Sophian Plaza Association v. City of Kansas City, Missouri

SUPREME COURT OF MISSOURI
en banc
SOPHIAN PLAZA ASSOCIATION, ) Opinion issued October 15, 2019
et al., )
)
Respondents, )
)
v. ) No. SC97626
)
CITY OF KANSAS CITY, )
MISSOURI, )
)
Appellant. )
APPEAL FROM THE CIRCUIT COURT OF PLATTE COUNTY
The Honorable James Van Amburg, Judge
I. Introduction
The City of Kansas City appeals a judgment in favor of Sophian Plaza Association
and a class of similarly situated plaintiffs on claims of breach of injunction, breach of
contract, specific performance and civil contempt in connection with City's termination of
its trash rebate program. The breach of contract claim is not viable because the underlying
contract was merged into the 1976 Modified Judgment at the request of the parties. Neither
Sophian Plaza nor the class of similarly situated plaintiffs may bring a contempt action to
enforce the 1976 Modified Judgment because they were not parties to the litigation nor
were the 1976 plaintiffs certified as a class under Rule 52.08. The circuit court's judgment
is reversed.
II. Background
In 1971, City enacted an ordinance, § 16.20(a), providing for trash collection for
all residences except "trailer parks or buildings containing seven or more dwelling units."
In 1975, three lawsuits filed by owners of residences excluded from the trash collection
service were consolidated in one suit challenging the constitutional validity of the
ordinance. In its April 1976 judgment, the circuit court held the exclusion of trailer parks
and buildings with seven or more dwelling units was unconstitutional and entered a
mandatory injunction requiring City to provide trash collection services to Graham 1 "unless
and until City enacts a valid ordinance which establishes a reasonable and justifiable
classification for those persons who are not entitled to refuse collection by City." Both
Graham and City filed timely notices of appeal of the April 1976 order.
On August 31, 1976, City and Graham filed a Stipulation and Agreement ("the
Agreement") with the circuit court. The Agreement was signed by Graham's attorney as
well as by the assistant city attorney on City's behalf. The Agreement required City to
either provide trash services to owners of apartment buildings containing seven or more
dwelling units and owners of trailer parks within Kansas City, Missouri, or pay each owner
$1.15 per occupied unit per year in lieu of trash services. The Agreement provided the
1
The three separate actions were styled: Graham, et al., v. City of Kansas City, No. C-75-515;
Byers & Danneberg, et al., v. City of Kansas City, No. C-74-172; and Frances Max, et al., v. City
of Kansas City, No. C-74-173. To promote clarity and avoid confusion, the collective of plaintiffs
in these three actions will be referred to as "Graham" in this opinion.
2
cash payment would be increased or decreased each year by "the same percentage as the
increase or decrease in the average cost of providing services" to those dwelling units
receiving trash service under the city ordinance. The Agreement also provided City's
obligations to provide the trash rebate program would terminate only upon City's
termination of its entire trash collection service. Following termination of the trash
collection service, City's obligation to provide the trash rebate program would renew
should City ever then restore its city-wide trash collection service.
Before the record on appeal was filed in the court of appeals, and upon the joint
request of the parties through the Agreement, the circuit court entered a modified judgment
(the "1976 Modified Judgment") declaring § 16.20(a) unconstitutional, adopting and
incorporating the Agreement into its judgment at the request of the parties, and entering a
mandatory injunction directing City to comply with the terms and conditions of the
Agreement. 2 In 1976, City amended its trash collection ordinances in adherence with the
1976 Modified Judgment by formally adopting the trash rebate program into the city code.
2
Though more than 30 days had passed after the circuit court's entry of judgment in 1976, Rule
75.01 was effectively identical to the rule today:
After the filing of notice of appeal and before the filing of the record on appeal in
the appellate court, the trial court, after the expiration of such thirty-day period,
may still vacate, amend or modify its judgment upon stipulation of the parties
accompanied by a withdrawal of the appeal.
(Emphasis added). The circuit court was within its power to modify its judgment despite both
parties having filed timely notices of appeal because the record on appeal was not filed in the
appellate court, the parties stipulated to the modification, and the parties filed a withdrawal of their
appeals.
3
City continued providing the trash rebate program until the city council approved a
proposed budget eliminating the program in 2008. In 2010, City effectively eliminated the
program by repealing City Code §§ 62-41(a3) and 62-42.
The class plaintiffs, Sophian Plaza Association, Townsend Place Condominium
Association, Inc., and Stadium View Apartments filed a class action petition in 2015,
alleging City's elimination of the trash rebate program was a breach of the modified
judgment and a breach of the Agreement. The circuit court certified a class consisting of:
All managers and owners of trailer parks, condominiums, apartments and
buildings containing seven or more dwelling units located in Kansas City
Missouri during the class period May 1, 2010 to the present. Excluded from
the class are members of the Heartland Apartment Association as of February
27, 2015.
After trial, the circuit court entered judgment in favor of the class on its claims for breach
of injunction, breach of contract, specific performance, and civil contempt. 3 The circuit
court assessed $10,274,704 in compensatory damages, required City to "pay $2,846 per
day until it complies with its trash collection obligations[,]" and ordered City to pay class
counsel $1,362,562.50 in fees and $59,035.56 in expenses. The court of appeals affirmed
the judgment, and this Court granted transfer. 4
3
"Breach of Injunction" is not a claim separate from civil contempt. See Contract Enforcement:
Specific Performance and Injunctions, § 1.2.2. (2d ed. 2019) ("A promisor who refuses to comply
with … an injunction may be subject to civil or criminal contempt.").
4
Mo. Const. art. V, § 10.
4
III. Analysis
The circuit court determined members of the class fell within the definition of
"Owners" provided in the Agreement. 5 In accord with this determination, the circuit court
concluded City breached the Agreement and the class could recover for breach of contract
and could receive specific performance of the Agreement. A fatal flaw in the circuit court's
conclusion in this regard is that, at the request of Graham and City, the circuit court merged
the Agreement into the 1976 Modified Judgment. "[M]erger is the substitution of rights
and duties under the judgment or the decree for those under the agreement[.]" 46 Am. Jur.
2d Judgments § 430 (2017).
The law of merger by judgment is one closely related to res judicata. See, e.g.,
Chesterfield Village, Inc. v. City of Chesterfield, 64 S.W.3d 315, 318 n.5 (Mo. banc 2002).
The most common method by which it operates is "[w]hen a claim on a contract is reduced
to judgment[.]" 46 Am. Jur. 2d Judgments § 438 (2017). This Court has recognized the
law of merger by judgment in this context. See Ballard v. Standard Printing Co., 202
S.W.2d 780, 782 (Mo. 1947) ("Generally a cause of action merges in the judgment entered
thereon and any further action must be upon the judgment."); State ex rel. Noe v. Cox, 19
S.W.2d 695, 699 (Mo. 1929) ("[A] valid judgment upon a promissory note merges the
cause of action which previously existed upon the note, and, after a valid judgment has
been rendered upon the note, recovery must be had upon such judgment and not upon the
5
The Agreement defines "Owners" as:
[T]he owners or authorized managing agents of the owners of apartment buildings
containing seven or more dwelling units and the owners or authorized managing
agents of trailer parks located within the City of Kansas City, Missouri.
5
note."). However, merger by judgment may also occur at the election of the parties to the
contract, so long as the parties intend the agreement to become decretal through its
requested merger with the judgment. School Dist. of Kansas City, Mo. v. Mo. Bd. of Fund
Comm'rs, 384 S.W.3d 238, 261 n.21 (Mo. App. 2012). 6
6
In School, the court of appeals outlined the law of merger by judgment in this particular context:
Generally, where the object of the contract does not, by its nature, require court
approval to render the terms of the contract enforceable, court "approval" of the
contract does not merge the contract with the decree and the contract remains
independently enforceable. Even in such circumstances, the parties can elect to
have the otherwise enforceable contract incorporated into a decree (as
distinguished from simply being approved by the court), in which case the contract
does merge with the decree, and is thereafter only subject to enforcement or
modification by the court. … [W]hether the agreement is to remain contractual
or to become decretal depends on the intention of the parties.
384 S.W.3d at 261 n.21 (emphasis added) (internal citations omitted); see also Toth v. Toth, 483
S.W.2d 417, 422 (Mo. App. 1972); Jenks v. Jenks, 385 S.W.2d 370, 375 (Mo. App. 1964).
The law of merger exists to prevent suits like Sophian Plaza's. Once parties turn to the
courts to enforce their previously-entered agreement—be it through a judgment on a breach of
contract claim, or, as here, a voluntary merger with a binding judicial decree in order to obtain the
right to bring a contempt action upon the Agreement's breach—a party cannot later seek to
separately and independently enforce the contract while retaining a right to enforce the court's
judgment through civil contempt proceedings.
When a claim on a contract is reduced to judgment, the contract between the parties
is voluntarily surrendered and canceled by merger in the judgment and ceases to
exist. Because all of the prior contractual rights are merged into and extinguished
by the judgment, thereafter … the contract no longer serves any purpose except as
evidence supporting the judgment.
46 Am. Jur. 2d Judgments § 438 (2017).
This is not a new or novel legal doctrine—its roots trace to the Court of Common Pleas in
1606. It was by noted English barrister and Judge Sir Edward Coke's pen that the law of merger
was first woven into the common law fabric. Maynard E. Pirsig, Merger by Judgment, 28 Minn.
L. Rev. 419, 424-25 (1944). In Higgens's Case, Coke reasoned:
So when a man has a debt on a bond, and by ordinary course of law has judgment
thereon, the contract by specialty which is of an inferior nature, is by judgment of
law changed into a matter of record, which is of a higher nature. If he who recovers
may have a new action and a new judgment he may have infinite actions, and
infinite judgments to the perpetual vexation and charge of the defendant & infinitum
in jure reprobatur [infinity in law is condemned].
6 Co. Rep. 44 b. (1606).
6
The parties' intention for the Agreement to become decretal by operation of merger
is clear from the Agreement's plain language. In paragraph seven, the Agreement reads:
"The parties jointly request the Court to incorporate this Stipulation and Agreement in a
judgment herein and to make compliance with the provisions hereof mandatory."
(Emphasis added). The language of the resulting 1976 Modified Judgment equally evinces
the parties' intent for the Agreement to become decretal. 7
When Graham and City jointly requested the 1976 circuit court to merge the
Agreement "in a judgment herein and to make compliance with the provisions hereof
mandatory[,]" and the circuit court complied with the request, they voluntarily surrendered
their future right to make a separate claim on the Agreement itself. Instead, the rights
established in the Agreement can only be enforced through a contempt proceeding brought
pursuant to the 1976 Modified Judgment.
7
In relevant part, the 1976 Modified Judgment provides:
[T]he parties hereto have filed herein their Stipulation and Agreement, a copy of
which is appended hereto and made a part hereof, proposing that a system of cash
payments or refuse services for the properties of plaintiffs and others similarly
situated, and for dwelling units in trailer parks, mutually agreeable to the parties,
be adopted by the Court and incorporated into a modification of its judgment
herein. … [A] Mandatory Injunction is hereby entered directing the City of Kansas
City to provide refuse collection services, or the cash equivalent thereof, to the
properties of the plaintiffs and to the properties of others similarly situated, and to
dwelling units located in trailer parks, under the terms and conditions specified in
the Stipulation and Agreement filed herein."
(Emphasis added).
7
The circuit court concluded that since May 1, 2010, "City has failed to meet its
obligation under the Modified Judgment and Mandatory Injunction[,]" and accordingly
held City in civil contempt of the Modified Judgment and Mandatory Injunction and
entered judgment for the class. However, no members of the class were parties to the 1976
Modified Judgment.
"Civil contempt is for the protection of a party to the litigation, the party for whose
benefit the order, judgment or decree was entered. Its function is to provide a coercive
means to compel the other party to the litigation to comply with relief granted to his
adversary." Teefey v. Teefey, 533 S.W.2d 563, 566 (Mo. banc 1976) (emphasis added). It
necessarily follows, then, that to bring a civil contempt action, one must have been a party
for whose benefit the original judgment was entered. No one in this class falls into that
category.
The class argues that, despite no formal class certification in the 1976 proceedings,
the 1976 Modified Judgment was clearly intended to "afford relief to all owners of relevant
properties" and "treated all such owners as members of a class for whom the Modified
Judgment provided a specific pecuniary benefit." (Emphasis omitted). Therefore, the class
argues, it should be entitled to enforce the 1976 Modified Judgment because its members
qualify as "others similarly situated" under the judgment's terms. Supra, n.7. However,
that argument ignores that the requirements imposed by Rule 52.08 "are not merely
technical or directory, but mandatory." Beatty v. Metro. St. Louis City Sewer Dist., 914
S.W.2d 791, 795 (Mo. banc 1995), overruled on other grounds by Zweig v. Metro.
8
St. Louis Sewer Dist., 412 S.W.3d 223, 248 n.17 (Mo. banc 2013). The reason, Beatty
provides, is:
The impact of certification of a lawsuit as a class action is readily apparent.
Individuals who did not initiate the litigation and who will have little or no
practical control over the litigation nonetheless will be bound by its result.
The potential increase in exposure to the defendant and the additional
increase in the burden and cost of litigation to all parties may well overwhelm
the substantive merits of the dispute.
Id. at 794-95 (emphasis added). The consequence of not certifying a class under Rule
52.08(b) and thereafter following class action procedures—including ordering individual
notice be provided to all class members under Rule 52.08(c)—is that the 1976 Modified
Judgment can be enforced only by the parties to that judgment, even though the judgment
extends benefits to others. State ex rel. Niess v. Junkins, 572 S.W.2d 468, 470 (Mo. banc
1978) (concluding a lawsuit was maintainable only by the individual parties on their own
behalf, and not as a class action, due to a failure to strictly adhere to Rule 52.08's
requirements).
IV. Conclusion
Accordingly, this class cannot avail itself of enforcement proceedings brought upon
the 1976 Modified Judgment. The circuit court's judgment holding City in civil contempt
of the 1976 Modified Judgment—to which no one in the class was a party—is reversed.
___________________________
Zel M. Fischer, Judge
All concur
9