City of Kan. City v. K.C. Beaton Holding Co.

• Decision Date: 14 January 2014
• Docket Number: Nos. WD 76068,WD 76110.,s. WD 76068
• Parties: CITY OF NORTH KANSAS CITY, Missouri, Appellant–Respondent, v. K.C. BEATON HOLDING COMPANY, LLC, et al., Respondents–Appellants, and Platte Valley Bank of Missouri and Keith Hicklin, Respondents.
• Court: Missouri Court of Appeals

417 S.W.3d 825

CITY OF NORTH KANSAS CITY, Missouri, Appellant–Respondent,

v. K.C. BEATON HOLDING COMPANY, LLC, et al., Respondents–Appellants,andPlatte Valley Bank of Missouri and Keith Hicklin, Respondents.

Nos. WD 76068, WD 76110.

Missouri Court of Appeals, Western District.

Jan. 14, 2014.

Keith Hicklin, Platte City, MO, for Respondent Acting Pro Se.

Keith Hicklin, Platte City, MO, for Respondent, Platte Valley.

Paul Henry, Clayton, MO, for Respondent–Appellant City of North K.C.

Robert Denlow, St. Louis, MO, for Respondent–Appellant City of North K.C.

Before Division Four: JAMES EDWARD WELSH, C.J., CYNTHIA L. MARTIN, J., and PATRICK ROBB, Sp. J.

JAMES EDWARD WELSH, Chief Judge.

The City of North Kansas City (the City) seeks to condemn property owned by K.C. Beaton Holding Company, L.L.C., upon which Gilbertson Restaurants, L.L.C., operates a Burger King restaurant.¹ The City filed an amended verified petition in condemnation against K.C. Beaton, and K.C. Beaton filed a motion to dismiss the petition. The circuit court granted K.C. Beaton's motion to dismiss finding that the City did not have the authority to condemn the Burger King property under section 88.497, RSMo 2000, for the “public purpose” of eliminating blight. The City appeals asserting that the circuit court erred in dismissing its amended verified petition in condemnation on the grounds that the City lacked legal authority to condemn the Burger King property under section 88.497. The City contends that section 88.497 granted the City the right to take property “for any other necessary public purposes” and that the elimination of blight is a public purpose. K.C. Beaton cross-appeals asserting that the circuit court erred in finding that the City's ordinance, which declared the Burger King property to be blighted, was valid. K.C. Beaton asserts that the City's ordinance violates article VI, section 21 of the Missouri Constitution, because the City did not follow the requirements of any statute when it made its determination that the area, which included the Burger King property, was blighted. We affirm the circuit court's judgment and dismiss K.C. Beaton's cross-appeal.

The City of North Kansas City is a third-class and non-charter city with a population between 4,000 and 5,000 inhabitants. K.C. Beaton Holding Company, L.L.C., is the owner of real property located generally at 1911 Armour Road in North Kansas City. Gilbertson Restaurants, L.L.C., is the operator of a Burger King on the property owned by K.C. Beaton Holding Company, L.L.C.²

The City has undertaken the removal of blight and seeks to redevelop approximately 57 acres of land located in the City south of Armour Road and east of Interstate 35 (the Armour Road Site). In an effort to determine whether the Armour Road Site was blighted, the City commissioned a blight study, dated July 31, 2008. The City obtained an updated blight study, dated April 30, 2010, to confirm and update the contents of the original study. Both the 2008 and 2010 blight studies concluded that the Armour Road Site was blighted. The blighting factors were not found on the Burger King property, but because the studies found a preponderance of blight, the studies concluded that the entire area was blighted.³

After reviewing the blight studies and being advised of the condition of the Armour Road Site, the City's city council passed Ordinance No. 8476, which was subsequently approved by the City's mayor on June 22, 2010. In Ordinance No. 8476, the city council found and declared that a preponderance of the Armour Road Site was blighted. Ordinance No. 8476 specifically stated that the city council reviewed the 2008 and 2010 blight studies for the Armour Road Site prior to determining the property was blighted. Further, Ordinance No. 8476 stated that the city council made its determination that the property was blighted after considering each parcel within the Armour Road Site. The ordinance authorized the City to acquire by purchase, donation, lease, or eminent domain, pursuant to section 88.497, RSMo, and Chapter 1.20 of the City Code, all legal interests in the properties within the Armour Road Site.

To carry out its intent to eliminate blight and redevelop the Armour Road Site, the City commenced acquiring various properties within the described area. The City acquired all of the properties at the Armour Road Site except the property that is the subject of this litigation.⁴

On June 28, 2011, the city council and the mayor approved Ordinance No. 8551, which specified that the City deemed it necessary and in the best interests of the citizens of the City to acquire certain interest in lands and all associated appurtenances and improvements, if any, in the Burger King property. Ordinance No. 8551 identified that the land was required for the necessary public purpose of providing for the clearance, replanning, reconstruction, redevelopment and rehabilitation of blighted and substandard areas for any necessary public purpose or any positive economic impact for the public good of the City. Through Ordinance No. 8551, the city council authorized and issued a certificate of public convenience and necessity authorizing the City to acquire by the exercise of eminent domain the Burger King property in fee simple or other appropriate estate.

On July 7, 2011, the City sent a letter to K.C. Beaton Holding Company, which gave notice of the City's intent to acquire the Burger King property as part of the City's plan for redevelopment of the Armour Road Site and which invited K.C. Beaton Holding Company to engage in negotiations prior to initiating a condemnation action. Prior to engaging in negotiations for the property, the City had the Burger King property appraised. The appraiser concluded that the fair market value of the property was $850,000 as of May 15, 2011. On October 4, 2011, the City made a written offer of $850,000 to acquire the Burger King property from K.C. Beaton Holding Company. K.C. Beaton Holding Company did not accept the offer and made no counteroffer. Although the City in good faith endeavored to agree upon proper compensation for the property, the City was unable to acquire from K.C. Beaton Holding Company fee simple absolute title to the property. Therefore, the City filed its verified petition in condemnation against K.C. Beaton Holding Company on March 23, 2012, and filed an amended petition against K.C. Beaton Holding Company and Gilbertson Restaurants on May 25, 2012, seeking to acquire by the City's power of eminent domain the Burger King property. K.C. Beaton Holding Company and Gilbertson filed their respective answers to the amended petition in condemnation and also filed a joint motion to dismiss.

The circuit court held an evidentiary hearing on the City's condemnation action. During the evidentiary hearing, the City called witnesses to testify and offered various documents and reports into evidence. K.C. Beaton did not call any witnesses to testify and offered no evidence, other than the City's master plan, during the hearing. At the hearing, the City acknowledged that it did not have an actual physical plan for what the redevelopment would look like on the Armor Road site and that it did not have a developer for the area. In the City's Master Plan, the area was not referenced as a redevelopment area but as a “planning area.”

On October 1, 2012, the circuit court entered its order and judgment in the case, sustaining K.C. Beaton's motion to dismiss. The City filed a motion for new trial or, in the alternative, a motion to amend or modify the judgment. K.C. Beaton filed a memorandum in opposition to the City's motion for new trial. The circuit court heard argument on the motions, and the circuit court entered an amended order and judgment ⁵ on January 23, 2013, granting K.C. Beaton's motion to dismiss and dismissing the City's amended verified petition in condemnation. The circuit court ruled that, although the City complied with the requirements for blighting the property, the City did not have the authority to condemn the Burger King property under section 88.497 for the “public purpose” of eliminating blight. The City appeals, and K.C. Beaton cross-appeals.

In its sole point on appeal, the City contends that the circuit court erred in dismissing its amended verified petition in condemnation on the grounds that the City lacked legal authority to condemn the Burger King property under section 88.497. The City contends that section 88.497 granted the City the right to take property “for any other necessary public purposes” and that the elimination of blight is a public purpose.

“As a general rule, review of the trial court's ruling on a motion to dismiss is limited to the sufficiency of the pleadings on their face.” City of Smithville v. St. Luke's Northland Hosp. Corp., 972 S.W.2d 416, 419 (Mo.App.1998). In this case, however, evidence beyond the pleadings was introduced prior to the dismissal.⁶ Under such circumstances, the motion to dismiss would be converted into a motion for summary judgment, and our standard of review would be de novo. Id.;Rule 55.27(b); ITT Commercial Fin. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). However, because this case involves the issue of statutory construction, which is a question of law, our standard of review is most certainly de novo. Nichols v. Dir. of Revenue, 116 S.W.3d 583, 585 (Mo.App.2003).

In Missouri, “the right of eminent domain rests with the state and does not naturally inhere in counties, municipalities or public service corporations.” State ex rel. Mo. Cities Water Co. v. Hodge, 878 S.W.2d 819, 820 (Mo. banc 1994). “The right to condemn,” therefore, “can be exercised only upon delegation from the state.” Id. “ ‘[A] statute delegating [the power of eminent domain] must be strictly construed, and the person or body claiming the right to exercise such delegated power must be able to point to the statute which...