2005 with respect to TIF activities and published financial reports every six months.  The County did not remit the TIF taxes and the City brought a mandamus and declaratory judgment and damages against the County.  The circuit court determined it construed Section 99.845.1 RSMo to require the approval of the redevelopment plan prior to enacting TIF ordinances.  It found that a review of the development plan showed that the plan proposed projects that were concepts that in time might become actual projects. On appeal, the Eastern District held that Section 99.845.1 RSMo required the municipality to either approve a redevelopment plan or undertake acts that would establish a redevelopment plan and a redevelopment project prior to enacting the TIF ordinance.  A review of the evidence showed that the plan showed only proposed projects and concepts but no specific project or an identifiable financial structure.  The City of Shelbina v. Shelbina County, (ED89352, 02/05/08)

CASE OUTLINES (FEDERAL)

No liberty interest implicated if allegation is general. Wellston School District (School) did not receive accreditation for two consecutive years resulting in the lapse of its corporate existence and the appointment of a three-member board (SAB) by state board of education. The School’s scores rose dramatically in the second year and were disallowed on the grounds that the increase in the School’s scores was not legitimate.  In June of 2005, the SAB stopped paying the salary of Stodghill and the school’s superintendent effectively terminated his services.  There were statements made by the SAB that cheating had occurred in the School with respect to the tests and that was the reason the scores were higher, and that the School failed to receive even provisional accreditation under the leadership of Stodghill. Statements were carried by the news media. Stodghill sought a name clearing hearing to vindicate his liberty interest in his good name. The SAB members filed motion seeking protection for their acts based on qualified immunity which was denied.  On appeal, the 8th  Circuit held that the statements about Stodghill, by the SAB officials, were not sufficiently stigmatized to implicate the liberty interest.  The statements that were made did not indicate that Stodghill cheated or was the cause of the cheating.  The court distinguishes between claims of general misconduct or unsatisfactory performance from claims where statements are made involving direct dishonesty, immorality, or unsatisfactory performance of the individual.  Stodghill v. Wellston School Dis., (8th Cir. No. 07-1190, 01/09/08).

POLICE CAN RECORD ONE SIDE OF PHONE CONVERSATION WITH ATTORNEY FOR DEFENDANT WITHOUT VIOLATING FOURTH AMENDMENT.  Police officer does not violate Fourth Amendment right of a person who has been arrested when the officer records one side of the conversation of arrestee with his/her attorney when the conversation takes place in an open room.  Sherbrooke v. City of Pelican Rapids, (8th Cir., 06-4072, 01/17/08).

SOL STARTS WHEN CONTRACT TERMINATED.  After a dispatcher of DM&E called a female employee of Taxi Connection a “shithead,” (did not use this term for male employees) the supervisor for Taxi Connection lodged a complaint against DME&E, and DME&E terminated the services of Taxi Connection.  Taxi Connection filed suit alleging unfair discrimination practice, which was dismissed based on the failure to file within the statute of limitations.  On appeal, the 8th Circuit held that a separate violation does not occur for each day the company refuses to use services of Taxi Connection; therefore, the suit was not timely due to statute of limitations.  Statute of limitations begins when contract was terminated.  Taxi Connection v. Dakota, Minnesota & Eastern Railroad Corporation, (8th Cir., No. 06-3510 01/22/08).

     Comment Howard: This case is a good starting point on the question of when a claim is a continuing violation.

CITY DID NOT VIOLATE EMPLOYEE’S RIGHT TO LEGAL COUNSEL.  Police officer (Employee) with the city of Chillicothe (City) was experiencing difficulties with his work performance.  During this same period, he accused other officers of taking bribes and falsifying records.  In the fall of 2003, he told a city councilman that the department was experiencing morale problems.  During that time, the officer submitted a grievance to the city administrator in February of 2004 outlining problems he observed including illegal activity and alleged that a fellow officer used excessive force.  Within two weeks of the letter, the city administrator met with the city attorney to discuss demoting Employee for spreading false rumors and for use of excessive sick leave.  The city attorney recommended termination but no decision was made at that time.  In late February of 2004, one of the officers accused by Employee and a fellow officer, assaulted the fellow officer who made the accusations on city property.  This led to a mandatory meeting for all employees at which time several officers called Employee names, including the nickname “backstabber.”  After the meeting, Employee decided to hire an attorney.  In late March of 2004, the City Council met to consider status of Employee at which time the chief recommended demoting Employee.  The City Council recommended suspension of the Employee with the understanding that the city administrator would meet with Employee. Immediately before this meeting, the attorney for the Employee wrote the City a letter informing the City that he was representing the Employee.  Employee was suspended and chief ordered Employee to attend the meeting, but Employee’s attorney could not attend and Employee was instructed by his attorney not to attend.  The City Council met again and authorized a resignation with a severance package, which Employee rejected.  Thereafter, the Employee was terminated leading to the filing of a suit in federal court in which Employee alleged that his First Amendment right of association was violated.  The district court granted summary judgment finding that the Employee did not produce any facts to support his claim that his retention of an attorney was a substantial or motivating factor in his dismissal.  Employee appealed and on appeal, the 8th Circuit applied a shifting burden analysis and found that the Employee failed to show that the actions of the City were pretextual, and that Employee failed to plead and prove facts sufficient to show impairment of his right to legal counsel.  Morris v. City of Chillicothe, (8th Cir No. 06-3995, 01/14/08). 

MULTI-YEAR COLLECTIVE BARGAINING AGREEMENT UPHELD THAT REQUIRED CITY TO PAY MEDICAL BENEFITS FOR RETIRED EMPLOYEES.  In 2002, the union negotiated a collective bargaining agreement (CBA) with the city of Benton, Arkansas (City) which expired December 31, 2004.  In 2003, the City adopted a resolution altering the health insurance coverage for its retired employees under the mistaken belief that state statute did not allow the City to pay for retiree medical benefits.  The Union sued the City, its aldermen (in their official capacities as city councilmembers), and the mayor to enjoin City from enforcing resolution terminating any city payment of retiree health insurance premiums and to continue paying those premiums under the CBA.  The United States District Court granted plaintiffs' motion for judgment on the pleadings in part and denied defendants' motion to dismiss. After a bench trial to determine appropriate remedy, the court entered an order,  requiring the City to pay health insurance premiums for specified union-represented city employees upon retirement.  Defendants appealed the decision.  The 8th Circuit found that the state statute did not prohibit the City from paying for these benefits under state law and that constitutional provisions did not prohibit City from entering into a binding, multi-year agreement.  American Federation of State, County and Municipal Employees v. City of Benton, (8th Cir., No. 07-1589, 01/25/08).

NO RIGHT TO ATTORNEY FEES IN 1983 ACTION UNLESS THE RELATIONSHIP BETWEEN THE PARTIES IS MATERIALLY ALTERED.  Advantage Media (Company) submitted permit applications for the construction of four, large billboards to the city of Hopkins, Minnesota (City).  The City declined to process the applications and Company brought an action pursuant to 42 U.S.C. § 1983 claiming that the City's sign code was unconstitutional under the First and Fourteenth Amendments, and that the City violated its constitutional rights by denying the applications. The district court granted Company’s motion for a preliminary injunction to halt the enforcement of the sign code, but the trial jury awarded no damages to the Company and the district court denied its motion for attorney fees for procuring the preliminary injunction. Company appealed the district court's determination that it was not a prevailing party under 42 U.S.C. § 1988.  The test for a prevailing party is that “a plaintiff ‘prevails’ when actual relief on the merits of his/her claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.”  The Supreme Court refined this standard in Buckhannon when it rejected the “catalyst” theory.  The Court held that a party must obtain a judicially sanctioned material alteration of the legal relationship between the parties to the lawsuit to achieve prevailing party status.  The preliminary injunction did not materially alter the party’s legal relationship even though the City later adopted a new sign code.  Advantage Media, L.L.C. v. City of Hopkins, Minn.,  (8th Cir., No. 07-1441, 01/08/08).

     Comment Howard.  Great case for local government but seems hard to believe that the City’s position was not materially altered.

LEGISLATION, NEWS, AND OTHER MATTERS

EEOC FINAL RULE ON RETIREE HEALTH BENEFITS.  On December 26, 2007, the EEOC issued a final rule on retiree health benefits that allows employers and labor unions to reduce or eliminate health benefits once an employee becomes eligible for Medicare.  This Rule will allow for better coordination of retiree health care benefits with provisions of Medicare without violating the ADEA.

HOW TO OBTAIN OPINIONS