Glen Oaks Utilities, Inc. v. City of Houston

• Decision Date: 04 August 1960
• Docket Number: No. 18165.,18165.
• Citation: 280 F.2d 330
• Parties: GLEN OAKS UTILITIES, INC. and Greenfield Utilities Corporation, Appellants, v. CITY OF HOUSTON, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

280 F.2d 330 (1960)

GLEN OAKS UTILITIES, INC. and Greenfield Utilities Corporation, Appellants, v. CITY OF HOUSTON, Appellee.

No. 18165.

United States Court of Appeals Fifth Circuit.

June 30, 1960.

Rehearing Denied August 4, 1960.

Melvin A. Dow, Houston, Tex., Edmund L. Cogburn, Dow & Dow, Houston, Tex., of counsel, for appellants, Glen Oaks Utilities, Inc., and Greenfield Utilities Corp.

John Gano, Senior Asst. City Atty., Charles F. Weaver, Asst. City Atty., R. H. Burks, City Atty., Houston, Tex., for appellee, City of Houston.

Before RIVES, Chief Judge, and JONES and WISDOM, Circuit Judges.

JONES, Circuit Judge.

The appellants brought suit in the United States District Court seeking an injunction to prohibit the City of Houston from enforcing an ordinance fixing the Companies' rates for water and sewer service. It was asserted that the rates were confiscatory. A similar suit had been brought and was pending in a state court of Texas. The district court entered an order that the suit and all proceedings therein be stayed pending final determination of the state court proceeding.

The appellants are corporations which provide water service and sanitary sewer service to a comparatively small area in the City of Houston, Texas. Prior to January 1, 1957, the area was not within the limits of the City, but it was made a part of the City by annexation on that day. In April, 1957, the Companies increased their rates. On May 1, 1957, the City, by Ordinance 57-531, fixed the rates of privately owned utilities at their December 31, 1956 levels. This was the first rate regulation to which the Companies had been subjected by the City. The Companies continued to charge their increased rates. The City sued to force compliance with the ordinance. The Texas court granted a temporary injunction against collection of the increased rates with a proviso that the City conduct rate hearings. A hearing was held, followed by negotiations between the City and the Companies for the purchase by the City of the utility properties. The hearings were concluded in August, 1957. The negotiations continued until April or May, 1959. The Companies set down for hearing on Monday, July 20, 1959, a motion for summary judgment in the state court suit which had been dormant since 1957. On July 17, 1959, the City Council of Houston passed, and on the same day the Mayor approved and signed, Ordinance 59-996. By recitals in the ordinance references were made to the rate hearings and the purchase negotiations, and new rates were fixed which, in the opinion of the council as stated in the ordinance, were fair and reasonable and took into consideration and provided for increases in operating costs since the rate hearings were held. The ordinance provided that if either company was not satisfied with the rates fixed by the ordinance, the City, upon application, would set new rate hearings for the purpose of adjusting rates or establishing new rates. The new rates, as fixed by the 1959 ordinance, were about fifty per cent. above those fixed by the 1957 ordinance.

The Companies asserted the conclusion that the rate increase was given for the purpose of rendering moot the issue in the state court case. Whether it did so we cannot say. The Companies' complaint leaves us in suspense as to the outcome of that litigation. The Companies increased their rates as authorized by the ordinance. On August 4, 1959, the Companies brought another suit in the Texas state court against the City seeking to enjoin the enforcement of the 1959 ordinance. In this state court suit an order was entered August 13, 1959, sustaining the City's plea to the jurisdiction and motion to dismiss. An appeal was taken. On August 26, 1959, the Companies instituted their suit in the Federal Court. The facts pleaded were those which we have outlined. The pleadings further recounted the matters and things upon which the Companies relied as justification for increasing their rates beyond those fixed by the 1959 ordinance. The City filed a plea to the jurisdiction and motion to dismiss. In this the City asserted that the question should be determined in the state courts; that the Companies should be denied access to the courts until administrative procedures, which had not been invoked, had been exhausted; that the Companies should be confined to the state court remedy which they had sought in the pending state court proceeding; and that the Companies' allegations showed they were not entitled to relief. The City also filed an answer and cross-claim in which fact issues were raised, and the contention was made that if the 1959 rates should be suspended the rates prescribed by the 1957 ordinance should be reestablished.

We are asked to determine whether error was committed by the district court in the entry of its stay order. But before that question is reached, we consider whether the stay order is appealable. If the order is one which grants or denies injunctive relief an appeal may be taken under 28 U.S.C.A. § 1292, even though the order is interlocutory and not final. Where the stay order is only a procedural step in controlling the progress of the cause it is not appealable. United States v. Richardson, 5 Cir., 1953, 204 F.2d 552. Where stay orders such as the one before us have been issued in proceedings which, historically, fell into the category of common law actions, such orders were regarded as the equivalent of an injunctive order of a court of equity and were therefore appealable. Baltimore Contractors v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233. Perhaps, since the Baltimore Contractors case was decided in 1955, there has been a modification of the rule there announced. The belief at one time prevailed that the doctrine of abstention could be invoked only in equitable causes. See Propper v. Clark, 337 U.S. 472, 69 S.Ct. 1333, 93 L.Ed. 1480. That belief has been dispelled, at least with respect to eminent domain proceedings. Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058, rehearing denied 360 U.S. 940, 79 S.Ct. 1442, 3 L.Ed.2d 1552. It might follow that the considerations which prompted the relaxation of the rule which previously restricted abstention to ...