Kan. City Premier Apartments Inc. v. Mo. Real Estate Comm'n

• Decision Date: 30 August 2011
• Docket Number: No. SC 91125.,SC 91125.
• Citation: 344 S.W.3d 160
• Parties: KANSAS CITY PREMIER APARTMENTS, INC., Appellant,v.MISSOURI REAL ESTATE COMMISSION, Respondent.
• Court: Missouri Supreme Court

344 S.W.3d 160

KANSAS CITY PREMIER APARTMENTS, INC., Appellant,

v.MISSOURI REAL ESTATE COMMISSION, Respondent.

No. SC 91125.

Supreme Court of Missouri, En Banc.

July 19, 2011.Motion to Modify Denied Aug. 30, 2011.

David E. Roland, Freedom Center of Missouri, St. Louis, for Kansas City Premier Apartments.Edwin R. Frownfelter, Attorney General's Office, Jefferson City, for Missouri Real Estate Commission.ZEL M. FISCHER, Judge.

Kansas City Premier Apartments, Inc. (“KCPA”) appeals an injunction entered by the trial court finding it in violation of chapter 339 and prohibiting it from continuing any activities requiring real estate licensure. KCPA claims that the trial court misapplied § 339.010.1, RSMo Supp.2010. ¹ It also claims that the trial court erred in not declaring § 339.010.1 and § 339.010.7 unconstitutional. This Court has exclusive jurisdiction over this appeal under article V, section 3, of the Missouri Constitution, as the appeal involves the validity of a state statute. Judgment affirmed.

Facts

In 2001, Tiffany Lewis and Ryan Gran founded KCPA, a business devoted to assisting owners of rental property in locating prospective renters (“prospects”). Neither Lewis nor Gran has a Missouri real estate brokerage license. KCPA's business model is built on entering into non-exclusive performance-based agreements with property owners. The property owners agree to pay a fee to KCPA for each new tenant who submits to the property owner a card verifying that he or she was referred to the property by KCPA. KCPA offers a $100 gift card to each prospect who gives a property owner a card that results in a payment to KCPA.

KCPA operates through its website, www. kcpremierapts. com. The website offers a searchable database of rental listings provided by property owners. It also offers prospects the option of direct, interactive contact with rental advisors. These advisors are independent contractors who will respond to any questions asked by prospects, recommend which properties to rent, and contact property owners to arrange appointments. The record shows that 80% of prospects take advantage of KCPA's rental advisors.

In 2004, the Missouri Real Estate Commission received a complaint about KCPA and began an investigation to determine if KCPA was unlawfully engaged in real estate activities. In 2006, the Commission sent Lewis a letter stating it had determined that KCPA was “conducting real estate activity without a Missouri real estate license ... in violation of Missouri law and must cease immediately.”

In January 2007, KCPA responded, stating that it believed it was in compliance with the law. In March, the Commission sent another letter to KCPA insisting that it was “illegally operating as a real estate broker ... without the required Missouri real estate broker license.” The letter threatened immediate legal action. In April, KCPA preempted the Commission by filing a lawsuit requesting a declaratory judgment that § 339.010.1 does not encompass its business activities, that § 339.010.7 exempts KCPA from the licensure requirements of chapter 339, and that the Commission's interpretation of chapter 339 violates KCPA's rights under the United States and Missouri constitutions.

In 2009, after two years of litigation, the Commission filed its own petition for a preliminary injunction, seeking to bar KCPA from performing real estate activities. In 2010, the two cases were consolidated and tried. The trial court issued an injunction prohibiting KCPA from “[c]ontracting with property owners to receive compensation in return for referring prospective tenants” and from performing “any act requiring real estate licensure.” It also prohibited KCPA from dispensing rebate cards to tenants and denied KCPA's request for declaratory judgment.

Application of § 339.010

KCPA challenges the trial court's judgment claiming that it erroneously applied § 339.010. KCPA claims that while it meets the definition of a “real estate broker” under § 339.010.1, it qualifies for an exemption under § 339.010.7.

Standard of Review

This Court must sustain the trial court's judgment “unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law.” Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

Analysis

Section 339.010.1 defines a “real estate broker” as a person or corporation who for valuable consideration does or attempts to do any of the following:

(3) Negotiates or offers or agrees to negotiate the sale, exchange, purchase, rental or leasing real estate;

(4) Lists or offers or agrees to list real estate for sale, lease, rental or exchange;

. . . . .

(7) Assists or directs in the procuring of prospects, calculated to result in the sale, exchange, leasing or rental of real estate;

(8) Assists or directs in the negotiation of any transaction calculated or intended to result in the sale, exchange, leasing or rental of real estate;

. . . . .

(10) Performs any of the foregoing acts on behalf of the owner of real estate, or interest therein, or improvements affixed thereon, for compensation.

§ 339.010.1. Section 339.020 makes it unlawful for any person or corporation to act as a real estate broker without a license, and a violation is a class B misdemeanor. Section 339.170.

KCPA argues the trial court's judgment erroneously applies these provisions because KCPA is retained by landlords to list and otherwise assist them in marketing their rental properties and, therefore, it qualifies for an exemption from the chapter 339 licensure requirements under § 339.010.7(5). Section 339.010.7(5) states that the provisions of chapter 339 do not apply to:

[a]ny person employed or retained to manage real property by, for, or on behalf of the agent or the owner of any real estate shall be exempt from holding a license, if the person is limited to one or more of the following activities:

(a) Delivery of a lease application, a lease, or any amendment thereof, to any person;

(b) Receiving a lease application, lease, or amendment thereof, a security deposit, rental payment, or any related payment, for delivery to, and made payable to, a broker or owner; (c) Showing a rental unit to any person, as long as the employee is acting under the direct instructions of the broker or owner, including the execution of leases or rental agreements;

(d) Conveying information prepared by a broker or owner about a rental unit, a lease, an application for lease, or the status of a security deposit, or the payment of rent, by any person;

(e) Assisting in the performance of brokers' or owners' functions, administrative, clerical or maintenance tasks....

KCPA argues that because the statute does not define what it means for a person to be “employed or retained to manage real property,” the term “retain” must be given its ordinary meaning as found in the dictionary. In re Coffman, 225 S.W.3d 439, 444 (Mo. banc 2007). It relies on the Black's Law Dictionary 1316 (6th ed.1990) definition of “retain,” which is “to engage the services of an attorney or counselor to manage a specific matter.” Based on this definition, KCPA argues that it is retained by property owners to list and otherwise assist them in marketing their rental properties; therefore, it qualifies for the exemption given under § 339.010.7(5).

KCPA's broad interpretation of the § 339.010.7(5) exemption ignores the plain and ordinary meaning of the statute and the intent of the legislature. “The primary rule of statutory construction is to ascertain the intent of the legislature from the language used, to give effect to that intent if possible, and to consider words used in the statute in their plain and ordinary meaning.” Howard v. City of Kansas City, 332 S.W.3d 772, 779 (Mo. banc 2011). “Exemptions are interpreted to give effect to the General Assembly's intent, using the plain and ordinary meaning of the words.” Brinker Missouri, Inc. v. Dir. of Revenue, 319 S.W.3d 433, 437 (Mo. banc 2010).

This Court has previously found that “the manifest intention” of the legislature in enacting chapter 339 was “to protect the public from the evils of fraud and incompetency.” Miller Nationwide Real Estate Corp. v. Sikeston Motel Corp., 418 S.W.2d 173, 176–77 (Mo.1967). Therefore, KCPA “must present a clear case, free from all doubt” that it fits under an exemption from chapter 339, and any such exemption “must be strictly construed against [it] ... and in favor of the public.” Id. at 177.

KCPA has failed to meet this burden. KCPA's interpretation of the exemption under § 339.010.7(5) ignores the language limiting the activities that can be performed by an unlicensed person “employed or retained to manage real property ... to one or more of the ... activities” listed in subsections (a) through (e). Section 339.010.7(5). Of these subsections, § 339.010.7(5)(d) is most applicable to the activities performed by KCPA. This subsection allows the “[c]onveying [of] information prepared by a broker or owner about a rental unit, a lease, an application for lease ... by any person.” Section 339.010.7(5)(d). However, KCPA's activities are not limited enough to fit under this exemption. KCPA provides other services that exceed all of the exemptions provided by § 339.010.7, such as providing rental advisors who market select units to prospects based on the prospect's particular needs and providing detailed advice about apartment search strategies. Because none of the exemptions applies to this type of assistance, KCPA cannot rely on any of the exemptions.

Constitutional Validity of § 339.010

KCPA challenges the constitutional validity of § 339.010.1(3), (4), (7), (8), and (10) and § 339.010.7.

Standard of Review

This Court reviews a constitutional challenge to a statute de novo. In re Brasch, 332 S.W.3d 115, 119 (Mo. banc 2011). “A statute is presumed valid and will not be held unconstitutional unless it clearly...