836 F.2d 921 (5th Cir. 1988), 86-2629, Mahone v. Addicks Utility Dist. of Harris County

Docket Nº:86-2629.
Citation:836 F.2d 921
Party Name:Randolph MAHONE, Plaintiff-Appellant, v. ADDICKS UTILITY DISTRICT OF HARRIS COUNTY, et al., Defendants-Appellees.
Case Date:February 04, 1988
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 921

836 F.2d 921 (5th Cir. 1988)

Randolph MAHONE, Plaintiff-Appellant,

v.

ADDICKS UTILITY DISTRICT OF HARRIS COUNTY, et al.,

Defendants-Appellees.

No. 86-2629.

United States Court of Appeals, Fifth Circuit

February 4, 1988

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[Copyrighted Material Omitted]

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David Showalter, Pamela Prince Stines, Bellaire, Tex., for plaintiff-appellant.

Glen E. Clover, Liddell, Sapp, Zivley & Laboon, Patricia L. Jones, Houston, Tex., for Addicks, Fitch, O'Rourke, Burpo, Taylor, Horning, Jones, Alan Jones, Bennion, Blocker, Cate.

B.D. Daniel, Susman & Kessler, Morton L. Susman, Charles S. Baker, Houston, Tex., for O'Donnell & Surburban Homes Realty.

Robert L. Lipstet, Dunn, Lipstet, Singer & Hirsch, Constance G. Decker, Houston, Tex., for Atkinson & Atkins.

Fred Knapp, Jr., Andrews & Kurth, Houston, Tex., for Moreland, Etc.

Appeal from the United States District Court for the Southern District of Texas.

Before WISDOM, GEE and KING [*], Circuit Judges.

CAROLYN DINEEN KING, Circuit Judge:

Plaintiff sued the Addicks Utility District, its officers and directors, and various businesses and individuals over the Utility District's decision not to annex a parcel of land plaintiff owned. Plaintiff's complaint alleged antitrust and civil rights claims. After being served, all but two of the defendants filed with the district court motions to dismiss the complaint with prejudice. Each motion argued that, as written, the complaint failed to state any claim upon which relief could be granted. After conducting a hearing, the district court granted all of the defendants' motions and, on its own motion, also dismissed with prejudice all claims against the two defendants who had not raised motions of their own. It is from this action that the plaintiff appeals, arguing simply that the rigorous standards for dismissal were not met in this case and that, in any event, dismissal with prejudice was improper. Our review of the complaint convinces us that the district court correctly dismissed with prejudice plaintiff's antitrust claim and all of plaintiff's civil rights claims except the one based on the equal protection clause. With respect to the equal protection claim, however, we are unable to conclude on this record that the claim is inadequate. Therefore, we remand the equal protection claim for further consideration by the parties and the district court. In addition, because we have concerns about the possible effect that the doctrine of claim preclusion could have on plaintiff's ability to bring a subsequent suit under state law on related matters, we direct the district court to dismiss with prejudice only the federal claims that we now rule on or that it disposes of on remand.

I.

FACTS AND PROCEEDINGS BELOW

The Addicks Utility District ("the District") is a municipal corporation in western Harris County, Texas organized pursuant to article XVI, section 59 of the Texas

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Constitution and chapter 54 of the Texas Water Code. 1 In general, a municipal utility district in Texas has the power, subject to certain rules and regulations, to review property owners' petitions for annexation into the utility district and to decide which properties are annexed. In 1977, the District exercised its annexation power to add to the District a 147 acre tract of land owned or controlled by Paul Wahlberg ("Wahlberg") and Edwin Franks ("Franks"). The effect of adding this tract to the District, however, was to encircle completely with annexed property a tract of approximately twenty acres of unannexed, undeveloped property. Because of the District's prior pattern of annexation, this unannexed tract became situated near the geographic center of the 600 acre District.

In January, 1982, Randolph Mahone ("Mahone") owned the twenty acre tract. In an effort to ready the tract for development, and thereby increase its value to potential purchasers, Mahone determined to obtain municipal utility services--including fresh water and waste water--from the District for the tract. Annexation, however, was a necessary prerequisite for obtaining the services. On several occasions, therefore, Mahone applied to the District for annexation. However, the Board of Directors of the District rejected each application Mahone filed. According to Mahone, the Board informed him that before it would even consider annexing his tract, Mahone would have to prepare and present to the Board expensive development plans. In addition, several individuals associated with the District "demanded more than two times" that, as a condition precedent to annexation, Mahone agree to pay money to certain developers whose land was already included in the District. Mahone, however, considered these demands for payment to be illegal. He also balked at the request for development plans--as far as Mahone could ascertain, no other petitioner for annexation and utilities had been required to submit similar costly plans at such an early stage in the annexation process. Finally, Mahone learned that the District had extended municipal services to a seventy-six acre tract of land which was located farther from the District's physical plant than Mahone's tract and whose owner had applied for services after Mahone.

Believing that his experience with the District evidenced an illegal conspiracy between the District, its employees, and the developers whose property who had already been annexed, on April 9, 1985, Mahone filed suit in the United States District Court for the Southern District of Texas. Named as defendants in Mahone's suit were: (1) the District and its former and present directors ("the District defendants"); (2) an engineering firm and its owner employed by the District ("the Atkinson defendants"); (3) the developers to whom Mahone had been asked to pay money ("the O'Donnell defendants"); (4) another business and its owner ("the Moreland defendants"); (5) Wahlberg; and (6) Franks. 2 In

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his twenty-three page original complaint, Mahone asserted three claims against the defendants. First, Mahone charged that the defendants acted in conspiracy, under color of state law, and in violation of section 1983 of Title 42 to deny him his federal and constitutional rights. Specifically, Mahone accused the defendants of violating his constitutional right to vote in the District's elections, his right to procedural due process, and his right to the equal protection of the law. Second, Mahone charged that the individually named defendants were operating the District as an enterprise and engaging in a pattern of racketeering activities in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). As predicate crimes, Mahone charged the defendants with extortion, mail fraud, and wire fraud. Third, Mahone charged the defendants with conspiracy to monopolize, attempt to monopolize, and monopolization of the commercial and residential development of land in the District's physical area, all in violation of the antitrust laws.

In May, 1985, after being served, the District defendants and the O'Donnell defendants separately filed motions to dismiss Mahone's complaint. Although the specific grounds for the two motions varied somewhat, both protested that the complaint failed to state a claim upon which relief could be granted. The District defendants also moved for a more definite statement, and the Atkinson defendants filed a similar motion. Six months later, Mahone filed his response to the various defendants' motions; the District defendants and the O'Donnell defendants quickly countered with a reply to Mahone's response. On December 13, 1985, the district court conducted a hearing on all pending motions. At the hearing, the court deferred ruling on the motions to dismiss and granted the motions for a more definite statement. Accordingly, the court entered an order directing Mahone "to amend his complaint within 20 days" and "to reduce [his] complaint to valid causes of action." On December 30, 1985, Mahone filed his First Amended Original Complaint.

Most of Mahone's amended complaint exactly duplicated his first effort. However, those changes which Mahone did make were significant. With respect to his civil rights claim, Mahone attempted to explicate his understanding of the relationship between the non-District defendants and the District. According to Mahone, the O'Donnell defendants, the Atkinson defendants, the Moreland defendants, Franks, and Wahlberg all had "close relationships" with the District defendants--relationships which they exploited to frustrate Mahone's attempts to obtain utilities for his tract of land. Moreover, Mahone alleged, the non-District defendants were all "inextricably intertwined in the affairs of the [District Board of Directors] and exercis[ed] de facto control" over its acts and decisions. In addition, Mahone concluded that the defendants' combined actions not only deprived him of the earlier alleged constitutional and federal rights, they also deprived him of "substantive" rights protected by the Constitution and caused him to suffer mental anguish and emotional distress. While Mahone's newly pled civil rights claim, therefore, was more expansive than the version contained in his original complaint, Mahone's newly pled antitrust claim presented a somewhat more limited version of his earlier claim. Most significantly, Mahone eliminated the District defendants as parties against whom the claim was asserted. The most notable change in the amended complaint, however, had to do with the RICO claim--all references to it were completely expunged.

The filing of the amended complaint triggered a flurry of activity among the defendants. In January, 1986, the Moreland defendants filed their first motion to dismiss

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and the O'Donnell defendants...

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