Property Law

Paul F. Sherman, Esquire

Applying the Missouri Condominium Property Act and the Uniform Condominium Act, one must still strictly construe and give effect to the declaration of condominium so as not to contravene the Declaration. Epstein, et al. v. Villa Dorado Condominium Association, Inc., Nos. 96777 & 96778 (Mo. App. E.D., April 10, 2012), Crane, P.J.

Villa Dorado Condominium (45 buildings) is a multi-building complex where 83 Plaintiffs are unit owners in building without elevators (35 buildings). These Plaintiffs sought a declaratory judgment that assessments by Defendant Condo Association for cost of elevator repairs were void. Access to elevators is by key given only to those owners in buildings with elevators (9 buildings). However, elevator repair costs of $351,000 were specially assessed by Defendant against all unit owners in all buildings in April 2008. This case was remanded previously to join all owners in buildings without elevators. The trial court then ruled the assessments void and invalid as to Plaintiffs named, granting their attorney fees. This appeal followed on grounds that common elements were assessable against all units and attorney fees were not supported. Defendant’s amended condominium declaration is dated March 9, 1995 and was recorded (“Declaration”).

Defendant claims the special assessment applied to all in reliance on the Missouri Condominium Property Act, §§ 448.005, et seq. (“CPA”) and the Declaration. CPA applies prior to 1983, assessing all unit owners proportionately and does not address or define “limited common elements.” After 1983 the Missouri Uniform Condominium Act (“UCA”) applies. The UCA does provide for “limited common elements” to include those elements “for the exclusive use of one or more but fewer than all units.” Giving effect to the plain and ordinary meaning of the UCA and limited common elements, the issue on Point I was to what extent the Declaration’s treatment of limited common elements controls.

Held: Judgment reversed.
The Declaration itself did define “Limited Common Element” to be that common element reserved for less than all the units, but it did not specify areas reserved for the use of units in a particular building, such as hallways and stairs, and makes no mention of elevators. Because the 1995 Amended Declaration does not require only against units in the buildings served, Point I is granted. Regards attorney fees, § 448.4-117, Plaintiffs have failed to show Defendant failed to comply with the UCA or a declaration. Attorney fees award is also reversed.

Delivery is the critical fact necessary to prove the taking of title to property. LaNear v. CitiMortgage, Inc. and Principal Residential Mortgage, Inc., No. 96719 (Mo. App. E.D., March 20, 2012), Romines, K.

Kirby Warren quit claimed the property to himself and Debry A. LaNear (Appellant) on June 30, 2004, recorded July 1, 2004. Kirby Warren also executed on June 30, 2004 two promissory notes and two deeds of trust to Respondents – recorded with the original owners’ general warranty deed to Kirby Warren of the property (dated June 30, 2004) on July 9, 2004. Also on July 9, 2004, the June 30, 2004 quit claim deed was re-recorded. Kirby Warren died March 18, 2009.

LaNear filed to partition the property (Count I) and quiet title (Count II). The trial court granted Respondents’ motion for summary judgment, finding Respondents’ interest superior and LaNear’s interest subject to their deeds of trust, dismissing the partition action, and this appeal follows.

Were Respondents bona fide purchasers for value entitled to judgment as a matter of law – specifically, did Respondents take with notice of Appellant’s claim? Unknown, a question of fact remains that is crucial – delivery. If Respondents took delivery of their instruments June 30 then they did not have notice of the July 1 filing. But if Respondents took delivery July 9, then they and the world had notice as of July 1 (not BFP). When the warranty deed is recorded is of no significance – title passes on delivery. Facts remain as to when delivery occurred for each instrument. For example, if the quit claim deed was delivered before the warranty deed was delivered to Kirby Warren then Kirby Warren gave LaNear nothing.

Held: Reversed.
Facts remain so that the trial court erred for determining when each party’s interest arose and was reversed.

A judgment creates a lien on property and imparts constructive notice of the lien when duly entered. State of Missouri, ex rel., Missouri Highways and Transportation Commission v. Westgrove Corporation, et al., No. 95960 (Mo. App. E.D., March 6, 2012) Clayton III, J.

This case began in 1998 and has had three previous appellate appearances. MHTC took a part of 1045 Majestic Drive (owned by Westgrove) for highway purposes. Westgrove was later determined over-compensated for the property taken, settlement and judgment was entered December 20, 1995 that Westgrove owed MHTC $326,549.04. Prior to that Judgment Westgrove encumbered the property $180,000 with a bank. Westgrove’s principal, William Matula, then borrowed from his brother with a second deed of trust to pay on the first. Westgrove then contracted to sell the property to the Matulas for release of the two deeds of trust. On December 28, 1995 Westgrove transferred the property to the Matulas. The abstract of judgment entered December 20, 1995 was not filed with the clerk until December 29, 1995.

MHTC brought suit in 1998 claiming the Matulas, among others, transferred with intent to defraud MHTC. In 2002, MHTC executed its lien with Sheriff’s Sale to MHTC for $385,000. The Matulas counterclaimed, alleging they were bona fide purchasers for value without notice of the judgment lien or equitable subrogation. The trial court granted the Matulas summary judgment on MHTC’s claims and the Matulas’ own counterclaim of equitable subrogation. Ultimately, after trial to the court, the Matulas were found bona fide purchasers without notice. This appeal follows.

Does equitable subrogation apply absent fraud or facts bordering on fraud? No. Ethridge v. Tierone Bank, 226 S.W.3d 127, 124 (Mo. banc 2007).

Does the judgment lien attach on the date rendered? Yes. Therefore, the trial court’s grant of summary judgment on counterclaim for equitable subrogation was erroneous. There was no MHTC fraudulent conduct and the judgment was a valid lien with priority as of December 20, 1995.
What about MHTC’s claim against the Matulas of fraudulent conveyance? The Matulas’ claim arose before the transfer and the transfer was made for reasonably equivalent value with the Matulas paying $320,500 for the property. The evidence was that the Matulas were contractually obligated before the judgment was entered to purchase the property from Westgrove.

What about Matulas’ BFP status? The trial court did find they had no actual or constructive knowledge of the judgment at the time of their purchase and acted in good faith. However, the judgment entry itself imparted constructive notice of the lien December 20, 1995 so the Matulas were charged with notice and could not claim BFP status.

Held: Reversed and remanded, Judge Clayton. Concur – Judge Romines. The judgment lien attached when judgment was entered December 20, 1995. Section 511.350; Rule 74.08. MHTC took title at sheriff’s sale in fee simple.

The Public Service Commission (PSC) is not authorized by statute to intervene as a party before Federal Energy Regulatory Commission (FERC) in interstate pipeline matters concerning the federal Natural Gas Act. State of Missouri ex rel. MOGAS Pipeline, LLC v. Missouri Public Service Commission, No. 91968 (Mo. banc, April 17, 2012) Stith, J.

On matter of first impression, Missouri Public Service Commission (PSC) denied MOGAS’ request that the PSC not intervene as a party in matters pending before the FERC. MOGAS delivers natural gas interstate via a pipeline with Missouri customers. Such interstate natural gas pipelines operate pursuant to the federal Natural Gas Act, subject to FERC jurisdiction. But when MOGAS sought FERC approval, PSC intervened to protest.
MOGAS filed petition with PSC to terminate PSC’s intervention and was denied by PSC’s Order entered July 2009. On review in Cole County Circuit Court, PSC’s order was determined unlawful and reversed. This appeal follows.

The PSC is a creature of statute, powers not granted by statute do not exist. Pursuant to § 386.030, PSC’s powers to regulate natural gas in the state are limited by preemption. Because MOGAS is an interstate pipeline, FERC regulations apply. While PSC may “confer” with FERC, § 386.201.1, this is interpreted to not enable PSC to “intervene” – the terms are different. While § 386.210.7 allows PSC to make joint investigations or hold joint hearings, it again does not authorize intervention – an interested litigator is not a neutral adjudicator. The PSC cannot engage in activity not authorized by the Missouri legislature. Missouri does not permit PSC intervention as a party with FERC.

Held: Affirmed
. The trial court’s reversal of the PSC order is affirmed.

For wrongful foreclosure, one must plead and prove there was no default. To claim the foreclosure sale was void or voidable requires an equity action to set aside the sale. The Business Bank of St. Louis v. Apollo Investments, Inc., et al., No. 96547 (Mo. App. E.D., May 9, 2012), Odenwald, C.J.

The Business Bank loaned Apollo Investments money guaranteed by Apollo Realty, Alan and Carol Sheehy and Richard Bennett (Guarantors), all notes secured by deeds of trust on the Northfield Property and the Thomas Property. When Apollo Investments defaulted, the Bank made demand on the Guarantors without success then foreclosed. Defendants claimed wrongful foreclosure alleging there was an oral agreement to extend the payments due. The trial court granted The Business Bank summary judgment and this appeal followed.

Reviewing the record, the Bank set out the facts of the promissory notes, balance due and demand for payment made and refusal on all four notes with a bank officer’s affidavit in support. The guaranty contracts were attached, unconditionally provided, and credit was extended in reliance. In response,
Defendants did not admit or deny as required by Rule 74.04(c)(2). These facts are then deemed admitted.

For a wrongful foreclosure action to be maintained Defendants must plead and prove they were not in default when foreclosure commenced – but they did not. If the claim is that the sale was void or voidable, their only remedy is in equity to set aside the sale. Defendants did not request foreclosure sales be set aside, thus their wrongful foreclosure claim was properly dismissed.

Held: Affirmed.