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Home / News / Court upholds million-dollar verdict against hospital

Court upholds million-dollar verdict against hospital

In a 2-1 decision, a state appeals court upheld a bench verdict ordering SSM Healthcare of St. Louis to pay $1.02 million for traffic generation assessment credits SSM bought when it purchased land in Fenton to build a new hospital.

The dissenting judge put the value of the credits at $646,000.

First, a couple of definitions, courtesy of the Missouri Court of Appeals Eastern District: A traffic generation assessment is imposed on developers for costs associated with an increase in traffic generated by the development. Developers may be entitled to TGA credits for public road improvements they make or intend to make during the development of the property.

Typically, the county applies the developer’s traffic generation assessment credits against the assessment. But in this case Richard J. Stahlhuth and Sally I. Irwin sold SSM the credits along with the land on which the St. Clare Health Center was built. Stahlhuth and Irwin, the plaintiffs, received the credits from St. Louis County in the 1990s in exchange for land taken to widen Highway 141.

In a bench trial, Judge Carolyn Whittington said SSM owed the plaintiffs $1.02 million for the TGA credits, prejudgment interest, costs and attorney fees. The judge’s verdict was less than the $1.4 million the plaintiffs alleged SSM owed them.

Whittington based her value of the credits on the county ordinance in effect before May 13, 2008, which said SSM’s traffic generation assessment would be calculated at a rate of $3,006.94 per parking space. In 2008, the county repealed that particular ordinance and reset the rate at $1,668.47 per hospital parking space and $2,730.25 per loading space.

Whittington used the earlier rate because the county applied the credits against SSM’s traffic generation assessment on Nov. 27, 2006, and on Jan. 24, 2008. SSM didn’t pay for the credits at that time. The appellate court majority, which consisted of Judges Mary K. Hoff and Kathianne Knaup Crane, said the traffic generation assessment was payable as of these dates, so the earlier rate was valid.

“The ordinances set the TGA rates, and the TGA rates are calculated at a particular time, and that time is when you apply for building permits. You have to satisfy your TGA to get your building permit,” said Michael M. Godsy, of Sonnenschein, Nath & Rosenthal, who represented the plaintiffs.

SSM’s lawyer, Kevin F. Hormuth, of Greensfelder, Hemker & Gale, did not return phone calls seeking comment.

Judge Kenneth M. Romines said SSM owed the plaintiffs $646,033, which the hospital paid on the first day of trial. The plaintiffs refused to accept payment in satisfaction of their claims.

Romines said the contract entitled the plaintiffs to whatever the county said SSM owed, minus the hospital’s own credits. SSM had $415,966 in its own credits. When that number is subtracted from the $1,065,999 traffic generation assessment, the result is that SSM already fulfilled its obligation to the plaintiffs.

By Romines’ calculations, the plaintiffs have leftover credits that SSM will be liable for if it develops the hospital further.

“Stahlhuth has not been deprived of any of its credits. Were SSM required to pay more than $646,033.12, then Stahlhuth has the benefit of payment for credits that went unused. That was not the agreement and a breach does not entitle Stahlhuth to more than he would have received under the contract,” Romines wrote.

But Godsy said SSM didn’t have its own credits when it applied for building permits for both the first and second phases of the development. So on the dates that the traffic generation assessments were payable, SSM had only the plaintiffs’ credits.

Romines also said the plaintiffs were not entitled to argue that the recalculation of the traffic generation assessment was invalid. The county is free to repeal and enact ordinances as it sees fit, and if the plaintiffs want to challenge the validity of the county’s actions, they’ll have to sue the county, he said.

The case is Stahlhuth et al. v. SSM Healthcare of St. Louis, ED91990.