Harris Cty. Wrecker Owners v. City of Houston

• Decision Date: 21 October 1996
• Docket Number: Civil Action No. H-95-4802.
• Citation: 943 F.Supp. 711
• Parties: HARRIS COUNTY WRECKER OWNERS FOR EQUAL OPPORTUNITY and Houston Private Wrecker Association, Plaintiffs, v. CITY OF HOUSTON, Defendant.
• Court: U.S. District Court — Southern District of Texas

943 F.Supp. 711

HARRIS COUNTY WRECKER OWNERS FOR EQUAL OPPORTUNITY and Houston Private Wrecker Association, Plaintiffs, v. CITY OF HOUSTON, Defendant.

Civil Action No. H-95-4802.

United States District Court, S.D. Texas, Houston Division.

October 21, 1996.

COPYRIGHT MATERIAL OMITTED

Jonathan E. Bruce, Houston, TX, for plaintiffs.

Gene L. Locke, James Edwin Essig, Liddell Sapp Zivley Hill and Laboon, Houston, TX, for defendant.

MEMORANDUM AND ORDER

LAKE, District Judge.

Plaintiffs, Harris County Wrecker Owners for Equal Opportunity (HCW) and Houston Private Wrecker Association (HPWA), are associations whose members tow vehicles in the City of Houston. Because their members do not possess emergency wrecker permits (E-Tags), they are restricted under the Houston Wrecker Ordinance from engaging in non-consensual towing from the scene of an accident or arrest. In this action plaintiffs contend that parts of the ordinance are invalid because they are preempted by federal law.

Pending before the court are HCW and HPWA's Motion for Summary Judgment (Docket Entry No. 9), Supplemental Motion for Summary Judgment (Docket Entry No. 25), Motion for Leave to Amend Complaint and Add Additional Plaintiffs (Docket Entry No. 38), and Motion for Permanent Injunction (Docket Entry No. 39), the City of Houston's Motion for Summary Judgment (Docket Entry No. 15) and First Amended Motion for Summary Judgment (Docket Entry No. 22), and Johnny L. Waltmon's Motion to Dismiss Houston Private Wrecker Association as Plaintiff (Docket Entry No. 27).

I. Factual and Procedural Background

The City of Houston has regulated tow truck operators for many years.¹ The current wrecker ordinance is codified as Article III, Chapter 8, Code of Ordinances of the City of Houston.² The wrecker ordinance regulates licensing, pricing, areas of operation, minimum levels of financial responsibility, storage facilities, and minimum equipment requirements.³

The wrecker ordinance establishes four categories of wrecker permits: transfer wrecker permits (T-Tags),⁴ private wrecker permits (P-Tags),⁵ emergency wrecker permits (E-Tags),⁶ and heavy-duty wrecker permits.⁷ T-Tags, P-Tags, and heavy-duty wrecker permits are issued as a matter of course upon the submission of a verified application, an application fee, and proof of financial responsibility.⁸ The approval of E-Tags, however, is limited "to service public need and convenience."⁹ E-Tag applications are only accepted once every two years, in July of odd-numbered calendar years.¹⁰ An applicant must demonstrate to the City Director of Finance and Administration that a public need and convenience exists for an additional E-Tag in the requested service area.¹¹ If an applicant makes an initial showing of public need, the applicant must appear at a hearing and present "clear, cogent and convincing evidence" that he or she is qualified for an E-Tag.¹² The director will then determine which, if any, of the E-Tags requested should be granted.¹³ Over the years competition among tow truck operators for the issuance of an E-Tag has been intense.¹⁴ In 1991, for example, 115 applicants requested 297 E-Tag permits, but only sixteen permits were issued.¹⁵ In the previous four years (1987-1990) a total of fifteen permits were issued.¹⁶

All wrecker permits for non-consensual towing (P-Tags and E-Tags) are restricted to one of five established service areas in the city.¹⁷ The wrecker ordinance sets the price of non-consensual towing at $57.00 for all tows not requiring a heavy-duty wrecker.¹⁸ If a tow requires a heavy-duty wrecker the fee is limited to $50 per hour with a minimum charge of two hours.¹⁹ A tower found in violation of any provision of the wrecker ordinance is guilty of a misdemeanor and subject to a fine of not less than $200 nor more than $500.²⁰

On January 1, 1995, section 601(c) of the Federal Aviation Administration Authorization Act (the FAAA Act) of 1994 became effective and was codified as part of the Interstate Commerce Act (the Act). The Act provided in part:

(1) General Rule. — Except as provided in paragraph[] (2) ... a State, [or] political subdivision of a State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier ... or any motor private carrier ... with respect to the transportation of property.

(2) Matters not covered. — Paragraph (1) —

(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization....

49 U.S.C. § 14501(c)(1) and (2)(A) and (B) (1996).

On October 11, 1995, plaintiffs filed this action alleging that certain provisions of the Houston wrecker ordinance are preempted by the Act. Plaintiffs requested a declaration that those provisions are illegal, an order enjoining their enforcement, and compensatory damages for the loss of business opportunity and loss of profits suffered by plaintiffs because of the continued enforcement of the challenged provisions of the wrecker ordinance.

On November 29, 1995, pursuant to an expedited briefing schedule on the issue of preemption, plaintiffs filed a motion for summary judgment requesting the court to declare Code of Ordinances §§ 8-102, 8-115(c) & (d), 8-135, 8-136, and 8-214 preempted by the Act and to enjoin their enforcement (Docket Entry No. 9). The city filed a cross-motion for summary judgment on December 29, 1995, arguing that the Act did not preempt the wrecker ordinance provisions or, alternatively, that certain of those provisions are excepted from preemption as safety regulatory measures (Docket Entry No. 15).

While these motions were pending, Congress passed the Interstate Commerce Commission (ICC) Termination Act of 1995, effective January 1, 1996. Pub.L. No. 104-88, 109 Stat. 803 (1995). As part of the termination of the ICC Congress recodified former 49 U.S.C. § 11501(h) as 49 U.S.C. § 14501(c) and amended the statute to include a new exception to preemption:

(2) Matters not covered. — Paragraph (1) —

* * * * * *

(C) does not apply to the authority of a State or a political subdivision of a State to enact or enforce a law, regulation, or other provision relating to the price of for-hire motor vehicle transportation by a tow truck, if such transportation is performed without the prior consent or authorization of the owner or operator of the motor vehicle.

49 U.S.C. § 14501(c)(2)(C).

On February 8, 1996, the court granted the parties leave to amend or supplement their pleadings, motions, and briefs, to allow them to address the import of this new law. In response plaintiffs filed their First Amended Complaint on February 21, 1996,²¹ and Supplemental Motion for Summary Judgment on March 15, 1996, arguing that newly-added § 14501(c)(2)(C) evidenced Congress's intent to preempt state and local intrastate towing regulations. Specifically, plaintiffs' supplemental motion for summary judgment requests the court to declare Code of Ordinances §§ 8-102, 8-115(c) & (d), and 8-135 through 8-142 preempted by the Act and to enjoin their enforcement. The city filed its First Amended Motion for Summary Judgment (Docket Entry No. 22) arguing that § 14501(c) does not preempt local towing regulations, that the challenged ordinances fall within the statutory exception from preemption or, alternatively, that the statute violates the Commerce Clause.

While the court was considering these motions, Johnny L. Waltmon, a non-party to this lawsuit, filed a Motion to Dismiss Houston Private Wrecker Association as Plaintiff (Docket Entry No. 27) on August 16, 1996. Waltmon argues that he organized and obtained the assumed name certificate for HPWA as a proprietorship and is the only person authorized to use that name or act on behalf of HPWA.²²

Apparently roused into action by Waltmon's filing, the Houston Automobile Wrecker Association (HAWA), whose members include Houston-area towing companies holding E-Tags, P-Tags, and heavy-duty wrecker permits, filed a Motion for Leave to File Amicus Curiae Brief (Docket Entry No. 29) on August 21, 1996. The court granted the motion on September 6, 1996 (Docket Entry No. 36). The Amicus Curiae Brief supports the challenged ordinances and also argues that HCW and HPWA have failed to show standing to sue on behalf of their individual members. Plaintiffs filed their Response to Amicus Curiae Brief (Docket Entry No. 37) on September 23, 1996. Plaintiffs also seek leave to amend the complaint and to add additional plaintiffs in order to cure any standing problems raised by Amicus Curiae.

II. Waltmon's Motion to Dismiss HPWA

Waltmon argues that he is the only person authorized to use the name HPWA or to act on its behalf. As proof, Waltmon attaches certified copies of a "Certificate of Ownership for Unincorporated Business or Profession" and a "Direct Index of Assumed Name Records," both filed with the County Clerk of Harris County, Texas, showing that Waltmon is the owner of HPWA.²³ Plaintiffs respond that the motion to dismiss should be denied and attorney's fees be awarded to plaintiffs because Waltmon has not been joined by any party or intervened in this suit and has filed the pending motion solely for purposes of delay and harassment. Because Waltmon has not been joined as a party to this action and has not properly intervened under Fed.R.Civ.P. 24 he has no standing to file any pleadings in this case. Accordingly, the motion to dismiss will be denied. However, because the court is not satisfied that Waltmon's motion was filed solely for purposes of delay and harassment the plaintiffs' request for attorney's fees...