Land Clearance for Redevelopment Auth. of St. Louis v. Osher

Decision Date21 April 2020
Docket NumberNo. ED 107081,ED 107081
Citation604 S.W.3d 827
Parties LAND CLEARANCE FOR REDEVELOPMENT AUTHORITY OF the CITY OF ST. LOUIS, Respondent, v. James Townsend OSHER, Appellant.
CourtMissouri Court of Appeals

FOR APPELLANT, Daniel R. Schramm, 121 Chesterfield Business Parkway, Chesterfield, MO 63005, Tracy H. Gilroy, 10101 270th Street NW, Stanwood, WA 98292.

FOR RESPONDENT, Gerard T. Carmody, Ryan M. Prsha, Christopher P. Kellett, Ryann C. Carmody, 120 South Central Avenue, Suite 1800, Clayton, MO 63105.

Philip M. Hess, Presiding Judge

Introduction

James Townsend Osher ("Appellant") appeals from the trial court's judgment awarding him $573,000 as compensation for the Land Clearance Redevelopment Authority ("LCRA") condemning his property ("Property") in the City of St. Louis and assessing $21,207.13 in costs against him. Appellant brings eight points on appeal. First, Appellant argues the circuit court erred in failing to assign his case to a general division once exceptions were filed. Second, Appellant argues the circuit court erred in denying his request for a new judge. Third, Appellant argues the circuit court erred in assessing costs against him. Fourth, Appellant argues the circuit court erred in denying his request for a homestead allowance. Fifth, Appellant argues the circuit court abused its discretion when it excluded evidence of the amount Appellant paid a leaseholder for the extinguishment of its leasehold interest after the Property's condemnation. Sixth, Appellant argues the circuit court abused its discretion when it excluded photographic evidence of Appellant's experience in the construction and hotel industry, excluded photographic evidence of recent developments in the City of St. Louis, and criticized him in front of the jury. Seventh, Appellant argues the circuit court abused its discretion when it admitted photographs offered by LCRA depicting his Property after the date of the taking. Lastly, Appellant argues the circuit court erred in allowing LCRA to cross-examine one of Appellant's witnesses regarding an alleged fraudulent tax credit scheme to purchase the Property and other properties and to call a witness to give opinion testimony regarding the same. We affirm.

Factual and Procedural Background
Pre-Trial

In December 2015, LCRA brought a condemnation action to take Appellant's Property, known as the "Buster Brown Building," located at 1516-1530 North Jefferson Avenue in the City of St. Louis, and over 500 other properties, to construct a new facility for the National Geospatial-Intelligence Agency ("NGA"). The case was initially assigned to Judge David Dowd in Division 2 of the St. Louis City Circuit Court, who set a condemnation hearing. On December 30, 2015, the then-presiding judge of the St. Louis City Circuit Court issued an order ("December 2015 Order") stating Appellant's case was "specially assigned to Division 2 for all further proceedings." Appellant was served with process on March 18, 2016. On April 4, 2016, a commissioners’ hearing was held to determine the fair market value of the Property, which neither Appellant nor his attorney attended. In May 2016, the commissioners awarded $817,589.59. LCRA deposited the award, with interest, in the circuit court and took title to the Property. LCRA filed its exceptions to the commissioners’ award on May 31, 2016, and Appellant filed his exceptions to the commissioners’ award on June 13, 2016. On July 7, 2016, LCRA took the Property.

In November 2016, Appellant requested the case be transferred to Division 1 and assigned to a trial judge under Local Rule 66.3.11 because exceptions were filed in May and June 2016. In December 2016, Appellant again requested the case be transferred to Division 1 and assigned to a trial judge under Local Rule 66.3.1, seeking clarification from the circuit court regarding the applicability of Local Rule 66.3.1 in condemnation proceedings. The circuit court denied Appellant's requests, stating "trial of the exceptions had been previously assigned to Judge David Dowd on December 30, 2015." On February 8, 2017, Appellant requested a change of judge under Supreme Court Rules 55.01(b) and 55.01(d),2 which the circuit court denied. Appellant then filed a Writ of Prohibition in this Court and the Missouri Supreme Court challenging the circuit court's denial of his requests for pre-assignment under Local Rule 66.3.1 and change of judge.3 Both writs were denied. In September 2017, Appellant requested Judge Dowd recuse himself, claiming Judge Dowd was "too invested in the Condemnation Case to have the appearance of independent judgment in the Exception Case" and exhibited an "inherent bias" favoring LCRA. Appellant's request for recusal was also denied.

Trial

In May 2018, the exceptions filed by LCRA and Appellant proceeded to a jury trial, which lasted seven days.

Appellant's Evidence

Appellant testified on his own behalf. He testified he began renting the Property in 1993 and bought the Property in 1996 for $200,000. Appellant testified the Property's highest and best use was for redevelopment as a boutique hotel and the Property was worth $5.5 million on the date of the taking. Appellant testified he asked for the Property to be registered in the National Historic Registry in 2005 to "sav[e] the structure if anything should ever happen." Appellant testified the Property was valuable to himself, the City, and the neighborhood because of its history. Appellant sought to admit photographic evidence of his experience in the construction and hotel industry and nearby developments in the City of St. Louis during his testimony, but the trial court excluded such evidence.

Appellant also testified regarding an earlier sale of the Property from JTO, LLC ("JTO"), a company Appellant formed, to NorthSide Regeneration, LLC ("NSR"), a company owned by Paul McKee, for $3.75 million in 2011 (the "2011 Sale"). Appellant testified he transferred title to the Property to JTO. He testified NSR purchased the Property from JTO in an arms-length transaction. He testified the sale was structured as a "sale-leaseback" or "triple net lease," where NSR would own the Property but lease the Property to another company called Wilco Leasing, which was created by Appellant's then-wife. Under the triple net lease, Wilco Leasing would pay all insurance, taxes, repairs, and utility bills and NSR would collect $375,000 in rent payments per year. Appellant testified he self-financed the transaction and NSR agreed to pay him $3.75 million over five years at a 10% interest rate. Appellant would retain possession of the Property. He testified he did not consider the $3.75 million purchase price inflated.

On cross-examination, Appellant testified he received no payment from NSR on the closing date. He testified he knew McKee was going to receive "a lot" of tax credits for NSR's $3.75 million purchase of the Property.4 He testified he could not recall an email he sent to NSR in November 2011 that stated NSR owed him a "[o]ne time principal payment of 50 percent of tax credits in Q1 2012." Appellant testified he received $591,000 from NSR in January 2012 but denied the source of the $591,000 was tax credits. Appellant testified the Department of Economic Development disqualified the tax credits it previously granted McKee in March 2013 and all payments from NSR to JTO stopped in March 2013. Appellant testified he received $733,000 from NSR as of March 2013. Appellant agreed he and McKee thereafter "unwound" the 2011 Sale and conveyed the Property back to Appellant. On re-direct examination, Appellant testified he did not recall the Department of Economic Development disapproving of the owner-financed, sale-leaseback structure of the transaction between JTO and NSR.

Appellant also sought to testify about a settlement he entered with AT&T Mobility ("AT&T"), a company that rented a space for a cell tower on the Property's roof, after the Property was condemned. Appellant sought to testify he paid AT&T $65,000 to resolve any claims arising from the termination of AT&T's lease with Appellant due to the Property's condemnation and Appellant owed AT&T nothing further. The circuit court disallowed this testimony, stating "I think it is a matter that can be handled after the verdict in this trial."

Appellant next called William Otto Spence, his appraiser, as a witness. Spence testified he conducted a lengthy inspection of the Property four times but observed the Property on several other occasions. Spence testified the fair market value of the Property at the time of the taking was $4.93 million. Like Appellant, Spence testified the highest and best use of the Property was for conversion into a "lifestyle or boutique hotel." In valuing the Property, Spence considered the 2011 Sale price of $3.75 million. Spence testified he met with McKee to discuss the 2011 Sale. He testified McKee told him the sale was conducted at arms-length and represented the market value of the Property. Spence testified the 2011 Sale was not a "sham sale" and he considered the source of NSR's funding from tax credits irrelevant to his valuation of the Property. Spence testified he based his appraisal of the Property upon what was occurring in the Property in 2016 before Appellant moved out. He explained his appraisal included some photographs taken of the Property after the date of the taking because Appellant requested he wait until Appellant moved out of the Property to take photographs. Spence also based his valuation, in part, on the Property's historic significance and its status in the National Historic Registry.

Appellant also called McKee as a witness. McKee testified NSR purchased the Property from JTO in 2011 for $3.75 million with the triple net lease structure Appellant described in his earlier testimony. He testified he received tax credits from the 2011 Sale from the Department of Economic...

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