Elevi Holdings, LLC, Respondent, v. City of St. Louis, et al., Appellants.

ELEVI HOLDINGS, LLC, Respondent, v. CITY OF ST. LOUIS, et al., Appellants. ) ) )

) ) ) ) ) ED11 3528

Appeal from the Circuit Court of the City of St. Louis The Honorable Jason M. Sengheiser, Judge The City of St. Louis, the City of St. Louis Preservation Board, Richard Callow, Anthony Robinson, Tiffany Hamilton, Michael Killeen, David Richardson, Michael Allen, Catherine Hamacher, and Bret Narayan ("Appellants") appeal the trial court's judgment, which reversed the decision of the City of St. Louis Preservation Board (" Preservation Board" or "Board") denying Elevi Holdings, LLC ("Respondent") a permit requesting a roofing variance from the Central West End ("CWE") Historic District roofing standard. The trial court's judgment found the decision of the Board was unsupported by competent and substantial evidence, contrary to the overwhelming weight of the evidence, and arbitrary, capricious, and unreasonable. We affirm the trial court's judgment reversing the Preservation Board's decision.

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Factual and Procedural Background In May 2015, Lindsay Dausman ("Dausman") purchased a house located in the CWE Historic District ("Westminster House" or "the House") for $492,500. At the time Westminster House was purchased, the roof was made of slate. Over the next two years, Westminster House underwent extensive rehabilitation, at the expense of Dausman, totaling approximately $500,000. Dausman then listed Westminster House for sale, with the initial listing price set at $1.15 million, based upon the purchase price of the H ouse, the rehabilitative work done to the House, and additional expenses related to the House. 1 1 Dausman anticipated receiving approximately $100,000 in Historic Tax Credits as reimbursement for portions of the rehabilitative work done to Westminster House, but did not receive them based upon a filing error.

Dur ing the next year Westminster House was on the market, Dausman reduced the price fourteen times, and by the end of 2019, the listing price was down to $725,000. Despite reducing the listing price several times, the House never sold. Because Dausman was unable to maintain Westminster House as an individual and was unable to sell the House, she formed the Respondent entity to operate the House as a short-term rental. Over the next couple of years, Westminster House continued to operate as a short-term rental, and subsequent attempts to sell were unsuccessful. Respondent assumed a total of $109,311.82 in losses from 2020 to 2022, even with the House operating as a short-term rental. Respondent was expected to lose a total of $69,137.26 in 2023. In or around March 2023, Westminster House's slate roof had an extensive leak, and was actively leaking into the master bedroom. In order to prevent further damage to

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the inside of the house, Dausman, on behalf of Respondent, had an insurance adjuster inspect the roof. The adjuster informed Dausman the entire roof needed to be replaced because not only was there damage to the area causing the leak, but there was damage to the entire roof. Dausman was quoted by multiple companies for a new slate roof at around $180,000. Westminster House also required replacement of its copper gutters, which would cost an additional $100,000. Respondent concluded it could not afford a new slate roof because: (1) Respondent was operating Westminster House as a short-term rental at a loss; (2) Respondent/Dausman had already invested over one million dollars into rehabilitating and maintaining the House; and (3) Respondent/Dausman had previously attempted to sell the House at significantly lower prices with no success. Instead of a slate roof, the roof was replaced with "an architectural shingle/luxury roofing material designed to replicate the look of slate." While the new ro of was being installed, Respondent was informed that it needed to obtain a permit requesting a roofing variance from the Cultural Resources Office (" the CRO") , because the roofing material was non-compliant with the CWE Historic District roofing standard. Specifically, the new roof installation was in violation of CWE Historic District Ordinance 69423 ("Ordinance 69423"), 2 2 All references to Central West End Historic District Ordinance 69423 are to the Ordinance effective from 2013 to the present. which in relevant part states: "Original or existing slate ... roofs shall be preserved through repair and maintenance. Original or historic roof material shall not be replaced with another type of historic material that would change the character of the roof ...." Respondent later applied for a

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permit with the CRO, requesting a roofing variance due to financial hardship, under section 24.20.090 of the Revised Code of the City of St. Louis ("the City of St. Louis Revised Code"). 3 3 All references to sections within the City of St. Louis Revised Code are to the City of St. Louis Revised Code effective from 1994 to the present. This s ection of the City of St. Louis Revised Code allows for an applicant to apply for a permit requesting a roofing variance by showing: (1) evidence that the property cannot be put to a reasonable beneficial use without approval of the roofing variance; and (2) in the case of an income-producing property, that the property cannot obtain a reasonable return on investment without approval of the roofing variance. See section 24.20.090 of the City of St. Louis Revised Code. The CRO denied the permit application and Respondent appealed the decision to the Preservation Board. The Preservation Board held a public hearing on June 26, 2023 ("June 2023 hearing") and another public hearing on August 28, 2023 ("August 2023 hearing"), wherein the CRO presented evidence in opposition to Respondent's application for a permit requesting a roofing variance, and Respondent, by and through Dausman, presented evidence in support of granting the permit due to financial hardship. On September 26, 2023, the Board issued its findings of fact and conclusions of law, upholding the CRO's denial of Respondent's application for permit. The Preservation Board noted its doubt regarding Respondent's claims of financial hardship and stated "a lack of profitability did not constitute financial hardship ...." Respondent later appealed the Board's decision to the trial court, asserting the decision was, inter alia, unsupported by competent and substantial evidence and was arbitrary, capricious, and unreasonable.

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Respondent also asked the trial court to consider additional evidence, which consisted of prior Board decisions related to permits requesting roofing variances, because the Board allegedly had irregularities in procedure and acted unfairly towards Respondent. On March 14, 2025, the trial court issued its final judgment, which reversed the Board's decision denying Respondent a permit requesting a roofing variance, finding the decision was " not supported by competent and substantial evidence, and [] against the overwhelming weight of the evidence." The trial court stated it came to this decision upon review of the record before the Board and did not rely "on the additional evidence that [Respondent] [] asked the [c]ourt to consider." However, the trial court did "review[] th[e] additional evidence of alleged irregularities as provided by [s]ection 536.140.4 RSMo." 4 4 All statutory references are to RSMo 2016 (effective from August 28, 2005, to August 27, 2025). In doing so, the trial court found the Board's decision was arbitrary, capricious, and unreasonable because "the Board acted without a rational basis for its decision when reaching its [] [d]ecision and that it acted in an impulsive and unpredictable manner." This appeal followed. 5 5 To avoid unnecessary repetition, additional facts relevant to Appellants' arguments on appeal will be set forth below.

Discu ssion Appellants raise two points on appeal asserting the trial court's judgment reversing the Preservation Board's decision was erroneous. For the reasons discussed below, we disagree.

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Appellants' First Point On Appeal In Appellants' first point on appeal, they argue the trial court erred in reversing the Preservation Board's decision because Respondent did not present sufficient evidence of the two elements necessary to obtain a permit requesting a roofing variance from the CWE Historic District roofing standard. 6 6 As discussed in detail below, an applicant seeking a permit requesting a variance must provide sufficient evidence showing: (1) the property cannot be put to a reasonable beneficial use without the approval of the variance; and (2) in the case of an income-producing property, that the property cannot obtain a reasonable return on investment without the approval of the variance. See section 24.20.090 of the City of St. Louis Revised Code; see also section 24.20.110B of the City of St. Louis Revised Code. However, this Court reviews the agency's d ecision rather than the trial court's judgment. 7 7 We note that some Courts have dismissed an appellant's point on appeal for alleging trial court error when an appellant seeks review of an agency decision. See Kelly v. Missouri Department of Social Services, Family Support Division, 456 S.W.3d 107, 111-12 (Mo. App. W.D. 2015); Rice v. State, Dept. of Social Services, 971 S.W.2d 840, 842 (Mo. App. E.D. 1998). See F oltz v. City of St. Louis, 677 S.W.3d 856, 862 (Mo. App. E.D. 2023) (citing Ferry v. Board of Education of Jefferson City Public School District, 641 S.W.3d 203, 206 (Mo. banc 2022)). Accordingly, we undertake Appellants' assertion, which is outlined within the argument section of their brief, that the Board's decision was supported by substantial and competent evidence because Respondent never claimed or demonstrated to the Board the two elements necessary to obtain a permit requesting a roofing variance from the CWE Historic District roofing standard and instead requested relief solely on the grounds of

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financial hardship. 8 8 We find evidence of financial hardship is a relevant factor in considering a claim that a property cannot be put to a reasonable beneficial use without the approval of a variance. See Antioch Community Church v. Board of Zoning Adjustment of City of Kansas City, 543 S.W.3d 28, 36 (Mo. banc 2018) (citation and internal quotation marks omitted) ("[i]t is generally held that the existence of a practical difficulty or unnecessary hardship is the principal basis on which a variance is granted") ; see also section 24.20.100 of the City of St. Louis Revised Code ("the Preservation Board shall consider ... other relevant considerations, such as the availability of economically feasible alternatives to the proposed work"). See Jacoby v. Hamptons Community Association, Inc., 6 02 S.W.3d 869, 872 (Mo. App. E.D. 2020) ("[b]ecause we understand Appellants' arguments as elaborated in the argument portions of their brief, we exercise our discretion to proceed in our review"). Standard of Review In an appeal from the trial court's review of an administrative agency's decision, this Court reviews the decision of the agency rather than the trial court's judgment. Foltz, 677 S.W.3d at 862 (citing Ferry, 641 S.W.3d at 206). Additionally, this Court's review of an administrative agency's decision in a contested case is governed by section 536.140 RSMo. Nexgen Silica, LLC v. Missouri Department of Natural Resources, 677 S.W.3d 594, 600 (Mo. App. E.D. 2023). Accordingly, we will uphold the agency's decision unless it is, inter alia: (1) not supported by competent and substantial evidence upon the whole record; or (2) arbitrary, capricious, or unreasonable. Id.; section 536.140.2 RSMo. Moreover, under section 536.140.2 RSMo, when this Court reviews the record to determine whether the agency's findings are supported by substantial and competent evidence, we look at the entire record and not merely the evidence that supports the

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decision. Morgan v. City of St. Louis, 154 S.W.3d 6, 8 (Mo. App. E.D. 2004) (citing Lagud v. Kansas City Bd. of Police Com'rs, 136 S.W.3d 786, 791 (Mo. banc 2004)). Thus, we no longer view the evidence in the light most favorable to the agency's decision. Id. Evidence is considered to be sufficiently competent and substantial when it has "probative force upon" an issue if believed. See Hoffmeier v. Civil Service Commission of St. Louis Metropolitan Sewer District, 541 S.W.3d 8, 12 (Mo. App. E.D. 2017) (quoting Morgan, 154 S.W.3d at 8). An agency's decision is not supported by competent and substantial evidence upon the whole record only in "the rare case when th e [] decision is contrary to the overwhelming weight of the evidence." In re M.F. v. Schafer, 508 S.W.3d 194, 201 (Mo. App. E.D. 2017) (quoting Albanna v. State Bd. of Registration for Healing Arts, 293 S.W.3d 423, 428 (Mo. banc 2009)). Analysis Ordinance 69423 requires "[o]riginal or existing slate ... roofs shall be preserved through repair and maintenance. Original or historic roof material shall not be replaced with another type of historic material that would change the character of the roof ...." Nevertheless, section 24.20.090 of the City of St. Louis Revised Code allows an applicant to apply for and obtain a permit under certain circumstances: If the applicant for permit claims that the property involved cannot be put to a reasonable beneficial use without the approval of the proposed construction ... the applicant shall present evidence ... establishing such a claim, and in the case of income-producing property, the applicant shall also present evidence whether the applicant is able to obtain a reasonable return on the applicant's investment from the property without the approval of the proposed construction ....

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See also section 24.20.110B of the City of St. Louis Revised Code (stating in relevant part: "[i] f the Preservation Board determines that the property cannot be put to a reasonable beneficial use without the approval of the proposed construction ... the Preservation Board shall recommend that the application for permit be granted ..."). Accordingly, in order to obtain a permit requesting a roofing variance, Respondent had the burden of proving: (1) Westminster House could not be put to a reasonable beneficial use without approval the roofing variance; and (2) Respondent would not obtain a reasonable return on investment for Westminster House, as an income-producing property, without approval of the roofing variance. At the June 2023 hearing and the August 2023 hearing, Respondent, by and through Dausman, presented evidence to the Board which showed Westminster House could not be put to a reasonable beneficial use without approval of the roofing variance. Respondent testified that Westminster House had an extensive leak and the entire slate roof needed to be replaced. Respondent also testified it had to act quickly "to prevent any interior damage [from] occurring ...." It is clear that without a functioning roof, a property cannot be put to any reasonable beneficial use. Respondent testified it was quoted by multiple companies for a new slate roof and was informed that it would cost upwards of $180,000, which Respondent testified it could not afford, with the following evidence to support this contention: (1) Respondent was operating Westminster House as a short-term rental at a loss; (2) Respondent/Dausman had already invested over one million dollars into rehabilitating and maintaining Westminster House; and (3) Respondent/Dausman had previously attempted to sell Westminster House at

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significantly lower prices with no success. Given this evidence, we find the Board was presented with an abundance of evidence to support Respondent's contention that without the approval of the roofing variance, Westminster House could not be put to a reasonable beneficial use. 9 9 Appellants assert in their appellate brief: "Respondent submitted limited financial records from Elevi Holdings, LLC, but not personal financial records ...." We find Respondent was not required to submit any personal financial records to establish its burden under section 24.20.090 of the City of St. Louis Revised Code. Respondent was operating as a limited liability company ("LLC") which is regarded as a legal entity distinct from its members or owners. See Hibbs v. Berger, 430 S.W.3d 296, 306 (Mo. App. E.D. 2014). Accordingly, the members of an LLC are generally not lia ble for any debts of the LLC. Id. Moreover, it would be inappropriate to require Respondent to submit any personal financial records as there were no allegations or evidence of Respondent acting with an improper purpose. See Bick v. Legacy Building Maintenance Company LLC, 626 S.W.3d 700, 705 (Mo. App. E.D. 2021) (citation omitted) (piercing the corporate veil is "used by the courts to look past the corporate form and impose liability upon owners of the corporation ... when the owners create or use the corporate form to accomplish a fraud, injustice, or some unlawful purpose").

Furthe rmore, the evidence before the Board established that Respondent would not obtain a reasonable return on investment for Westminster House, as an income-producing property, without approval of the roofing variance. Respondent's testimony showed that if it was required to install the slate roof (and copper gutters), the only way to receive any profit was to sell Westminster House for $1.4 million. However, the reality of selling Westminster House for $1.4 million was impracticable, as the evidence showed th e House could not even be sold for $725,000, which was the lowest price Respondent/Dausman attempted to sell the house for. This reality was also emphasized by a Board member: "... [T]here is no question just based on [what Dausman purchased the House for and the denial of rehabilitation tax credits] that [Respondent is] underwater

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on this because it's just not going to sell ... where it needs to." Respondent additionally presented evidence to the Board which showed Respondent could not adequately refinance Westminster House, as Respondent was only appraised for a $700,000 loan. Moreover, Respondent submitted evidence that the House was operating at a loss. In 2023 alone, Respondent was expected to lose approximately $69,137.26 to the House. See Matthew v. Smith, 707 S.W.2d 411, 417 (Mo. banc 1986) ("[m]ost courts agree that mere conclusory and lay opinion concerning the lack of any reasonable return is not sufficient; there must be actual proof, often in the form of dollars and cents evidence"). Accordingly, the record shows the Board was provided with ample evidence to support a finding that Respondent would not obtain a reasonable return on investment without approval of the roofing variance. Based upon the foregoing, the Preservation Board erred in denying Respondent a permit requesting a roofing variance because the decision was not supported by competent and substantial evidence on the whole record and was contrary to the overwhelming weight of the evidence. See Nexgen Silica, LLC, 677 S.W.3d at 600; Schafer, 508 S.W.3d at 201. Respondent presented competent and substantial evidence to the Board to support the contentions that: (1) Westminster House could not be put to a reasonable beneficial use without approval of the roofing variance; and (2) Respondent would not obtain a reasonable return on investment for Westminster House, as an income-producing property, without approval of the roofing variance. See Morgan, 154 S.W.3d at 8 (citing Lagud, 136 S.W.3d at 791); section 24.20.090 of the City of St.

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Louis Revised Code; see also section 24.20.110B of the City of St. Louis Revised Code. Appellants' first point on appeal is denied. Appellants' Second Point On Appeal In Appellants' second and final point on appeal, they argue the trial court erred in considering evidence not presented to the Preservation Board because judicial review of an administrative decision is bound to the record before the Board. Specifically, Appellants contend that Respondent's submissions to the trial court of prior Board decisions improperly expanded the record. 10 10 Appellants also argue the trial court's consideration of additional evidence deprived Appellants of notice and an opportunity to respond at the trial court level. Appellants have failed to cite any controlling legal authority to support this contention. Moreover, this argument has no merit because the record shows Appellants had notice of Respondent's allegations of irregular procedures and unfairness within the following documents before the trial court: (1) Respondent's initial petition filed on October 25, 2023; (2) Respondent's brief filed on December 10, 2024; and (3) Respondent's reply brief filed on December 30, 2024. Similarly, Appellants had an opportunity to respond within their answer to Respondent's petition filed on February 20, 2024, and within their brief filed on December 20, 2024. See Collins v. Collins, 586 S.W.3d 282, 291 (Mo. App. W.D. 2019) (citation omitted) ("[o]ur courts have recognized that de facto notice is given to a party by 'virtue of a pleading or pending motion or conversation with the court'").

Al t hough the trial court generally views the record before the agency, see section 536.140.1 RSMo, 536.140.4 RSMo provides " [t]he court may in any case hear and consider evidence of alleged irregularities in procedure or of unfairness by the agency, not shown in the record." See section 536.140.4 RSMo; see also Boyer v. City of Potosi, 38 S.W.3d 430, 434 (Mo. App. E.D. 2000). We review a trial court's decision to consider additional evidence under section 536.140.4 RSMo for an abuse of discretion. See Boyer, 38 S.W.3d at 434 (citing Burgdorf v. Board of Police Com'rs, 936 S.W.2d 227, 233

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(Mo. App. E.D. 1996) (overruled on other grounds)). A trial court abuses its discretion when its ruling is clearly against the logic of the circumstances, is arbitrary and unreasonable, and indicates a lack of careful consideration. State ex rel. Coco-Cola Co. v. Nixon, 249 S.W.3d 855, 860 (Mo. banc 2008). Here, after the Board denied Respondent the permit requesting a roofing variance, Respondent investigated other decisions from the Board related to permits requesting roofing variances. Respondent submitted such Board decisions to the trial court to show alleged irregularities in the Board's procedure or unfairness. See section 536.140.4 RSMo (" [t]he court may in any case hear and consider evidence of alleged irregularities in procedure or of unfairness by the agency, not shown in the record"); see also Boyer, 38 S.W.3d at 434. Two of those decisions are particularly instructive for purposes of this appeal: a Board decision from 2021 ("2021 Board decision") and a Board decision from 2022 ("2022 Board decision"). In the 2021 Board decision, the owners ("2021 owners") applied for a permit requesting a roofing variance on a similar basis as Respondent's application in this case – because of financial hardship and because roof replacement was a matter of urgency. Notably, the Board granted the 2021 owners' permit stating, "[t]he owner presented evidence of financial hardship," whereas in this case the Board denied Respondent's permit even when Respondent put forth substantial evidence of financial hardship. These circumstances demonstrate both: (1) disparate treatment by the Board of similarly-situated applicants; and (2) inconsistencies in whether the Board considered financial hardship as a relevant factor. See Wolfner v. Board of Adjustment of City of

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Frontenac, 672 S.W.2d 147, 151 (Mo. App. E.D. 1984) (citation omitted) (holding a board "is not free to pick and choose between similarly situated applicants of whom they will or will not require strict compliance with the ordinance"). Additionally, in the 2022 Board decision, the owner (" 2022 owner") applied for a permit requesting a roofing variance, and despite the owner not claiming any financial hardship, the Board granted the permit. In contrast, Respondent here did claim financial hardship, yet the Board denied the permit. These circumstances, especially when considered in light of the Board's 2021 decision discussed above which granted the 2021 owners' permit on the basis of their financial hardship, indicate the Board acted subjectively and unfairly when making decisions for permits requesting roofing variances. See Board of Educ. of City of St. Louis v. Missouri State Bd. of Educ., 271 S.W.3d 1, 11 (Mo. banc 2008) ("[a]n agency must not act in a totally subjective manner without any guidelines or criteria"). Based on the foregoing, the trial court did not abuse its discretion when it considered additional evidence showing the Board's irregularities in procedure or of unfairness in granting or denying permits requesting roofing variances. See Nixon, 249 S.W.3d at 860; Boyer, 38 S.W.3d at 434; section 536.140.4 RSMo. Moreover, the additional evidence considered by the trial court revealed substantial irregularities in granting or denying permits requesting roofing variances to applicants, which ultimately gave rise to unfair results, making the Board's decision arbitrary, capricious, and unreasonable. See Board of Educ. of City of St. Louis, 271 S.W.3d at 11 (indicating an agency's decision is arbitrary, capricious, and unreasonable when the agency does not

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have a rational basis for its decision and acts in a totally subjective manner without any guidelines or criteria). Appellants' second and final point on appeal is denied. Conclusion Based on the foregoing, the trial court's judgment reversing the Preservation Board's decision is affirmed.

Robert M. Clayton III, Presiding Judge

L isa P. Page, Judge and Michael E. Gardner, Judge, concur.