Pinehurst Enterprises v. Town of Southern Pines

• Decision Date: 24 June 1988
• Docket Number: No. C-87-774-R.,C-87-774-R.
• Citation: 690 F. Supp. 444
• Court: U.S. District Court — Middle District of North Carolina
• Parties: PINEHURST ENTERPRISES, INC., Pinehurst Water Company, and Pinehurst Sanitary Company, North Carolina Corporations, Plaintiffs, v. The TOWN OF SOUTHERN PINES, a North Carolina Municipal Corporation, the Council of the Town of Southern Pines, North Carolina, the governing body of the Town of Southern Pines, including all members of the Council for the Town of Southern Pines in their official capacities, William Coleman, in his capacity as Town Manager of the Town of Southern Pines, and Jane Clark, in her capacity as Mayor of the Town of Southern Pines, Defendants.

690 F. Supp. 444

PINEHURST ENTERPRISES, INC., Pinehurst Water Company, and Pinehurst Sanitary Company, North Carolina Corporations, Plaintiffs, v. The TOWN OF SOUTHERN PINES, a North Carolina Municipal Corporation, the Council of the Town of Southern Pines, North Carolina, the governing body of the Town of Southern Pines, including all members of the Council for the Town of Southern Pines in their official capacities, William Coleman, in his capacity as Town Manager of the Town of Southern Pines, and Jane Clark, in her capacity as Mayor of the Town of Southern Pines, Defendants.

No. C-87-774-R.

United States District Court, M.D. North Carolina, Rockingham Division.

June 24, 1988.

Frank A. Schiller and Edward S. Finley of the firm of Hunton & Williams, Raleigh, N.C., David F. Peters and Sondra Tomlinson of the firm of Hunton & Williams, Richmond, Va., for plaintiffs.

W. Lamont Brown of the firm of Brown, Robbins, May, Pate, Rich, Scarborough & Burke, Pinehurst, N.C., Roddey M. Ligon, Jr. and Gusti W. Frankel of the firm of Womble, Carlyle, Sandridge & Rice, Winston-Salem, N.C., and James D. Monteith of the firm of Waggoner, Hamrick, Hasty, Monteith, Kratt, Cobb & McDonnell, Charlotte, N.C., for defendants.

MEMORANDUM OPINION AND ORDER

HIRAM H. WARD, Chief Judge.

This matter comes before the Court on Defendants' Motion for Summary Judgment on Plaintiffs' Federal Claims and on Plaintiffs' State Law Claims Due to a Lack of Pendent Jurisdiction (December 21, 1987). In the underlying action, the parties dispute, inter alia, who has the right to provide sewage service to a development in southern Moore County, North Carolina. For the reasons stated below, the Court will grant defendants' motion for summary judgment with respect to Claims I, II and X-A. Further, the Court will dismiss Claim III for failure to state a claim under 42 U.S.C. § 1983. Finally, the Court will not exercise pendent jurisdiction over the state law claims and will dismiss them.

I. FACTS

For the most part, the parties agree on the underlying facts giving rise to this dispute. Accordingly, the verified complaint and defendants' admissions in their answer establish the following facts. Plaintiffs, Pinehurst Enterprises, Inc., Pinehurst Water Co., and Pinehurst Sanitary Co., are each corporations incorporated under the laws of North Carolina and headquartered in the Village of Pinehurst, North Carolina. Pinehurst Sanitary Co. and Pinehurst Water Co. are wholly owned subsidiaries of Pinehurst Enterprises, Inc., and both are public utilities authorized by certificates of public convenience and necessity to provide public utilities service in and around the Village of Pinehurst. Pinehurst, Inc. was the predecessor corporation of Pinehurst Enterprises, Inc.

Defendant Town of Southern Pines Southern Pines is a municipal corporation organized and existing under the laws of the State of North Carolina. Defendant Town Council of the Town of Southern Pines is the governing body of that town. Defendants Jane Clark and William Coleman are, respectively, the mayor (previously mayor pro tem) and town manager of Southern Pines. Pinehurst National Corp. Pinehurst National is a North Carolina Corporation that is developing a tract of land in southern Moore County, North Carolina. Plaintiffs and defendants both desire to provide Pinehurst National with water and sewer utility service. The Court allowed Pinehurst National to intervene for the limited purpose of entering into a consent order that allows plaintiffs to furnish sewer service to Pinehurst National during the pendency of this litigation.

Pursuant to 33 U.S.C. §§ 1281-89, Moore County applied for a federal grant to aid in the construction of a wastewater treatment facility in southern Moore County. In connection with the application, Moore County, as the lead agency, prepared a "201 Plan" for sewer service to the Southern Moore County region. Plaintiffs and defendants both supplied information, comments, and funds during the preparation of the 201 Plan.

In December 1973 the Town of Southern Pines adopted a resolution providing in pertinent part:

NOW THEREFORE be it ordained, that the County of Moore and each of the communities of Pinehurst, Southern Pines, Aberdeen, and Pinebluff do in the interest of health, safety, and public welfare of the citizens of Moore County, declare and establish a 201 Planning area to be the Aberdeen Creek watershed.

AND do hereby commit themselves collectively to the proposition of treating all wastewater in this planning area jointly;

AND further commit themselves not to fragment the intended and proposed wastewater treatment planning area by individual efforts inconsistent with the Master Plan for the area AND do hereby further commit themselves as individual communities in the Planning Area to take part in the program and share their proportionate cost of wastewater treatment as necessary under the program, and recognize Moore County as the lead agency for providing wastewater facilities in Moore County.

Similar resolutions were adopted by other municipalities in southern Moore County, as well as by Pinehurst, Inc. between December 1973 and February 1974. As stated before, Pinehurst, Inc. was the predecessor corporation of plaintiff, Pinehurst Enterprises, Inc.

Moore County adopted the 201 Plan in 1974. In furtherance of the 201 Plan, Moore County and Pinehurst, Inc. entered into a "Sewage Treatment and Disposal Service Contract" dated August 20, 1975. Therein, Moore County agreed to provide wastewater treatment services to Pinehurst, Inc., who in turn agreed to receive such services. Additionally, Moore County entered into a similar contract with Southern Pines in furtherance of the 201 Plan.

On or about October 27, 1977, the Moore County Board of Commissioners adopted the Moore County Sewer Use Ordinance to govern operations at the County's new wastewater treatment facility, into which all wastewater from the Southern Moore County Wastewater System District would be pumped for treatment. Adoption of the Sewer Use Ordinance was a requirement for the federal financing.

Moore County was successful in securing an Environmental Protection Agency grant to aid in construction of the facility. Part of the remaining financing was secured through a loan made and insured by the federal government acting through the Farmers Home Administration FmHA.

On or about November 27, 1977, the Moore County Board of Commissioners passed "Addendum II" to the Moore County Sewer Use Ordinance. Addendum II states that the Moore County Waste Water System District is "divided into the following four service areas: 1. Aberdeen Service Area 2. Pinehurst Service Area, 3. Southern Pines Service Area 4. Aberdeen South Service Area." See (Complaint Exhibit C at Addendum II). Addendum II also states that the first three service areas listed above are assigned respectively to the Town of Aberdeen, Pinehurst, Inc., and the Town of Southern Pines. The Aberdeen South Service Area was unassigned.

The share of the debt service on the FmHA loan borne by each Service Agency is based upon the percentage of the treatment facility capacity reserved to serve each Service Area. The percentage of the capacity reserved to serve each Service Area was determined by the projected population within the Service Area to be served at full utilization anticipated to occur in year 2010. Plaintiffs have paid their share of the annual debt service—$143,328 per year—for approximately the past ten years.

Pinehurst National is developing the Pinehurst National Golf Club the development. The development lies within the "Pinehurst Service Area" referred to in Addendum II. Subsequent to the execution of the Sewage Treatment and Disposal Service Contracts and passage of the Moore County Sewer Use Ordinance, Southern Pines annexed the area that Pinehurst National is developing. Thereafter, plaintiffs and defendants both desired to provide service to Pinehurst National.

In June of 1987, Pinehurst National filed a request with the Town of Southern Pines to rezone the 512.79 acres that are to be developed. The Town Council approved the zoning request on the express condition that Pinehurst National use Southern Pines water and sewer. Not surprisingly, the parties disagreed as to who has the right to service Pinehurst National. Thus, the dispute generated this lawsuit with the complaint being filed on November 4, 1987. The parties and Pinehurst National entered into a consent order allowing plaintiff to provide service to Pinehurst National during the pendency of this action.

II. DISCUSSION

Defendants move for summary judgment on the merits as to plaintiffs' federal claims and move to dismiss plaintiffs' state claims in the Court's discretion associated with pendent subject matter jurisdiction. Plaintiffs allege four federal claims. The first two claims allege antitrust violations. In Claim I, plaintiffs allege that defendant violated 15 U.S.C. § 1 by unreasonably restraining trade in the sewage service market in Southern Pines by requiring Pinehurst National to purchase sewer services from Southern Pines. Claim II alleges that these same acts violated the anti-monopoly provision, 15 U.S.C. § 2. Claim III alleges that defendants' conduct deprived plaintiffs of their property right to service Pinehurst National without due process of law and without just compensation in violation of the fourteenth amendment. It further alleges that the due process violation is remediable under 42 U.S.C. § 1983. Claim X-A alleges that defendants' conduct illegally curtailed the utility service plaintiffs provide, in violation of 7 U.S.C. § 1926(b). See (Amendment to Complaint November 20, 1987). Defendants challenge each of these claims by their motion. The Court will analyze the antitrust claims together because the same consideration is dispositive of both. Then the Court will consider, in order, the section 1983, section 1926(b),...