84R21119 AJA-F
By: Turner of Tarrant H.B. No. 409
Substitute the following for H.B. No. 409:
By: Miller of Comal C.S.H.B. No. 409
A BILL TO BE ENTITLED
AN ACT
relating to liability insurance or other proof of financial
responsibility for persons holding certain alcoholic beverage
permits; adding a provision that is subject to a criminal penalty;
authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 11, Alcoholic Beverage
Code, is amended by adding Sections 11.14 and 11.15 to read as
follows:
Sec. 11.14. LIABILITY INSURANCE REQUIREMENT. (a) This
section does not apply to the holder of a food and beverage
certificate.
(b) Except as provided by Section 11.15, a person may not
hold a permit allowing the person to sell alcoholic beverages for
on-premises consumption unless the person establishes financial
responsibility by maintaining a liability insurance policy:
(1) issued by an insurance company authorized to write
liability insurance in this state or an eligible surplus lines
insurer; and
(2) that, subject to Subsection (e), will pay, on
behalf of the permit holder or a person who sells or serves
alcoholic beverages under the authority of the permit holder's
permit, amounts the permit holder or person becomes obligated to
pay as damages arising out of the sale or service of alcoholic
beverages.
(c) The commission shall adopt rules relating to:
(1) subject to Subsection (d), the minimum amounts of
insurance coverage that are required under this section, which must
be at least:
(A) $500,000 for each occurrence; and
(B) $1 million for any annual aggregate limit;
(2) the method for filing proof of insurance and
obtaining the commission's approval under this section; and
(3) verification by the commission of a permit
holder's continued maintenance of the required insurance coverage.
(d) The minimum amounts of insurance coverage required
under this section for a permit holder that is a governmental unit,
as defined by Section 101.001, Civil Practice and Remedies Code,
are the amounts of the liability limits applicable to the
governmental unit under Section 101.023, Civil Practice and
Remedies Code. A governmental unit subject to this section may
satisfy the insurance requirements of this section through a
self-insurance fund or program established under Section 2259.031,
Government Code, or Chapter 791, Government Code.
(e) A person may not recover from the proceeds of an
insurance policy held by the permit holder for purposes of this
section damages arising out of the sale or service of an alcoholic
beverage to the person if, at the time of the sale or service, the
person was obviously intoxicated or a minor.
Sec. 11.15. BOND IN LIEU OF INSURANCE. (a) A person may
establish financial responsibility for purposes of Section 11.14
without maintaining an insurance policy by filing with the
commission a bond:
(1) with at least two individual sureties, each of
whom owns real property in this state that is not exempt from
execution under the constitution or laws of this state;
(2) conditioned for payment in the amounts and under
the same circumstances as required under a liability insurance
policy sufficient to meet the requirements of Section 11.14;
(3) that is not cancelable before the sixth day after
the date the commission receives written notice of the
cancellation;
(4) accompanied by a fee prescribed by the commission;
and
(5) approved by the commission.
(b) The real property required by Subsection (a)(1) must be
described in the bond approved by a judge of a court of record. The
assessor-collector of the county in which the property is located
must certify the property as free of any tax lien. The sureties in
combination must have equity in the property in an amount equal to
at least twice the amount of the bond.
(c) The bond is a lien in favor of the state on the real
property described in the bond. The lien exists in favor of a
person who holds a final judgment against the person who filed the
bond.
(d) On the filing of a bond, the commission shall issue to
the person who filed the bond a certificate of compliance with this
section.
(e) The commission shall file notice of the bond in the
office of the county clerk of the county in which the real property
is located. The notice must include a description of the property
described in the bond. The county clerk or the county clerk's
deputy, on receipt of the notice, shall acknowledge the notice and
record it in the lien records. The recording of the notice is
notice in accordance with statutes governing the recordation of a
lien on real property.
(f) If a judgment rendered against the person who files a
bond under this section is not satisfied before the 61st day after
the date the judgment becomes final, the judgment creditor, for the
judgment creditor's own use and benefit and at the judgment
creditor's expense, may bring an action in the name of the state
against the sureties on the bond, including an action to foreclose a
lien on the real property of a surety. The foreclosure action must
be brought in the same manner as, and is subject to the law
applicable to, an action to foreclose a mortgage on real property.
(g) Cancellation of a bond filed under this section does not
prevent recovery for a right or cause of action arising before the
date of the cancellation.
SECTION 2. (a) The changes in law made by this Act apply to
a person who applies for a permit for the sale of alcoholic
beverages for on-premises consumption on or after January 1, 2016,
and to a person who, on January 1, 2016, holds a permit for the sale
of alcoholic beverages for on-premises consumption regardless of
when the permit or license was issued.
(b) The Texas Alcoholic Beverage Commission shall adopt all
rules necessary to implement the changes made by this Act not later
than December 31, 2015.
SECTION 3. This Act takes effect September 1, 2015.