St. Louis Association of Realtors v. City of Ferguson

In the Missouri Court of Appeals
Eastem Distrtct
DIVISION THREE
ST. LOUIS ASSOCIATION ) No. ED103385
OF REALTORS, )
)
Respondent, ) Appeal from the Circuit Court of
) St. Louis County, Missouri
vs. ) 2107CC-03 604
)
CITY OF FERGUSON, ) Honorable Mary Elizabeth Ott
)
Appellant. ) Filed: Septembe1'27, 2016
OPINION
This dispute makes its third appearance in this Court. The St. Louis Association of
Realtors (Realtors) filed a petition for declaratoly judgment challenging an ordinance
enacted by the City of Ferguson that purported to regulate the business of renting
residential property. The trial court found that Ferguson lacked the authority to enact the
ordinance because the business of renting residential property was not mentioned in section
94.110,l the Missouri statute that empowers third class cities to impose and collect license
taxes on certain businesses We find that because Ferguson is a constitutional charter city,
it is not limited to passing ordinances regulating only the types of businesses set forth in
section 94.110, and therefore, We reverse and remand for further proceedings consistent
with this opinion.
l Ail references to statutes are to RSMo 2000 unless otherwise indicated
Facts and Procedural History
In 2006, Fer'guson enacted an ordinance creating a regulatory fee and licensing
system for owners of residential property within Ferguson who seek to lease or rent their
property to others The ordinance mandates that property owners meet certain
requirements and pay a fee to obtain a license to rent or lease their property Property
owners must undertake building inspections file affidavits stating whether any adult
tenants are registered sex offenders, and maintain a property manager within twenty-five
miles of the rental property. 'l``he ordinance makes it unlawful for property owners to rent
or lease their property without a license.
License holders are subject to two classifications: l) responsible or 2) provisional.
The “responsible” classification is granted to owners who have submitted a lease
agreement setting forth the number and names of the persons allowed to reside in the
property, have paid the license fee, and have maintained their property in good condition
free of nuisances T|ie “provisional” classification is for owners who may not meet the
“responsible” classification requirements because of nuisance or property maintenance
problems The ordinance allows owners with a “provisional” classification to attain the
“responsible” classification status upon the remediation of any problems with the property.
ln 2008, Realtors challenged the validity of`` the ordinance on constitutional and
statutory grounds Specifically, Realtors alleged: l) Ferguson’s license program is
unauthorized by its charter or by statute; 2) Ferguson’s classifications of “responsible” or
“provisional” licenses violate due process and are unconstitutionally vague and arbitrary;
3) Ferguson’s license fee is a tax that violates the Hancock amendmentz; 4) Ferguson has
no authority to require owners to determine whether any tenant is subject to and in
compliance with Missouri’s sex offender registration law; 5) Ferguson’s licensing program
violates Missouri law to the extent that it restricts the right to post property for sale or lease;
and 6) Ferguson’s licensing program is in excess of any authority delegated to Ferguson
by the state and is otherwise unconstitutional. Realtors voluntarily dismissed count III.
The court held a bench trial and took the matter under submission
In 2009, while the case was pending, Ferguson amended the ordinance to make tire
term “residential rental property” synonymous with “rooming house.” In 2010, the trial
court dismissed Realtors’s petition for lack of standingl Realtors appealed and in 2011 the
Missouri Supreme Court held that Realtors had standing and remanded the case for a trial
on the merits St. Lom's Ass’n of Realtors v. City ofFergusOn, 354 S.W.3d 620 (Mo.banc
2011). On remand, the trial court dismissed Realtors’s petition finding that the 2009
amendments mooted its challenge to the 2006 ordinance
ln 20]4, this Court reversed the trial court’s decision and held that the 2009
amendments did not supersede the 2006 ordinance and that therefore Realtors’s petition
was not moot. St. Louis Ass’n of Realtors v. Ciiy of Ferguson, 448 S.W.3d 340, 342
(Mo.App.E.D. 2014). We remanded the case for further proceedings on the merits of
Realtors’s petition, and in doing so, we noted that the trial court should consider allowing
Realtors to amend its petition and/or supplement the record so that the case could be
litigated and resolved in light of the 2009 amendments Id. at 343 n.2.
2 Mo. CoNsT., an. X, § 22.
On remand, Realtors filed a motion for leave to amend its petition and to
supplement the trial record The trial court granted the motion, but Realtors never filed an
amended petition, and the parties agreed to submit the case to the court on the original
petition and the record before the court, including the evidence that was presented at the
trial in 2008.3 fn July 2015, the trial court issued its order and judgrnent, finding that
because section 94.110 does not mention the rental of residential property, the Ferguson
ordinance was not authorized and was therefore invalid The court also found that the
“responsible” and “provisional” owner classifications in the ordinance were not
constitutionally void for vagueness but the court did not specifically address the issues
raised in Realtors’s counts lV, V, and Vl. This appeal follows
Standard of Review
The constitutional validity of an ordinance is a question of law that is reviewed de
novo. Cin ofSulIz'vmr v. Sites, 329 S.W.3d 691, 693 (Mo.banc 2010). Under Rule 84.14,4
an appellate court shali award a new trial or partial new trial, reverse or affirm the judgment
or order of the trial court, in whole or in part, or give such judgment as the court ought to
give. Only allegations of error presented to or expressly decided by the trial court shall be
considered on appeal. § 512.160.
3 Neveltheless, the trial court makes reference to Reators’s amended petition, which is not
in the record, and to matters outside of the original petition, including the 2009
amendments in its judgment On remand, we direct the trial court and the parties to clearly
identify the pleadings at issue and to ensure that those pleadings are properly filed with the
trial court so that we are given an adequate record for review.
4 All references to rule are to Missouri Court Rules (20l6) unless otherwise indicated
Discussion
Article VI, section 15 of the Missouri Constitution directs the general assembly to
provide laws for the organization and classification of cities and towns, restricted to no
more than four classesl This classification scheme was organized so that the powers of
each class are defined by general laws and so that such municipal corporations of the same
class possess the same powers and are subject to the same restrictions Id.; Fmternal Order
ofPolice Loa’ge No. 2 v. Cz``ty ofSI. Joseph, 8 S.W.3d 257, 261 (Mo.App.W.D. 1999).
As an alternative to a city electing to become a class city, Article VI, section 19
permits a qualifying city to frame and adopt a charter for its government Cily of St. Joseph,
8 S.W.3d at 261-62. The constitutionai authority for cities to adopt and amend a charter
intends to grant cities broad authority to tailor a form of government that its citizens believe
will best serve their interests Cz'!y ofSpringfield v. Gojj€ 918 S.W.Zd 786, 789 (Mo.banc
1996).
The enactment of a charter form of government by a city automatically supersedes
the statutory provisions applicable to class cities Cz'iy ofSt. Joseph, 8 S.W.3d at 262 (citing
McGhee v. Walsh, 155 S.W. 445, 448 (Mo.banc 1913)). A statute exclusively applicable
to a class city, generally has no application to a city operating under the charter form of
government Cr``!y ofSt. Joseph, 8 S.W.3d at 262. lf all cities were subject to the same laws
there would be no reason to have different classes of cities. Rr``den v. Cin ofRolIa, 348
S.W.2d 946, 951 (Mo.banc 1961).
Article VI, section 19(a) gives charter cities all powers which the general assembly
has authority to confer upon any city, provided such powers are consistent with the
Constitution and are not limited or denied by the city’s charter or by statute. MO. CONST.
art. Vl, § l9(a); Cape ll/[olor Lodge, Inc. v. City ofCape Gim)'deau, 706 S.W.2d 208, 210
(Mo.banc 1986). The emphasis is not on whether the charter city has the authority to
exercise the power involved, but rather on whether the exercise of that power conflicts with
the Missouri Constitution, state statutes, or the charter itself. Cape Moto)‘ Lodge, Inc. , 706
S.W.2d at 211; see § 71 .010. Thus, the issue is whether an ordinance is consistent with the
constitution and not iirnited or denied by the constitution, by statute, or by the charter itself.
Cape Mor‘or Lodge, Inc., 706 S.W.2d at 210.
Here, the trial court found that section 71.610 limited Ferguson’s power to impose
a license tax on the business of renting residential property because section 94.110 did not
specifically set forth that type of business as taxable Section 71.610 provides that no
municipal corporation shall have the power to impose a license tax upon any business,
avocation, pursuit or calling, unless such business, avocation, pursuit or calling is specially
married as taxable in the clrarter, or unless such power is conferred by statute. The power
conferred by state statute to tax businesses does not have to be specially named but can be
named generally. See Erb Indus. Equip. Co., Inc. v. City ofCape Gira)'deau, 845 S.W.2d
551, 552 (Mo.banc 1993) (holding that because section 94.110 gave the power to tax
“merchants of all kinds,” the City of Cape Girardeau could tax a merchant on its sales and
service of farm, construction, and forestry equipment even though not specially named).
Section 94.110 grants third class cities the power to collect license taxes on a
multitude of businessesl Similarly, section 94.2705 grants fourth class cities the power to
license, tax, and regulate certain businesses and occupations, section 94.360 grants special
5 RSMo 2015 Supp.
charter cities the power to collect license taxes on certain businesses and section 94.400
sets forth a taxing scheme applicable to constitutional charter cities
Ferguson is a constitutional charter city. Perguson’s charter6 grants it the power,
through the enactment of ordinances, to license, tax, and regulate all business services,
occupations professions, vocations, activities or things of any nature which are authorized
by state statute with respect to any statutory, special charter, or constitutional charter city.
The charter further provides that the above-described power shall not be interpreted to limit
the general power of the city to impose license taxes upon any business, vocation, pursuit,
or calling not prohibited by law. Thus, Ferguson, by incorporating in its charter the power
to license and tax any business authorized by state statute applicable to any statutory,
special charter, or constitutional charter city, has the authority to impose a license tax on
any business which Missouri statutes have authorized statutory, special charter, or
constitutional charter cities to regulate. See See Er'b Indus. Eqm'p. Co., Inc., 845 S.W.2d
at 552 (noting that such incorporation by reference is lawful).
Turning to the circumstances of this case, we find that the trial court has
misconstrued the impact of section 94.110 on the issues in this case. The trial court found
that since section 94.110 does not specifically mention the business of renting residential
property, Ferguson therefore lacked the authority to regulate that business The trial court
erred in this regard because its holding is based on an incorrect interpretation of the scope
and impact of section 94.110 with respect to charter cities like Ferguson.
6 Article I, section 19 of the Missouri Constitution dictates that the courts shall take
judicial notice of city charters
Section 94.1 10, generally applicable to third class cities, is just one potential source
of power Ferguson had to impose a license tax. See Erb Indus. Equip. Co., Inc., 845
S.W.2d at 552 (finding that because Cape Girardeau’s charter gave it the power to tax all
businesses authorized by statute applicable to third and fourth class cities, Cape Girardeau
has the power pursuant to section 94.110 to tax merchants of all kinds). Because
Ferguson’s charter granted it the authority to impose a license tax authorized by state
statute with respect to any statutory, special charter, or constitutional charter city, Ferguson
could have also imposed a license tax pursuant to the power conferred by a statute
applicable to those cities Thus, the trial court erred in finding that Ferguson lacked the
authority to regulate the renting of residential property merely because it was not
specifically set forth by section 94.110.
Moreover, a critical, yet unresolved issue here, is whether Ferguson’s license fee is
even a tax at all, or whether it is a user fee. See Ashworth v. Cin ofMober'Iy, 53 S.W.3d
564, 568-78 (Mo.App.W.D. 2001) (finding that the City of Moberly’s ordinance requiring
owners of a rental unit to obtain a rental permit conditioned on the payment of a permit and
inspection fee to be a user fee, and not a tax, and therefore not subject to section 71.610).
The trial court did not decide this issue or the issues raised in Realtors’s counts IV, V, and
Vl.7 Before we review these issues they should be decided by the trial court. Accordingly,
7 Despite finding that the ordinance was invalid based upon section 94.110, the trial court
also held that the ordinance classifications of a “responsible” and “provisional” were not
void for vagueness as alleged in Realtors’s count ll. While Realtors did not cross-appeal
on this issue, Realtors argue in its response brief that there are numerous provisions in the
ordinance that violate the due process clause because they are unconstitutionally vague. In
the absence of a cross-appeal, ordinarily a party cannot complain of an adverse ruling by
the trial court. See Goldberg v. State Tax Comm ’n, 618 S.W.2d 635, 642 (Mo. 1981); Bldg.
Ow)rers & Managers Ass’n ofMetro. St. Lorris, Irrc. v. City ofSt. Louis, 341 S.W.3d 143,
147 n.4 (Mo.App.E.D. 2011). Further, to preserve a constitutional claim, a constitutional
we reverse and remand this case and instruct the trial court to issue a decision on the merits
of Realtors’s counts 1, II, IV, V, and VI.
Conclusioll
F or the reasons stated above, the trial court’s judgment is reversed and remanded
for proceedings consistent with this opinion.
Jam M. Boi'/leudge_/
Robert M. Clayton lIl, P.J., and
Lawrence E. l\/looney, J., concur.
question must be preserved at every stage of review to prevent surprise to the opposing
party and to permit the trial court an opportunity to fairly identify and rule on the issues
Smte ex rel'. Tolrrpl‘as v. Bd. OfEIection Com'rs ofSt. Lour's Cm‘y., 136 S.W.3d 65, 66
(Mo.banc 2004). Rule 84.04(f) provides, however, that the respondent’s brief may also
include additional arguments in support of the judgment that are not raised by the points
relied on in the appellant’s brief. Given our remand and the fact that Realtors raises issues
that were not decided by the trial court, we direct the trial court to allow the parties an
opportunity on remand to develop a record and raise all arguments on these issues so that
the trial court’s decision provides this Court an adequate record on appeal.