City of Excelsior Springs v. Elms Redevelopment Corporation

• Decision Date: 28 March 2000
• Parties: (Mo.App. W.D. 2000) City of Excelsior Springs and Land Clearance For Redevelopment Authority of Excelsior Springs, Respondents, v. Elms Redevelopment Corporation, Elms Inn Partners, Elms Hotel Associates Limited Partnership, The Elms of Excelsior Springs, Inc., Robert L. and Carol S. Bisbee, Elms Timesharing Intervals, Inc., Elms Hotel Operating Company, James A. Ash, Laramie Insurance Company, The Industrial Development Authority of the City of Excelsior Springs, Boatmen's First National Bank of Kansas City, Anthony G. Sommers, City of Excelsior Springs, John W. Mcclelland, Richard E. Morrison, CCDC Financial Corporation, Historic Kansas City Foundation, Pat Vagino, Jessica Vagino, Wendall Swenson, Alice Swenson, Paul E. Bell, Richard Buchli, Robert Burns, Roger A. Fisher, Richard Hernandez, D. Bradford Johnson, Billy Joe Kitterman, Kris W. Leiby, M. Chris Scholdberg, the Department of Revenue of the State of Missouri, Collector for the City of Excelsior Springs, and Collector for Clay County, Defendants, and Linda Snider, Albert Teepen, Barbara Teepen, Dennis Murphy, Lea Murphy, Robert Carver, Fred Thorp, and Ruth Thorp, Appellants. WD54862 0
• Court: Missouri Court of Appeals

18 S.W.3d 53 (Mo.App. W.D. 2000)

City of Excelsior Springs and Land Clearance For Redevelopment Authority of Excelsior Springs, Respondents, v. Elms Redevelopment Corporation, Elms Inn Partners, Elms Hotel Associates Limited Partnership, The Elms of Excelsior Springs, Inc., Robert L. and Carol S. Bisbee, Elms Timesharing Intervals, Inc., Elms Hotel Operating Company, James A. Ash, Laramie Insurance Company, The Industrial Development Authority of the City of Excelsior Springs, Boatmen's First National Bank of Kansas City, Anthony G. Sommers, City of Excelsior Springs, John W. Mcclelland, Richard E. Morrison, CCDC Financial Corporation, Historic Kansas City Foundation, Pat Vagino, Jessica Vagino, Wendall Swenson, Alice Swenson, Paul E. Bell, Richard Buchli, Robert Burns, Roger A. Fisher, Richard Hernandez, D. Bradford Johnson, Billy Joe Kitterman, Kris W. Leiby, M. Chris Scholdberg, the Department of Revenue of the State of Missouri, Collector for the City of Excelsior Springs, and Collector for Clay County, Defendants, and Linda Snider, Albert Teepen, Barbara Teepen, Dennis Murphy, Lea Murphy, Robert Carver, Fred Thorp, and Ruth Thorp, Appellants.

WD54862

Missouri Court of Appeals Western District

03/28/2000

Appeal From: Circuit Court of Clay County, Hon. David W. Russell

Counsel for Appellant: Julie J. Gibson, Angela Green and John Waldeck

Counsel for Respondent: Douglas Richmond, David Barnard, Brian Engel and John McClelland

Opinion Summary: Nine members of a class of more than 850 persons who bought a right to stay at the Elms Hotel in Excelsior Springs for one to two weeks a year appeal the circuit court's decision to deny their motion to set aside its judgment in a condemnation action.

Division holds: The circuit court erred in not granting the Gold Key Club members' motion to set aside the judgment. Because the Gold Key Club members were denied the opportunity to be heard and were not represented adequately by the class representatives, the issue of whether the Gold Key Club memberships were compensable was never adequately litigated in the condemnation proceeding.

Paul M. Spinden, Judge

Nine members of a class of more than 850 persons who bought a right to stay at the Elms Hotel in Excelsior Springs for one to two weeks a year appeal the circuit court's decision to deny their motion to set aside its judgment in a condemnation action. The appellants contend that the judgment was void because only nine members of their class received individual notice of the proceedings and because those individuals did not represent their interests adequately. We handed down an opinion on October 20, 1998, reversing the circuit court's judgment, but we granted the motion of Excelsior Springs' municipal government and its Land Clearance Redevelopment Authority (LCRA) for a rehearing to clarify our holding. We withdrew our opinion of October 20, 1998, and issued a new opinion on February 2, 1999, reported at 984 S.W.2d 887 (Mo. App. 1999).Now, because of an error in our directions to the circuit court on remand, we recall our mandate, on our own motion, and issue this new opinion. We may recall our mandate to correct errors that occurred in appellate proceedings. State v. Edwards, 983 S.W.2d 520, 522 (Mo. banc 1999). The parties in this case have returned to this court in a companion case, see City of Excelsior Springs v. Elms Development Corporation, WD 57204, slip op. (Mo. App. Mar. 28, 2000), essentially complaining about the circuit court's decision concerning the directives of our mandate which we issued in this case. Recalling a mandate on our own motion is unusual, but we do so in this case because the case has not reached a final disposition and the error has been called to our attention. In these unusual circumstances, we recall our mandate to correct this error.

The evidence established that the class consists of persons who paid $5000 to $10,000 for the right to stay at the Elms Hotel for one to two weeks a year for 30 to 50 years, depending on their individual agreements. Elms Timesharing Intervals, Inc., leased a portion of the hotel in 1983 from Elms Hotel Operating Company and began selling the hotel stay plans, called Gold Key Club memberships. Members paid a lump sum for the Gold Key Club memberships. They stayed in rooms leased to Elms Timesharing Intervals, and their getting a room for a particular time depended on Elms Timesharing Intervals' having a room available. Neither the week of the year nor a particular room was predetermined. The circuit court and the parties referred to these plans as "timesharing" arrangements.¹ To resolve this dispute, however, we need only determine whether the Gold Key Club members make a colorable argument that their memberships constituted a property interest.

The hotel quit honoring the members' right to stay at the hotel in 1996 after Excelsior Springs' municipal government and LCRA, which the city established to rehabilitate the hotel, obtained the circuit court's condemnation of the hotel. The city and LCRA concluded that the condemnation terminated the Gold Key Club members' rights.

The city's and LCRA's petition seeking condemnation, filed on August 29, 1995, named nine purchasers of Gold Key Club memberships as representatives of a class of all club members.² As ordered by the circuit court, the city and LCRA published notice of the condemnation in an Excelsior Springs local daily newspaper three times during September 1995. The notice described the property and hearing schedule, and it identified the nine representatives of the class of Gold Key Club members. Six of the nine class representatives filed answers to the petition.³ Only one, Richard Buchli, was assisted by a lawyer. Buchli's son, a lawyer, appeared for Buchli and clarified that he was representing only his father's interest. All of the other Gold Key Club members' averments were identical:

[T]his Defendant is specifically not capable of ascertaining whether or not members of the Gold Key Club should be treated as "class" for purposes of this litigation at this time and, without some specific orders of limitation and protection from this Court, is not financially capable of representing the interests of all of those persons who might be included in such "class."

The city and LCRA asked the circuit court to certify the Gold Key Club members as a defendant class.

The circuit court held a hearing to consider certifying the class. Only three of the six persons who had filed answers appeared at the hearing,⁴ and only Buchli had an attorney. The three persons who had not filed answers appeared, pro se, at the hearing.⁵ The circuit court certified the class as meeting the requirements of Rule 52.08(b)(1) but still ordered the city and LCRA to notify each class member individually of the proceedings. The city and LCRA did not obey the circuit court's order; they did not notify any of the absent Gold Key Club members. At the same hearing, the circuit court condemned the Elms Hotel and the other property in what the city and LCRA called the Elms Neighborhood Redevelopment Area. The circuit court appointed commissioners to appraise the property. The commissioners later assessed the net damage for the condemned property at $675,000. No one filed any exceptions to their report.

On July 31, 1996, the circuit court declared that the city and LCRA were beneficiaries of six deeds of trust encumbering the property in the redevelopment area and that they held a lien against the property for unpaid real estate taxes. In its order, the circuit court said:

. . . The liens of the . . . deeds of trust and unpaid taxes are prior and superior to the interests of all other parties named in the condemnation petition. The outstanding principal balance of the obligations secured by the deeds of trust is in excess of $20 million.

. . . On March 19, 1996, the Commissioners Award pursuant to Section 523.040 RSMo. was duly entered and filed in this cause in the amount of $675,000.00. No exceptions were filed, and the award is now final.

. . . Since the rights and interest of the City and LCRA in the condemned property are prior and superior to the rights of all other parties named in the condemnation petition and exceed the total amount of the final award, the City and LCRA should be allowed to credit the amount of the award against the amounts due the City and LCRA under the deeds of trust and liens[.]

. . . The Courts [sic] finds that no persons or corporations other than the defendants named in the condemnation petition have any interest in the award.

The Gold Key Club members who were not involved in the proceedings apparently did not learn of the condemnation and its effect on their rights until a few months later when Doug Morrision, Elms Resort Hotel's general manager, sent a letter to them. The letter said:

The City of Excelsior Springs, Missouri and the Land Clearance for Redevelopment Authority of the City of Excelsior Springs, Missouri ("LCRA") recently completed condemnation of The Elms Hotel and related properties. The interests of Elms Timesharing Intervals, Inc. and the members of The Gold Key Club at the Elms Hotel were terminated in the condemnation action.

The LCRA has assumed operation of the hotel, and intends to transfer ownership to a new developer who will commence a complete renovation. It is presently anticipated that the developer will close the hotel for renovation on or about November 1, 1996. The LCRA cannot accept new reservations for use of units at the hotel either from the Gold Key Club members or through any exchange program with Interval International. To minimize the inconvenience to those who have already made reservations, the LCRA will honor any existing reservations for use of rooms through October 31, 1996. Unfortunately, reservations for use of rooms after that date cannot be honored.

On July 31, 1997, 11 Gold Key Club members⁶ asked the circuit court to set...