Bluefield Water Ass'n v. City of Starkville, Miss., 08-60648.

Citation577 F.3d 250
Decision Date21 July 2009
Docket NumberNo. 08-60648.,08-60648.
PartiesBLUEFIELD WATER ASSOCIATION, INC., A Mississippi Non-Profit Corporation, Plaintiff-Appellee, v. CITY OF STARKVILLE, MISSISSIPPI, A Municipal Corporation, Defendant-Appellant. Texas Rural Water Association, Amicus Curiae.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

James Harrell Herring (argued), Herring, Long & Crews, Canton, MS, for Plaintiff-Appellee.

William T. Siler, Jr. (argued), William Brett Harvey, Phelps Dunbar, L.L.P., Jackson, MS, for Defendant-Appellant.

Louis T. Rosenberg, San Antonio, TX, for Texas Rural Water Ass'n, Amicus Curiae.

Appeal from the United States District Court for the Northern District of Mississippi.

Before JONES, Chief Judge, and HIGGINBOTHAM and HAYNES, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This dispute over water provision emerges from a grant of preliminary injunctive relief to plaintiff-appellee Bluefield Water Association by the United District Court of the Eastern District of Mississippi, requiring defendant-appellant, the City of Starkville, to change its main pipe interface with Bluefield and to turn over its customers in a disputed area to Bluefield on terms specified by the court. We affirm in part and reverse in part.

I

The Mississippi Public Service Commission authorized ("certificated") Bluefield Water Association, which was incorporated as a non-profit water association in 1965, to provide water services in a designated area of Oktibbeha County, Mississippi. The Farmers Home Administration, a federal agency later subsumed into the Rural Development office of the Department of Agriculture, loaned Bluefield money for its startup and operation. Bluefield's certificated service area comprised some land near the city of Starkville, Mississippi. Pursuant to a 1986 Water Purchase Contract, Starkville supplies Bluefield's water, which Bluefield distributes to its customers in what we call the "western service area."

As it grew, and apparently beginning in the mid-1990's, Starkville provided water service for some residents and businesses in Bluefield's area, without complaint. Because these customers are located in the eastern part of Bluefield's service area, we refer to this contested area as the "eastern service area."1 In 2004, negotiations commenced for the acquisition of the reportedly financially troubled Bluefield by Starkville. Bluefield noted—apparently as a bid to raise its selling price—that Starkville's provision of water in the eastern service area violated Bluefield's exclusive right to provide water within its certificated area. In late 2007, citing shortage of water to supply its customers, Bluefield requested that the city allow it to access a 12-inch pipe in lieu of the 8-inch pipe with 6-inch connector. The city refused.

With negotiations at a standstill, Bluefield filed a complaint in the United States District Court on March 17, 2008, and on May 8 of that year requested a preliminary injunction with two distinct facets. First, it invoked federal law protecting rural utility providers indebted to Department of Agriculture, providing in part that "[t]he service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body...."2 Alleging that Starkville's encroachment violates this provision, Bluefield asked the court to provide immediate relief from the eastern service area encroachment, pursuant to one of several proposed remedies. Second, invoking supplemental jurisdiction, Bluefield asked for the court to enforce its contract with the city by ordering connection to a larger water main in Starkville's system. It argued that Starkville's refusal to do so left its customers vulnerable to disastrous financial and public health consequences in case of disruptive events such as flooding.

On July 9, 2008, the district court granted broad relief on both facets. Its preliminary injunction ordered Starkville to connect Bluefield to a larger main and to turn over to Bluefield the billing apparatus of its water service in the eastern service area, while continuing to provide water as before, with Bluefield billing the customers formerly billed by Starkville.3 Starkville timely appealed.

II

The conditions of preliminary injunctive relief guide, indeed largely dictate, our decision in this case. "To be entitled to a preliminary injunction, the applicant must show (1) a substantial likelihood that he will prevail on the merits, (2) a substantial threat that he will suffer irreparable injury if the injunction is not granted, (3) his threatened injury outweighs the threatened harm to the party whom he seeks to enjoin, and (4) granting the preliminary injunction will not disserve the public interest. We have cautioned repeatedly that a preliminary injunction is an extraordinary remedy which should not be granted unless the party seeking it has `clearly carried the burden of persuasion' on all four requirements."4

Our review is deferential: "A district court's determination as to each of the elements required for a preliminary injunction are mixed questions of fact and law, the facts of which this Court leaves undisturbed unless clearly erroneous. Conclusions of law made with respect to denial of a preliminary injunction are reviewed de novo. The ultimate decision for or against issuing a preliminary injunction is reviewed under an abuse of discretion standard."5

We are convinced that the district court erred as to one wing of the granted injunctive relief, namely requiring Starkville to turn over billing and customer relations to Bluefield. There is nothing to suggest that harm suffered between the time of suit and the time of ultimate decision in this case would seriously prejudice Bluefield's...

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