TCAA NEWS
(Volume 5, Issue 6—June/July 2010)
"Your Source for Information About the Texas City Attorneys Association"
News and Updates

TCAA to Fill Board Position on October 28, 2010: Those interested in applying for a place on the Board should fill out an application and return it via e-mail to Scott Houston at legalgovt@tml.org. Application forms are available on the front page of TCAA's Web site at www.texascityattorneys.org and must be received by 5:00 p.m. on October 8, 2010.

Save the Date! The TCAA Fall Seminar in conjunction with the TML Annual Conference is scheduled for October 28, 2010, in Corpus Christi. A link to registration and hotel information will be available soon on the front page of www.texascityattorneys.org. A separate e-mail and printed publicity will be sent to all members when registration is available.

Galveston Legal Department Offers Disaster Assistance: If you need help or information regarding hurricane emergency and disaster operations, please contact the Galveston legal department at 409-797-3530. The department can share experiences as well as example emergency documents.

Scenic Texas Sign Law Seminar: The Texas Municipal League and the Texas City Attorneys Association are co-sponsoring a Scenic Texas sign regulation seminar on September 16, 2010, at the Austin Hilton Hotel. Given the complex nature of sign regulation in the courts and at the local, state, and federal levels, there is a demand for legal education in this area. The event will offer five hours of CLE credit. More details and the seminar agenda will be made available soon.

TCAA Announces On-Demand Participatory CLE Seminars: TCAA Online Seminars allow city attorneys, assistant city attorneys, and attorneys who regularly practice municipal law to purchase and view a video of past seminars in a single-session format. The viewing of the session, along with the completion of an evaluation and participation in the LisTCAA listserv, allows attorneys to receive participatory CLE credit with the State Bar. The purchaser will receive a confirmation e-mail with a link to each online session that is purchased. The link will send the purchaser to a Web page that will have all materials and other necessary items linked through buttons beside the video screen. Important Note Regarding Access to Sessions: The purchase of a session or sessions will not allow immediate access. Once payment is confirmed, a confirmation e-mail with a link to the session or sessions will be e-mailed to the purchaser. That process may take up to two business days, but is often faster. To view available seminars, please go to www.texascityattorneys.org and click on "TCAA Online Seminars" on the front page.

Thank you to all who attended and sponsored the TCAA South Padre Conference at the Isla Grand Beach Resort! This year's theme was "Ex Mari Veritas" (From the Sea, Truth). For MCLE reporting instructions, go to www.texascityattorneys.org, click on speaker papers, Summer Conference 2010, and then MCLE directions.

LisTCAA Listserv: Many Texas city attorneys participate in the International Municipal Lawyers Association Municode listserv. Now's your chance to glean and share information on a listserv that consists only of Texas attorneys! To join, please go to www.texascityattorneys.org and click on the "LisTCAA" link on the left side of the page.

IMLA Conferences: The International Municipal Lawyers Association conducts various seminars that complement the TCAA programs. This month's featured seminar is IMLA's 2010 Annual Conference. The conference will be held on October 10-13, 2010, at the Hilton New Orleans Riverside. For more information or to register, go to www.imla.org and click on "events."

Municipal Attorney Job Openings: For the most recent Texas Municipal League classifieds postings, please click here.

TML/TCAA Legal Defense Program
Amicus Brief, Attorney General Opinion, and State Agency Comments Filed

RLUIPA: The Elijah Group v. City of Leon Valley, No. 10-50035 (5th Cir. 2009). This case involves the Religious Land Use and Institutionalized Persons Act (RLUIPA). TML, as amicus curiae, argued that religious institutions should not be wholly exempt from legitimate zoning ordinances. Such a finding would contravene the intent, purpose, and effect of RLUIPA. So long as legitimate regulatory purposes exist to support a zoning ordinance, and comparable religious and secular assemblies are treated the same, cities should be authorized to enforce their ordinances. The brief was filed on July 16, 2010.

Recent Texas Cases of Interest to Cities
Note: Included cases are from the period beginning on the 10th of the previous month through the 10th of the current month.

Governmental Immunity: City of Balch Springs v. Austin, No. 05-09-00984-CV (Tex. App.—Dallas June 10, 2010). Diana Austin sued the city when Jimmy Hall was killed by an off duty police officer who ran into Mr. Hall with his police car. Mr. Hall was driving a riding lawn mower when the officer hit and killed him with his police car. At the time of the accident, the police officer was returning to his private security job at Wal-Mart. Austin sued the city under the Tort Claims Act, arguing that: (1) the officer was in the scope of his employment when the accident occurred; and (2) a condition of the police car caused the accident. The city filed a plea to the jurisdiction, arguing that the officer was off duty and privately employed at the time of the accident. The city also presented evidence that the condition of the officer's car did not cause the accident.

The Tort Claims Act waives a city's governmental immunity and allows a suit for damages if personal injury is caused by: (1) operation or use of a city vehicle by a city employee in the scope of his employment; or (2) a condition or use of city personal property. TEX. CIV. PRAC. & REM. CODE 101.021.

Scope of Employment

Section 101.021 of the Texas Civil Practices and Remedies Code states:

A governmental unit in the state is liable for . . . personal injury, and death proximately caused by the wrongful act or omission or the negligence of an employee acting within his scope of employment if . . . death arises from the operation or use of a motor-driven vehicle or motor-driven equipment . . . .

TEX. CIV. PRAC. & REM. CODE 101.021. A person is acting within the scope of his employment if the action causing the injury was in furtherance of the employer's business and for the accomplishment of the job for which the person was hired. Leadon v. Kimbrough Bros. Lumber Co., 484 S.W.2d 567, 569 (Tex. 1972); see also Biggs v. U.S. Fire Ins. Co., 611 S.W.2d 624, 627 (Tex. 1981). "[E]ven where an employee is on call 24 hours a day he must be engaged in or about the furtherance of the affairs or business of his employer to be in the scope of his employment." Garcia v. City of Houston, 799 S.W.2d 496, 499 (Tex.App.-El Paso 1990, writ denied).

Police officers are required by state law to always "preserve the peace within the officer's jurisdiction." TEX. CODE CRIM. PRO. art. 2.13(a). Police officers retain this duty even if they are off duty. See Hafdahl v. State, 805 S.W.2d 396, 401 (Tex. Crim. App. 1990). In the City of Balch Springs, "[o]fficers are always considered on duty while in the City of Balch Springs." City of Balch Springs, "Responsibilities and General Conduct," Paragraph 4.03.05. The court held that, even though a police officer may have a duty to respond to criminal activity regardless of whether he is technically on duty at the city, he was not doing so when the accident occurred. He was returning to the location of his private, off-duty employment where he was providing security for this employer.

Condition of Tangible City Property

Section 101.021 states:

A governmental unit in the state is liable for . . . death so caused by a condition or use of tangible personal or real property if the governmental unit would, were it a private person, be liable to the claimant according to Texas law.

TEX. CIV. PRAC. & REM. CODE 101.021. The condition or use of the city's property must have actually caused the injury to waive immunity under this section. Dallas County Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339, 343 (Tex. 1998).

Although there was evidence that the vehicle's odometer was not working, this condition did not cause the accident. The court held that there was no evidence that a condition of the police vehicle caused the accident.

The court ultimately held that the city's governmental immunity was not waived under the Tort Claims Act and dismissed the plaintiff's claims against the city.

Telecommunications: Comcast Cable of Plano, Inc., v. City of Plano, No. 05-09-00754-CV (Tex. App.—Dallas June 24, 2010).

In March 2002, the Federal Communications Commission (FCC) issued its 2002 Cable Modem Declaratory Ruling, which declared that "cable modem service" is not a "cable service" nor is it a "telecommunication service." Rather, the FCC concluded, it is an "information service."

Shortly after the 2002 Cable Modem Declaratory Ruling, most cable providers ceased paying cities cable service franchise fees on cable modem service. In response, a number of cities—including the City of Plano—sent demand letters asserting that providers of cable modem service, as a non-cable service, must pay a franchise fee for use of the rights-of-way to provide that non-cable service. The cities also asserted the need for a separate franchise to use the rights-of-ways because the cable franchise did not authorize provisioning of non-cable service

The city has been in litigation since 2003 with its local cable incumbent, now Comcast, on the cable modem issue. The case was stayed upon Comcast's request due to Comcast's urging that the FCC or Congress were contemplating a resolution to the issue. Last year, Comcast filed a motion for summary judgment (MSJ) that the city's claim is preempted by federal law and cited the FCC Cable Modem order as authority. The MSJ was denied by the trial court. The parties appealed the matter solely on the federal preemption issue.

The city asserted that if cable modem service is a non-cable service in accordance with the 2002 Cable Modem Declaratory Ruling, the city's franchise still requires a five-percent franchise fee from Comcast on the non-cable component as a "contract claim." (The city also asserted four alternative legal bases for recovery: implied contract, quantum merit, unjust enrichment, and trespass.) The city took the position that its contract claim is outside of the federal "cable" area. In other words, the city argued that any FCC ruling on cable modem service is only in the context of cable franchising and does not limit what a city may charge for non-cable services. Further, the city noted that the 2002 Cable Modem Declaratory Ruling was only a "tentative" conclusion as to cable modem service and franchise fees until the FCC's March 2007 Report and Order.

The city also asserted that, not only has the FCC never stated a city cannot collect a right-of-way use fee on non-cable service revenue if there is independent authority to charge a fee, the FCC has concluded essentially to the contrary, when it stated that the applicability of FCC Orders to local franchise provisions should be "assessed on a case-by-case basis under applicable law." According to the city, this is a contract compliance dispute for which it has independent authority under Texas law to enforce and collect the fee as a home rule city.

Comcast, on the other hand, asserted that revenue from cable modem service should not be included in the calculation of gross revenues from which the franchise fee ceiling is determined, citing both the 2002 Cable Modem Declaratory Ruling and federal law as preempting the Plano franchise fee provisions that the city relies on to impose the franchise fee.

On June 24, 2010, the Dallas Court of Appeals held in Comcast's favor that federal preemption barred the city's franchise fee contract claim on cable modem service revenue, but remanded on the claims of breach of implied contract, quantum meruit, unjust enrichment, and trespass. (Note: this case summary was prepared by Clarence West, Attorney at Law, www.cawestlaw.com.)

Sexually Oriented Business:A.H.D Houston, Inc., et al., v. City of Houston, No. 14-08-00758-CV (Tex. App.—Houston [14th Dist.] June 24, 2010). In this opinion, the court of appeals examined: (1) whether the trial court applied an incorrect standard of review when hearing a judicial challenge to a hearing created by city ordinance; (2) whether the trial court erred in refusing to require the hearing officers to make fact findings as part of the hearings process; and (3) whether the conduct of the hearing officers constituted a violation of both due process and the doctrine of separation of powers.

This case centers around the sexually oriented business (SOB) ordinance passed by the City of Houston in 1997. The ordinance amended the city's existing SOB ordinance, including provisions regulating where SOBs could be located. In order to mitigate the economic impact on existing SOBs, the ordinance included an amortization procedure, which allowed an SOB owner to apply for additional time to operate a club in its current location in order to recoup the owner's investment. At a hearing before a city hearing officer, the owner would present evidence to justify his request.

When the ordinance was enacted, A.H.D. Houston, Inc., and the other appellants (SOB owners) operated several men's clubs in the city that were no longer permitted to operate in their current locations. All of the club owners involved in the present law suit presented evidence at a hearing and their requests were denied either in whole or in part. In response to the ordinance, several SOB owners (including all involved in the present case) brought a federal lawsuit challenging the constitutionality of the ordinance on several grounds.

After almost a decade in litigation, the Fifth Circuit upheld almost all parts of the ordinance as constitutional. The city and the SOB owners agreed that amortization hearings would continue during the federal lawsuit, but any judicial review as provided for in the ordinance would be stayed until entry of a final judgment in the case. After all post-judgment motions were denied, the SOB owners filed for judicial review of the hearing officers' decisions, and this case reviews the trial court's decision in that judicial review.

The SOB owners argued first that the trial court improperly applied the substantial evidence standard of review, which the court defined as a limited, deferential standard requiring only more than a mere scintilla of evidence to uphold the decisions of the hearing officers. The SOB owners argued that the issue should have been reviewed de novo by the trial court (citing City of Houston v. Lurie. 224 S.W.2d 871 (Tex. 1949)). The court disagreed, holding that while Lurie did call for a de novo review where the case involved a taking of property, it also specifically held that a substantial evidence review was appropriate for matters of licensing.

The SOB owners also complained that the trial court did not remand and require the hearing examiners to make findings of fact outlining the reasoning behind their decisions. The court held that the ordinance does not require findings of fact, and because the issue on hearing is so narrow (whether the owner has proven that he needs extra time to recoup his investment) that a negative finding is an implied finding that the owner did not meet his burden of proof. Although the SOB owners argued that a detailed fact finding is a necessary prerequisite to conduct a proper substantial evidence review (relying on Morgan Drive Away, Inc. v. Railroad Comm'n of Texas, 498 S.W. 2d 147 (Tex. 1973), the court held that the case was not applicable here because there was statutory language requiring a fact finding in that case, where there was none in the ordinance. The SOB owners went on to argue that without such fact findings, the trial court was merely guessing at the reasoning of the hearing officers. The court held that was irrelevant because the substantial evidence standard requires only that the evidence provide a reasonable basis for the officers' decision for the decision to be upheld.

The court also reviewed the evidence presented to the hearing officers and held that the trial court conducted a proper substantial evidence review. City of El Paso v. Pub. Util. Comm'n of Tex., 883 S.W.2d 179 (Tex. 1994); Montgomery Indep. Sch. Dist. v. Davis, 34 S.W.3d 559 (Tex. 2000).

Finally, the SOB owners asserted two constitutional arguments, contending that the conduct of the hearing officers constituted a violation of both due process and the doctrine of separation of powers. The SOB owners argued that because judicial review without fact finding is ineffective and the hearing officers (from the police department's vice squad) were usurping a judicial function, the separation of powers clause of the Texas Constitution was violated. The SOB owners further argued that the lack of detailed fact finding required them to guess at the reasons why the hearing officers denied their amortization request. The court found that each of these challenges lay in the structure of the ordinance, not its application to the SOB owners, making them facial constitutional challenges to the ordinance. Because the federal litigation on this issue addressed a variety of facial constitutional challenges, the court held that the arguments here were barred by res judicata. However, the court went on to state that even if the claims were not barred by res judicata, they failed on the merits because the separation of powers doctrine in the Texas Constitution does not apply to branches of local government. See City of Fort Worth v. Zimlich, 29 S.W.3d 62, 72 (Tex. 2000); Bradford v. Pappillion, 207 S.W.3d 841, 843 n.2 (Tex. App.—Houston [14th Dist.] 2006, no pet.). On the due process issue, the court held that "the ultimate test of due process in an administrative hearing is the presence or absence of the rudiments of fair play." See also State v. Crank, 666 S.W.2d 91, 94 (Tex. 1984). Because the SOB owners were given fair notice and an opportunity to be heard, and could prove no bias on the hearing officers' part nor show any authority supporting their argument that fact findings are required for due process, the court overruled the SOB owners' issues alleging separation of powers and due process violations.

The court overruled all of the SOB owners' issues and affirmed the trial court's judgment.

Prompt Payment Act: M.T.D. Environmental, L.L.P. v. City of Midland, No. 11-09-00004-CV (Tex.App.—Eastland, May 13, 2010). The City of Midland entered into a contract with M.T.D. Environmental (MTD) for the grinding and hauling of yard waste materials. After the grinding work was performed, MTD submitted an invoice to the city in the amount of $100,609.25. A dispute arose between the city and MTD regarding the amount of work actually performed, and the city did not pay the invoice. As a result, MTD filed suit against the city.

At trial, the city moved for summary judgment on the grounds that MTD's claim was barred because of a clause in the contract releasing any breach of contract claim against the city. MTD argued that the Prompt Payment Act (Act) prevented the city from relying on the release clause, while the city contended that the Act did not apply. The trial court granted summary judgment in favor of the city, and MTD appealed.

On appeal, MTD contended that the release and waiver provisions in the contract were invalid because the Act prohibits the waiver of a right or remedy granted by the Act. See TEX. GOV'T CODE 2251.004. The city countered by citing Government Code Section 2251.002(a)(2), which provides that if there is a bona fide dispute between the political subdivision and a contractor about the service performed that causes payment to be late, then Subchapter B of the Act does not govern payment of the contractor.

The court of appeals found that Section 2251.004 of the Government Code voided any purported release or waiver by MTD of its right to prompt payment under the Act. Although the court agreed with the city that there was a bona fide dispute, and that payment was therefore not governed by Subchapter B of the Act in accordance with 2251.002(a)(2), MTD had a right to resolve its bona fide dispute with the city in court under Subchapter C of the Act, and not under Subchapter B. Consequently, the court determined the release and waiver provisions were void with respect to MTD's claim under the Act. The city's motion for rehearing was denied, and the case was reversed and remanded to the trial court.

Employment Discrimination: Acosta v. City of Austin, No. 03-08-00788-CV (Tex. App.—Austin June 30, 2010) (mem. op.). The court held that summary judgment in favor of the city was appropriate because Acosta did not raise a material fact issue as to whether the city's nondiscriminatory reasons for his termination were a pretext for a discriminatory purpose.

Open Meetings: City of Richardson v. Gordon, No. 05-09-00532-CV (Tex. App.—Dallas July 2, 2010) (op. on reh'g). The court held that the plaintiff's suit was moot because the charter provision that prohibited closed meetings has now been amended.

Whistleblower Act: Foddrill Sr. v. City of San Antonio, No. 04-09-00339-CV (Tex. App.—San Antonio July 7, 2010) (mem. op.). The jury's finding that Foddrill had not made a good faith report of a violation of law was upheld by the court of appeals because Foddrill failed to submit points or issues to supplement the partial reporter's record he requested.

Procedure: Bolling v. City of Farmers Branch, et al., No. 05-08-01566-CV (Tex. App.—Dallas June 25, 2010). The Bollings' briefing was so inadequate that the court was unable to figure out what they were arguing and dismissed the case.

Eminent Domain: Harlow Land Co., LTD, v. City of Melissa, No. 05-08-01178-CV (Tex. App.—Dallas June 17, 2010). The court held that the landowner's suit was moot because they had accepted all sums under the trial court's condemnation judgment. Couch v. State, 688 S.W.2d 154, 155 (Tex. App.—Beaumont 1985, writ ref'd n.r.e.).

Takings: City of Carrollton v. HEB Parkway South, LTD., et al., No. 2-09-179-CV (Tex. App.—Fort Worth June 17, 2010). HEB's takings claim was not ripe because it had never requested a variance from the ordinance in question.

Ratemaking: Cities of Corpus Christi, et al., v. PUC of Texas, et al., No. 03-09-00116-CV (Tex. App.—Austin June 11, 2010) (mem. op.). The court held that an electric utility can include energy efficiency costs in its rates even if the utility does not meet its energy efficiency goals. The court also upheld the Public Utility Commissiom's determination of the utility's consolidated tax savings allocation because the allocation was within the bounds of reasonableness.

Employment Discrimination: Michael v. City of Dallas, No. 05-09-00210-CV (Tex. App.—Dallas June 10, 2010). The court affirmed the trial court's judgment in favor of the city because Michael did not show a prima facie case of employment discrimination. He failed to show that he was treated differently than other employees or that he was replaced by someone outside his protected class.

Collective Bargaining: Port Arthur Police Association v. City of Port Arthur, No. 09-09-00242-CV (Tex. App.—Beaumont May 27, 2010) (mem. op.). The court held that the city had to arbitrate inclement weather pay under its collective bargaining agreement because it was a dispute involving the interpretation or application of the collective bargaining agreement.

Employment: Zellers v. City of McAllen, No. 13-09-00158-CV (Tex. App.—Corpus Christi-Edinburg May 20, 2010) (mem. op.). The court held that the trial court could submit the question of whether a contract had been accepted by performance to a jury.

Declaratory Judgment: City of El Paso v. Bustillos, et al., No. 08-08-00244-CV (Tex. App.—El Paso May 19, 2010). The court held that the plaintiffs had standing to bring a declaratory judgment action because they alleged that the city violated the residents' due process and equal protection rights.

Takings: Destructors, Inc., v. City of Forest Hill, No. 2-08-440-CV (Tex. App.—Fort Worth May 13, 2010) (mem. op.). The court held that the plaintiffs had not established jurisdiction in the civil equity court in their dispute with the city's truck route ordinance because they had failed to identify an irreparable injury to a vested property right.

Attorney General Opinions of Interest to Cities
Note: Included opinions are from the period beginning on the 10th of the previous month through the 10th of the current month.

Opinion No. GA-0781 (Water Supply Corporations): Concludes that, pursuant to Subsection 13.2502(a) of the Water Code, if a water supply corporation receives a request for water service from an applicant and can document that the conditions in that subsection exist, the water supply corporation may, but is not required to, provide water service to the applicant.

You can view attorney general opinions at www.oag.state.tx.us. On the same site, you can also sign up to receive e-mail updates of opinion requests and newly released opinions.

As a supplement to TCAA News, please check the TML Legislative Update Newsletter and TML's Connect News Service .
Please contact Scott Houston, TCAA General Counsel, with your news, questions, and/or comments by e-mail at legalgovt@tml.org or by phone at 512-231-7400.
TCAA members may use the information herein for any purpose. No other person may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas City Attorneys Association.
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