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St. Louis Association of Realtors v. City of Ferguson

Court of Appeals of Missouri, Eastern District, Third Division

September 27, 2016

ST. LOUIS ASSOCIATION OF REALTORS, Respondent,
v.
CITY OF FERGUSON, Appellant.

         Appeal from the Circuit Court of St. Louis County, Missouri 2107CC-03604 Honorable Mary Elizabeth Ott

          OPINION

          James M. Dowd, Judge

         This dispute makes its third appearance in this Court. The St. Louis Association of Realtors (Realtors) filed a petition for declaratory 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, [1] 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.

         Facts and Procedural History

         In 2006, Ferguson 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. The ordinance makes it unlawful for property owners to rent or lease their property without a license.

         License holders are subject to two classifications: 1) 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. The "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.

         In 2008, Realtors challenged the validity of the ordinance on constitutional and statutory grounds. Specifically, Realtors alleged: 1) 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 amendment[2]; 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 the term "residential rental property" synonymous with "rooming house." In 2010, the trial court dismissed Realtors's petition for lack of standing. 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. Louis Ass'n of Realtors v. City of Ferguson, 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.

         In 2014, 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. City 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.

         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] In July 2015, the trial court issued its order and judgment, 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 IV, V, and VI. This appeal follows.

         Standard of Review

         The constitutional validity of an ordinance is a question of law that is reviewed de novo. City of Sullivan v. Sites, 329 S.W.3d 691, 693 (Mo.banc 2010). Under Rule 84.14, [4]an appellate court shall 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.

         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 classes. 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 ...


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