Fran Welch Real Estate Sales v. Seabrook Island Co.

• Decision Date: 06 September 1985
• Docket Number: Civ. A. No. 82-2762-1.
• Citation: 621 F. Supp. 128
• Parties: FRAN WELCH REAL ESTATE SALES, INC., Plaintiff, v. SEABROOK ISLAND COMPANY, Defendant.
• Court: U.S. District Court — District of South Carolina

621 F. Supp. 128

FRAN WELCH REAL ESTATE SALES, INC., Plaintiff, v. SEABROOK ISLAND COMPANY, Defendant.

Civ. A. No. 82-2762-1.

United States District Court, D. South Carolina, Charleston Division.

September 6, 1985.

Harry A. Swagart, III, Columbia, S.C., for plaintiff.

Gerald A. Connell, Washington, D.C., and Robert H. Hood, Charleston, S.C., for defendant.

ORDER

HAWKINS, District Judge.

This civil antitrust action came on for hearing before the court on January 17, 1984, upon plaintiff's and defendant's cross-motions for summary judgment pursuant to Rule 56(c) and (e) of the Federal Rules of Civil Procedure. The plaintiff, Fran Welch Real Estate Sales, Inc. (hereinafter "Fran Welch"), is a real estate brokerage firm which does business on Kiawah, Seabrook and John's Islands, South Carolina. It was organized and licensed as a South Carolina corporation in February, 1981. This company is wholly owned by Mrs. Fran Welch and her husband.

The defendant, Seabrook Island Company (hereinafter "SIC"), is a South Carolina limited partnership. Since the early 1970's, SIC, or its predecessors-in-interest, has engaged in the development, promotion, and management of Seabrook Island as a private, residential resort community. As part of its business, SIC offers real estate sales and agency services to the public in connection with properties on Seabrook Island.

Seabrook Island is a 2100-acre tract of land situated along the South Carolina Coast about twenty-three miles south of Charleston, South Carolina. This island has become one of the finest resort communities in the United States. Dwellings on Seabrook Island are confined to private, single and multi-family residences. Seabrook Island offers its residents and guests a variety of recreational services and facilities, including golf, tennis, swimming, boating, fishing, and horseback riding. The success of Seabrook Island is attributable in large part to its natural beauty and private, non-commercial character.

This action arises out of dispute between Fran Welch and SIC over the latter's business practices in the real estate brokerage business on Seabrook Island. The plaintiff's complaint, containing five counts, was filed on October 29, 1982, Count one, premised on Section 1 of the Sherman Act, 15 U.S.C. § 1, charges that SIC participated in a contract, combination, or conspiracy which has restrained competition in the market for real estate brokerage services. Inter alia, Fran Welch alleges that SIC participated in five specific business practices which are per se violations¹ of Section 1:

(1) Restrictive deed covenants which prohibit all "For Sale" and "For Rent" signs on Seabrook Island;

(2) SIC's policies which govern access onto Seabrook Island;

(3) SIC's real estate broker referral program;

(4) A "listback" provision in one of SIC's sales contracts;² and,

(5) Exclusive dealing contracts between Seabrook Island property owners and SIC.

Count two, brought pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2, alleges that SIC has monopolized the market for real estate brokerage services on Seabrook Island.

Count three is a claim under South Carolina common law for intentional interference with Fran Welch's contractual relations.

Count four alleges that the acts complained of in counts one through three constitute unfair and deceptive trade practices in violation of the South Carolina Unfair Trade Practices Act (hereinafter "UTPA"), S.C.CODE ANN. §§ 39-5-10 et seq. (Law. Co-op 1985).

Count five sets forth a claim for a permanent and/or preliminary injunction against SIC.

SIC filed its answer on November 22, 1982. It denied all material allegations of the complaint and set forth other defenses.

Fran Welch filed its motion for partial summary judgment, or, in the alternative for a preliminary injunction on April 25, 1983. It argues that the five practices in Count one are per se violations of the Sherman Act and, therefore, violations of the U.T.P.A. Alternatively, it asserts that it is entitled to a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure.

On June 20, 1983, SIC cross-moved for summary judgment on all counts. Following extensive discovery, by way of depositions and interrogatories and the submission of voluminous affidavits and memoranda, the court scheduled and heard oral arguments on January 17, 1984. At that time, it denied Fran Welch's motion for partial summary judgment or, in the alternative, for a preliminary injunction. In addition, the court granted, in part, SIC's cross-motion for summary judgment. This order sets forth the reasons for the court's ruling.

At the outset, this court is mindful of the Supreme Court's admonition that "summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot." Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). On the other hand, Rule 56(e), Federal Rules of Civil Procedure, requires a party resisting a properly supported motion for summary judgment to demonstrate the substance of the naked assertions contained in the complaint: "An adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e) (emphasis added). In a case following the Poller decision, First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) (Marshall, J.), the court rejected the arguments that antitrust litigants are immune from summary proceedings or exempt from the requirements of Rule 56(e). Plaintiffs should not be allowed

to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations.... While we recognize the importance of preserving litigants' rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

391 U.S. at 289-90, 88 S.Ct. at 1592-93.

Indeed, the courts of the Fourth Circuit have not hesitated to grant summary judgment in antitrust cases where the defendant specifically refutes the allegations of a complaint and the plaintiff fails to produce significant probative evidence tending to show the existence of the alleged violations. See e.g., Hester v. Martindale-Hubbell, Inc., 659 F.2d 433 (4th Cir.1981), cert. denied, 455 U.S. 981, 102 S.Ct. 1489, 71 L.Ed.2d 691 (1982); Principe v. McDonald's Corp., 631 F.2d 303 (4th Cir. 1980); Central Chemical Corp. v. Agrico Chemical Co. 531 F.Supp. 533 (D.Md.1982); Human Resources Institute of Norfolk, Inc. v. Blue Cross of Va., 484 F.Supp. 520 (E.D.Va.1980).

In moving for summary judgment, the defendant, in addition to citation to pertinent legal precedent, has set forth by way of detailed affidavits and exhibits uncontroverted facts which establish its right to judgment as a matter of law on part of the plaintiff's complaint. Fran Welch, in order to defeat this motion, must come forward with evidence which raises a genuine issue of material fact. It has failed to do this.

SECTION 1 CLAIMS

Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete — to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster. Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy.

United States v. Topco Associates, Inc., 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515 (1972) (Marshall, J.).

Section 1 of the Sherman Act provides in relevant part:

Every contract, combination in the form of trust or otherwise, or conspiracy, in the restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal....

15 U.S.C. § 1.

Read literally, Section 1 prohibits every agreement "in the restraint of trade." The United States Supreme Court, however, in United States v. Joint Traffic Ass'n., 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259 (1898), recognized that Congress did not intend to prohibit "every" agreement which restrains trade. The reason for rejecting such a literal construction was articulated by Mr. Justice Brandies in Board of Trade of City of Chicago v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918): "Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence." 246 U.S. at 238, 38 S.Ct. at 243.

In order to properly administer the prohibition contained in Section 1, the courts developed two doctrines: (1) the rule of reason, and (2) the per se rule. Since Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), most practices are analyzed under the so-called rule of reason. "As its name suggests, the rule of reason requires the factfinder to decide whether under all the circumstances of the case the restrictive practice imposes an unreasonable restraint on competition." Arizona v. Maricopa County Medical Society, 457 U.S. 332, 343, ...