December 2015 - Issue 46

Year-End Message

Liability Insurance as a Requirement for Permit or License

Parks and Recreation Academy

Spotlight on Disability Access Consultants

AB 1146 Skateboard Parks

Supreme Court Takes Broad View of Design Immunity

News: Worthy

Year-End Message

by Jonathan Shull, CEO

In 2015, the Authority continued to move forward as a leader in the pooling industry.  In keeping with its core values: Integrity, Excellence, Innovation, and Teamwork, the Authority has expanded its services to members and continues to keep technology in the forefront of all we do.  

Authority staff has been working on the development of a new Excess Liability Coverage Program to provide new or existing members with an alternative to the primary liability coverage program currently offered.  The new excess pool will have a different funding structure, allowing for greater flexibility and customization of risk retention at the member level.  It will offer options for member self-insured retentions, access to training and risk management services, and an optimized memorandum of coverage. The program is designed to retain existing members while attracting good prospective members that will make the Authority even stronger. We are looking forward to the program’s inaugural coverage period beginning July 1, 2016.

Three new programs were also launched in 2015 for the membership: the Risk Technician Program; Sidewalk Inspection and Repair Program; and the Americans with Disabilities Act Assistance Program.  The Risk Technician Program provides temporary risk management staffing on-site at member locations for short-term assignments.  The risk technicians function as an extension of the members’ staff to carry out various risk management related tasks.  The Sidewalk Inspection and Repair pilot program was launched to member agencies with the most notable claims history addressing slip and trip hazards. While the pilot program is currently only available to ten members, the entire membership has access to a master services agreement with preferred pricing between the Authority and Precision Concrete Cutting for services in their own jurisdiction.  Lastly, the Americans with Disabilities Act Assistance Program helps members in the most critical areas of ADA compliance, including self-assessments and assisting in the development of transition plans for barrier removal.  The Executive Committee approved $5 million in short-term loan funds available to the members as seed money funding capital improvements related to ADA compliance.

On the technology front, the Authority implemented a learning management system (LMS) to replace an older training management system.  The new LMS is enjoying broad use and acceptance in conjunction with ongoing website enhancements.  It allows members easier access to important training programs and services.  
 
Two new members joined the pool in 2015, Big Bear Fire Authority and the City of Monrovia.  Big Bear Fire Authority provides fire and medical services for the City of Big Bear Lake and the Big Bear City Community Services District and other communities in the Big Bear region.  The City of Monrovia is a full-service city located in the San Gabriel Valley, with its own fire and police department.
 
The 20th Annual Risk Management Educational Forum, Managing Risk Like a Champion, was held in San Francisco in September.  Once again, it was the Authority’s marquee training event for members.  With an inspirational keynote presentation by former Major League pitcher, Dave Dravecky and the Authority’s panel of subject matter experts presenting the most relevant topics facing public entities today, the event reached record attendance for this venue with over 300 participants. 

The Authority welcomed two new Executive Committee members and two new staff members in 2015.  Tom Chavez, Mayor of the City of Temple City and Sonny Santa Ines, Council Member of the City of Bellflower became members of the Committee in March and December respectively.  Office Assistant, Lyndsie Buskirk joined the Authority staff in July, supporting the executive and administration divisions.  Abraham Han is the Authority’s newest Administrative Analyst in the risk management division.  Abraham will assist in development of loss control and risk management policies and serve as a technical resource for the Authority’s risk managers. 
   
Thank you for your continued support of the California JPIA.  We wish you a very happy holiday season and New Year.


News: Worthy

Liability Insurance as a Requirement for Permit or License

By John Barber, Partner with the Law Offices of Barber and Bauermeister

This article discusses the validity of municipal regulations that require liability insurance as a condition for obtaining business licenses and permits. 

Overview of the Law

Municipal licensing and permitting is a device commonly used for generation of revenue and enforcement of police power regulations.[1] Exercise of the police power must be reasonably related to a legitimate governmental purpose[2], and the regulation must be reasonably based on wisdom and necessity[3].

Under the Supremacy Clause of the U.S. Constitution, state and local laws that interfere or conflict with federal law are “preempted” and invalid.[4] This doctrine is referred to as the federal preemption doctrine. Federal law may preempt a state or local law in one of two ways: (1) Congress demonstrates its intent to occupy the field of regulation and supplant state or local authority; or (2) state or local law conflicts with federal law by making it impossible to comply with federal law or by creating an obstacle to the goal of the federal law.

A city may not enact local laws that conflict with state laws.[5] Local legislation that conflicts with the general laws of the state is void.[6] A local law conflicts with state law if it duplicates, contradicts, or enters a field which has been fully occupied by state law, whether expressly or by legislative implication.[7]

However, the mere fact that the state, in the exercise of its police power, has enacted certain regulations does not prohibit a municipality from imposing additional requirements. So long as no conflict exists between the two, the requirements of the municipal ordinance are not unreasonable or discriminatory, and the state has not preempted the field, both will stand.[8]

With these broad concepts in mind, it becomes clear that some liability insurance ordinances will pass muster, while others will not. It depends on whether the ordinance serves a legitimate governmental purpose and whether the subject matter has been preempted by federal or state law. There is no “one size fits all”.

Application of the Law:

(a) Does the ordinance serve a legitimate governmental purpose?

With certain exceptions, cities may license, for revenue and regulation, every kind of lawful business transacted in the city.[9]

(b) Is the ordinance preempted by federal or state law?

In the absence of preemption, local governments may enact laws, even on matters that overlap federal or state laws. Such enactments must be under some identified source of local authority such as police power, statute, or charter.

Sample case #1[10]: A city ordinance required ambulance services to maintain liability insurance and required advance notice to the city of any modification of the insurance policy. Ajax Ambulance Company obtained a liability policy and provided a copy of the policy to the city. During the policy period, company ambulance driver Dan lost his driver’s license and the company signed a “driver exclusion” endorsement excluding Dan from coverage under the policy. The company failed to give notice to the city of this policy modification. Dan thereafter injured Jane in a motor vehicle accident while in the course and scope of his employment. Jane sued the ambulance company. The company’s insurer denied coverage under the exclusion, and argued that insurance companies are governed exclusively by state law which expressly allows a driver exclusion, and therefore the exclusion nullified the compulsory insurance provision of the city’s ordinance.

In this sample case #1, the court would hold that the preemption doctrine does not apply because although ambulance services are regulated and licensed by the state through the California Highway Patrol, the Vehicle Code explicitly authorizes local governments to adopt more restrictive regulations of ambulance services. In this sample case, it is clear that the field is not preempted because state statute explicitly provides that local governments have leeway to enact ordinances that are even more restrictive than state law.

Sample case #2: A city ordinance required a limousine service company to maintain liability insurance. The company, which was neither domiciled nor had an office in the city, disregarded the city ordinance.

In this sample case #2, the court would hold that state law preempted the local ordinance because the California Public Utilities Commission (PUC) regulates the operators of charter-party carriers, which are defined as every person engaged in the transportation of persons by motor vehicle for compensation[11], and the limousine service company was neither domiciled nor had an office in the city.

Several types of transportation services, such as taxicab services that are licensed and regulated by a city and incidental ride sharing, are excluded from the definition of “charter-party carriers”.[12] The primary difference between charter-party carriers, e.g., limousine and other hired car services) and taxicabs is that charter-party carriers operate exclusively on a “prearranged” basis, e.g., the transportation must be arranged in advance either by written contract or by telephone. [13] Taxicabs, on the other hand, may accept hails from the curb. Another difference is that charter-party carriers must carry a waybill or trip report documenting their travel arrangements[14], while taxicabs do not.

Cities have limited authority to regulate charter-party carriers, e.g., limousine services. Cities may require permits and impose reasonable rules and regulations from limousine services operating limousines that are domiciled in, or maintain a business office in, the city or that operate limousines at municipally owned airports.[15] 

Sample case #3[16]: Street vendors sued a city alleging a city ordinance banning street venders from parking their vehicles on public streets in residential areas violated the Vehicle Code. The vendors argued that the ordinance infringed on an area of statewide concern, and that it was preempted by the California Vehicle Code. The vendors argued that the state legislature had amended the Vehicle Code by deleting the sentence, “An ordinance or resolution … may prohibit vending from a vehicle upon a street”, and that this was evidence that the state legislature had withdrawn its express authorization to local governments to prohibit street vending from vehicles in residential areas and that while cities were still free to regulate that activity, they were no longer entitled to ban it.

In this sample case #3, the court would hold that the vendors were correct and that it has long been presumed that the Legislature by deleting an express provision of a statute intended a substantial change in the law.

Sample case #4:  A mobile park corporate owner planned to install a two-story mobile home in violation of a city’s ordinance restricting height of mobile homes to one story. The corporate owner alleged that the ordinance was preempted by the California Mobilehome Parks Act[17].

In this sample case #4, the court would hold that state law preempted the local ordinance because the goal of the Mobilehome Parks Act was to promote uniformity in mobilehome construction and installation standards impliedly demonstrated that California fully occupies the area of mobilehome regulation. The court would hold that the goal of uniformity can only be achieved through occupation of the field, alleviating variances in local regulation.

The moral of the story here is that a local ordinance that requires liability insurance as a condition for obtaining business licenses and permits must be scrutinized to determine whether the field has been preempted by state or federal law. If the field has not been preempted, the local government is free to enact such an ordinance, but as indicated below, not necessarily an ordinance that requires the applicant to provide insurance for the local government’s own conduct.

(c) Can local government require a business to provide insurance against the conduct of the local government?

In general, an ordinance that requires a business to insure a city by way of an additional insured endorsement for vicarious liability arising out of the conduct of the business is valid, assuming it has a legitimate governmental purpose and is not preempted by federal or state law.

However, an ordinance that requires a business to insure a city for liability arising out of the city’s own tortious conduct by way of a public liability insurance or additional insured endorsement is probably invalid.  The correct course is for the city to insure itself against liability for its own tortious conduct, and then pass on the costs of such “management” and “maintenance” to those benefiting from the program by charging a permit fee.[18]

Conclusion

If a city wants an ordinance that requires liability insurance as a condition for issuance of a business license or permit to withstand a legal challenge, the city would do well to consider the following factors:

  1. Does the ordinance relate to a legitimate governmental purpose?
  2. Is the ordinance reasonably wise and necessary?
  3. Does the ordinance purport to regulate a field that is preempted by federal or state law?
  4. Does the ordinance seek to protect the city from its own tortious conduct, and not just the tortious conduct of the licensee or permittee?
In most instances, factor #3 [preemption] is probably best left to a city attorney to address.

[1] McQuillin, Municipal Corporations §26.22 (3d ed 1988)
[2] Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 159
[3] Consolidated Rock Products Company v. City of Los Angeles (1962) 57 Cal.2d 515, 522
[4] U.S. Const. art VI, cl 2
[5] Cal. Const. art XI, §7
[6] Cohen v. Board of Supervisors (1985) 40 C.3d 277, 290
[7] California Fed. Sav. & Loan Ass’n v. City of Los Angeles (1991) 54 C.3d 1
[8] Calif. Rifle & Pistol Ass’n, Inc. v. City of W. Hollywood (1998) 66 C.A.4th 1302
[9] West Coast Adver. Co. v. City & County of San Francisco (1939) 14 C.2d 516
[10] This sample case is patterned on Empire Fire and Marine Insurance Co. v. Bell (1997) 55 C.A.4th 1410
[11] Pub. Util. C. §5360
[12] Pub. Util. C. §5353
[13] Pub. Util. C. §5360.5
[14] Pub. Util. C. §5381.5
[15] Pub. Util. C. §5371.4
[16] This sample case is patterned on Barajas v. City of Anaheim (1993) 15 C.A.4th 1808
[17] Health and Safety Code §18300 et seq.
[18] 63 Ops. Cal. Atty. Gen. 874 (1980); Ellis v. The Board of Education of the San Franciso Unified School Dist. (1945) 27 C.2d 322


News: Worthy

Parks and Recreation Academy

by Michelle Aguayo, Training Coordinator

The California JPIA Parks and Recreation Academy is set to take place February 9 – February 11, 2016 at the Shorebreak Hotel in Huntington Beach. This three-day academy is designed for parks and recreation directors, managers, and supervisors. The Academy will provide strategies for developing new programs and evaluating existing ones, staffing, utilizing technology and social media, providing safe environments in parks and aquatic centers, and creating an action plan for your agency.

Seven speakers will present twelve topics including:
  • Parks and Recreation Risk Management
  • Unique Parks and Recreation Facilities with Unique Challenges
  • Learn the Secrets to Lawsuit Proofing Your Public Facilities
  • What’s the Best Way to Keep from Being Sued? (and, if we are, how to lessen the blow)
  • Little Known Ways for Feeling Safer in an Unsafe Tech World
  • Preparing a Parks and Recreation Master Plan
  • Public Input Process:  Meetings with Meanings
  • Aquatics Risk Management
  • What Everyone Ought to Know About Background Checks, Volunteers, and Part-Time Employees
  • Playground Maintenance and Safety
  • Safe Facilities:  Conducting a Facilities Risk Review
  • Recreation for Tomorrow and Creating an Action Plan
Registration is limited to 40 participants. The cost to attend the Academy is $375 for members/$775 for nonmembers and includes two nights at the Shorebreak Hotel, breakfast and lunch, and materials.  For more information or to register for the Parks and Recreation Academy and make your hotel reservation, please contact Michelle Aguayo, Training Coordinator.

Pro: Files

Spotlight on Disability Access Consultants

In 1990, the Americans with Disabilities Act (ADA) was signed into law, and since then, Authority members have faced the challenging tasks of determining whether or not their facilities, programs, services, and policies are all in compliance, and establishing plans to remove barriers where they are found.  To assist members with their ADA compliance efforts, the Authority entered into a partnership in 2015 with Disability Access Consultants (DAC), a consulting firm specializing in accessibility requirements.  DAC has extensive experience working with numerous state and federal agencies, as well as private businesses, to bring them into compliance with the ADA.

Headquartered in Oroville, California, DAC was formed in 1998 with the goal of assisting public agencies with requirements, regulations and standards related to the ADA.  DAC has grown over the last 17 years to become one of the nation’s largest consulting firms specializing in accessibility compliance.
Barbara Thorpe
Barbara Thorpe, the President of DAC, has been a valuable asset to the Authority.  She has worked closely with the California JPIA’s Training Department to ensure that the training curriculum is up to date on the latest state and federal regulations surrounding the ADA, offering guidance on policy templates and manuals, and presenting at the annual Risk Management Educational Forum.  

Barbara and the team at DAC have also been an integral part of the Authority’s ADA Assistance Program.  Through this program, members have a variety of services made available to them, including assessment of a member's current level of compliance, development of transition plans, inspection of public rights-of-way and facilities, and review of programs and procedures.  Additionally, members are able to use DacTrak, software developed by DAC which is designed to collect data and generate reports in order to maintain and document compliance efforts.  The Authority is currently developing plans to introduce members to DacTrak and train members how to best use the software.  

For information about participating in the ADA Assistance Program, members should contact their assigned Regional Risk Manager.

Photo: Barbara Thorpe, President, Disability Access Consultants

Legislative Update

AB 1146 Skateboard Parks

By Alex Mellor, Risk Manager

For some time, California local public agencies have enjoyed limited statutory immunity, under Health & Safety (H&S) Code Section 115800, for liability for injuries to users riding a skateboard in a skate park owned by the agency. Now, a new bill (AB 1146, Jones) signed into law by Governor Brown earlier this year, expands the immunity to skate park users operating “other wheeled recreational devices” such as non-motorized bicycles, inline skates, roller skates, scooters, and wheelchairs.

This legislation is in response to a reluctance from local public agencies to allow those riding anything other than a skateboard to use public skate parks, for fear that the statutory immunity would not apply; and, represents a clear acknowledgment from the legislature that society is best served by encouraging those who ride “other wheeled recreational devices” to enjoy doing so in a skate park rather than in the streets or on private property.

Since the immunity available under H&S Code Section 115800 is limited, and predicated upon certain requirements being met, the anticipated increase in skate park use makes it more important than ever that local public agencies are aware of the limitations and requirements. Riding a skateboard, or other wheeled recreational device, is only considered a hazardous recreational activity (and therefore immunity is only available), if all the following conditions are met:

  • The person riding the skateboard or other wheeled recreational device is 12 years of age or older.
  • The riding of the skateboard or other wheeled recreational device that caused the injury was stunt, trick, or luge riding.
  • The skate park operator requires that skate park users wear a helmet, elbow pads, and knee pads. If the skate park is unsupervised, this requirement can be satisfied by adopting an ordinance requiring skate park users to wear the above safety equipment, and posting signage to that effect. Posted signage should also state that any person failing to wear the required safety equipment will be subject to citation.
In addition, local public agencies that own skate parks are required to maintain a record of all known or reported injuries, claims, and lawsuits filed by a person riding a skateboard or other wheeled recreational device in an agency-owned skate park. Copies of the records of claims/lawsuits must be filed annually, no later than January 30 each year, with the Assembly Committee on Judiciary and the Senate Committee on Judiciary.

While AB 1146 should give local public agencies a high level of confidence in welcoming users of other wheeled recreational devices into their skate parks, it is unclear how this legislation will affect a design immunity defense, in the event one needs to be asserted. This is most likely to become an issue in the event the hazardous recreational activity requirements are not met (e.g. a child under the age of 12 is injured while using the park). Although this is perhaps cause for mild concern, now that express immunity has been granted for local public agencies to allow those who enjoy riding bicycles, scooters etc. in agency-owned skate parks, refusing to allow them to do so will be a hard sell to the extreme sports community and the public in general.

A copy of AB 1146, along with an amended version of H&S Code Section 115800 can be found here: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160AB1146

If you have any questions, please contact your Regional Risk Manager.

The Court Report

Supreme Court Takes Broad View of Design Immunity

(Reprinted from the Metropolitan News Enterprise, December 11, 2015)
  
A public entity need not show that the official who approved the design of a road or other public work followed, or even knew, what the entity’s design standards were in order to claim design immunity, the state Supreme Court ruled yesterday.

The court unanimously affirmed a ruling by the Fourth District Court of Appeal in favor of San Diego County. The lower courts agreed that the county could not be held liable for injuries sustained in an auto collision by a motorist who claimed that the design and construction of the intersection where the collision occurred violated the county’s own standards for visibility.

The plaintiff, Randall Hampton, was seriously injured in the pre-dawn collision in 2009. He alleged that he pulled forward from rural Miller Road onto two-lane Cole Grade Road while attempting to turn left. He alleged that the collision was caused both by the negligence of the other driver, who pulled “right in front of him,” as well as by that of the county.

The county, he said, should have taken into account the loss of visibility over a high embankment covered with vegetation, which was not described or depicted in design drawings or considered in the design plan.

The county, however, won its summary judgment motion, largely on the basis of a declaration by the county traffic engineer establishing that the appropriate officials in the Design Engineering Section signed off on the drawings and plans.

While there was a dispute as to how visibility should be measured under the county standards, Superior Court Judge Timothy Taylor ruled, the immunity of Government Code §830.6 applied because it was undisputed that the approval of the road’s design was made by an “employee [of the public entity] exercising discretionary authority to give such approval” and there was  “substantial evidence upon the basis of which...a reasonable public employee could have adopted the plan or design or the standards therefor.”

The plaintiffs argued that discretion, in the contemplation of the Legislature, requires “an awareness of what is to be judged or chosen,” and that they had established a triable issue by showing that the engineers improperly measured visibility from behind the edge of the lane of oncoming traffic, instead of behind the “limit line.”

But both the Court of Appeal and the Supreme Court said the county had the better of the argument.

Chief Justice Tani Cantil-Sakuye, in her opinion for the high court, noted that the statutory language goes back to the 1963 Tort Claims Act, and that the Law Revision Commission, in recommending the language, took a position consistent with the county’s defense.

The purpose of the immunity, the commission said, was to avoid “reexamination in tort litigation of particular discretionary decisions where reasonable men may differ as to how the discretion should be exercised.” The litigation of such issues, the commission said, “would create too great a danger of impolitic interference with the freedom of decision-making by those public officials in whom the function of making such decisions has been vested.”

Those statements reflect legislative intent, the chief justice said, while the plaintiffs’ interpretation “would implicate the adequacy of the deliberative process at the discretionary approval stage and would lead a jury into just the sort of second-guessing concerning the wisdom of the design that the statute was intended to avoid.”

Another problem with the plaintiffs’ interpretation, Cantil-Sakauye said, is that cases involving identical designs might have different outcomes, “depending simply upon the recordkeeping ability of the public entities involved, or the availability of employees who are able to remember the decision-making process of the persons involved — a process that may have occurred long before the lawsuit.”

Cantil-Sakauye distinguished Cameron v. State of California (1972) 7 Cal.3d 318, in which the court ruled the state had not established design immunity with respect to a “superelevation” of a highway, a condition that was omitted from the plans on which the immunity defense was based.

The court in that case, the chief justice wrote, “did not suggest that, under the discretionary approval element of section 830.6, the public entity bears the burden of demonstrating that its employee considered all potentially applicable standards.”

If the court had imposed such a requirement, she added, it would have been “a surprising retreat from the basic understanding that the discretionary approval element of design immunity asks whether a person vested with discretion to approve the plan did approve the plan or design that was built, and that the question whether it was wise to approve the plan is judged under the reasonableness element of the statute.”

Cantil-Sakauye acknowledged that a pair of later Court of Appeal decisions cited Cameron in reaching results consistent with the plaintiffs’ arguments in the present case. But those cases do not reflect the actual holding in Cameron or the correct interpretation of the statute, she said.

The case is Hampton v. County of San Diego, 15 S.O.S. 5907.