Case Information
*1 TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-15-00370-CV
Rеagan National Advertising of Austin, Inc. d/b/a Reagan National Advertising, Appellant
v.
City of Austin, Texas; and Marc A. Ott, being sued in his Official Capacity, Appellees FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. D-1-GN-12-001211, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING O P I N I O N
Reagan National Advertising of Austin, Inc. d/b/a Reagan National Advertising (Reagan) sued the City of Austin and city manager Marc A. Ott, in his official capacity (collectively, the City), alleging that the City’s “billboard registration fee” amounts to an unconstitutional occupation tax against Reagan. The trial court signed a final judgment ordering that Reagan take nothing on its claims. In four issues on appeal, Reagan сontends that none of its claims were time-barred and that the trial court erred in determining that the assessment against Reagan was a proper regulatory fee. Because we conclude that a prior federal-court ruling precluded relitigation of whether the assessment was a regulatory fee or a tax and that none of Reagan’s claims are time-barred, we will reverse the trial court’s judgment and render judgment in Reagan’s favor in part and remand for the consideration of attorney’s fees.
BACKGROUND Reagan owns and operates billboards in the Austin area. The City regulates these billboards and requires them to be registered. Before amending its regulations in 2008–2009, the City assessed a “billboard registration fee” of $220 per billboard every two years (an effective rate of $110 per year). After the amendments, the City collected an assessment of $200 per billboard per year, although the City could not point to anything it had done by way of a study, budget, or survey to determine the costs associated with the City’s registration program.
In 2009, Robert Rowan, a City employee, analyzed the $200 billboard assessment. In an email sent to his superiors in November 2009, Rowan concluded that an assessment of $140 would be “a more reasonable fee” and would “close the gap between the revenue and expenditures of running this program.” Daniel Cardenas, another City employee, later conducted a study concluding that $242 per year was the proper assessment. After communicating with his superior, Cardenas raised his estimate to $352 per year. In 2012, the City lowered the assessment to $190 per year.
Reagan, under protest, paid the $200 billboard assessment each year from 2009 to 2012 and the $190 assessment each year for 2013 and 2014. In April 2010, Reagan sued the City in federal district court, Judge Lee Yeakel presiding, challenging the constitutionality of the billboard assessment. After Reagan filed suit, the City retained a consulting firm to conduct a study of the billboard assessment. This firm concluded that “the cost of service for administering the billboard registration fee is $190.” Meanwhile, Reagan retained its own consultant, who determined that the assessment should be about $43 per year.
*3
On November 30, 2011, following a bench trial, Judge Yeakel issued а final
judgment dismissing Reagan’s suit without prejudice for lack of jurisdiction. In his findings of fact
and conclusions of law, Judge Yeakel concluded that the City’s billboard assessment is a “tax” for
purposes of the Tax Injunction Act (TIA) and, therefore, the court lacked subject-matter jurisdiction
over Reagan’s suit. Under the TIA, federal courts lack subject-matter jurisdiction to “enjoin, suspend
or restrain the assessment, levy or collection of any tax under State law where a plain, speedy
and efficient remedy may be had in the courts of such State.”
See
28 U.S.C. § 1341;
Washington
v. Linebarger, Goggan, Blair, Pena & Sampson, LLP
,
On April 25, 2012, Reagan filed this suit in the Travis County district court (the trial court). At the ensuing bench trial, Reagan argued that Judge Yeakel’s determination that the billboard assessment is a tax was “res judicata” and barred relitigation of whether the assessment is a tax or a regulatory fee. Reagan further argued that, because the assessment is a tax, and because the State of Texas does not levy a tax on the outdoor advertising business, the City’s billboard assessment violates the Texas Cоnstitution by levying a tax that exceeds one half of the tax levied by the State on the same business. See Tex. Const. art. VIII, § 1(f) (“The occupation tax levied by any county, city or town for any year on persons or corporations pursuing any profession or business, shall not exceed one half of the tax levied by the State for the same period on such profession or business.”). Reagan sought a declaration under the Uniform Declaratory Judgments Act that the billboard assessment is an unconstitutional tax, damages under 42 U.S.C. § 1983 consisting of “the *4 portion of the fees paid under duress that are unconstitutionally excessive,” and attorney’s fees. The City responded that Judge Yeakel’s ruling that the assessment is a tax for purposes of the TIA does not control the question of whether the assessment is a tax under the Texas Constitution and that it is not a tax because it is reasonably related to the cost of billboard regulation. The City also argued that any claims Reagan might have arising from the assessments it paid in 2009 and 2010 were barred by the statute of limitations.
In its final judgment signed on March 31, 2015, the trial court ordered that Reagаn take nothing on its claims. The court also issued findings of fact and conclusions of law, in which it found that “[t]he activities performed for the billboard registration program are related to the program” and that “[t]he fee is based on the City’s costs for actual activities performed.” The trial court also concluded that “Judge Yeakel’s ruling based on the [TIA] is not res judicata as to this suit,” that “[t]here is a reasonable relationship between the amount of the fee and the City’s costs,” that “[t]he primary purpose of the fee, in light of the ordinancе that authorizes the fee as a whole, is for regulation,” and that “[t]he City’s fee is reasonable and constitutional.” Finally, the court concluded that “Reagan’s claims for fees paid in August of 2009 and March of 2010 are time-barred.” This appeal followed.
DISCUSSION
Statute of Limitations
In its third issue on appeal, Reagan contends that the trial court erred in concluding that claims arising from the assessments it paid in 2009 and 2010 are time-barred.
Reagan’s claims are governed by a two-year statute of limitations.
See
Tex. Civ.
Prac. & Rem. Code § 16.003(a);
Lowenberg v. City of Dall.
,
The period between the date of filing an action in a trial court and the date of a second filing of the same action in a different court suspends the running of the applicable statute of limitations for the period if: (1) because of lack of jurisdiction in the trial court where the action was first filed, the action is dismissed or the judgment is set aside or annulled in a direct proceeding; and (2) not later than the 60th day after the date the dismissal or other disposition becomes final, the action is commenced in a court of proper jurisdiction.
Tex. Civ. Prac. & Rem. Code § 16.064(a).
*6
In response, the City points out that the federal court signed its judgment dismissing
Reagan’s claims on November 30, 2011, and Reagan filed this suit on April 25, 2012, more than
60 days later. The City argues that because Reagan did not file this suit within 60 days after the
federal court signed its judgment, section 16.064 does not toll the statute of limitations and Reagan’s
claims are untimely. Whether section 16.064 tolled the statute of limitations is a question of law we
review de novo.
See Brown v. Fullenweider
,
Section 16.064’s first requirement is met because the court in which Reagan
originally filed this action dismissed the case for lack of jurisdiction.
See
Tex. Civ. Prac. & Rem.
Code § 16.064(a)(1). Therefore, we must determine whether Reagan filed its state-court action
within 60 days of the date when the federal court’s judgment “bec[ame] final.”
See id.
§ 16.064(a)(2).
As the Texas Supreme Court has recognized, whether a judgment is considered “final” depends on
the context.
See Long v. Castle Tex. Prod. Ltd. P’ship
,
The statute’s use of “becomes final” suggests that a judgment is not always final for purposes of the savings clause thе instant the judgment is signed or rendered. Otherwise, the legislature would have specifically provided that the tolling period begins on the day the first court signs the judgment. The legislature knows how to use the signing and rendition of a judgment as statutory reference points, but did not choose to do so here. [5]
*8
We need not decide in this case precisely when a federal district court’s judgment
becomes final for purposes of section 16.064, because here Reagan unquestionably refiled in state
court within the statutory timeframe. The federal court denied the City’s motion for new trial on
February 6, 2012.
See
Fed. R. Civ. P. 59(e) (“A motion to alter or amend a judgment must be filed
no later than 28 days after the entry of the judgment.”). Reagan then had 30 days in which it could
have filed a notice of appeal.
See
Fed. R. App. P. 4(a)(1)(A) (“In a civil case . . . the notice of
appeal . . . must be filed with the district clerk within 30 days after entry of the judgment or order
appealed from.”);
id.
R. 4(a)(4)(A)(v) (providing that if party timely files motion for new trial under
Rule 59, “the time to file an appeal runs for all parties from the entry of the order disposing of the
last such remaining motion”). In additiоn, Reagan still could have filed an additional motion for
relief from the federal court’s judgment under Rule 60(b).
See
Fed. R. Civ. P. 60(b), (c). We
conclude that, for the purposes of section 16.064, the federal court’s judgment dismissing Reagan’s
claims did not become final until at least 30 days from its February 6th order denying the City’s
motion for new trial.
See Oscar Renda Contracting, Inc. v. H & S Supply Co.
,
defense of limitations was without merit. The court opined that, “when dismissal by one court begins the running of a deadline to file suit in another court, it only makes sense to begin the deadline when the first court has lost plenary power. Otherwise, a litigant would be required to file suit in the second court while continuing to argue in the first court, perhaps successfully, that the action should remain there.” Nevertheless, in its findings of fact and conclusions of law, the trial court concluded, without explanation, that “Reagan’s claims for fees paid in August of 2009 and March of 2010 are time-barred.”
section 16.064 when it disposes of all issues and parties in the case
and the court’s power to alter
the judgment has ended
.”) (emphasis added);
Vale
,
Accordingly, we sustain Reagan’s third issue.
Issue Preclusion
In its first two issues, Reagan contends that the trial court erred in deciding that the federal court’s conclusion that the billboard assessment is a tax did not preclude relitigation of the issue and in holding that the assessment is a constitutional regulatory fee.
Federal law governs the preclusive effect of the federal court’s judgment in Reagan’s
subsequent state-court action.
See Jeanes v. Henderson
,
Issue preclusion applies only if four conditions are met: First, the issue under consideration in a subsequent action must be identical to the issue litigated in a prior action. Second, the issue must have been fully and vigorously litigated in the prior action. Third, the issue must have been necessary to support the judgment in the prior case. Fourth, there must be no special circumstance that would render preclusion inappropriate or unfair.
State Farm Mut. Auto. Ins. Co. v. LogistiCare Sols., LLC
,
We must begin, then, by deciding whether the federal court’s determination that the
billboard assessment is a tax under the TIA involved an issue of fact or law that is identical to the
question of whether the assessment is a tax under article VIII, section 1(f) of the Texas Constitution.
In determining whether an assessment is a tax under the TIA, federal courts consider whether the
*11
assessment is imposed: (1) by an agency or by the legislature, (2) upon those it regulates or upon the
community as a whole, and (3) for the purpose of defraying regulatory costs or for general
revenue-raising purposes.
See Neinast v. Texas
,
It is useful to begin with a look at who imposes, administers, and collects the assessment. An assessment imposed directly by a legislature is more likely to be a tax than one imposed by an administrative agency. If responsibility for administering and collecting the assessment lies with the general tax assessor, it is more likely to be a tax; if this responsibility lies with a regulatory agency, it is more likely to be a fee. But the heart of the inquiry centers on function, requiring an analysis of the purpose and ultimate use of the assessment. If the revenue is paid into the state’s (or county’s) general fund and provides a general benefit to the public, it sounds like a tax. If, on the other hand, the assessment covers only a narrow class of persons and is paid into a special fund to benefit regulated entities or defray the cost of regulation, it sounds like a fee.
Collins Holding Corp. v. Jasper Cty., S.C.
,
Here, in his findings of fact and conclusions of law, Judge Yeakel concluded that the first factor suggested that the billboard assessment is a tax because it was imposed by the City’s legislative body and that the second factor suggested that the assessment is a regulatory fee *12 because it was imposed only on billboard оwners rather than on the public at large. Turning to the third factor, Judge Yeakel noted that the billboard assessments are deposited into the City’s general-revenue fund and that the City has no separate billboard-regulatory fund. He also noted that the parties had presented conflicting evidence at trial concerning whether the assessment was revenue-neutral. Judge Yeakel then made the following findings:
In reviewing the evidence presented, the Court finds that the record lacks any indication of the City Council’s purpose for increasing the [billbоard assessment] or the circumstances surrounding the City Council’s 2008 passage of the increased amount of the [assessment]. The Court finds that the annual per billboard [assessment] of $200 was set by the City Council, is deposited into the City’s general-revenue fund, and is assessed against a narrow class of individuals, billboard owners. Further, given the conflicting evidence presented about the reasonable cost of registering billboards, the Court finds that the City’s [billboard assessment] benefits the entire community rather than only defraying the City’s reasonable cost of registering billboards .
(foоtnote omitted) (emphasis added). Finally, in a footnote, Judge Yeakel made the following statement:
Although placing all [billboard-assessment] collections in the City’s general-revenue fund does not, standing alone, compel the result that the [assessment] is a tax, it does hamper the City’s ability to present persuasive evidence that the [assessment] is not a tax. Placing the collections in the general-revenue fund creates the impression that the collections are available to fund all City programs, gives cause to question the City’s after-the-fact calculations of the cost of billboard regulation, and blurs the issue of whether the charge is used for the regulation and benefit of the billboard owners.
Judge Yeakel went on to conclude that the billboard assessment is a tax under the TIA and therefore the court lacked subject-matter jurisdiction over Reagan’s suit.
We conclude that Judge Yeakel’s determination under the third TIA factor that
the billboard assessment benefits the entire community rather than only defraying the cost of the
City’s billboard regulation is identical, for the purposеs of issue preclusion, to the question of
whether the assessment is a tax under article VIII, section 1(f) of the Texas Constitution. To determine
whether an assessment is a tax under article VIII, section 1(f), courts consider whether the primary
purpose of the assessment is for regulation or for raising revenue.
See Texas Boll Weevil Eradication
Found., Inc. v. Lewellen
,
Under the second issue-preclusion condition, we must determine whether the
issue of the assessment’s status was fully and vigorously litigated in the federal-court action. We
conclude that it was. There is no dispute that Judge Yeakel conducted a bench trial, which included
the presentation of expert testimony concerning the cost of the billboard registration program.
Accordingly, we proceed to the third issue-preclusion condition: whether the issue was necessary
to support the judgment in the prior case. Here, Judge Yeakel determined that the first two TIA
factors cut in different directions. The third factor was therefore dispositive and, indeed, it is the
“critical factor” in a TIA analysis.
See Neinast
,
Having determined that each of the four issue-preclusion conditions has been satisfied, we conclude that issue preclusion applies and that the federal court’s determinations should have precluded relitigation in the trial court of whether the billboard assessment is a tax under article VIII, section 1(f) of the Texas Constitution. We therefore sustain Reagan’s first two issues.
Because the City’s billboard assessment constitutes a tax on the outdoor advertising
business under article VIII, section 1(f), the Texas Constitution provides that it may not exceed
half of the tax levied by the State on outdoor advertising. It is undisputed that the State levies no
tax on billboards; thеrefore, the City’s billboard assessment violates the Texas Constitution. An
unconstitutional tax is void from its inception, so Reagan would ordinarily be entitled to a refund of
the entire amount it paid—an amount to which the parties stipulated.
See Wichita Cty. v. Robinson
,
CONCLUSION
Having sustained Reagan’s first, second, and third issues, we reverse the trial court’s judgment and render judgment that the billboard assessment violates the Texas Constitution and that Reagan recover $198,450.00 from the City. We also remand the cause to the trial court to determine the amount of attorney’s fees, if any, to which Reagan is entitled.
__________________________________________ Scott K. Field, Justice Before Chief Justice Rose, Justices Pemberton and Field
Reversed and Rendered in Part, Reversed and Remanded in Part
Filed: June 15, 2016
Notes
[1] Unless otherwise noted, all facts recited herein are undisputed.
[2] Although Reagan’s live pleading advanced other theories and causes of action, on appeal Reagan argues only that the billboard assessment violates article VIII, section 1(f).
[3] We address Reagan’s limitations argument first given its threshold nature.
[4]
The City relies heavily on
Ruiz v. Austin Independent School District
, No. 03-02-00798-CV,
[5] See Tex. Elec. Code § 232.014(b) (“To be timely, an appellant’s bond, affidavit, or cash deposit for costs of appeal must be made not later than the fifth day after the date the district court’s judgment in the contest is signed .”) (emphasis added); Tex. Fam. Code § 201.111(a) (providing that referring court shall take action “[n]ot later than the 10th day after the date an associate judge’s proposed order or judgment recommending a finding of contempt is signed ”) (emphasis added); id. § 201.318(b) (“the date an order or judgment by the referring court is signed is the cоntrolling date for the purposes of appeal to or request for other relief from a court of appeals or the supreme court”) (emphasis added); Tex. Fin. Code § 304.005(a) (“postjudgment interest on a money judgment of a court in this state accrues during the period beginning on the date the judgment is rendered and ending on the date the judgment is satisfied”) (emphasis added); Tex. Prop. Code § 24.0052(a) (“the tenant may appeal the judgment of the justice court by filing with the justice court, not later than the fifth day after the date the judgment is signed , a pauper’s affidavit”) (emphasis added); Tex. Tax Code § 43.04 (“If the court finds that the chief appraiser or appraisal review board failed to comply without good cause, the court shall enter an order requiring the chief appraiser or appraisal review board to comply with the deadline not later than the 10th day after the date the judgment is signed .”) (emphasis added); id. § 111.010(d) (“The state is entitled to interest at the rate of 10 percent a year
[7] $198,450.00 is the largest refund Reagan has prayed for. We express no opinion on what amount would have been a reasonable аnd constitutional billboard assessment.
[8] In its fourth issue, Reagan contends that the trial court erred in failing to award Reagan the difference between $190 per sign and the amounts Reagan actually paid in 2009–2012. Because we sustain Reagan’s other issues, we need not address this contention. Reagan’s fourth issue also contends that the trial court erred in failing to award Reagan attorney’s fees. We will remand this cause to the trial court for further consideration of whether Reagan is entitled to attorney’s fees under the Uniform Declaratory Judgments Act in light of our opinion. See Tex. Civ. Prac. & Rem. Code § 37.009.