66, Inc. v. Crestwood Commons Redev. Corp

• Decision Date: 19 August 2003
• Docket Number: No. ED 81218.,No. ED 81094.,ED 81094.,ED 81218.
• Citation: 130 S.W.3d 573
• Parties: 66, INC., Plaintiff/Appellant/Cross-Respondent, v. CRESTWOOD COMMONS REDEVELOPMENT CORP., and Hycel Partners III, L.P., and Shnuck Markets, Inc., Defendants/Respondents/Cross-Appellants.
• Court: Missouri Court of Appeals

130 S.W.3d 573

66, INC., Plaintiff/Appellant/Cross-Respondent, v. CRESTWOOD COMMONS REDEVELOPMENT CORP., and Hycel Partners III, L.P., and Shnuck Markets, Inc., Defendants/Respondents/Cross-Appellants.

No. ED 81094.

No. ED 81218.

Missouri Court of Appeals, Eastern District, Division Two.

August 19, 2003.

Motion for Rehearing and/or Transfer to Supreme Court Denied October 2, 2003.

Case Transferred to Supreme Court November 25, 2003.

Case Retransferred to Court of Appeals April 27, 2004.

Original Opinion Reinstated May 5, 2004.

Martin M. Green, Joe D. Jacobson, Green Schaaf & Jacobson, P.C., Clayton, for appellant.

Thomas C. Walsh, Dan M. Lesicko, Bryan Cave LLP, St. Louis, Gerard T. Carmody, Carmody MacDonald, P.C., Clayton, William J. Travis, Greensfelder, Hemker & Gale, P.C., St. Louis, for respondents.

KATHIANNE KNAUP CRANE, Judge.

This consolidated appeal arises from a lawsuit brought by an owner of commercial property to recover damages for abandonment of condemnation against a redevelopment corporation and its joint venture owners. The trial court entered a judgment of $392,612 in the property owner's favor.

Plaintiff, the commercial property owner, claims that it should have been awarded additional items of damages as follows: $2,291,105.12 in interest paid on a loan secured by the property from November 29, 1989 to November, 1993; $60,000 in lease termination payments paid prior to the filing of the underlying condemnation action; and prejudgment interest on the damages attributed to interest payments and real estate taxes. Plaintiff also contends that the trial court erred in not including in its judgment, by reason of an offset, the $47,174 in mortgage interest payments made by plaintiff from September 13, 1989 to November 1, 1989, and in reducing the award of attorney's fees by $112,764 deemed to have been previously included in the statutory interest awarded to plaintiff in the condemnation action.

Defendants contend that the trial court should not have awarded plaintiff any damages because plaintiff did not suffer any loss in that plaintiff profited after abandonment by the November, 1993 sale of the property to National Supermarkets for $7,934,500. In the alternative, defendants assert that the trial court erred in awarding plaintiff $136,507 in attorney's fees for work performed in this case and $90,058 for real estate taxes paid while the condemnation was pending. Defendants further contend that the trial court erred in awarding $278,811 in attorney's fees for defense of the condemnation action because that amount included work on other matters, which was not recoverable. Finally, defendants claim that the trial court failed to reduce the damages awarded plaintiff by the amount of all statutory interest previously awarded and paid.

On plaintiff's appeal we hold that the trial court erred in reducing the judgment in this case by $112,764 and order that amount reinstated in the judgment. On defendant's appeal we hold that the trial court erred in awarding plaintiff $90,058, representing real estate taxes, and $136,507, representing attorney's fees in this action, and reverse that part of the judgment that awards those amounts. We also hold that the trial court erred in including in its award of attorney's fees in defense of the underlying condemnation case the fees incurred in a separate declaratory judgment action between the city in which the property was located and a competing developer and the fees incurred in developing the property for sale. We reverse that part of the judgment awarding those fees and remand to the trial court to determine the amounts of those fees and to deduct them from the judgment. In all other respects, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Parties and the Efforts to Acquire and Develop Movie Theater Property

Plaintiff, 66, Inc.¹, is a wholly-owned subsidiary of Ronnie's Enterprises, Inc. Ronnie's Enterprises, Inc. and Wehrenberg, Inc. (Wehrenberg) are two companies within the greater "Wehrenberg Family of Companies," both of which are owned by Ronald Krueger and the Gertrude Wehrenberg Trust. Plaintiff leased and operated a parcel of commercial property (the property) located in the City of Crestwood, Missouri (the City), as a drive-in movie theater. An ordinance blighting the property was introduced and read for the first time at the City's March 8, 1988 aldermanic meeting. On March 18, 1988, with knowledge of the pending blighting ordinance, plaintiff entered into a contract with its lessor to purchase the property for $3.5 million. In April, 1988, the City passed an amended blighting ordinance and sought bids for redevelopment.

Emmis Broadcasting, operator of KSHE radio, subleased a portion of the property from plaintiff as the site for its broadcast antennae. In 1988, after plaintiff contracted to purchase fee ownership of the property from the lessor, plaintiff contracted with Emmis to buy out Emmis's leasehold interest before the lease's April, 1991 termination date in order to better facilitate the sale or development of the property. The lease termination agreement required plaintiff to make two payments to Emmis of $30,000 each. The first payment was due in 1988 and the second in 1989. Plaintiff made both payments before the condemnation action was filed.

On June 22, 1988, plaintiff entered into a contract to sell the property for $7.2 million to Daniel Devereux, Joseph Pottebaum, and Robert Kaplan. The contract was contingent upon the City's selection of the redevelopment plan proposed by Crestwood Festival Associates (Festival), one of three developers to submit proposals to the City.

Defendant, Crestwood Commons Redevelopment Corp. (Commons), is a Chapter 353 urban redevelopment corporation formed on June 24, 1988 by a joint venture general partnership between defendants Schnuck Markets, Inc., and Hycel Partners III, L.P. Commons, Festival, and Centennial Development Company each submitted a development plan to the City in July, 1988.

Following three public hearings on each of the development plans, the City approved Commons' development plan on September 6, 1988. Because Festival's plan was not selected, the contract between plaintiff and Devereux, Pottebaum and Kaplan terminated.

On November 28, 1988 plaintiff closed on its contract to purchase the fee interest from its lessor. Plaintiff financed the purchase price with a $3.5 million loan from Mercantile Bank. Commons then entered into negotiations with plaintiff to purchase the property, but the parties could not agree on a purchase price.

On March 9, 1989 plaintiff entered into a contract to sell the property to Festival in exchange for $7 million plus a ten-percent limited partnership interest in Festival to Mr. Krueger. This contract was scheduled to close on September 13, 1989.

On April 5, 1989, the City's Planning, Zoning, and Architectural Review Commission recommended that the Board of Aldermen approve a special use permit for plaintiff, Festival, and Festival's architect. Instead, six days later, the Board of Aldermen passed an ordinance granting Commons the power of eminent domain so that it could complete its development plan. Commons was given the power of eminent domain on July 11, 1989, and the City entered into a development agreement with defendants on that date.

II. The Underlying Condemnation and Contemporaneous Events

On July 13, 1989, Commons filed a petition in the circuit court to condemn the property. On September 5, 1989 plaintiff moved to dismiss the petition on the grounds that the ordinance was invalid.

In October, 1989 the trial court entered a judgment against Commons on its condemnation action, which we reversed in June, 1991. Crestwood Commons v. 66 Drive-In, Inc., 812 S.W.2d 903 (Mo.App. 1991) (Crestwood I). On December 16, 1991 the appointed commissioners valued the property at $7,399,990. Plaintiff and Commons filed exceptions to the commissioners' determination and requested a jury trial on the value of the property.

While the condemnation action was pending, three other events occurred which are relevant to the issues on appeal. We describe them below.

A. Declaratory Judgment Action

The City approved a special use permit to Festival, Festival's general partner, and plaintiff on September 12, 1989 to develop the property although, at the time, the City had previously granted eminent domain powers to defendants and the condemnation action was pending. Because of this situation, the City stipulated that it would not issue the permit until a court entered a final judgment declaring that (1) the grant of the special use permit would not breach the Development Agreement between Commons and the City, and (2) the denial of the special use permit, on the grounds that Commons had been granted development rights and power of eminent domain, violated the rights of Festival, Festival's general partner, and/or plaintiff. The City subsequently filed a declaratory judgment action against Festival. The record on appeal does not disclose when the action was filed or how it was resolved. The attorneys who represented plaintiff in the underlying condemnation action also represented Festival in the declaratory judgment lawsuit.

B. Contract Extension Payments

Between September, 1989 and June, 1990, plaintiff entered into eleven contract amendments with Festival extending the closing date on the property because of the pending condemnation. Beginning with the seventh amendment, Festival paid $2000.00 per day for the contract extensions. The eighth amendment also increased the cash portion of the sale price from $7,000,000 to $7,600,000. The eleventh amendment extended the closing date to July 31, 1990. After the last extension, Festival's general partner began experiencing financial problems and did not extend the closing date. The contract expired at the end of the July 31, 1990 extension. Festival paid approximately $182,000 in contract...