Kansas City does not have to pay a $10.2 million fine for eliminating its trash rebate program for large apartment buildings and trailer parks, the Missouri Supreme Court unanimously decided Tuesday.
The ruling reversed damages granted by a Platte County circuit court judge in 2017 that were affirmed by the Missouri Court of Appeals last year.
The lawsuit was first filed in 2015 by Sophian Plaza Association, Townsend Place Condominium Association and several hundred other building owners and managers.
They argued that eliminating the trash rebate program violated a 1976 court order, related to the city’s earnings tax.
At the time, a different Platte County judge said Kansas City had improperly created two classes of earnings-tax-paying residents, because the city provided free trash pickup for single-family homes but not for large apartment buildings. His 1976 order required the city to make payments to multifamily buildings with seven or more units.
Upon appeal, the city and plaintiffs worked out a memorandum in which the city agreed to a rebate program that covered the exempted properties’ trash services.
The City Council decided in 2010 to halt those payments because of severe budget constraints. The mayor then was Mark Funkhouser, and none of the incumbent council members were in office. The payments stopped for most apartment owners, except the Heartland Apartment Association, a group that reached a separate legal settlement after it threatened to sue.
Plaintiffs in the 2015 lawsuit were certified as a class and, at first, received a resounding victory in circuit court.
Circuit Court Judge James 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 City Manager Troy 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.”
Not only did Van Amburg find the city in contempt and level a hefty fine, he ordered it to “pay $2,846 per day until it complies with its trash collection obligations.” Attorneys for the plaintiffs have so far been awarded nearly $4.1 million.
In Tuesday’s order, Missouri Supreme Court Judge Zel Fischer wrote that because the original 1976 case didn’t involve a class action, only the original plaintiffs can request the agreement be enforced.
Since none of the current plaintiffs were involved in the original case or party to the resulting agreement, the Supreme Court threw out the lower courts’ decision.
The decision does not change anything for city-provided trash collection, but it does mean the city has dodged a $14 million financial hit, according to Schulte.
If the city had lost in court, it would have also had to keep money aside for rebates to large apartment landlords, which cost about $1.5 million a year, he said.
A request for comment to the attorney for apartment owners was not immediately returned.