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The City Of Omaha Properly Enacted an Ordinance Requiring General Contractors to Obtain a License

on Friday, 2 September 2016 in Dirt Alert: David C. Levy, Editor

Malone v. City of Omaha, 294 Neb. 516 (2016).

In 2011, the City of Omaha enacted Ordinance No. 39090 (the “Ordinance”), requiring contractors working in Omaha to obtain a license. John J. Malone, Sr. sued the City in 2013, challenging the City’s authority to enact the Ordinance.

The district court dismissed all of Malone’s claims. Malone appealed on the following grounds: (1) the enactment of the Ordinance violated the notice requirements of the City’s charter; (2) the City lacked the power to enact the Ordinance; (3) the Ordinance was monopolistic and failed to further public health, safety, or welfare; (4) the Legislature’s occupation of the fields of licensing the public’s health, safety, and welfare, the construction industry, and the lead abatement industry preempted the Ordinance; (5) the Ordinance violated Malone’s constitutional rights to conduct a business; (6) the district court erred by granting the City summary judgment; and (7) the district court erred by not granting Malone a permanent injunction. The Nebraska Supreme Court affirmed.

The City’s charter requires three days’ notice of the title of an ordinance and the time and place of the public hearing. The City provided sufficient notice of the initial hearing. After the initial hearing, there were amendments to the Ordinance, and Malone asserted the City had to provide new notice. The Court held the City’s charter did not require the notice process to begin anew following the changes to the Ordinance.

Nebraska law contradicted Malone’s allegation the City had no authority to license contractors. For example, the Court found the City had broad police powers to make and enforce regulations for the general welfare, health, and safety of the City, and to pass all necessary and proper ordinances in the exercise of the City’s police power. Neb. Rev. Stat. § 14-102(25). The Court also had previously held Lincoln had the power to license house movers. State v. Phillips, 133 Neb. 209, 211 (1937).

The Court found the Ordinance affected the health, safety, and welfare of the citizenry. The purposes of licensing contractors was to decrease the number of reinspections, to ensure contractors knew what inspectors expected, and generally to keep a closer watch on the contracting community. Malone alleged the Ordinance made it more difficult for individual and small firm contractors to obtain licensure than for larger contracting firms. The requirements for licensure, however, were the same regardless of the applicant.

The Court held state law did not preempt the Ordinance. The Building Construction Act did not control who builds buildings. The Contractor Registration Act required contractors to register with the Nebraska Department of Labor, but that did not preclude the City from regulating contractors. The Residential Lead-Based Paint Professions Practice Act (the “Lead Abatement Act”) also did not preempt the Ordinance because the Ordinance controlled the licensure of activities the Lead Abatement Act expressly excluded from the definition of lead-based paint abatement.

The Ordinance did not violate Malone’s constitutional rights to conduct business. The test of validity was the existence of a substantial relationship between the exercise of police power and public health, safety, and welfare, and the Court had already concluded the Ordinance improved the health, safety, and welfare of Omaha’s residents. Finally, having held the district court did not previously err, the Court dismissed Malone’s sixth and seventh assignments of error.

Anthony D. Todero

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