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Missouri Bankers Ass'n, Inc. v. St. Louis County

Supreme Court of Missouri, En Banc

November 12, 2014


APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY. The Honorable Brenda Stith Loftin, Judge.

The bankers were represented by Jane E. Dueker, Charles W. Hatfield and Jamie L. Boyer of Stinson Leonard Street LLP in St. Louis.

The county was represented by Patricia Redington of the St. Louis County counselor's office in Clayton.

The Business Bank of St. Louis, which filed a brief as a friend of the Court, was represented by John L. Davidson of John L. Davidson PC in St. Louis.

GEORGE W. DRAPER III, JUDGE. Russell, C.J., Breckenridge, Fischer, Stith and Wilson, JJ., concur; Teitelman, J., dissents in separate opinion filed. RICHARD B. TEITELMAN, Judge.


George W. Draper III, Judge.

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Missouri Bankers Association, Inc. and Jonesburg State Bank (hereinafter and collectively, " Bankers" ) sought a judgment declaring an ordinance that implemented a foreclosure mediation program invalid. This Court holds St. Louis County (hereinafter, " the County" ) exceeded its charter authority when enacting the ordinance and the ordinance was void ab initio. This Court further holds Bankers are not entitled to an award of attorneys' fees pursuant to their Hancock Amendment claim. The circuit court's judgment is reversed, and the case is remanded.[1]

Factual and Procedural History

In 2012, the St. Louis County Council adopted an ordinance titled the " Mortgage Foreclosure Intervention Code." The ordinance stated it addressed " the national residential property foreclosure crisis" and the negative impact this national crisis had on the County's property values, tax base, budget, assessments, and collection of real property taxes. The ordinance recognized that " unsecured and unmaintained properties present a danger to the health, safety and welfare of the public ... and as such, constitute a public nuisance." In response to this nuisance, the ordinance implemented a mediation program requiring lenders to provide residential borrowers an opportunity to mediate prior to foreclosure.

The ordinance mandates the lender provide the homeowner with written notice of the mediation process, the homeowner's right to request mediation, and a notice of foreclosure. Along with these notices, the lender must pay a nonrefundable fee of $100 to a mediation coordinator who manages and oversees the mediation program. The mediation coordinator must make at least three attempts to contact the homeowner regarding participation in the mediation program.

If the homeowner chooses to participate in the mediation program, the mediation must be scheduled within sixty days. The lender must pay an additional $350 fee to the mediation coordinator. If the parties are able to reach a settlement regarding

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the foreclosure prior to the mediation, the $350 fee is refunded to the lender. If the parties are unable to reach a settlement during the mediation conference, the lender is deemed to have satisfied the ordinance's requirements so long as the lender has made " a good faith effort" to settle the matter.

After satisfying the ordinance's requirements, the mediation coordinator must issue the lender a certificate of compliance attesting the lender has complied with the ordinance and is eligible to record the foreclosure deed without penalty. If the homeowner fails to respond or declines to participate in the mediation program, the lender shall be deemed to have satisfied the ordinance's requirements and will receive a certificate of compliance within one business day. The certificate of compliance must be filed with the county assessor simultaneously with the filing of a conveyance of the foreclosed property with the county recorder of deeds. Failure to obtain and file a certificate of compliance does not prevent the recording of the conveyance; however, the ordinance subjects the lender to criminal prosecution and a fine up to $1,000 for failure to comply.[2]

Bankers filed suit against the County and Charlie A. Dooley, the county executive (hereinafter and collectively, " the County" ), seeking a declaratory judgment and injunctive relief. Bankers presented six counts, alleging the ordinance: (1) conflicted with state statutes; (2) violated the Hancock Amendment, Mo. Const. art. X, sec. 22; (3) violated Missouri constitutional taxation provisions; (4) violated Missouri constitutional restrictions on charter county authority; (5) violated Bankers' rights; and (6) violated the County charter. The circuit court issued a temporary restraining order enjoining the County from enforcing the ordinance. Both parties filed motions for summary judgment.

After reviewing the pleadings, the circuit court dissolved the restraining order and sustained the County's motion for summary judgment. The circuit court held the County possessed the charter authority to enact the ordinance, the ordinance was a valid exercise of the County's police power, and the ordinance was not preempted by state law. The circuit court further found the fees associated with the ordinance did not violate the Hancock Amendment.

Bankers appealed. During the pendency of the appeal at the court of appeals, the legislature enacted a new state mortgage law, section 443.454, RSMo Supp. 2013. This statute, effective August 28, 2013, states:

The enforcement and servicing of real estate loans secured by mortgage or deed of trust or other security instrument shall be pursuant only to state and federal law and no local law or ordinance may add to, change, delay enforcement, or interfere with any loan agreement, security instrument, mortgage or deed of trust. No local law or ordinance may add, change, or delay any rights or obligations or impose fees or taxes of any kind or require payment of fees to any government contractor related to any real estate loan agreement, mortgage or deed of trust, other security instrument, or affect the enforcement and servicing thereof.

Section 443.454 expressly prohibits local municipalities from enforcing the type of ordinance the County enacted. The court of ...

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