Honorable Steven D. Wolens OpinionNo. X4-1257

Chairman Business and Commerce Committee Re: Whether a chamber of Texas Rouse of Representatives commerce is a "charitable P. 0. Box 2910 organizationotwithin the Austin. Texas 78768-2910 Charitable Immunitv and Liability Act of -1987, Civil Practice and Remedies Code chapter 84 (RQ-2054)
Dear RepresentativeWolens:
You request advice about the Charitable Immunity and LiabilityAct off1987, codified as chapter 84 of the Civil Practice and Remedies Code. You specifically inquire whether a chamber of commerce is a "charitableorganization as defined by that statute. The Charitable Immunity and Liability Act of 1987 [hereinafterthe act] was adopted to reduce the liability exposure and insurancecosts of charitable organizations "in order to encourage volunteer services and maximize the resources devoted to delivering these services." Civ. Prac. &Rem. Code 5 84.002(7).1 With certain exceptions, a volunteer serving as an officer,director, or trustee of a charitable organization is granted immunity from civil liability for "any act or omission resulting in death, damage, or injury"done in the course and scope of his

1. The Supreme Court of Texas gave notice in Watkins v. Southcrest Baotist Chm 399 S.W.2d 530 (Tex. that the doctrine of. charitable immunitywould be 1966),reconsidered andmight be abrogated. InRowle v. Camu Amon C rt I: 470 S.W.2d 629 (Tex. 1971), the court held thata t&k doctrinewas completelyabrogated as to causes of action arising from events occurringafter themotion for rehearing inWatkinswas overruledonMarch 9, 1966.

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duties. ;EBL 0 84.004(a); s.s2 ia, JS 84.004(c), 84.007 (exceptions). A similar immunity is granted to a person serving as a direct service volunteer of a charitable organization ifhe acts in good faith and in the course and scope of his duties or functions within the organization. L 5 84.004(b). The liability of employees and of the organization itself is limited tomoney damages in a maximum amount set out in the statute. ra, 5s 84.005 - 84.006. These limitations on liability are available only to a charitable organization that carries liability insurance in the amounts requiredby the statute. L f 84.007(g). The definition of "charitableorganization" is given in section 84.003 of the act:

(1) *Charitableorganization'means: (A) any organization exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986 by being listed as an exempt organization in Section 501(o)(3) or 501(c)(4) of the code, [enumerationof additional conditions thi: must be met]: (B) any bona fide charitable, religious, prevention of cruelty to children or animals, youth sports and youth recreational, or educational organization, excluding alumni associationsand related on-campus organizations, or other orua&j&ation oraanized and ouerated exclusivelv for the nromotion of socialwelfare bv beina nr.&8rllv enoaaed in promotina the common aood and aeneralwelfare of the oeoole in a commu~&y, and that: (i) is organized and operated exclusively for one ormore of the abovepurposes: (ii) does not engage in activities which in themselvesare not in furtheranceof the purpose or purposes; (iii) does not directly or indirectly participate or intervene in any political campaign on behalf of or in oppositionto any candidate forpublic office;

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(iv) dedicates its assets to achieving the stated purpose or purposes of the organization: (v) does not allow anypart of its net assets on dissolutionof the organization to inure to the benefit of any group, shareholder, or individual:and (vi) normally receives more than onethird of its support in anyyear fromprivate or public gifts, grants, contributions, or membership fees: or ((3 a homeowners association as defined by Section 528(c) of the Internal Revenue Code of 1986. Civ. Prac. h Rem. Code S 84.003(l) (emphasisadded, footnotes deleted).
A chamber of commerce isnot a homeowners association within section 84,003(1)(C). Wor does it fit the definition of charitable organization within section 84.003(1)(A). Although a chamber of commerce does have an exemption from federal income tax, it isnot exemptunder section 501(c)(3) or 501(c)(4),but under section 501(c)(6) of the Internal Revenue Code, which designates the following entities as exempt organizations:

'(6) Business leagues,Ghambers of commerc real-estate boards, boards of trade, EG professional football leagues

. . . not organized forprofit and nopart of the net earnings ofwhich inuresto the benefit of any private shareholderor individual.
I.R.C. 8 501(c)(6) (emphasisadded). Section 84.003(1)(B)describes organizationsthat are organized and operated for one ormore statedpurposes. An organizationmust fitwithin this description and comply with the conditions. set out in subsection (B)(i) through (B)(vi)to qualify as a "charitableorganizationV1 under this provision. Thus, as a threshold issue,we must identifythe purpose of a chamber of commerce and determinewhether it is one of the purposes described in subsection 84.003(1)(B).

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The decision that a particular entity is a "charitable organizationnwithin the act ordinarily involves the investigation and resolution of fact questions,which cannot be undertaken in the opinion process. &S Attorney General Opinion JW-951 (1988) (whethera public broadcasting station is a charitable organizationwithin section 84.003(1)(B) is a question of fact). However, in the present case, we may rely on judicial and administrativedeterminations about the purpose of a chamber of commerce in decidingwhether it is a charitable organization. The federal regulation construing the tax exemption granted by section 501(o)(6) of the InternalRevenue Code describes the activities of a chamber of commerce as lIdirected to the improvementof business conditions of one or more lines of business as distinguished from the performance of particular services for individualpersons.n 26 C.F.R. 5 1.501(c)(6)-1 (regulation defining "business league" by analogy to 'chamberof commerce)

. A chamber of commerce promotes the general economic welfare within a geoI graphically defined area. a -States, 565 F.2d 845 (2dCir. 1977),affLB, 440 U.:. 472 (1979) (discussingTreas. Reg. 5 1.501(c)(6)-1). Prior opinions of this office and at least one Texas court have also considered the purposes of a chamber of commerce. &S Jcordus v. Citv of Gaw 561 S.W.Zd 260 (Tex.Civ.App. - Tyler 1978,writ ref'dA.r.e.); Attorney General Opinions JW-1199 (1990); JW-516 (1986); Ii-397 (1974):see also Attorney General Opinions C-76 (1963); WW-106 (1957) (applicationof franchisetax exemption to chamber of commerce). Most of these decisions address the question of whether amunicipal government may donate money to a chamber of commerce,but their descriptions of the purpose of such entities are helpful in addressing the questionbefore us. Attorney General Opinion H-397 (1974) held that a county could not become a dues-payingmember of a chamber of commerce operated by aprivate corporation. The county attorneywho requested the opinion advised that the purposes of the Beeville and Bee County Chamber of Commerce included "promoting industrial development in the county, the development of downtown Seeville, and thepromotion of the county-owned stadium." &at 1. It also supported other measures beneficial to its commercialmembers. The opinion determined that the payment of dues wouldbe a donation of public funds to a private entity inviolation of article XI, section 3, of the Texas Constitution. It was "an attempt to

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secure for the community and its citizens by subscription generalbenefits resulting from encouragement of private industryand business." L at 2. Attorney General Opinion H-397 was cited inRordus v. Cm a suitby taxpayers of the city to money the city' had donated to the Garland recover Chamber of Commerce and to enjoin futurepayments. The court agreed with the opinion that the Texas Constitution prohibited donations and expendituresof this nature. See also Attorney 'General Opinion JW-1199 (1990) (festivals held by chamber of commerce and similarorganizations to promote localproducts and businesses). The purpose of a chamber of commerce can be summarized as thepromotion of the general economicwelfare of an area through activities that advertise its products and industries and encourage private industry and business. Our question is whether an organizationwith this purpose is included in the following definition of "charitable organization": (B) any bona fide charitable, religious,

prevention of cruelty to children or animals, youth ~sports and youth recreational, or educational organization

. . . 9r other d ODerated excluSivelv for the uromot1on of social welfare

. . v belna or-v enaaaed inDromotma the 008)~gnaood and aeneralwelfare of the neonle in a mrmw4.b
. Civ. Prac. h Rem. Code S 84.003(1)(B) (emphasisadded).
A chamber of commerce isnot any of the specialpurpose entities listed at the beginning of the provision. The remainderof the provision, underlined in the quotation, encompassesorganizationsthatpromote the socialwelfare by promoting "the commongood and generalwelfare of the people in a community." This statementof charitablepurpose is so broad that it is difficult to apply in isolation from the rest of the statute. However, it can be given further definitionby reference to the .legislature‘sstatement of findingsand purposes,which provides inpart:

(1) robust, active,bona fide, and wellsupported charitableorganizationsare needed within Texas to Derform essentialand needed senrices:

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(2) the willingness of volunteers to offer their services to these organizations is deterred **by the**  perception of personal liability arising out of the services rendered to these organizations;

. . . . (5) these to diminish services beina orovided +o Texas nq v because of higher costs znd fewerprograms: (6) the citizens of this state have an pverridina interest in the continued and
must be balancedwith otherpolicy considerations. Civ. Prac. 6Rem. Code 5 84.002 (emphasisadded). This statement of purpose indicatesthat the legislaturewas concerned about the delivery of needed services to citizens. In resolving the questionbefore us, we will not attempt to determine the full range of activities that might be performed by organizations that are *organized and operated exclusively for the promotion of socialwelfare by

. . .promoting the common good and generalwelfare of the people in a community.w Nonetheless,we believe that the legislature had in mind an organization that provides services to individualswho are in need of them. It did not intend to include an entity that promotes the general economicwelfare of an area in expectationof some benefit to some residents in the indefinite future, but does not provide tangible assistance to specific individuals in the present.2 We conclude that the purposes of a chamber of

2. Courts of other states have determined that a chamber of commercewas not a charitable institution within particular statutes. &S Bostomer of Commerce v, Assessors, 54 N.E.2d 199 (Mass.1944) (not a charitable institution within tax exemption): Chamber of Commerce of North K nsa Citvv. Unemolovment commission, 201 S.i.2ds771 (MO. 1947) (not aComuensation charitable institutionwithin exemption fromunemployment compensation law).

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commerce are not the purposes of "charitable organization" as defined by section 84.003(1)(B)of the Civil Practice and Remedies Code. The Charitable Immunity and LiabilityAct of 1987 does not apply to a chamber of commerce.
SUMMARY The Charitable Immunity and Liability Act of 1987, Civil Practice

codified as chapter 84 of the and Remedies Code, does not apply to a chamber of commerce.

JIM MATTOX Attorney General of Texas
RARYZBLLRR First AssistantAttorney General
LouMCCREARY ExecutiveAssistant 'AttorneyGeneral
JUDGE ZOLLIE STEARLBY SpecialAssistantAttorney General
RENEA HICKS SpecialAssistantAttorney General
RICK GILPIN Chairman,Opinion Committee Preparedby Susan Garrison AssistantAttorney General

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