Commerce Oil Refining Corporation v. Miner

• Decision Date: 05 January 1959
• Docket Number: Civ. A. No. 2113.
• Citation: 170 F. Supp. 396
• Parties: COMMERCE OIL REFINING CORPORATION, Plaintiff, v. William W. MINER et al., Defendants.
• Court: U.S. District Court — District of Rhode Island

170 F. Supp. 396

COMMERCE OIL REFINING CORPORATION, Plaintiff, v. William W. MINER et al., Defendants.

Civ. A. No. 2113.

United States District Court D. Rhode Island.

January 5, 1959.

COPYRIGHT MATERIAL OMITTED

Letts & Quinn, Providence, R. I. (Andrew P. Quinn, Daniel J. Murray, A. Peter Quinn, Jr., Providence, R. I., of counsel), Simpson Thacher & Bartlett, New York City (Stephen P. Duggan, Jr., Richard Hawkins, New York City, of counsel), for plaintiff.

Cornelius C. Moore, Newport, R. I. (Salvatore L. Virgadamo, Francis J. Boyle, Newport, R. I., of counsel), Higgins & McCabe, Providence, R. I. (James A. Higgins, William C. Dorgan, Providence, R. I., of counsel), Charles H. Drummey, Providence, R. I., for defendants.

DAY, District Judge.

This is an action wherein the plaintiff seeks damages and injunctive relief against the defendants. Jurisdiction of this Court is based on diversity of citizenship and the existence of a controversy in the requisite amount.

Plaintiff's complaint contains two counts. In the first count plaintiff alleges in substance that on or about September 27, 1956, a license to engage in the refining, manufacturing and processing of petroleum products was issued to it by the Town Council of the Town of Jamestown in accordance with the provisions of Chapter 50 of the ordinances of said Jamestown, and that it paid a fee of $5,000 for said license; that refinery operations are a permissive use in a refinery use district in said town; that under the ordinances of said Jamestown, the laws of the State of Rhode Island and of the United States, plaintiff has a right to construct and operate a plant for the purpose of conducting refinery operations and intends to construct and operate such a refinery forthwith in such a refinery use district in said Jamestown; that the defendants have unlawfully combined and conspired to harass, delay and prevent plaintiff from exercising its right to construct and operate said refinery in said Jamestown; that pursuant to said unlawful combination and conspiracy to deprive plaintiff of its said right the defendants have unlawfully and maliciously resorted to the use of unlawful means, including certain overt acts, which are alleged therein; that it is informed and believes and alleges on information and belief that the defendants in furtherance of said unlawful combination and conspiracy intend to perform further acts to harass, delay and prevent it from constructing and operating said refinery, and that it has been damaged in the sum of $500,000. In this count, plaintiff demands that the defendants be enjoined during the pendency of this action and permanently "from unlawfully combining and conspiring against the plaintiff and from taking any action designed to harass, delay or prevent plaintiff from exercising its said rights etc.", and that it have judgment against the defendants and each of them in the sum of $500,000, the costs of this action and exemplary or punitive damages.

The second count alleges a cause of action arising under the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, with jurisdiction of this Court based on the provisions of the Clayton Act, 15 U.S.C.A. § 12 et seq.; repeats the allegations with respect to the license, etc. contained in the first count; seeks similar injunctive relief as that demanded therein, and judgment against the defendants and each of them in the sum of $1,500,000, reasonable attorneys' fees and costs.

Defendants in their answers assert that the license upon which the plaintiff relies is invalid, that the amendment to the zoning ordinance of Jamestown creating a refinery use district is invalid, and that the amendment to the building ordinance whereby plaintiff was excused from compliance therewith is invalid. In addition, they filed counterclaims wherein they allege the invalidity of said license, the invalidity of said amendment to said zoning ordinance, and of said amendment to the building ordinance. They also allege therein that the value of the real estate owned by them will be substantially reduced and destroyed, and that said real estate will be rendered unfit and uncomfortable for its enjoyment by the erection and operation of said refinery, and that said refinery will constitute a continuing nuisance to them.

In their counterclaims the defendants seek a declaratory judgment that said license and said amendments are void; and temporary and permanent injunctions enjoining the plaintiff from taking any further action or doing any act purported to be authorized under said license and said amendments; and such other or further relief as may be required by equity and good conscience.

Plaintiff in its reply to the counterclaims denies that said license and amendments are invalid, and further by way of defense to said counterclaims alleges that the defendants have been guilty of such laches as should in equity bar them from maintaining said counterclaims because the plaintiff "in reliance on the validity of said ordinances and said license" and on defendants' failure to bring any legal or equitable proceedings to challenge the validity thereof has taken certain steps, including the acquisition of lands, the expenditures of large sums of money, etc.

Subsequent to the filing of its reply, the plaintiff moved for the entry of a summary judgment in its favor dismissing said counterclaims. This motion was denied by me on February 7, 1958. See Commerce Oil Refining Corporation v. Miner, D.C., 22 F.R.D. 5.

When this case was reached for trial, plaintiff announced in open court that it did not intend to offer any evidence in support of its claim of an illegal conspiracy by the defendants against it, and upon motion by the defendants its complaint was dismissed with prejudice. The trial then proceeded on the defendants' counterclaims.

The trial, which lasted for more than forty days, produced a record of nearly 6,000 pages and a great many exhibits. Apart from the presentation of detailed testimony as to the circumstances attendant upon the adoption of said amendments to the zoning and building ordinances and the adoption of an ordinance and the issuance to the plaintiff of a license thereunder, many days of the trial were devoted to the presentation of testimony by expert witnesses on the question of whether the operation of the refinery as planned will constitute a nuisance to the defendants.

The issues developed by the pleadings and the evidence are (1) the validity of said amendments to the zoning and building ordinances, (2) the validity of the license granted to the plaintiff and (3) whether the operation of said refinery at the location specified and in the manner proposed by the plaintiff will constitute a nuisance to the defendants or any of them.

Plaintiff contends that the defendants have no standing to attack the validity of amendments to the zoning and building ordinances or the validity of the license or the ordinance pursuant to which it was granted. In my opinion this contention is without merit. It is well settled in Rhode Island that if a party can show that an amendment to a zoning ordinance is illegal and that the value of his property is injured or substantially threatened with injury by its enforcement, he is entitled to relief in equity with respect to such illegal amendment. In Rhode Island Home Builders v. Hunt, 1948, 74 R.I. 255, at page 259, 60 A.2d 496, at page 498, the Supreme Court said:

"* * * When his rights are injured or substantially threatened with injury by the enforcement of the alleged illegal amendment to the zoning ordinance and he is able to establish the illegality of such amendment, he has ample remedy through ordinary proceedings in equity."

That the same rule applies in Rhode Island to the amendment to the building ordinance and license aspects of this case is implicit in the decision of the Supreme Court of Rhode Island in Order of St. Benedict in Portsmouth v. Town Council of Portsmouth, R.I.1956, 120 A.2d 329. In that case the petitioner applied for certiorari to review and quash the action of the respondents in granting a building permit to erect and a license to operate an oil refinery to the plaintiff in this action. The Supreme Court in refusing to grant the relief sought pointed out that at common law the issuance of a writ of certiorari rested in the discretion of the Court, and held that in the exercise of that discretion it would not issue the writ because of the pendency of other proceedings in equity instituted by the petitioner to secure relief from the grievances alleged in the petition for certiorari.

Similarly, the federal courts have long adhered to the doctrine that private persons may attack the validity of municipal ordinances in equity proceedings when ordinary remedies do not afford full protection against the threat of substantial harm. General Electric Ry. Co. v. Chicago, I. & L. Ry. Co., 7 Cir., 1900, 98 F. 907, affirmed on rehearing 107 F. 771; Seattle Gas & Electric Co. v. Citizens' Light & Power Co., C.C.C.Wash.1903, 123 F. 588.

In this case the defendants have produced ample evidence that their rights are substantially threatened with injury by the continued enforcement of said amendments to the zoning and building ordinances, and the ordinance under which said license was granted. Under the laws of Rhode Island the defendants thus have standing presently to attack their validity in this Court.

I Validity Of The Amendments To The Zoning And Building Ordinances

The original zoning ordinance of the Town of Jamestown which the Town Council purported to amend by the creation of said refinery use district on September 27, 1956 was adopted on August 28, 1935. The evidence establishes and plaintiff concedes that due notice of the hearing on its proposed adoption was not given prior thereto as required by the state enabling act authorizing cities and towns to adopt zoning ordinances. As a consequence thereof the zoning...