Kansas City took a potentially huge financial hit Tuesday when a state appellate court upheld a $10 million award in a class action suit brought by apartment owners and dwellers when the city stopped paying for their trash service.
A three-judge panel of the Missouri Court of Appeals affirmed a 2017 lower court ruling that the city knowingly violated a 30-year-old agreement to pay for trash collection at apartment buildings with seven or more units. The appellate panel upheld $10.2 million in damages to a group of several hundred apartment and condo residents, managers and owners.
The panel said the city also remained on the hook for an additional $1.4 million in plaintiff’s attorneys fees. The ruling did not address Platte County Circuit Judge James Van Amburg’s order in 2017 fining the city $2,846 per day until it complied with trash collection obligations.
City Manager Troy Schulte said Tuesday evening that he will recommend to the City Council that the city appeal to the state supreme court.
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Until 1976, the city provided free trash pickup for single-family homes but not large apartment buildings. A Platte County judge ruled that the policy created two classes of residents paying the same city earnings tax. He ordered the city to make payments to multifamily buildings with seven or more units so they could cover their trash expenses.
The system remained intact until 2010, when budget issues prompted the council to halt the payments to most apartment owners. The council made an exception for the Heartland Apartment Association, a group of more than 100 major apartment complex owners that threatened to sue the city.
In February 2015, another group, including the Sophian Plaza Association,Townsend Place Condominium Association and several hundred other building managers and owners, filed a class action, asserting that they deserved the same benefits received by Heartland.
Van Amburg found that the city “knowingly, intentionally and deliberately chose not to comply” with the 1976 court order. He cited a deposition in which Schulte said he had wanted city lawyers to seek court approval before halting the program. That consultation never took place.
The judge also found that the city made its deal with Heartland “for political reasons,” namely the “economically and politically prominent Kansas City residents” who comprised the group’s membership. Meanwhile, he said, other apartment owners and tenants were left “out in the cold.”
The appellate court rejected all of the city’s arguments in Tuesday’s ruling, calling some of them “overblown” and “unpersuasive.”
For example, the city challenged the validity of the original 1976 agreement, arguing that the court had violated constitutional separation of powers principles by usurping the city’s authority and ordering payments for trash services.
The appeals panel said that the city, having operated under the agreement without protest between 1976 and 2010, could not suddenly argue that it was unconstitutional.
Schulte said the city would continue to fight the matter in the courts because resuming payments for apartment trash service would be far more expensive than the legal judgment, costing about $1.5 million a year, not counting increases from inflation.
“It’s a very expensive option,” he said.