City’s billboard registration fee determined to be unconstitutional tax

Reagan National Advertising of Austin, Inc. d/b/a Reagan National Advertising v. City of Austin, Texas; and Marc A. Ott, being sued in his Official Capacity 03-15-00370-CV (Tex. App.- Austin, June 15, 2016)

This is a case to determine whether a billboard registration fee was a unconstitutional tax. The court held the fee was an fact a tax and unconstitutional.

Reagon owns and operates various billboards subject to the City’s registration requirements. The City raised the registration fee from $110 per year to $200 per year but had no studies or surveys to support the increase. Afterwards, several City employees conducted surveys and determined the costs could be covered in a range from $140 per year to $352, although Reagan had an expert opinion noting the proper costs should be closer to $42 per year. Reagon sued in federal court. However, the federal judge determined that since the fee actually qualified as a “tax” the federal court lacked jurisdiction to rule on a state tax under the Tax Injunction Act. After the federal judge dismissed the case, Reagon sued in state court. After a bench trial the trial court dismissed Reagon’s claims and Reagon appealed.

The first issue addressed was whether Reagon was precluded by the statute of limitations to bring suit. The Court of Appeals held under Tex. Civ. Prac. & Rem. Code Sec. 16.064 Reagon filed suit 60 days after the federal judgment “became final.” While the federal court signed the judgment in 2011, the City’s motion for new trial extended the deadline to determine finality. Once the motion for new trial was denied, the judgment became final 30 days afterwards, which then started the 60 day deadline (i.e 90 days after motion for new trial is denied). Therefore the limitations is tolled. Next the court determined that since the federal judge had to make a determination as a matter of law that the registration fee was a tax in order to determine jurisdiction, that issue was fully and vigorously litigated in federal court. Therefore, the state court is precluded by res judicata from reconsidering that issue. And since no statute authorizes such a tax, the tax is unconstitutional.

To read the opinion click here. Panel consists of Chief Justice Rose, Justice Pemberton and Justice Field. Justice Field issued the Memorandum Opinion. Attorney for Marc A. Ott, being sued in his Official Capacity is Ms. Patricia L. Link. Attorneys for Reagan National Advertising of Austin, Inc. d/b/a Reagan National Advertising are Ms. Elizabeth Von Kreisler, Mr. B. Russell Horton and Ms. Taline Manassian. Attorneys for the City of Austin are Mr. Henry Gray Laird III and Ms. Patricia L. Link.