TCAA NEWS
(Volume 5, Issue 9—October/November 2010)
"Your Source for Information About the Texas City Attorneys Association"
News and Updates

Speakers needed for TCAA’s 2011 South Padre Conference to be held on June 8-10, 2011: Please submit your ideas by e-mail to shouston@tml.org by December 31, 2010.

2011 Riley Fletcher Basic Municipal Law Seminar to be held in Austin: The Twelfth Annual Riley Fletcher Basic Municipal Law Seminar will be held in Austin on February 18, 2011. Details are forthcoming!

TCAA will provide ten $500 scholarships to the seminar for in-house city or assistant city attorneys only. Five will be from the eight largest cities (Arlington, Austin, Corpus Christi, Dallas, El Paso, Fort Worth, Houston, or San Antonio), and five will be from the remaining cities. The winners will be drawn from lots, and there can be only one winner per city. The deadline to apply for the drawing is FRIDAY, DECEMBER 17, 2010, AT NOON. If you wish to submit your name for the drawing, please send an e-mail to J.J. Rocha at jj@tml.org. Include your name, position, city, address, phone number, and e-mail address.

Congratulations to New TCAA Board Member Sylvia Firth, Senior Assistant City Attorney, El Paso: Also, special thanks to Jonathan Graham, City Attorney, Temple, for his outstanding past service on the TCAA Board. For a complete list of board members, please visit www.texascityattorneys.org.

Eighty-Second Legislative Session Begins Soon: Pre-filing of bills has already begun. Keep current by reviewing the Texas Municipal League’s Legislative Update, which includes a short summary of most city-related legislation that is filed, as well as articles and other updates on items of interest. View the update at www.tml.org by clicking on “Legislative.”

TCAA Fall Seminar: The TCAA Fall Seminar in conjunction with the TML Annual Conference was held on October 28, 2010, in Corpus Christi. Thanks to all of our volunteer speakers! Speaker materials and information on CLE reporting can be found under the “Seminar Materials” link at www.texascityattorneys.org.

FREE CLE! The 2010 TCAA Summer Conference Available Online: TCAA Online Seminars is a FREE SERVICE that allows TCAA members who are city attorneys, assistant city attorneys, or attorneys who regularly practice municipal law to 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. To view available seminars, please go to www.tcaaseminars.org. Use the password “FreeCLE” to gain access to the sessions.

Attention, Municipal Court Prosecutors! The U.S. Department of Justice recently approved the Texas Higher Education Coordinating Board’s application for a $701,233 grant to fund the John R. Justice Loan Repayment Program. The funds will be distributed equally between the pool of eligible prosecutor applicants and the pool of eligible public defender applications. For more information, go to www.tdcaa.com/node/7514.

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

Employee Rights: City of Round Rock and Fire Chief Larry Hodge v. Rodriguez and Round Rock Fire Fighters Association, 10-0666 (Tex. 2010). The issue in this case is whether a city employee has the right to have a representative at an investigatory interview under Labor Code Section 101.001. Section 101.001 of the Labor Code provides to employees the right to associate in order to protect their employment. Other statutes involving public employees and their labor rights are found in the Local Government and Government Codes. Those statutes regulate the ability of public employees to protect their employment, to associate through collective bargaining, civil service, specific discipline procedures, and other associational rights. The rights specified in the statutes specific to public employers conflict with those provided by the Labor Code Section 101.001. The Amici argued that the public employer statutes should prevail over the general Labor Code provisions that are applicable to all employees. TML, TCAA, the Texas Association of School Boards, and the Texas Association of Counties filed the amicus brief on October 25, 2010.

Recent Federal Cases of Interest to Cities

Judicial Estoppel – Entitlement to Preexisting Judgment – Claims Concealed from Bankruptcy Court Reed v. City of Arlington, No. 08-11098, 2010 WL 3585375 (5th Cir. Sept. 16, 2010). In 2004, Lubke, formerly a firefighter for the City of Arlington, Texas, obtained a large verdict (a total judgment of over $1 million) against the City of Arlington in his lawsuit pursuant to the Family Medical Leave Act. While the city’s appeal to the Fifth Circuit was pending, Lubke and his wife filed a Chapter 7 bankruptcy case without advising their lawyer in the FMLA case that they were doing so. Lubke omitted to include the pending $1 million-plus judgment from his sworn statements and bankruptcy filings, and also omitted several other items of nonexempt property that could have been available for distribution to his creditors (including his ownership of five goats). As a result, the bankruptcy court deemed their case a no-asset case, the Lubkes were discharged from their debts of approximately $300,000, and their trustee, Reed, closed the case. Without knowing of the bankruptcy, the Fifth Circuit affirmed the verdict against the city but remanded the case for a recalculation of the damages. When the city later offered Lubke a Rule 68 judgment for $580,000, his counsel learned of the bankruptcy and informed Reed. Reed and Lubke agreed to seek reopening of the Chapter 7 case, and the bankruptcy court revoked Lubke’s discharge on a motion that, by agreement with Reed, did not contain findings of fraud.

The city had petitioned for a rehearing of the lawsuit, and now argued that Lubke should be judicially estopped from collecting on his judgment against the city. (Judicial estoppel prevented a party from asserting a claim in a legal proceeding that was inconsistent with a claim taken by that party in a previous proceeding.) The district court, dealing with the matter on remand, reduced the damages in accordance with the panel’s instructions on remand, and, despite finding that Lubke‘s recovery must be judicially estopped, declined to find estoppel as against the trustee, Reed. However, it ordered the city to pay the entire FMLA judgment to Reed and, concerned that Lubke would benefit from any remaining funds not disbursed to creditors, the court ordered that any remaining funds be returned to the city.

The Fifth Circuit was faced with the issue of whether judicial estoppel should prevent not only Lubke but his bankruptcy trustee from collecting the judgment against the city. It concluded that, to protect the integrity of judicial processes, judicial estoppel barred Reed, too, from collecting the judgment. The district court’s ?novel approach was an erroneous application of the governing legal principles and constituted an abuse of discretion. Judicial estoppel remained applicable to litigation claims that were undisclosed in bankruptcy, and here, it was undisputed that Lubke repeatedly misrepresented his assets and concealed from the trustee, the creditors, and the court, through actions that were far from inadvertent. Although Reed was not part of this conduct, she succeeded to the debtor’s claim with all its attributes, including the potential for judicial estoppel. Further, the harm to the city was a factor. It was possible that the city had been victimized by the non-disclosure of his bankruptcy, and Lubke’s concealment of the judgment in bankruptcy court created numerous complications that had dramatically increased the fees charged by Reed, and cost the city and its taxpayers far more than they would have had to bear because of an ordinary appeal. Equity did not support further continuation of this litigation, and both Lubke and Reed were judicially estopped from pursuing it. See http://www.ca5.uscourts.gov/opinions/pub/08/08-11098-CV0.wpd.pdf

Section 1983 – Marches and Parades – Permits and Other Conditions – “Sponsorship” and Selective Waivers of Fees Upheld. Internat’l Women’s Day March Planning Comm. v. San Antonio, No. 09-50692, 2010 WL 3491532 (5th Cir. Sept. 08, 2010). In 2007, the City of San Antonio enacted a parade and procession ordinance that was challenged by the Free Speech Coalition and the International Women’s Day March Planning Committee. The district court issued a preliminary injunction, finding that there was a substantial likelihood that certain aspects of the 2007 ordinance were unconstitutional (excessive discretion of the police in assessing fees, an exemption of funeral processions and government agencies from its permit scheme, and others), but that court upheld certain other aspects (the waiver of fees for certain events). In 2008, the city amended the permitting scheme to take into account the ruling and adopted a new ordinance. A permit was still required, and permit holders were required to reimburse the city for the cost of clean-up and security, with an exception for some First Amendment processions, that had as their sole or principal object expressive and associative activity protected by the U.S. and Texas Constitutions. For these, the city provided a $3,000 subsidy, so that the organizers paid only for expenses above that amount. For three events — the Diez Y Seis Parade, the Martin Luther King March, and the Veterans’ Day Parade — the city agreed to pay all of the traffic and clean-up costs because of the events’ broad appeal, historic tradition, and cultural significance, and made waivers possible for other events. The city had also adopted a 13-page document providing additional guidance to police officers regarding San Antonio’s permit scheme.

The two groups challenged the new ordinance, claiming that the imposition of fees on the organizers of marches, as a means of ensuring that march organizers paid for the expenses of providing traffic control and cleanup for their events, and a selective exemption of certain events from payment of these fees, were unconstitutional. The payment of traffic control expenses for certain processions but not others, they said, showed that the city was engaging in impermissible content or viewpoint-based discrimination. In response, the city defended its waivers by claiming that its financial support for particular events constituted government speech, which was exempt from First Amendment scrutiny. The district court lifted the preliminary injunction and granted summary judgment for the city, suggesting that the amendments had cured any constitutional infirmities the ordinance may once have had. The groups appealed. The Fifth Circuit affirmed, in a decision that was limited to a facial challenge only.

Although the city had not shown that its financial support for certain events was government speech, the court found the city could selectively subsidize some processions and not others, as this was not engaging in viewpoint discrimination. Even assuming that processions could, in some circumstances, qualify as government speech, the city failed to show that its procession sponsorship was such speech in the absence of any evidence that the city exercised any control over the messages conveyed at its sponsored events, other than endorsing the general message of each event through its provision of financial support. For sponsorship to qualify as government speech, a municipality was required, at the very least, to make some bare showing of organizational or planning involvement in a procession beyond the provision of financing. Nonetheless, the opposite did not automatically apply: the city did not engage in viewpoint discrimination in subsidizing the private speech of its choice, provided that it did not discriminate invidiously in its subsidies in such a way as to aim at the suppression of dangerous ideas, or leverage the subsidies into a penalty on disfavored viewpoints.

San Antonio’s provision of financial support for certain processions did not demonstrate that it had any animus against the viewpoints expressed by the plaintiff groups. [I]n our view, public fora need not be a subsidy-free zone. When a municipality imposes reasonable user fees controlling access to public fora, it does not lose its ability to provide financial support for community events held in its public fora.

Dealing with the ability to waive fees for other events on occasion (besides those specified in the ordinance), the court held that should this arise, this was more closely an exercise of the city council’s legislative authority than a specific licensing decision, and was permissible as long as the council did not exempt so many events to create concerns about viewpoint discrimination. Lastly, the ordinance was narrowly tailored to serve a significant governmental interest and left open ample alternatives for communication. The selective fee waivers did not deprive the ordinance of the narrow tailoring necessary to sustain its constitutionality— San Antonio need not recoup all its traffic control expenses for its fees to be narrowly tailored. See http://www.ca5.uscourts.gov/opinions/pub/09/09-50692-CV0.wpd.pdf

Recent Texas Cases of Interest to Cities

Whistleblower Act: City of Elsa v. Joel Homer Gonzalez,No. 09-0834 (Tex. Oct. 1, 2010) (per curiam). Gonzalez’s Whistleblower Act claim was not valid because reporting an Open Meetings Act violation of the city council to the city council was not reporting to an “appropriate law enforcement authority” under Texas law.

Civil Service: Matthew Cooke, et al. v. City of Alice,No. 04-09-00731-CV (Tex. App.—San Antonio Sept. 29, 2010). A city’s civil service rules that define a “day” as eight hours do not violate or conflict with Texas civil service statutes, Texas Local Government Code §§ 143.045; 143.046, because “day” is not defined in those statutes.

Nuisance: City of Waco v. Tex. Comm’n on Envtl. Quality,No. 03-09-00005-CV (Tex. App.—Austin Sept. 17, 2010). In this case, a dairy applied for a major amendment to its concentrated animal feeding operation (CAFO) permit from the Texas Commission on Environmental Quality (TCEQ) in order to expand its operation. The City of Waco sought a contested case hearing to oppose the application, arguing that an expansion of the operation and the subsequent increase in discharge into a nearby river would affect water quality in Lake Waco, the city’s water source. TCEQ denied the city’s request, stating that the city was not an “affected party” under the definition in the 30 Texas Administrative Code Section 55.203 and therefore did not have the ability to request a contested case hearing. The city appealed, arguing that because it would be potentially harmed by the agency action, it met the definition of an affected party. The trial court upheld the TCEQ’s denial. The court of appeals reviewed the trial court’s ruling based on a substantial evidence standard. It found that there was substantial evidence presented to uphold the trial court’s ruling. Further, it found that the city was given adequate opportunities to be heard to satisfy due process. One judge dissented because TCEQ had declared the water body where the dairy would be discharging as an “impaired water body” in order to permit more public input on major permit amendments. With that in mind, the dissent argued, TCEQ should have at the very least referred the question of whether the city was an “affected party” to the State Office of Administrative Hearings, as authorized under Texas Water Code Section 5.115(a) and 30 Texas Administrative Code Section 55.211.

Workers Compensation: City of Beaumont v. Tracy A. O’Quinn,No. 09-09-00448-CV (Tex. App.—Beaumont Sept. 16, 2010) (mem. op.). The court of appeals held that there was legally insufficient evidence that the employee’s gastritis was caused by his compensable injury, and thus the gastritis was not compensable under workers compensation.

Governmental Immunity: Gatesco Q.M., LTD., v. City of Houston, et al., No. 14-09-00176-CV (Tex. App.— Houston [14th Dist.] Oct. 28, 2010). In this case, the owner of an apartment complex sought declaratory and injunctive relief against the City of Houston, which provided water service to the complex. Gatesco was charged a late fee of over $1,000 and was then required to pay a deposit of $3,000 to reinstate water service to the complex. Gatesco claimed that it had exhausted all administrative remedies after being denied relief by a hearing examiner at the city on both issues, and filed suit. The city filed a plea to the jurisdiction based primarily on governmental immunity. The trial court granted the city’s plea, and Gatesco appealed.

Before the district court, the city argued that Texas Water Code Sections 13.042(a) and (d) state that a city’s governing body has exclusive original jurisdiction over “all water and sewer utility rates, operations, and services provided by a water and sewer utility within its corporate limits” and that the Texas Commission on Environmental Quality has exclusive appellate jurisdiction to review the governing body’s rulings. The statute, the city argued, deprived the courts of subject-matter jurisdiction over Gatesco’s claims. The court, choosing not to follow three existing court of appeals’ opinions, disagreed. The court held that Texas Water Code Section 13.002(23) specifically excludes cities from the definition of “water and sewer utility.” Thus, the statute did not deprive the court of subject-matter jurisdiction.

The court also remanded several claims brought under the Texas Constitution, including a claim that the late fee was an excessive fine and an unlawful tax, holding that because the requests for relief were based on alleged constitutional violations, Gatesco had sufficiently pleaded a waiver of governmental immunity. Gatesco also claimed alleged due process and equal protection violations based on the late fee and deposit, but due to a failure by Gatesco to allege a life, liberty, or property interest issue and the city’s subsequent failure to assert the defect in its plea to the jurisdiction, the court held that it was appropriate to remand and give Gatesco an opportunity to amend its pleadings.

Dangerous Buildings: Edward Slavin, et al., v. City of San Antonio, No. 04-09-00601-CV (Tex. App.—San Antonio Oct. 27, 2010). The City of San Antonio’s Dangerous Structure Determination Board (Board) issued a repair and demolition order for two properties. One property was owned by Edward Slavin, Jr. and Shelia Slavin (the Slavins), and the other was owned by Edward Slavin, Sr. The Board’s determination was appealed to district court, and the district court remanded consideration of Edward Slavin, Sr.’s property back to the board while affirming the order as to the Slavins. The Slavins appealed the district court’s decision on the grounds that they were improperly denied the opportunity to conduct discovery and offer evidence on the issue of whether their due process rights were violated by the Board. The city appealed the district court’s decision as to the Edward Slavin, Sr. property, arguing that the issue was improperly remanded.

On appeal, the Slavins contended that the district court improperly denied them the ability to enter evidence of the Board’s unfair practices into the record. Relying on a footnote in a previous opinion issued by the San Antonio Court of Appeals, the Slavins contended that although a “pure substantial evidence” review was appropriate, the court was also permitted to consider whether proceedings before the board satisfied due process. See Perkins v. City of San Antonio, 293 S.W.3d 650, 654 n. 2 (Tex. App.—San Antonio 2009, no pet.). According to the court, the Slavins’ allegation that their due process rights were violated was not the type of claim envisioned by the Perkins opinion. Because the record from the hearing before the Board did not indicate a due process violation, the trial court did not err in refusing to allow the Slavins to enter additional evidence into the record.

The city argued on appeal that the district court improperly remanded consideration of the order for Edward Slavin, Sr.’s property back to the Board. At issue was the sufficiency of the notice provided to Slavin Sr. regarding the initial hearing before the Board. The city mailed notice to Slavin Sr., but did not receive any indication that personal service on Slavin Sr. could not be obtained. Local Government Code Section 54.035(f) provides that:

When a municipality mails a notice in accordance with this section to a property owner, lienholder, or registered agent and the United States Postal Service returns the notice as ‘refused’ or ‘unclaimed,’ the validity of the notice is not affected, and the notice is considered delivered.

The court held in this case that because the city did not receive confirmation from the postal service that the notice was unclaimed until after the initial hearing, the city did not establish the validity of the notice. Therefore, the district court did not err in remanding Slavin Sr.’s case to the Board. The court of appeals overruled all issues on appeal and affirmed the trial court’s judgment.

Eminent Domain: City of San Antonio v. Kopplow Development, Inc., No. 04-09-00403-CV (Tex. App.—San Antonio Nov. 3, 2010). The court of appeals denied the property owner’s request for remainder damages under Texas Property Code Section 21.042 because the owner produced insufficient evidence that the part of the property that was taken lowered the value of the remainder of her property. The court also held that the property owner’s inverse condemnation cause of action was premature because flooding has to be repeated to amount to a physical taking.

Nuisance: Pick-Up Poker, Inc., v. City of Dallas, et al.,No. 05-09-00562-CV (Tex. App.— Dallas Oct. 28, 2010) (mem. op.). The court of appeals upheld the trial court’s ruling granting the city’s plea to the jurisdiction. Pick-Up Poker did not attack all the city’s grounds for the plea where the trial court had multiple grounds on which it could base the plea, but did not state the grounds on which it granted the plea.

Employment: Robert Wood v. City of Flatonia, No. 03-09-00495-CV (Tex. App.—Austin Oct. 21, 2010) (mem. op.). The court of appeals affirmed the trial court’s judgment for the city because there was at least a scintilla of evidence that the contract put forward by the city was the final contract between the city and Mr. Wood.

Governmental Immunity: City of Alton v. City of Mission, No. 13-08-00582-CV (Tex. App.—Corpus Christi-Edinburg Oct. 14, 2010) (mem. op.). The court of appeals held that the city did not have immunity from suit where the underlying cause of action was a permissible declaratory judgment action that also asked for attorneys’ fees and costs.

Attorneys Fees: Ray E. Gilbert v. City of El Paso, et al., No. 08-08-00282-CV (Tex. App.—El Paso Oct. 13, 2010). The court of appeals deleted the award of appellate attorneys’ fees from the trial court’s judgment because: (1) appellate attorneys fees must be conditioned on an unsuccessful appeal; and (2) there was insufficient evidence presented on the amount of the attorneys fees.

Employment: Juan Carlos Solis, et al., v. City of Eagle Pass, No. 04-09-00658-CV (Tex. App.—San Antonio Oct. 13, 2010) (mem. op.). The court of appeals held that no employment contract was created by the city’s personnel policy, which included termination for “just cause.” The city manager had discretion to determine “just cause,” and the policies did not create a specific agreement that would curtail the city’s right to terminate an employee.

Attorney General Opinions of Interest to Cities

Opinion No. GA-0808 (Dual Office Holding): Concludes that a member of the board of trustees of an independent school district may not simultaneously serve as mayor of a type A general law municipality that is located wholly within the geographical boundaries of the school district.

Opinion No. GA-0805 (Residence Appraisals): Concludes that the calculation of the 2010 appraised value of a residence homestead damaged by Hurricane Ike in 2008 and renovated to its pre-storm status is determined by Section 23.23(f) of the Tax Code so long as the structure was “rendered uninhabitable or unusable.” If the structure was not rendered uninhabitable or unusable, calculation of the 2010 appraised value is dependent upon whether the renovations may reasonably be said to constitute a mere “repair” or a “new improvement” under Section 23.23(e). If the structure was rendered uninhabitable or unusable, calculation of the 2010 appraised value is dependent upon the appraised value the property would have had in 2009 but for the storm damage, together with the market value of all new improvements to the property as described by subdivision (f)(2).

Opinion No. GA-0806: Concludes that a court would likely hold that pursuant to Election Code Section 41.0052, a school district may change the date on which it holds its general election for officers to the November uniform election date and adjust the terms of office to conform to the new election date on or before December 31, 2010.

Opinion No. GA-0812 (Eight Liners): Concludes that Texas courts have repeatedly considered the legal status of eight-liner machines that award gift certificates redeemable at retail establishments or tickets redeemable for further play and have determined that those machines are gambling devices and do not meet the requirements for exclusion under Subsection 47.01(4)(B) of the Penal Code. Similarly, a device that awards bingo cards or paper, card-minding devices and pull-tab bingo, or gift certificates redeemable for the same, is not rewarding the player exclusively with “noncash merchandise prizes, toys, or novelties,” under Subsection 47.01(4)(B) of the Penal Code.

Opinion No. GA-0811 (Professional Fee Exemption): Concludes that, because the Brazos River Authority is, in its enabling legislation, designated a municipality, a court would conclude that the River Authority is a municipal government for purposes of Occupations Code Subsection 901.410(1). Accordingly, an employee of the River Authority who holds a license under the Texas Public Accountancy Act and otherwise qualifies for the exemption is exempt from the professional fees imposed under Occupations Code Sections 901.406 and 901.407.

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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