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State ex rel Koster v. Kansas City Board of Police Commissioners

Court of Appeals of Missouri, Western District, First Division

August 15, 2017


         Appeal from the Circuit Court of Jackson County, Missouri The Honorable Joel P. Fahnestock, Judge

          Before James Edward Welsh, P.J., Lisa White Hardwick, and Gary D. Witt, JJ.

          James Edward Welsh, Presiding Judge.

         The Kansas City Board of Police Commissioners ("the Board") appeals the circuit court's judgment in favor of the Attorney General of the State of Missouri ("the State"), on the State's claims for declaratory judgment as to the parties' respective rights under section 105.726.4 RSMo, [1] of Missouri's Legal Expense Fund statutes. We affirm.

         Factual Background

         The Kansas City Board of Police Commissioners ("Board") is an entity created by the Missouri Legislature (§§ 84.350-.860) to manage and operate the Kansas City Missouri Police Department. The Missouri Attorney General has a long history of providing the Board with legal representation under the Legal Expense Fund statutes, and, until 2013, did so without requesting attorney's fees.

         On February 11, 2013, the State notified the Board that it would be unable to continue to provide legal representation without payment "of the reasonable expenses and charges that will fairly compensate [the State] for the costs of the representation, " pursuant to section 105.726.4. Citing changes in its budget and fiscal position, reduction in office attorneys, and increased caseload, the State advised that, on April 1, 2013, it would begin billing the Board $125 per hour for the Attorney General's representation.

         In July 2013, the Board responded via email that it would not pay $125 per hour, but offered to pay an amount equal to the base salaries of the assistant attorneys general representing the Board. The State then informed the Board, in a letter dated September 24, 2013, that it would begin billing the Board at the rate of $125 per hour on October 1, 2013, but would not charge for certain incidentals. That letter recounted that the State and the Board "[had] had some discussions concerning the matter and manner of billing for services provided by Assistant Attorney Generals over several months and [had] been unable to come to a complete agreement."

         In February 2014, the State began sending quarterly invoices to the Board requesting payment for legal services the Attorney General had provided since October 1, 2013. At a meeting in September 2014, the Board discussed the State's request for payment but did not approve payment of the amount requested (or any other amount). Throughout this dispute, the Attorney General has continued to provide legal representation upon the Board's request, as mandated by section 105.726.4.

         On December 11, 2014, the State filed a petition against the Board alleging action on account and quantum meruit, in Counts I and II, arising out of attorney's fees owed by the Board under section 105.726. The State later amended its petition to add Counts III and IV, in which it sought a declaration of the parties' respective rights under section 105.726.4 and ancillary relief.

         The parties filed stipulated facts and exhibits, which reflected the foregoing facts. The parties also stipulated that, since October 2013, the Attorney General had provided over 8, 000 hours of legal representation to the Board. The parties agreed that the number of hours spent to represent the Board was reasonable and necessary; they did not stipulate as to the reasonableness of the requested hourly rate.

         The parties thereafter filed cross motions for judgment. On June 27, 2016, the circuit court entered judgment for the Board on the State's Counts I and II, but found in favor of the State on Counts III and IV (the declaratory judgment counts), finding that section 105.726.4 obligated the Board to pay attorney's fees for the Attorney General's legal representation.

         In September 2016, the circuit court held a hearing as to the reasonableness of the Attorney General's $125 hourly rate for attorney's fees. The State presented the testimony of the special counsel to the Attorney General and its deputy chief of staff in support of its claim that that rate is reasonable. On October 7, 2016, the circuit court entered judgment holding that the rate of $125 per hour for attorney's fees is reasonable. The Board appeals.

         Statutory Framework and Background

         In 1983, the Missouri Legislature enacted §§105.711-.726, creating the State Legal Expense Fund ("Fund"), to replace the "Tort Defense Fund." P.L.S. ex rel. Shelton v. Koster, 360 S.W.3d 805, 809 (Mo. App. 2011).[2] The Fund has been described as "a voluntary assumption of defense and payment [of claims] against State employee[s] sued for their conduct arising out of and performed in connection with official duties on behalf of the state." Dixon v. Holden, 923 S.W.2d 370, 379 (Mo. App. 1996). The fundamental purpose of the Fund is

to protect the covered employees from the burden and expense of civil litigation relating to the performance of their duties. The purposes are apparent. A competent employee, who is in demand elsewhere, may be unwilling to work for the state without protection. Those who do serve may be unwilling to take necessary risks for fear of litigation.

Kershaw v. City of Kansas City, 440 S.W.3d 448, 458 (Mo. App. 2014).

         The Fund "consists of sums appropriated by the General Assembly and any funds otherwise credited to the Fund by certain departments pursuant to section 105.716." P.L.S., 360 S.W.3d at 809; §105.711.1. The assets in the Fund are intended "for the payment of any claim, or any amount required by any final judgment" against (1) "the State, or any agency of the State" (to the extent that the claim against the State is authorized pursuant to § 537.600, the sovereign immunity statute), and (2) "any officer or employee of the State or any agency of the State, " as provided and as limited in the statute. P.L.S., 360 S.W.3d at 809; § 105.711.2.[3] Pursuant to the statutory scheme, "the attorney general is directed to investigate, defend, negotiate, and compromise any claims against state officers and employees covered by the statute." Vasic v. State, 943 S.W.2d 757, 759 (Mo. App. 1997) (citing § 105.716.1). Payments from the Fund are made by the commissioner of administration with the attorney general's approval. § 105.711.5.

         In 2005, in Smith v. State, 152 S.W.3d 275, 278-80 (Mo. banc 2005), the Supreme Court examined the applicable statutes and held that the St. Louis Board of Police Commissioners and its police officers were entitled to coverage under the Fund, in that the Board was an "agency of the state, " and its officers were "officers of the state, " within the meaning of section 105.711.2.[4]The Court based its ruling on the fact that, in creating the Board, the legislature intended for it to operate entirely independently of the City of St. Louis. Id. at 278. By extrapolation, that ruling also applied to the Kansas City Board of Police Commissioners, which was established by the legislature in an almost identical fashion to the St. Louis Board.[5] See Sherf v. Koster, 371 S.W.3d 903, 906 (Mo. App. 2012) (citing §§ 84.350-.860).

         That same year, in explicit response to Smith, the Missouri Legislature amended section 105.726 to limit (but not entirely eliminate) the Fund's obligations to the St. Louis and Kansas City Boards. Id.; see 2005 Mo. Laws S.B. Nos. 420 & 344, ยง A. Pertinent to this ...

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