Mo. Bankers Ass'n, Inc. v. St. Louis Cnty.

• Decision Date: 12 November 2014
• Docket Number: No. SC 93848,SC 93848
• Citation: 448 S.W.3d 267
• Parties: Missouri Bankers Association, Inc., and Jonesburg State Bank, Appellants, v. St. Louis County, Missouri, and Charlie A. Dooley, Respondents.
• Court: Missouri Supreme Court

448 S.W.3d 267

Missouri Bankers Association, Inc., and Jonesburg State Bank, Appellants

v.St. Louis County, Missouri, and Charlie A. Dooley, Respondents.

No. SC 93848

SUPREME COURT OF MISSOURI en banc

Opinion issued November 12, 2014

Jane E. Dueker, Charles W. Hatfield, Jamie L. Boyer of Stinson Leonard Street LLP, St. Louis, for bankers.

Patricia Redington of the St. Louis County counselor's office, Clayton, for county.

John L. Davidson of John L. Davidson PC, St. Louis, for the Business Bank of St. Louis, which filed a brief as a friend of the Court.

Opinion

George W. Draper III, Judge

Missouri Bankers Association, Inc. and Jonesburg State Bank (hereinafter and collectively, “Bankers”) sought a judgment declaring an ordinance that implemented a foreclosure mediation program invalid. This Court holds St. Louis County (hereinafter, “the County”) exceeded its charter authority when enacting the ordinance and the ordinance was void ab initio. This Court further holds Bankers are not entitled to an award of attorneys' fees pursuant to their Hancock Amendment claim. The circuit court's judgment is reversed, and the case is remanded.¹

Factual and Procedural History

In 2012, the St. Louis County Council adopted an ordinance titled the “Mortgage Foreclosure Intervention Code.” The ordinance stated it addressed “the national residential property foreclosure crisis” and the negative impact this national crisis had on the County's property values, tax base, budget, assessments, and collection of real property taxes. The ordinance recognized that “unsecured and unmaintained properties present a danger to the health, safety and welfare of the public ... and as such, constitute a public nuisance.” In response to this nuisance, the ordinance implemented a mediation program requiring lenders to provide residential borrowers an opportunity to mediate prior to foreclosure.

The ordinance mandates the lender provide the homeowner with written notice of the mediation process, the homeowner's right to request mediation, and a notice of foreclosure. Along with these notices, the lender must pay a nonrefundable fee of $100 to a mediation coordinator who manages and oversees the mediation program. The mediation coordinator must make at least three attempts to contact the homeowner regarding participation in the mediation program.

If the homeowner chooses to participate in the mediation program, the mediation must be scheduled within sixty days. The lender must pay an additional $350 fee to the mediation coordinator. If the parties are able to reach a settlement regarding the foreclosure prior to the mediation, the $350 fee is refunded to the lender. If the parties are unable to reach a settlement during the mediation conference, the lender is deemed to have satisfied the ordinance's requirements so long as the lender has made “a good faith effort” to settle the matter.

After satisfying the ordinance's requirements, the mediation coordinator must issue the lender a certificate of compliance attesting the lender has complied with the ordinance and is eligible to record the foreclosure deed without penalty. If the homeowner fails to respond or declines to participate in the mediation program, the lender shall be deemed to have satisfied the ordinance's requirements and will receive a certificate of compliance within one business day. The certificate of compliance must be filed with the county assessor simultaneously with the filing of a conveyance of the foreclosed property with the county recorder of deeds. Failure to obtain and file a certificate of compliance does not prevent the recording of the conveyance; however, the ordinance subjects the lender to criminal prosecution and a fine up to $1,000 for failure to comply.²

Bankers filed suit against the County and Charlie A. Dooley, the county executive (hereinafter and collectively, “the County”), seeking a declaratory judgment and injunctive relief. Bankers presented six counts, alleging the ordinance: (1) conflicted with state statutes; (2) violated the Hancock Amendment, Mo. Const. art. X, sec. 22 ; (3) violated Missouri constitutional taxation provisions; (4) violated Missouri constitutional restrictions on charter county authority; (5) violated Bankers' rights; and (6) violated the County charter. The circuit court issued a temporary restraining order enjoining the County from enforcing the ordinance. Both parties filed motions for summary judgment.

After reviewing the pleadings, the circuit court dissolved the restraining order and sustained the County's motion for summary judgment. The circuit court held the County possessed the charter authority to enact the ordinance, the ordinance was a valid exercise of the County's police power, and the ordinance was not preempted by state law. The circuit court further found the fees associated with the ordinance did not violate the Hancock Amendment.

Bankers appealed. During the pendency of the appeal at the court of appeals, the legislature enacted a new state mortgage law, section 443.454, RSMo Supp.2013. This statute, effective August 28, 2013, states:

The enforcement and servicing of real estate loans secured by mortgage or deed of trust or other security instrument shall be pursuant only to state and federal law and no local law or ordinance may add to, change, delay enforcement, or interfere with any loan agreement, security instrument, mortgage or deed of trust. No local law or ordinance may add, change, or delay any rights or obligations or impose fees or taxes of any kind or require payment of fees to any government contractor related to any real estate loan agreement, mortgage or deed of trust, other security instrument, or affect the enforcement and servicing thereof.

Section 443.454 expressly prohibits local municipalities from enforcing the type of ordinance the County enacted. The court of appeals requested additional briefing discussing the impact of the new legislation on the ordinance's validity. The County conceded there was an express conflict between section 443.454 and the ordinance and stated it would not enforce the ordinance. The County then argued the statute's passage rendered the controversy moot. The court of appeals agreed, dismissed the appeal, and ordered the case be remanded so that the circuit court could vacate the judgment and dismiss the lawsuit.³ This Court granted transfer.⁴ Mo. Const. art. V, sec. 10.

Mootness

Initially, this Court must address whether this cause is moot due to the enactment of section 443.454.

A cause of action is moot when the question presented for decision seeks a judgment upon some matter which, if the judgment was rendered, would not have any practical effect upon any then existing controversy. When an event occurs which renders a decision unnecessary, the appeal will be dismissed. And where an enactment supersedes the statute on which the litigants rely to define their rights, the appeal no longer represents an actual controversy, and the case will be dismissed as moot.

Humane Soc'y of United States v. State, 405 S.W.3d 532, 535 (Mo. banc 2013) (quoting C.C. Dillon Co. v. City of Eureka, 12 S.W.3d 322, 325 (Mo. banc 2000) ). Enactment of subsequent legislation will cause a challenge to a law to become moot if the law being challenged is repealed. C.C. Dillon Co., 12 S.W.3d at 325.

At the outset, the County argues the enactment of section 443.454 renders the cause moot because the statute expressly prohibits what the ordinance permits. The County stated on appeal it would not enforce the ordinance going forward. However, the County concurrently argues this Court should hold the ordinance remains valid because of the County's charter authority granted to it pursuant to Missouri Constitution article VI, section 18(c), which it believes takes precedence over any state statute. Further, it is undisputed the ordinance has not been repealed. Had the constitutional validity of the ordinance in light of the enactment of the statute been the only issue in the case, and had the ordinance been repealed after the statute's enactment, this Court's basis for deciding the ordinance's constitutional validity would have dissolved. C.C. Dillon Co., 12 S.W.3d at 325. In light of the County's argument concerning the scope of its charter authority, and because the ordinance was not repealed after section 443.454 was enacted, the issues presented are not moot.

Standard of Review

This Court's review of an appeal from summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid–America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is appropriate when the record demonstrates there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Hargis v. JLB Corp., 357 S.W.3d 574, 577 (Mo. banc 2011). “A summary judgment, like any trial court judgment, can be affirmed on appeal by any appropriate theory supported by the record.” Columbia Cas. Co. v. HIAR Holding, L.L.C., 411 S.W.3d 258, 264 (Mo. banc 2013).

Ordinances are presumed to be valid and lawful. McCollum v. Dir. of Revenue, 906 S.W.2d 368, 369 (Mo. banc 1995). “An ordinance must be construed to uphold its validity unless it is ‘expressly inconsistent or in irreconcilable conflict’ ” with a statute or provision of the Missouri Constitution. Home Builders Ass'n of Greater St. Louis, Inc. v. City of Wildwood, 107 S.W.3d 235, 238 (Mo. banc 2003) (quoting McCollum, 906 S.W.2d at 369 ). Whether the ordinance conflicts with state law is a question of law this Court reviews de novo. State ex rel. Sunshine Enterprises of Missouri, Inc. v. Bd. of Adjustment of City of St. Ann, 64 S.W.3d 310, 314 (Mo. banc 2002).

Validity of the Ordinance

Bankers raise a number of arguments challenging the validity of the ordinance.⁵ Among those arguments is whether Missouri Constitution article VI, section 18 grants the County the charter authority to enact the ordinance and whether that enactment takes precedence over...