                                         In the
                         Missouri Court of Appeals
                                  Western District
SAXONY LUTHERAN HIGH                         )
SCHOOL, INC., ET AL.,                        )
                                             )   WD78187
                Respondents,                 )
                                             )   OPINION FILED: October 13, 2015
v.                                           )
                                             )
MISSOURI LAND RECLAMATION                    )
COMMISSION, ET AL.,                          )
                                             )
                 Appellant.                  )

                Appeal from the Circuit Court of Cole County, Missouri
                         The Honorable Daniel R. Green, Judge

     Before Division Four: Alok Ahuja, Chief Judge, Presiding, Gary D. Witt, Judge and
                            S. Margene Burnett, Special Judge


         This is the second appeal stemming from an application for a permit to operate a

limestone mine.      Here, the State, on behalf of the Missouri Land Reclamation

Commission ("Commission"), challenges the trial court's award of attorney fees and

expenses following judgment in favor of Saxony Lutheran High School, Inc. ("Saxony")

and Save Our Children's Health, Inc. ("SOCH") (collectively, "Respondents"). The State

argues that the award of attorney fees did not satisfy the three required elements of
Section 536.087.1 Alternately, the State alleges error in the calculation of the amount of

attorney hours and in the calculation of the attorneys' hourly rates. For reasons explained

below, we reverse the trial court's award of attorney fees and expenses and therefore do

not reach the alleged error as to the calculation of the award.

                                     Facts and Procedural History2

        Heartland Materials, LLC ("Heartland") is a company in the business of mining

limestone.       On October 4, 2010, Heartland submitted a limestone mining permit

application to the staff director ("Director") of the Commission for a proposed 161-acre

limestone quarry. Saxony is an incorporated and accredited private Lutheran high school

located just north of, and adjacent to, the proposed quarry. SOCH is a Missouri not-for-

profit corporation organized to enhance and protect the health, safety, and livelihood of

the members in the community from the impact of open quarry activities and has

members that live near the proposed Heartland quarry site.

        On January 5, 2011, the Director recommended that Heartland's land reclamation

permit be issued.           Respondents timely opposed Heartland's requested permit and,

pursuant to Section 444.773.33 of the Missouri Land Reclamation Act, requested a public

meeting. Heartland did not agree to a public meeting. The Director then referred the

matter to the Commission for a formal public hearing.

        On January 27, 2011, before granting the formal public hearing, the Commission

held a meeting to determine whether Saxony and SOCH possessed standing to be entitled

        1
          All statutory references are to RSMo (Cum. Supp. 2011) unless otherwise indicated.
        2
          Portions of the facts and procedural history are adopted from Saxony Lutheran High School, Inc. v.
Missouri Land Reclamation Commission, 392 S.W.3d 52 (Mo. App. W.D. 2013), without further attribution.
        3
          The Act was amended 2014, and those amendments are not at issue.

                                                         2
to a formal public hearing.4 At this meeting, the Commission permitted the parties to

present evidence on the topic of whether Respondents had provided "good faith evidence

of how their health, safety, or livelihood will be unduly impaired by the issuance of the

permit," in accordance with the requirements for standing found in 10 CSR 40-10.080(2).

There were videotapes played of comments of speakers, live testimony from individuals

associated with Respondents and with Heartland, and several speakers addressing the

issues of health, safety and livelihood. Those who opposed the permit stood and stated

their position; they were not always questioned by lawyers, and they were not cross-

examined by lawyers for Heartland. Similarly, those who spoke on behalf of Heartland

were not directly examined by their attorneys, and they were not cross-examined. None

of the witnesses were under oath.

        On February 7, 2011, the Commission conducted a conference call.                                  The

Commission decided that neither Saxony nor SOCH had provided good faith evidence of

how its health, safety, or livelihood would be unduly impaired by the issuance of the

surface mining permit to Heartland and therefore the Commission refused to conduct a

formal public hearing.           The Commission then issued a surface mining permit to

Heartland, which began mining activities. The Commission had counsel present at the

January 27, 2011 meeting and the February 7, 2011 proceeding.

        On March 7, 2011, Respondents filed a timely Petition for Judicial Review and

Declaratory Judgment against the Commission in the Circuit Court of Cole County in

        4
          At this same meeting, the Commission heard evidence on whether Respondents had standing to request a
formal public hearing regarding the permit application from J.W. Strack ("Strack"), another potential quarry
operator. The Strack quarry would be located north of Saxony Lutheran High School. The Commission found that
Respondents did possess standing sufficient to hold a formal public hearing as to the Strack permit.

                                                       3
which Heartland intervened.      Respondents filed the petition under Section 536.150,

which is the statute setting out review of non-contested cases. Key to this appeal,

Respondents prayed for a declaration that Saxony and SOCH had presented evidence

sufficient to establish standing pursuant to Section 444.773.3 and 10 CSR 40-10.080(2)

so as to be entitled to a formal public hearing.

       In a motion for summary judgment, Respondents set forth the evidence that they

had presented to the Commission on January 27, 2011, and also presented to the trial

court additional evidence regarding the issue of their standing, which included

depositions taken after the January 27, 2011 meeting. The trial court determined that it

had jurisdiction over the matter under Section 536.150. It entered summary judgment in

favor of Respondents, concluding as a matter of law that Saxony and SOCH had

established standing. It further directed the Commission to conduct a formal public

hearing as required under Section 444.773.3 and in accordance with 10 CSR 40-10.080.

       The Commission and Heartland appealed the trial court's judgment to this Court.

In affirming the trial court's judgment, we noted "[o]nce the petitioners establish

standing, they are entitled to a formal public hearing before the Commission." Saxony

Lutheran High Sch., Inc. v. Mo. Land Reclamation Comm'n, 392 S.W.3d 52, 57 (Mo.

App. W.D. 2013) (hereafter "Saxony I"). After a review of the record, we held that

Saxony and SOCH established standing by providing sufficient good faith evidence that

high school students and residents near the proposed quarry sites would face an increased

risk of incurring or worsening respiratory illnesses if the quarry permit were issued. Id.

at 59. We concluded as a matter of law that Saxony and SOCH provided good faith

                                              4
evidence of a future undue impairment sufficient to establish standing, and we directed

the Commission to conduct a formal public hearing under Section 444.773. Id. at 59-60.

In an unpublished order that accompanied the opinion, we noted that we were without

jurisdiction to rule on Respondents' motion for attorney fees and remanded that matter to

the trial court.5

         On remand, the Missouri Department of Natural Resources retained a hearing

officer to conduct a formal public hearing based on our holding in Saxony I. Before the

formal public hearing took place, Respondents and Heartland reached a settlement

agreement that rendered the hearing unnecessary and jointly filed a stipulation for

dismissal.        The settlement agreement placed restrictions on Heartland that the

Commission did not have the authority to require, including terms such as blasting times,

providing notice to the school of intent to blast, and signage.                                   In the settlement

agreement, Heartland acknowledged that the obligations and requirements in the

agreement are "over and above existing obligations" imposed by various permits,

including through the Commission. As required in the settlement, Respondents withdrew

their formal public hearing demand, terminating their challenge to the permit. The State

was not a party to the settlement agreement.

         On October 8, 2013, in the circuit court, Respondents again filed an Application

for Award of Attorney's Fees and Expenses relating to all proceedings before the

Commission, the trial court, and the first appeal to this court, Saxony I. On July 17, 2014,

         5
           In that order, we indicated that the award of attorney fees appeared appropriate and remanded the case
back to the trial court for a ruling on that issue at the completion of the action. Now that the issue has been fully
briefed by the parties for our review, as set forth infra, it is clear that attorney fees are not appropriate under the
statute as applied to the facts of this case.

                                                             5
the Circuit Court of Cole County held a bench trial on the Application for Award of

Attorney's fees.    Bill Zeaman ("Zeaman"), the chief of the non-coal unit for the

Department of Natural Resources and Land Reclamation Program, testified about the

permitting process and the contents of the settlement agreement.

       On July 31, 2014, the court submitted Findings of Fact, Conclusions of Law,

Order and Judgment on Saxony and SOCH's Application for Award of Attorney's Fees

and Expenses, sustaining the Application and ordering Heartland and the Commission to

pay Respondents' attorney fees and expenses. The Commission appeals. Further facts

are set forth as necessary.

                                  Standard of Review

       Under Section 536.087.7, where fees and expenses are awarded to a prevailing

party, we

       may modify, reverse or reverse and remand the determination of fees and
       other expenses if the court finds that the award or failure to make an award
       of fees and other expenses, or the calculation of the amount of the award,
       was arbitrary and capricious, was unreasonable, was unsupported by
       competent and substantial evidence, or was made contrary to law or in
       excess of the court's jurisdiction.

       Though we ordinarily will defer to findings of fact based on the credibility of

witnesses, we will review de novo any questions of law raised by the application for

attorney fees, including questions of law as to statutory interpretation. Garland v. Ruhl,

455 S.W.3d 442, 446 (Mo. banc 2015) (citation omitted).




                                            6
                                        Analysis

       Section 536.087.1 provides for an award of attorney fees and expenses only in "an

agency proceeding or civil action arising therefrom." "Agency proceeding" is defined by

statute as "an adversary proceeding in a contested case pursuant to this chapter in which

the state is represented by counsel. . . ." § 536.085(1). "Contested case" is also defined

by statute as "a proceeding before an agency in which legal rights, duties or privileges of

specific parties are required by law to be determined after hearing." § 536.010(4).

       Classifying a case as "contested" or "non-contested" is a matter of law. City of

Valley Park v. Armstrong, 273 S.W.3d 504, 506 (Mo. banc 2009). "Contested cases

provide the parties with an opportunity for a formal hearing with the presentation of

evidence, including sworn testimony of witnesses and cross-examination of witnesses,

and require written findings of fact and conclusions of law. Id. (citing Hagely v. Bd. of

Educ., 841 S.W.2d 663, 668 (Mo. banc 1992)); see also Section 536.070. Put another

way, in addition to the requirement of a hearing, contested cases also require a "measure

of procedural formality," such as "notice to all necessary parties, oral evidence presented

under oath or affirmation and subject to cross-examination, use of exhibits, adherence to

evidentiary rules, a record preserving the proceedings and written decisions with findings

of fact and conclusions of law." Lipic v. State of Mo., 93 S.W.3d 839, 842 (Mo. App.

E.D. 2002). Review of a contested case by the trial court constitutes a review of the

record created before the administrative body. Valley Park, 273 S.W.3d at 506.

Contested case review is controlled by Section 536.140. The trial court's decision is



                                            7
appealable, but the appellate court also looks back to the record of the administrative

body. Valley Park, 273 S.W.3d at 506 (citation omitted).

       In contrast, non-contested cases do not require formal proceedings or hearings

before the administrative body. Id. As such, there is no record required for review. Id.

In reviewing a non-contested decision, the circuit court does not review the

administrative record, but hears evidence, determines facts, and adjudges the validity of

the agency decision. Id. Under Section 536.150.1, the trial court conducts such a hearing

as an original action. Id. Put another way, the petition for review of a non-contested

case, "whether by writ or other action, constitutes an original proceeding, involves a

determination of facts de novo, and on that evidence yields an independent judgment as

to the lawfulness of the agency decision." Phipps v. Sch. Dist. of Kansas City, 645

S.W.2d 91, 96 (Mo. App. W.D. 1982).

       Further, "[t]he relevant inquiry is not whether the agency actually held an

'adversary proceeding in a contested case,' but whether it was required to do so by statute,

ordinance, or constitutional provision." Lipic, 93 S.W.3d at 841 (quoting State ex rel.

Yarber v. McHenry, 915 S.W.2d 325, 328 (Mo. banc 1995)). Additionally, the Supreme

Court recently reiterated that there "is ample evidence" that the legislature intended for

Section 536.087 to apply only if the State is a party to the "agency proceeding."

Garland, 455 S.W.3d at 447. "Parties can be 'represented by counsel,' not adjudicators."

In short, the State "cannot have 'lost the agency proceeding' unless it was a party to the

agency proceeding.'" Id.



                                             8
       In determining whether an "adversary proceeding in a contested case" was

required here, we find Painter v. Missouri Commission on Human Rights, 251 S.W.3d

408 (Mo. App. W.D. 2008) instructive.        There, the appellant petitioned for writ of

mandamus pursuant to Rule 94.01 and Section 536.150 against the Commission on

Human Rights and its director.       The appellant alleged that the Commission had

wrongfully closed its file concerning his complaint of discrimination without conducting

an investigation, making a determination as to whether probable cause existed to credit

his complaint, or issuing him a right to sue letter.      Id. at 409.    The circuit court

determined that the Commission "arbitrarily" refused to perform its statutory and

regulatory duties in part by failing to investigate or make a probable cause determination.

The court ordered the Commission to provide a right-to-sue letter. Id.

       The Painter appellant subsequently sought attorney fees under Section 536.087.

Id.   The Commission argued that the appellant had not prevailed in an "agency

proceeding" and therefore had no right to an award. The appellant contended that "after

conducting multiple hearings on the record and reviewing sworn testimony and other

evidence, the trial court ultimately granted summary judgment" to him and ordered the

issuance of the right-to-sue letter. Id. at 411. We determined that we are required to

apply the statutory definition of "contested case," not a colloquial meaning. Id. We

noted precedent indicating that a hearing is required and the case would be a contested

one if probable cause were found, conciliation failed, and the Commission proceeded

with enforcement.    Id. at 412.   However, the Commission's prior investigation and

probable cause determinations were not contested cases.          Our determination was

                                            9
reinforced by the appellant's mandamus petition, which sought review from the trial court

under Section 536.150, which is the statute setting out review only of non-contested

cases. Id.

       In the case at bar, the Director had reviewed Heartland's application for a permit to

operate a limestone quarry on property adjacent to Saxony. Under Section 444.772, the

Director was required to make a recommendation to the Commission to issue or deny the

permit. The Director recommended that a permit be issued. Following submission of the

recommendation, Respondents requested an opportunity for a hearing before the

Commission to show that issuance of the permit would unduly impair their health, safety,

or livelihood -- in other words, Respondents sought to establish standing pursuant to 10

CSR 40-10.080(2)(A). To obtain a formal public hearing, Respondents were required to

establish standing in good faith.

       At the meeting held pursuant to 10 CSR 40-10.080(2)(A) on January 27, 2011,

Heartland and Respondents presented information to the Commission. As noted above,

at that hearing, there were videotapes of comments from speakers and live testimony

from individuals addressing the issues of health, safety, and livelihood. Those who

opposed the permit stood and made statements; they were not always questioned by

lawyers, and they were not cross-examined by lawyers for Heartland. Similarly, those

who spoke on behalf of Heartland were not directly examined by their attorneys, and they

were not cross-examined. None of the witnesses for either side were under oath. An

attorney was present at the hearing acting on behalf of the Commission. The procedural

requirement that oral evidence shall be taken "only" on oath or affirmation pursuant to

                                            10
Section 536.070(1) was not followed.           Although we later determined that the

Commission's ruling as to standing was in error, there is no real question that the hearing

conducted regarding standing was informal.

       Indeed, that there was no formal hearing necessary to determine standing under

the regulation at issue is evident in the title of the CSR that governed the matter:

"Establishing Standing for a Formal Public Hearing" (emphasis added). 10 CSR 40-

10.080(2)(A) goes on to state that "For a formal public hearing to be granted by the Land

Reclamation Commission, the petitioner must first establish standing." Additionally, we

recognized in Saxony I that Heartland and the Commission may wish to challenge the

"veracity and persuasive force of this good faith evidence, [but that] this is not the stage

of the process to do so." 392 S.W.3d at 59 n.10. "That the veracity or persuasive force of

this evidence may be challenged is a topic for a formal public hearing, where the permit

applicant will bear the burden of persuasion after the petitioner has satisfied its burden of

production in establishing issues of fact." Id. (emphasis added).

       That the dispute over standing was an "non-contested case" is additionally evident

in the parties' and in the trial court's treatment of the issue throughout Saxony I.

Respondents filed their action under Section 536.150, the trial court determined that it

had jurisdiction under Section 536.150, additional evidence was presented to the trial

court beyond what was presented at the hearing before the agency, and both parties

sought review to this court under Section 536.150. See Painter, 251 S.W.3d at 412

(holding that throughout the proceedings, the appellant was aware that the judicial

proceeding arose out of a non-contested case, in part because he alleged as much in his

                                             11
mandamus petition, and in part because during litigation he conducted discovery and

submitted new evidence to the trial court).

       Finally, the State was never a party to the "agency proceeding." Garland, 455

S.W.3d at 447. "Parties can be 'represented by counsel,' not adjudicators." Id. at 448.

Here, the extent of the State's involvement in this case was in the role of adjudicator in

the decision of whether Respondents had standing. Although the State had counsel

present at the hearing on whether Saxony and SOCH had standing, it is evident that the

agency merely received testimony from numerous individuals in making this preliminary

determination and did not participate as a party.

       In so holding, we reject Respondents' arguments that the action at hand is a

contested case because "when considered in its entirety, the underlying proceeding before

the Land Reclamation Commission was a 'contested case.'" Respondents contend that

"the focus" of Section 444.773 "required that there be various public hearings," all of

which were required to be based on competent and substantial scientific evidence on the

record so as to trigger review of a contested case under Section 536.140. Respondents

further argue that Section 444.773 "in various places, used, interchangeably, the phrases

'hearing as provided in sections 444.760 to 444.790,' 'public meeting or hearing,' formal

public hearing,' 'public hearing to formally resolve,' and 'any public hearing.'"

       A review of the relevant statute, regulation, and our summary of the proceedings

governing land permits in Saxony I belies this argument. In Saxony I, we explicitly

delineated the procedure for the issuance of land reclamation permits. 392 S.W.3d at 57.

We noted that that Section 444.530 states that the Commission may "[a]dopt and

                                              12
promulgate rules and regulations respecting the administration of sections 444.500 to

444.789." Id. Those rules and regulations are found at 10 CSR 40-10.080. Subsection 1

describes the "public meeting" process that is conducted by the Director. Subsection 2

describes the rules for establishing standing for a formal public hearing. Subsection 3

describes the "formal public hearing" process conducted by the Commission.

Subsections 4 through 6 encompass procedures not relevant to this cause. There is no

indication in the statute or regulation that standing must be established by "competent and

substantial evidence"; Section 444.773.4, on which Respondents rely, refers to

"competent and substantial evidence" only as to the issuance or denial of a permit and

does not encompass standing.

       Even when considered "in its entirety," as Respondents urge, there is no way to

view the agency determination of standing, nor of any other meeting or hearing from the

issuance of this permit, as fitting within the definition of a contested case, which, as noted

above, provides the parties "with an opportunity for a formal hearing with the

presentation of evidence, including sworn testimony of witnesses and cross-examination

of witnesses."   Valley Park, 273 S.W.3d at 506 (emphasis added).             It is from the

Commission's ruling regarding Respondents' standing that the civil proceeding arose.

The reversal on the issue of standing was as a non-contested case and was nothing more

than a preliminary determination regarding what might have later become a contested

case had the issues not been resolved by the parties. See Painter, 251 S.W.3d at 412.

       Point I is granted.



                                             13
                                     Conclusion

      The judgment awarding attorney fees and costs is reversed.




                                       __________________________________
                                       Gary D. Witt, Judge

All concur




                                          14
