A federal appeals court has blocked Montgomery County from seizing $5 million in collateral from Tribune-United Cable Co. while negotiations continue over terms of the franchise agreement, an attorney for the county said yesterday.

Nicholas P. Miller, who represents Montgomery County on cable issues, said the U.S. 4th Circuit Court of Appeals announced Friday that it had ordered a lower court to grant a preliminary injunction barring the county from some enforcement actions against Tribune-United.

The ruling reverses a lower court decision that would have allowed the county to seize the funds and take other action against the company.

County officials announced in November that they would revoke Tribune-United's franchise, seize the $5 million collateral and impose heavy penalties, contending that the company had repeatedly violated its contract.

In January, the company's parent firm, Tribune Co. of Chicago, announced that the system would be sold to Hauser Communications Co. of New York. The county must still approve the sale.

"Our assumption is that, at a minimum, the court ruling prevents us from drawing the $5 million," said Miller, who had not seen the written order. "That is a setback . . . because there are things the county needs to be doing with that money to correct the problems" stemming from the company's difficulties in fulfilling its contract to provide cable service in Montgomery County.

"It looks as if the 4th Circuit has said they don't want anything further to happen until we've resolved the modification process," Miller said.

That process, established a year ago under federal law, allows cable companies to seek modifications in their contracts. Two public hearings have been held in Montgomery as part of the procedure, which is scheduled to be completed in March.

The issue of whether the county could take enforcement action against the company when the modification process is completed was not before the appeals court, Miller said.