ST. LOUIS — The Missouri Court of Appeals Eastern District has partially reversed a lower court’s ruling in a long-running legal dispute between the Bank of Washington and two city-affiliated redevelopment entities over agreements tied to the proposed relocation of the National Geospatial-Intelligence Agency (NGA) to north St. Louis.
The appellate court upheld summary judgment on the bank’s breach of contract claims but reversed a ruling that had granted sovereign immunity to LCRA Holdings Corporation, allowing the bank’s tort claims to proceed, the Oct. 7 decision stated.
The case stems from property redevelopment efforts in anticipation of the NGA’s construction of a new facility in a blighted area of north St. Louis. To meet federal requirements for the NGA site, the city of St. Louis authorized the Land Clearance for Redevelopment Authority (LCRA) to acquire all property within the area.
The LCRA created LCRA Holdings, a nonprofit corporation, to help acquire land for the project.
Some of the targeted property was owned by Northside Regeneration, which had an existing redevelopment agreement with the city.
The Bank of Washington had financed Northside’s property purchases and held liens on that land.
In 2016, the LCRA, LCRA Holdings, Northside and the bank entered into a Purchase and Sale Agreement (PSA) and a related Future Assurances Agreement (FAA).
Under those agreements, LCRA Holdings acquired the land, the bank released its liens and all parties agreed to cooperate on further redevelopment efforts in the area.
The agreements also required Northside to meet new development thresholds and deadlines and called for the negotiation of a Second Amended Redevelopment Agreement between the LCRA and Northside.
However, the parties never reached an agreement on those new terms. In 2018, after the city declared Northside in default of its redevelopment agreement, the Bank of Washington filed suit alleging fraud, negligent misrepresentation and breach of contract against the LCRA and LCRA Holdings.
The circuit court dismissed the tort claims against the LCRA on sovereign immunity grounds and later granted summary judgment to LCRA Holdings after it argued it should be treated as a public entity entitled to the same immunity.
The court also granted summary judgment to both defendants on the bank’s breach of contract claims, finding that undisputed facts disproved elements of those claims.
On appeal, the Missouri Court of Appeals affirmed the lower court’s decision on the contract claims but found that LCRA Holdings failed to show it qualified for sovereign immunity.
The judges noted that while LCRA Holdings’ board members were appointed by city officials, the nonprofit was not required to seek city approval for its decisions, nor was it subject to reporting or oversight mechanisms that would ensure accountability.
As for the breach of contract claims, the appellate panel found that the undisputed facts negated key elements of the bank’s allegations.
The court concluded that only the city of St. Louis, not the LCRA or LCRA Holdings, declared Northside in default.
Because the bank’s petition alleged that the LCRA parties themselves made the declarations, the court ruled that claim failed as a matter of law.
The bank’s alternative theory — holding the LCRA parties liable for the city’s actions — had not been raised in its original petition and therefore could not be considered on appeal.
The court also rejected the bank’s assertion that the LCRA parties breached the FAA by failing to “support” Northside’s redevelopment or by failing to “agree” to a draft amendment to the redevelopment agreement.
The judges found that the contract language required the parties to cooperate and negotiate in good faith, but not to provide unconditional support or reach a final agreement. Negotiation, the court noted, does not guarantee an outcome.
Ultimately, the appellate court affirmed summary judgment in favor of the LCRA and LCRA Holdings on all breach of contract claims but reversed summary judgment on the tort claims against LCRA Holdings.
The case has been remanded to the circuit court for further proceedings consistent with the opinion.
Judge Michael E. Gardner authored the opinion, with Presiding Judge Thomas C. Clark II and Judge Kenneth R. Garrett III concurring.
Missouri Court of Appeals, Eastern District case number: ED113056
