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DAN MORALES August 26,1992 

\‘,‘I,,“SkI <itSEllA,. 

Honorable John Hannah 

Office of the Secretary of State 

Executive Division 

State of Texas 

P. 0. Box 12697 

Austin, Texas 7871 l-2697 

Opinion No. DM-157 

Re: Whether a health spa exempted 

from the security deposit requirement by 

the 1985 version of the Health Spa Act is 

exempt under the 1989 revision of the act 

and related questions (RQ-306) 

Dear Mr. Hannah: 

Your question concerns the security deposits that health-spa owners must file 

under article 52211, V.T.C.S., the Health Spa Act. In particular, you wish to know 

whether any health spas are exempted from the security-deposit requirement. 

Article 52214 V.T.C.S., which is designed to protect customers of health-spa 

services, was adopted in 1985. Acts 1985, 69th Leg., ch. 13. It was substantially 

amended in 1989 by House Bill 863 of the 71st Legislature. Acts 1989, 71st Leg., 

ch. 1039. Responsibility for administering its provisions, initially vested in the Texas 

Department of Labor and Standards, was transferred to the Office of the Secretary 

of State by the 1989 legislation. Health spas must file a registration statement with 

the secretary of state before offering to sell or selling memberships. V.T.C.S. art. 

52211,s 8. In addition, a security bond must be filed with the secretary of state. 

Section 10 of article 52211, V.T.C.S., which sets out the security bond 

requirements, was amended in 1989. Prior to this amendment, section 10 included 

the following “grandfather clause”: 

(a) Except mprovided by Subsection (d) of this section, on or 

before the 30th day after the date a health spa opens its facilities 

for the use of its members, the health spa shall file with the 

department [of Labor and Standards] a surety bond.. . . The 

bond . . . shall be payable in favor of the state and shall be held 

for the benefit of any members of the health spa who suffer 

financial losses due to the insolvency or cessation of operation of 

the health spa. “Financial losses” shall mean and be limited to 

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Honorable John Hannah - Page 2 (m-157) 

any unused or unearned portion of such member’s dues or 

fees. . . . 

(d) A health spa ir exempt from the security requirements of 

this section if the owner of the health spa owns at least one other 

spa in this state which has operated at one location for at least 

the two years preceding then effective date of this Act 

[September 1.19851 and against which none of its members have 

initiated litigation or filed a complaint with any governmental 

authority in this state relating to the failure to open or the 

closing of the health spa. 

Acts 1985,69th Leg., ch. 13 (emphasis added). 

Section 10(d) of the 1985 enactment provided a complete exemption from 

the surety-bond requirements for any new spa opened by the owner of a spa that 

had operated since September 1,1983 in compliance with the stated conditions. In 

1989 the legislature repealed section 10(d) and deleted the reference to it in section 

lo(a). Acts 1989,71st Leg., ch. 1039, # 3.17. 

The section 10(d) “grandfather clause” has been removed from the statute, 

but House Bill 863 included a savings clause, and you wish to know whether it 

preserved section 10(d) for any purpose. The savings clause reads as follows: 

Sec. 6.09. Health spas. (a) The security requirements 

imposed under Section 10, ‘Health Spa Act . . . as amended by 

this Act, apply to a health spa that opens an initial facility on or 

after September 1.1989, and to each additional location opened 

on or after September 1, 1989, by a health spa that opens an 

initial facility on or after September 1.1989. 

(b) A health spa in operation before September 1, 1989, 

and any additional location opened by that health spa on or 

after September 1, 1989, is subject to the security requirements 

in effect on August 31.1989, and the former law is continued in 

effect for that purpose. 

Acts 1989.71st Leg., ch. 1039,s 6.09. 

A brief received in connection with this request argues that the language of 

section 6.09(b) preserves the language of former section 10(d), so that spas exempt 

p. 827 
Honorable John Hannah - Page 3 (m-157) 

under that provision from filing a security deposit on August 31.1989 continue to be 

exempt under the present version of the statute. To state this argument in terms of 

section 6.09(b), the version of section 10(d) applicable on August 31, 1989 

established “security requirements” for spas within its provisions on that date, and 

the former “grandfather clause” is continued for those spas. 

Your position is that section 6.09 establishes two different classes of health 

spas for the purpose of determining security deposit requirements. One class, 

described by subsection (a), consists of spas that open an initial facility on or after 

September 1, 1989. and of any additional location opened by those spas. The spas 

within section 6.09(a) are subject to the new security requirements adopted in 1989. 

The other class, described by subsection (b), consists of spas in operation before 

September 1, 1989, and of any new location opened by such spas after that date. 

Spas in this group are subject to the security requirements in effect on August 31, 

1989. You believe that there is no longer any exemption from the security 

requirement of section 10, and that all spas in operation before September 1, 1989 

are required to have a seciuity bond on file. 

We believe that the absence. of an express savings clause for those spas 

formerly “grandfathered” by subsection 10(d) indicates that the legislature no longer 

wished them to be exempt from the security requirement. See State v. Body, 118 

S.W. 128 (Tex. 1909) (savings clause of a repealing statute is strictly construed). 

Section 6.09(b) states that the spas it applies to are “subject to the security 

requirements in effect on August 31, 1989.” Thus, it indicates that all spas in that 

category are subject to security requirements, the amount of which shall be 

determined by reference to former law. The grandfather clause, strictly speaking, 

was not a “security requirement” of the former law, but an exemption from the 

security requirement; thus, section 6.09(b) does not keep that clause in effect. 

Moreover, we believe that your interpretation of the savings clause is 

consistent with the legislative intent underlying House Bill 863. An express purpose 

of the Health Spa Act is to “safeguard the public against fraud, deceit, imposition, 

and financial hardship” in the field of health spa services by prohibiting contractual 

and marketing practices that had injured the public. V.T.C.S. art. 52211, 5 2. The 

act is to be liberally construed and applied to promote this purpose. Id 5 4. 

One purpose of the 1989 legislation was to improve the consumer protection 

aspects of the Health Spa Act. House Comm. on Governmental Organization, Bill 

Analysis, H.B. 863, 71st Leg. (1989). The security deposit provision provides a 

p. 828 
Honorable John Hannah - Page 4 m-157) 

source from which health-spa members may recover any unused portion of their 

dues or fees if the health spa becomes insolvent or ceases operations. The 1985 

version of subsection 10(d) allowed the owner of any health spa that had been 

satisfactorily established since September 1, 1983 to open new spas without any 

security deposit. Your reading of section 6.09 extends the security deposit 

requirement to all spas now open or to be opened in the future. This reading serves 

the consumer-protection purpose of the Health Spa Act and the 1989 amendments 

because it accords to all consumers of health-spa services a means of recouping 

unused dues or fees paid to a spa that becomes insolvent or ceases operations. 

Accordingly, we agree that section 6.09 creates only two categories of health 

spas, one subject to the security requirements that became effective on September 1, 

1989, and the other subject to the security requirements in effect on August 31, 

1989. No health spas, even those grandfathered by the prior version of article 52211, 

V.T.C.S., are now exempt from the security deposit requirement. 

You inquire about the amount of security deposit to be Sled under the 

Health Spa Act by a health spa that was exempt from the security-deposit 

requirement by the former version of the statute. When the Health Spa Act was 

adopted in 1985, it required security in the amount of 20 percent of prepayments, 

but not less than $20,000 or more than $50,000. Acts 1985, 69th Leg., ch. 13 

(formerly codified as V.T.C.S. art. 52214 3 10(b)). This security requirement 

applied to the spa for two years after the filing date, and thereafter only $5,000 in 

security had to be maintained. Id (formerly codified as V.T.C.S. art. 522lZ, 9 10(c)). 

The 1989 enactment establishes a uniform $20,000 security deposit for all spas and 

requires maintenance of security in this amount for two years after the spa ceases 

business or until claims against it are satisfied or foreclosed by law. Acts 1989,71st 

Leg., ch. 1039, g3.17 (codified as V.T.C.S. art. 52211. 5 10(b), (c)). You contend 

that a spa that was previously exempt from the security deposit requirement must 

initially file $20,000 before it can be eligible for the reduction to $5,000. 

A health spa that was exempt from the security deposit prior to September 1, 

1989 is subject to the security deposit requirements in effect on August 31, 1989. 

Former section 10 required the security bond to be filed by the 30th day after the 

health spa opened its doors and set it as 20 percent of the total value of the 

prepayments received by the spa, but not less than $20,000 or more than $50,000. 

Acts 1985,69th Leg., ch. 13. “Prepayment” was formerly defined as “a payment for 

all services or for the use of facilities made by members of a health spa before the 

first day the services or facilities are made available to the members.” Id After 

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Honorable John Hannah - Page 5 ml-157) 

maintaining the minimum $20,000 security for two years, the health spa is to 

maintain security in the amount of $5.000. 

A health spa that was exempt from the initial security bond requirement 

under the former law camrot now comply with the requirement that it file a security 

bond within 30 days after opening the spa. Moreover, the former law based the 

amount of security bond on prepayments received prior to opening, an amount 

unlikely to be relevant to any present exposure for unpaid fees and dues for health 

spas that have operated since 1983. The spas that were formerly “grandfathered 

had operated at one location for two years prior to the effective date of the 1985 

statute without any member filing a lawsuit or a complaint with a governmental 

authority relating to the failure to open or the closing of the health spa. Acts 1985, 

69th Leg., ch. 13. That two years of operation without such complaints or lawsuits 

appears to serve the same purposes as the requirement that a spa maintain at least 

$20,000 in security for the first two years of operation. In our opinion, health spas 

that were exempt from all security deposits under the now-repealed section 10(d) 

are now required to maintain security in the amount of $5,000 without first filing a 

security deposit of $20,000. 

If a spa in operation on August 31, 1989 opens a new location after 

September 1,1989, the new spa location will be able to file a security deposit by the 

30th day after opening. The new spa location will therefore be required to file an 

initial security deposit of 20 percent of the total value of the prepayments it has 

received, but not less than $20,000 nor more than $50,000. It must maintain this 

amount of security for two years after the date the security is filed, and thereafter, it 

must continuously maintain security in the amount of $5,000. 

SUMMARY 

V.T.C.S. article 52211, the Health Spa Act, as amended in 

1989. effective September 1, 1989, requires every health spa in 

the state to file a surety bond with the secretary of state. The 

security requirements imposed by the present version of the law 

applies to a health spa that opens an initial location on or after 

September 1.1989, and to each additional location opened after 

that date by such spas. A health spa in operation before 

September 1, 1989, and any additional location opened by that 

health spa on or after September 1, 1989, is subject to the 

security requirements in effect on August 31, 1989. An 

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Honorable John Hannah - Page 6 (ml-157) 

exemption for some health spas from all security requirements 

included in the prior version of the Health Spa Act has been 

repealed and is not continued in effect by the savings clause in 

the 1989 amendments. Health spas that were formerly 

exempted from the security requirement no longer have the 

benefit of that exemption. 

Health spas that were exempt from all security deposits 

under the repealed provision are now required to maintain 

security in the amount of $5,000 without first filing a security 

deposit of $20,000. If a spa in operation on August 31, 1989 

opens a new location after September 1, 1989, the new spa 

location must file an initial security deposit of 20 percent of the 

total value of the prepayments it has received, but not less than 

$20,000 nor more than $50,000. It must maintain this amount of 

security for two years after the date the security deposit is filed, 

and thereafter,. it must continuously maintain security in the 

amount of $5,000. 

DAN MORALES 

Attorney General of Texas 

WILL. PRYOR 

First Assistant Attorney General 

MARY KELLER 

Deputy Assistant Attorney General 

RENEA HICKS 

Special Assistant Attorney General 

MADELEINE B. JOHNSON 

Chair, Opinion Committee 

Prepared by Susan L Garrison 

Assistant Attorney General 

p. 831