Exxon Corp. v. Berwick Bay Real Estate Partners

• Decision Date: 03 December 1984
• Docket Number: No. 84-3732,84-3732
• Citation: 748 F.2d 937
• Parties: EXXON CORPORATION, Plaintiff-Appellee, v. BERWICK BAY REAL ESTATE PARTNERS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 937

748 F.2d 937

EXXON CORPORATION, Plaintiff-Appellee, v. BERWICK BAY REAL ESTATE PARTNERS, Defendant-Appellant.

No. 84-3732.

United States Court of Appeals, Fifth Circuit.

Dec. 3, 1984.

McGlinchey, Stafford, Mintz, Celline & Lang, P.C., J. Forrest Hinton, Graham Stafford, New Orleans, La., for defendant-appellant.

William B. Matthews, Jr., William R. Hurt, Trial Attys., Paul J. Heim, New Orleans, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WILLIAMS, JOLLY and HILL, Circuit Judges.

PER CURIAM:

I.

We have before us a request by the appellant, Berwick Bay, pursuant to Fed.R.App.P. 8 to stay the operation of a preliminary injunction issued by the district court. We conclude that Berwick Bay has failed to demonstrate a likelihood of success in the appeal, and we therefore deny the motion to stay.

This suit was initiated by Exxon Corp., as successor to Humble Oil Co. and H.S.L. Corp., a Humble subsidiary, to compel compliance with restrictive covenants granted to Humble and H.S.L. in connection with the development of a 4,000-acre subdivision in New Orleans, Louisiana. In 1965, the developer, LaKratt Corp., entered into agreements to convey nine gasoline service station sites to Humble and two service station sites to H.S.L. As a part of the agreements, Humble and H.S.L. negotiated for restrictive covenants which prevented LaKratt from conveying or anyone else from developing any service station within two blocks of a Humble or an H.S.L. service station. These restrictive covenants were noted on a comprehensive land use plan. The placement of the eleven service stations effectively prevented any other entity from constructing any service station in the development.

Under the original agreements, the restrictive covenants benefiting each of the eleven parcels of land were to expire on December 31, 1982. But in 1969, the restrictive covenants which affected seven of the nine Humble service stations were extended until December 31, 1985. The record as forwarded to us does not disclose conclusively whether the restrictive covenants affecting the H.S.L. service station sites were also extended until December 31, 1985. Berwick Bay claims that they were not, while Exxon claims that they were.

In August 1984, Berwick Bay purchased property in the subdivision and began constructing a low-cost, self-service gas station/convenience store/car wash. Berwick Bay's property was within two blocks of an Exxon service station which apparently was located on one of the two original H.S.L. service station sites. Exxon instituted this suit to enjoin the construction and/or operation of Berwick Bay's service station until the restrictive covenant expires in December 1985. The district court conducted a two-day hearing on Exxon's motion for a preliminary injunction and heard the testimony of eight witnesses. At the conclusion of the hearing, the parties waived the filing of post-hearing briefs and the court issued a preliminary injunction. The injunction restrained Berwick Bay and its agents from completing construction of its gasoline service station and from selling any motor fuels until December 31, 1985.

II.

We review the issuance of the preliminary injunction under an abuse of discretion standard. Myers v. Moody, 723 F.2d 388, 389 (5th Cir.1984). The issuance of such an injunction requires that four requirements be met. See City of Meridian v. Algernon Blair, Inc., 721 F.2d 525, 527 (5th Cir.1983). The issue before us at this time, however, a step earlier than the review of the injunction on the merits, is somewhat different. Berwick Bay asks this court to stay the operation of the preliminary injunction pending appeal. To justify a stay, Berwick Bay must show that (1) it is likely to succeed on the merits of its appeal, (2) it will be irreparably injured if the injunction is not stayed, (3) the stay would not substantially harm Exxon, and (4) granting the stay would serve the public interest. Florida Businessmen for Free Enterprise v. City of Hollywood, 648 F.2d 956, 957 (1981).

Berwick Bay's major arguments focus on the first of these requirements. It undertakes to show that the district court erred in concluding that Exxon was likely to prevail on the merits.

A LIKELIHOOD OF PREVAILING ON APPEAL

Berwick Bay first argues that at the TRO and the preliminary injunction hearings, the district court shifted the burden to it to demonstrate why an injunction should not issue. Berwick Bay quotes from the transcripts of both hearings in an attempt to show that the court was predisposed to grant the preliminary injunction and did not require Exxon to satisfy the four requirements for an injunction to issue. We have carefully read the entire record. Selected portions of the transcripts of the hearings might be taken to suggest that the court shifted the burden to Berwick Bay to show why an injunction should not issue. An examination of the entire record, however, reveals clearly that no such shifting of the burden occurred. Essentially, the court told Berwick Bay on several occasions that (1) Exxon had established a prima facie case warranting an injunction by showing that the restriction in question was in the public record; (2) this was an appropriate case for an injunction; and (3) Berwick Bay had a "rough row to hoe" to demonstrate why an injunction was unwarranted given those facts. These were acceptable statements in view of the evidence before the court.

Berwick Bay also argues that the district court's grant of the motion for a preliminary injunction is inconsistent with the court's findings of fact on Berwick Bay's antitrust defense. The district court found that "Exxon, clearly by physical presence and sales, does indeed--to use the expert's word--dominate that particular market area." The district court also found that Exxon's "d...