Dujakovich v. Carnahan

• Citation: 370 S.W.3d 574
• Decision Date: 03 July 2012
• Docket Number: No. SC 92062.,SC 92062.
• Parties: Pat DUJAKOVICH, et al., Appellants, v. Robin CARNAHAN, et al., Respondents, and Travis Brown, et al., Intervenors.
• Court: United States State Supreme Court of Missouri

370 S.W.3d 574

Pat DUJAKOVICH, et al., Appellants,

v. Robin CARNAHAN, et al., Respondents,andTravis Brown, et al., Intervenors.

No. SC 92062.

Supreme Court of Missouri, En Banc.

July 3, 2012.

Sarah Baxter, Stephen D. Walsh, Galen P. Beaufort, Assistant City Attorneys for Kansas City, for challengers.

James R. Layton and Jennifer Redel–Reed, Attorney General's Office, Jefferson City, for Secretary of State and the State.

Thomas W. Rynard, Marc H. Ellinger, James B. Deutsch, Stephanie Bell, Blitz, Bardgett & Deutsch LC, Jefferson City, for Let Voters Decide.

GEORGE W. DRAPER III, Judge.

Pat Dujakovich and Troy Schulte (hereinafter and collectively, “Appellant”) appeal the trial court's grant of judgment on the pleadings against them in their challenge to the amendments to the state earnings tax statutes, sections, 92.105 through 92.125, RSMo Supp.2011.¹ Appellant raises three arguments: (1) the amendments violate article III, section 51 of the Missouri Constitution by using the initiative for the appropriation of money to pay the election costs to continue the earnings tax; (2) the requirement to hold recurring elections without providing state funds constitutes an unfunded mandate in violation of the Hancock Amendment; and (3) the amendments violate article VI, section 20 of the Missouri Constitution by using the statewide initiative process to amend a city charter.

Facts and Procedural Background

In 1963, the Missouri General Assembly enacted the enabling legislation which authorized Kansas City to levy an earnings tax for general revenue purposes. Sections 92.210 through 92.300. In 2009, an initiative petition proposing to amend chapter 92 was submitted to Secretary of State Robin Carnahan (hereinafter, “the Secretary of State”). The Secretary of State certified the ballot title to be placed before Missouri voters.² After certification of the ballot title, the initiative petition was circulated by Let Voters Decide, which gathered signatures of registered Missouri voters. Let Voters Decide submitted their petitions to the Secretary of State for determination of whether sufficient signatures were gathered. The Secretary of State certified the initiative petition, and it appeared on the statewide ballot on November 2, 2010, as “Proposition A.”

Appellant filed this declaratory judgment action on August 13, 2010. Let Voters Decide, Travis Brown, and Scott Charton (hereinafter and collectively, “Intervenor”) intervened in the case. On September 17, 2010, the trial court held an evidentiary hearing limited to the claims it considered to be ripe prior to the general election.³ Proposition A was approved and adopted by a majority of the votes cast at the general election. After Proposition A was approved in the general election, discovery was conducted and Appellant filed a second amended petition joining the State of Missouri as an additional defendant.

Intervenor, the Secretary of State, and the State filed separate motions to dismiss Appellant's petition, along with suggestions in support of their individual motions. Appellant filed motions in opposition. After a hearing on all of the motions, the trial court dismissed all counts with prejudice in its August 15, 2011, judgment. This Court has jurisdiction because the case involves the validity of a state statute. Mo. Const. art. V, sec. 3.

Standard of Review

A motion to dismiss is an attack on the petition and is solely a test of the adequacy of that pleading. Reynolds v. Diamond Foods & Poultry, Inc., 79 S.W.3d 907, 909 (Mo. banc 2002). “When this Court reviews the dismissal of a petition for failure to state a claim, the facts contained in the petition are treated as true and they are construed liberally in favor of the plaintiffs.” Lynch v. Lynch, 260 S.W.3d 834, 836 (Mo. banc 2008). “In testing the sufficiency of a petition purporting to state a claim for declaratory relief the question is not whether the petition shows that plaintiff is entitled to the declaratory relief [the plaintiff] seeks in accordance with the theory he [or she] states, rather, it is whether under the averments of [the plaintiff's] petition he [or she] is entitled to a declaration of rights at all.” City of Creve Coeur v. Creve Coeur Fire Protection Dist., 355 S.W.2d 857, 859 (Mo.1962). This Court will affirm the dismissal if it is supported by any ground, regardless of whether the trial court relied on that ground. Stabler v. Stabler, 326 S.W.3d 561, 566 (Mo.App. E.D.2010).

This Court reviews the constitutional validity of a statute de novo. Gurley v. Missouri Bd. of Private Investigator Examiners, 361 S.W.3d 406, 411 (Mo. banc 2012). “A statute is presumed valid and will not be held unconstitutional unless it clearly contravenes a constitutional provision.” In re Brasch, 332 S.W.3d 115, 119 (Mo. banc 2011). This Court “resolve[s] all doubt in favor of the [statute's] validity.” Ocello v. Koster, 354 S.W.3d 187, 197 (Mo. banc 2011) (quoting Westin Crown Plaza Hotel Co. v. King, 664 S.W.2d 2, 5 (Mo. banc 1984)).

(1) Appropriation of money to pay election costs

Appellant claims the second amended petition alleged facts which demonstrated a justiciable controversy as to whether Proposition A violated article III, section 51 of the Missouri Constitution.⁴ Appellant argues this initiative was a de facto appropriation by requiring local elections to continue the Kansas City earnings tax without providing a new revenue source for the cost of that election.

Proposition A stemmed from an initiative petition, seeking to terminate the authority of any city to collect an earnings tax. Missouri voters adopted Proposition A. Proposition A amended section 92.111.1, which now states:

After December 31, 2011, no city, including any constitutional charter city, shall impose or levy an earnings tax, except, a constitutional charter city that imposed or levied an earnings tax on the effective date of this section may continue to impose the earnings tax if it submits to the voters of such city pursuant to section 92.115, the question whether to continue such earnings tax for a period of five years and a majority of such qualified voters voting thereon approve such question, however, if no such election is held, or if in any election held to continue to impose or levy the earnings tax a majority of such qualified voters voting thereon fail to approve the continuation of the earnings tax, such city shall no longer be authorized to impose or levy such earnings tax except to reduce such tax....

As a charter city that was authorized to collect an earnings tax on December 31, 2011, Kansas City may continue to maintain that tax. If Kansas City seeks continued authorization to impose an earnings tax, it now must seek the approval of its own qualified voters. Whether Kansas City seeks continued authorization to impose an earnings tax is purely discretionary. There is no mandate requiring an election. Cf. State ex rel. Sessions v. Bartle, 359 S.W.2d 716, 719 (Mo.1962) (finding proposed ordinance which established job classifications and wage schedules for employees that shall take effect and without providing additional revenues to pay increased salaries to be an appropriation violating article III, section 51).

Here, any cost of an election is within the pure discretion of Kansas City. Further, there is no prohibition against using the money raised from the earnings tax to pay for the costs necessary to continue the city's authorization of assessing a future earnings tax. Committee For A Healthy Future, Inc. v. Carnahan, 201 S.W.3d 503, 510 (Mo. banc 2006). Accordingly, there was no de facto appropriation.

(2) Hancock Amendment Violation

Appellant argues the second amended petition alleged facts which demonstrated Proposition A violated the Hancock Amendment. Appellant claims the determination of whether the Hancock Amendment applies to Proposition A requires an interpretation of the Missouri Constitution and, therefore, the trial court erred in sustaining the motion to dismiss.

In 1980, Missouri voters adopted an amendment to the Missouri Constitution article X, sections 16 through 24, which are referred to commonly as the Hancock Amendment. The Hancock Amendment “aspires to erect a comprehensive, constitutionally-rooted shield to protect taxpayers from government's ability to increase the tax burden above that borne by the taxpayers on November 4, 1980.” Fort Zumwalt School Dist. v. State, 896 S.W.2d 918, 921 (Mo. banc 1995). Its purpose was to “rein in increases in governmental revenue and expenditures.” Thompson v. Hunter, 119 S.W.3d 95, 98 (Mo. banc 2003) (quoting Roberts v. McNary, 636 S.W.2d 332, 336 (Mo. banc 1982)). The Hancock Amendment's provision for an...