Powers v. Nassau Development Corp., 83-2690
| Decision Date | 22 February 1985 |
| Docket Number | No. 83-2690,83-2690 |
| Citation | 753 F.2d 457 |
| Parties | 1985-1 Trade Cases 66,444 M. Lane POWERS, Plaintiff-Appellant, v. NASSAU DEVELOPMENT CORP., Houston Natural Gas Corp. and Thermal Resources, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jack D. Nolan, Houston, Tex., Yocel Alonso, Robert J. Vanderlyn, Bellaire, Tex., for plaintiff-appellant.
Jeffrey H. Hubbard, Houston, Tex., for Nassau Dev.
Vinson & Elkins, Max Hendrick, III, Alison L. Smith, David M. Bond, Houston, Tex., Ann M. Ashton, Washington, D.C., for Houston Nat'l Gas.
Lionel M. Schooler, Houston, Tex., for Thermal.
Appeal from the United States District Court for the Southern District of Texas.
Before GARZA, RANDALL and TATE, Circuit Judges.
The plaintiff Powers sues three defendants, allegedly co-conspirators, for treble damages, 15 U.S.C. Sec. 15(a), arising from their alleged violations of the Sherman Act, 15 U.S.C. Secs. 1-7 and the Clayton Act, 15 U.S.C. Secs. 12-27, by their agreements and acts in restraint of trade and competition. Powers alleges that, as a result of this illegal conspiracy, he was required to enter into a contract to pay grossly inflated prices for a product he was compelled to buy. Powers appeals from summary judgment that dismissed his suit as time-barred, because not commenced within the four years after his statutory causes of action arose, as required by 15 U.S.C. Sec. 15b.
We reverse. Summary judgment was precluded by the plaintiff Powers' factual showing of sufficient significant probative force to raise a genuine issue of material fact as to whether a continuing conspiracy resulted in an overt act, the filing of a state-court suit to enforce an illegal contract, within the four-year limitations period prior to the present suit.
The ultimate basis of the plaintiff Powers' cause of action stems from a 1963 agreement between two of the three defendants, Nassau (a land development company) and Houston Gas (a public utility). As will be explained more fully, by this agreement those who in the future purchased land from Nassau were required to obtain heating and chilling services exclusively from Houston Gas at rates to be fixed by agreement between Nassau and Houston Gas.
The factual showing supports a (disputed) finding, sufficient for summary judgment purposes, that the plaintiff Powers, when he purchased land in 1973 from Nassau to erect an office building, was required to enter into a contract with Houston Gas by which he and his assigns were bound for a period of twenty years to buy from Houston Gas chilled water services for space cooling, at rates to be established by Houston Gas from time to time, to be applicable to the Nassau Bay Center development in which Powers built.
In 1977, about three years later, Powers' successor in title refused any longer to comply with the contract, as illegally confected and non-binding, and it installed its own chilling units, as much more economical. Houston Gas did not sue Powers at this time for breach of the contract.
Instead, in September 1978 Houston Gas sold to Thermal, a newly formed corporation, its Nassau Bay central plant and assigned to Thermal all its contractual rights of exclusive chilling service to the buildings erected in the Nassau Bay development. Thermal had been formed for this purpose at the instigation of a principal executive of Nassau, who was also a principal stockholder of the new corporation. He and a Houston Gas executive were members of the three-person board of directors for Thermal; and both he and the Houston Gas executive had been involved as representatives of Nassau and Houston Gas in communications with Powers, the plaintiff, in unsuccessful efforts to force Powers to comply with the requirements of the Nassau-Houston Gas exclusive-chilling contract as to additional buildings Powers had constructed on land purchased from Nassau.
A year later, on September 13, 1979, Thermal filed suit in state court against Powers. Thermal alleged it was the assignee of the exclusive chilling contract entered into with Houston Gas by Powers in 1973, and that in June 1977 Powers had ceased using the chilled water services as obligated by the contract. Thermal alleged that by Powers' breach of his contract, it was entitled to recover all profits it lost following June 1977, praying for $1,200,000 damages and $400,000 attorneys' fees.
Powers filed the present suit stating antitrust causes of action on February 20, 1981. Made defendants were Houston Gas, Nassau, and Thermal, on allegations that they combined and conspired to coerce all individuals forced to enter into illegal monopolistic contracts with Houston Gas from questioning or breaking them, and that the purpose of the state court suit was to harass and intimidate persons by utilizing such costly litigation as an integral part of a scheme for maintaining their monopolistic strangehold over chilled and hot water service for the office buildings in the Nassau Bay development.
The principal issue of this appeal is whether the 1978 state court suit filed by Thermal prevented application to this February 1981 antitrust damage suit of the statutory four-year time-bar as to such suits, 15 U.S.C. Sec. 15b.
In granting summary judgment dismissing Powers' suit, the district court held that the undisputed factual showing was that the last payment by Powers individually (who had sold his property) under the allegedly illegal contract had been made no later than January 1977 (a ruling we accept for present purposes), more than four years before this February 1981 anti-trust suit.
As to the filing of Thermal's state court suit, the district court held, relevantly, that it was merely a suit based upon a unilateral cause of action for breach of contract and that (based upon the defendants' affidavits and depositions) it was not shown to have been brought for anticompetitive purposes as a result of a conspiracy or agreement with others to institute the law suit or as part of a conspiratorial scheme to enforce an illegal contract. For reasons to be stated (see III, infra ), we hold that summary judgment was improvidently granted on this ground because of disputed issues of material fact on the factual showing made. Preliminarily, however, we will address the issue of the illegality of the Nassau-Houston Gas contract (see I, infra ), as well as the standards applicable to grant of a summary judgment that dismisses an antitrust conspiracy suit (see II, infra ).
The ultimate basis of Powers' antitrust causes of action is an allegedly monopolistic illegal agreement entered into in 1963 between Nassau and Houston Gas, and those contracts thereby required to be executed by purchasers of land from Nassau to accept chilling and heating services exclusively from Houston Gas.
At the time of this agreement, Nassau owned a large and mostly undeveloped tract that contained most of the land adjacent to the Johnson Space Center in Houston. By the 1963 agreement, recorded in the conveyance records, Nassau and Houston Gas agreed, inter alia, that Nassau "and its tenants and grantees" would purchase exclusively from Houston Gas for twenty years "chilled water for its space cooling requirements and hot water or steam for its space heating requirements for all buildings to be built within the [contemplated business] Center"; and also to require every tenant or purchaser of land or space within the contemplated business-center development to enter into a restrictive covenant against their "installing any air conditioning equipment except as necessary to utilize chilled water and hot water or steam to be supplied by Houston [Gas]." The customers were to be charged rates for the first two years as provided by a schedule attached to the agreement, and "at the expiration of the two-year period such rates may be changed by mutual agreement of the parties hereto [i.e., Nassau and Houston Gas]."
Thus, this recorded agreement purported to compel all tenants of, or purchasers of land from, Nassau to obtain their heating and cooling exclusively from Houston Gas or its assigns, at rates after two years to be determined solely by Nassau and Houston Gas. Therefore, any tenant or purchaser who desired to acquire premises from Nassau within the large and attractive tract of land described by the recorded 1963 agreement, was also required to buy his heating and cooling services from Houston Gas.
Without substantial dispute, this anti-competition agreement was illegal insofar as it compelled Nassau's tenants or grantees to buy the services exclusively from Houston Gas (and, in fact, a discovery deposition indicates that about in 1980 Nassau itself repudiated the agreement as illegal). See Sherman Act, Section 1, 15 U.S.C. Sec. 1 (), and Section 2, 15 U.S.C. Sec. 2 (), cf. also, the Clayton Act, Section 3, 15 U.S.C. Sec. 14 ().
Accordingly, if Powers suffered damages as a consequence of this illegal agreement, he is entitled to recover them by civil suit against the parties to the agreement or those acting in concert with them, providing his suit is timely brought. See 15 U.S.C. Sec. 15(a): " * * * any person ... injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor ... and shall recover threefold the damages by him sustained * * *." However, any civil...
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