Thomas W. Garland, Inc. v. City of St. Louis, 78-129C(2).

• Decision Date: 27 June 1980
• Docket Number: No. 78-129C(2).,78-129C(2).
• Citation: 492 F. Supp. 402
• Parties: THOMAS W. GARLAND, INC., Plaintiff, v. CITY OF ST. LOUIS et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

492 F. Supp. 402

THOMAS W. GARLAND, INC., Plaintiff, v. CITY OF ST. LOUIS et al., Defendants.

No. 78-129C(2).

United States District Court, E. D. Missouri, E. D.

June 27, 1980.

Allen A. Yoder, St. Louis, for plaintiff.

Joseph R. Niemann and Robert H. Dierker, Jr., City Counselors, St. Louis, Mo., for City of St. Louis.

Donald J. Stohr, Charles A. Newman and R. J. Robertson, Thompson & Mitchell, St. Louis, Mo., for defendants Manley Inv. Co. and Mercantile Center.

MEMORANDUM

NANGLE, District Judge.

This case is now before the Court upon remand from the Eighth Circuit Court of Appeals. Plaintiff brought this action pursuant to 28 U.S.C. § 1331 seeking declaratory and monetary relief for an alleged de facto taking of its leasehold by defendant City of St. Louis.¹

Plaintiff alleges that the city's Board of Aldermen passed an ordinance in June, 1971 declaring portions of downtown St. Louis blighted. In April, 1973 a subsequent ordinance was passed designating Mercantile Center Redevelopment Corporation ("Mercantile") as developer, approving a redevelopment plan submitted by Mercantile for six of the city blocks previously declared blighted, including plaintiff's leased premises, and granting Mercantile the power of eminent domain to carry out the plan. Plaintiff alleges that actions subsequently taken by Mercantile in connection with the redevelopment constituted a de facto taking of its leasehold. On May 23, 1978, this Court held that a cause of action was not stated, since there had been no physical invasion or appropriation of the property.

The Eighth Circuit subsequently reversed, holding that plaintiff's allegations stated a valid cause of action, even without allegations of physical invasion or appropriation of the property. 596 F.2d 784, cert. denied 444 U.S. 889, 100 S.Ct. 208, 62 L.Ed.2d 135 (1979). That Court did not reach, since this Court had not, the question of whether the city could be held liable for the acts of Mercantile. This Court was directed to resolve that issue on remand. 596 F.2d at 789 n.3. The parties have briefed that issue further, and this Court now concludes that the city may not be held liable for the acts of Mercantile.

Mercantile was formed pursuant to The Urban Redevelopment Corporations Law of Missouri, §§ 353.010 et seq., R.S.Mo. (1969). Pursuant to this statute, corporations formed for the purpose of redeveloping blighted areas may be granted special privileges, one of which is the power of eminent domain. § 353.130 R.S.Mo. (1969); Young v. Harris, 599 F.2d 870, 873-874 (8th Cir.), cert. denied 444 U.S. 993, 100 S.Ct. 526, 62 L.Ed.2d 423 (1979). Such corporations may exercise the power of eminent domain only when so empowered by the city to be affected. § 353.130(2) R.S.Mo. (1969). In approving the redevelopment plan submitted by Mercantile, and entering into the contract with Mercantile, the city granted Mercantile the power of eminent domain.

Plaintiff claims that the acts subsequently taken by Mercantile were as the city's agent, and that the city is therefore liable for Mercantile's action. The city claims that the relationship is better characterized as that of an independent contractor. This Court does not believe that either such characterization properly describes the relationship between a redevelopment corporation and the city which empowers it with the powers of eminent domain.

The need for urban redevelopment has been widely recognized in the past decades. The growing blight of the cities represented a danger not only to the areas and persons immediately involved, but also to all those who are part of the society that must deal with the rippling consequences of that blight. Annbar Associates v. West Side Redevelopment Corp., 397 S.W.2d 635 (Mo. banc 1965), appeal dismissed 385 U.S. 5, 87 S.Ct. 41, 17 L.Ed.2d 4 (1966). In response to the widely perceived need to eliminate these breeding grounds for social ills, many states passed laws similar to Missouri's "The Urban Redevelopment Corporations Law". "The obvious objective of these laws was to involve private enterprise in the monumental task of eliminating urban blighted areas and the inevitable social ills flowing therefrom." Council Plaza Redevelopment Corp. v. Duffey, 439 S.W.2d 526, 528 (Mo.banc. 1969).

In pursuit of this objective, the private corporations were enticed to pursue their own private, profit-motivated plans within the broader framework of the overall societal welfare through the offering of special privileges. These privileges included long-term tax abatements, § 353.110 R.S.Mo. (1969), and the power of eminent domain. § 353.130 R.S.Mo. (1969). By granting these corporations the power of eminent domain, the legislature assured that the areas to be redeveloped could be acquired at a non-prohibitive cost.

Just as necessary, however, was the cooperation and approval of the cities to be affected. Though the redevelopment corporations formed pursuant to the state law were ostensibly working for the societal benefit of eliminating blight, they could not be granted a license to redevelop at will. To this end, the city to be affected was given the authority to grant or withhold the power of eminent domain, depending on the city's assessment of the need for redevelopment and the ability of the corporation to accomplish that end.

It is within this context that the relationship between the city and Mercantile must be assessed. It is clear that Mercantile was acting not as the city's agent, in the sense that it was carrying out the plans of the city, or as an independent contractor of the city, in the sense that it was "hired" by the city to do a job, but in furtherance of its own profit-motivated objectives pursuant to authority granted by the city. This authority was granted by the city due to its perception that the goals of Mercantile coincided with the broader societal goals of eliminating urban blight.

This characterization of Mercantile as a private enterprise acting on its own behalf is supported by the few cases which have tangentially touched on this issue. Young v. Harris, supra, dealt with the relationship between a redevelopment corporation and the city in which it operated in a different...