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GULF PARK WATER CO., INC. v. FIRST OCEAN SPRINGS DEVELOPMENT CO. AND PINE ISLAND GOLF COURSE

JULY 27, 1988

GULF PARK WATER CO., INC.
v.
FIRST OCEAN SPRINGS DEVELOPMENT CO. AND PINE ISLAND GOLF COURSE, INC.



BEFORE DAN LEE, PRATHER AND SULLIVAN.

DAN LEE, PRESIDING JUSTICE, FOR THE COURT:

This appeal brings to this Court the question of whether Gulf Park Water Co., Inc. (Gulf Park) will continue to discharge effluent from its troubled sewage treatment plant into a lagoon located on nearby Pine Island Golf Course (Pine Island) in Jackson County, Mississippi. The chancellor enjoined Gulf Park from using the lagoon as part of its final treating process, ordered Gulf Park to pay damages to Pine Island and First Ocean Springs Development Co. (FOSDC), and ordered Gulf Park to connect to a different system in order to dispose of its sewage effluent. From that ruling Gulf Park appeals, assigning three errors:

I. The chancery court's holding that Gulf Park Water Company, Inc. had a license, revocable at will, and not an implied easement to use a lagoon located on Pine Island Golf Course as part of its sewage treatment facility was manifestly in error against the overwhelming weight of the evidence, and not supported by any credible evidence.

 II. The chancery court's decree enjoining Gulf Park Water Company, Inc., to cease using the lagoon on Pine Island Golf Course and to discharge its sewage treatment effluent elsewhere was manifestly incorrect, against the overwhelming weight of the evidence, and unsupported by any credible evidence. There was no proof of irreparable harm and the lower court lacked jurisdiction to alter Gulf Park Water Company, Inc.'s sewage treatment facility system.

 III. The chancery court's award of monetary damages to appellees for the cost of electricity to pump water into the lagoon and the cost to maintain the golf course was against the overwhelming weight of the evidence and unsupported by any credible evidence.

 Appellees Pine Island and FOSDC originally filed a cross-appeal assigning four errors below. Pine Island and FOSDC withdrew their cross-appeal on May 19, 1988, prior to oral argument on the merits that date. Gulf Park expressed no opposition to this withdrawal.

 For the reason that we think the chancellor reached the best possible remedy in a difficult case, we affirm.

 PROCEDURAL SETTING

 First Ocean Springs Development Co. (FOSDC) and Pine Island Golf Course, Inc. (Pine Island) filed a bill of injunction and asserted a claim to monetary damages on September 25, 1981. The bill of injunction listed as defendants Gulf Park Water Co., Johnson, Limited, Inc., and Glenn K. Johnson, d/b/a Johnson, Ltd., Utility. All defendants other than Gulf Park were dismissed at the end of trial. The bill basically alleged that Gulf Park had no authority to continue pumping effluent into the lagoon and that plaintiffs lacked an adequate remedy at law. The bill further alleged damages in the amount of $3,000 per month from and after July 1, 1981.

 Gulf Park and the other defendants answered, denying lack of authority to use the lagoon, and they asserted numerous affirmative defenses, including the existence of an easement and an interminable right to continue using the lagoon by virtue of Gulf Park's permit from the State of Mississippi.

 Gulf Park in its answer asserted a counter-claim seeking to

 confirm in it a perpetual easement to use the lagoon. In its answer it made a cross-bill against defendant/intervenor Mississippi Commission on Natural Resources (Commission) and the Mississippi Bureau of Pollution Control Permit Board (Permit Board). Gulf Park sought to enjoin the Permit Board from rescinding its permit and it sought a court-fashioned scheme to modify its permit in the event plaintiffs prevailed.

 The Permit Board and the Commission intervened as defendants, answering both complaints, and including a cross-bill against both sides basically seeking to preserve the structure of the sewage treatment as provided in its permit to Gulf Park.

 Pine Island and FOSDC answered, asserting that though the Commission and the Permit Board had authority to grant a permit this did not alter FOSDC's title to the lagoon.

 Trial began on May 16, 1983. The court held a subsequent evidentiary hearing January 3 and 4, 1985, and a final decree was not rendered until February 25, 1985. The decree enjoined further use of the lagoon after July 1, 1985, and assessed damages in favor of Pine Island and FOSDC in the amount of $35,472 prior to January 1, 1985, and $902 per month from January 1, 1985, through July 1, 1985, when use of the lagoon was to terminate. The chancellor retained jurisdiction over future operations of Gulf Park and the location of a new discharge point from the treatment plant.

 After the chancellor denied the motion by Pine Island and FOSDC for a rehearing or, in the alternative a new trial on the issue of damages, Gulf Park perfected this appeal.

 FACTS

 Prior to the chancellor's decision Gulf Park Water Co. (Gulf Park) used a lagoon located on Pine Island Golf Course as the final treatment step for sewage treated at its plant. Gulf Park would pump sewage effluent from its plant to the lagoon, approximately one-half mile away. The effluent would then be used to water the golf course through the course sprinkler system, providing both irrigation and a final filtering system for the treated sewage.

 When and how Gulf Park obtained the right to use the lagoon, the extent of that right, and the consequences of irrigating the golf course with this effluent were all factual issues before the chancellor. Pine Island and FOSDC, which owns the property and leases it to Pine Island, maintained that the treatment plant deteriorated, and the resulting foul effluent spread algae on the course, killing grass and making the golf

 course virtually unplayable.

 After negotiations for payment of electric and water bills broke down, Pine Island and FOSDC filed their bill for injuction and for damages against Gulf Park, seeking to prevent continued use of the lagoon. The Mississippi Commission on Natural Resources and the Mississippi Bureau of Pollution Control Permit Board intervened because of the effect this suit could have on Gulf Park's waste disposal permit.

 This litigation did not begin and end with just these parties, however. A proper perspective of this dispute necessarily involves a discussion of other individuals, companies, and corporations that previously owned either the golf course, the sewage treatment plant, or both.

 The seeds of this dispute were sown in 1972. American Capital Land Corporation owned large tracts of property in Jackson County near the Mississippi Sound. American Capital and another company unconnected with this litigation set about developing a community area which came to be called Gulf Park Estates. At the time, American Capital also owned the property on which now sits Pine Island Golf Course.

 September 25, 1972, the State directed both American Capital and the other developer to work together on a single sewage treatment system to serve the subdivision. On October 31, 1972, American Capital entered into a contract to convey property to FOSDC for construction of what eventually became Pine Island Golf Course. FOSDC received the property for little or no consideration and agreed to pursue additional construction financing from the Small Business Administration. This property is near Gulf Park Estates, and there is little question that American Capital expected the golf course to enhance the value of the subdivision.

 The contract also provided:

 IT IS FURTHER UNDERSTOOD by and between the parties hereto that plans for proposed golf course shall be subject to the approval of American Capital Land Corporation and that the conveyance of said property shall be made upon the funding of the proposed golf course development project by the Small Business Administration.

 Though American Capital retained a right of approval FOSDC hired and paid the architect and construction contractor for the golf course. Even prior to entering the contract to convey, on October 25, 1972, the president and principle stockholder of

 FOSDC, E. W. Blossman, received a design for the course from the architect, Pete Dye & Associates. Blossman testified that the golf course construction plans called for a lake on the course to provide a water collection point from which the course sprinkler system could draw water. The design did not, however, contemplate using the lagoon to receive sewage effluent, he testified.

 Planning for the sewage treatment plant continued during this time. Initially, American Capital hired engineer Perry Ransom to design an advanced chemical treatment facility that could discharge its finished effluent directly into the Mississippi Sound. The cost of such a sophisticated system was prohibitive, however, and in February or March of 1973, American Capital opted, instead, to seek approval of another treatment system wherein secondarily treated effluent would be pumped into a holding pond on the golf course, and then subsequently sprayed onto the golf course. The new plan, utilizing a holding pond and the same sprinkling system necessary for irrigating the golf course, was officially approved in April 1973. Final design requirements were sent to American Capital in June 1973.

 Though the treatment plant stands near the Mississippi Sound, there is no dispute that the effluent from this plant would damage aquatic life and necessitate closing shellfish harvesting areas of the sound. There likewise was no dispute that absent construction of the highly sophisticated treatment plant, Gulf Park could not have obtained a permit to discharge into Mississippi Sound.

 Meanwhile, American Capital conveyed the property for the golf course by warranty deed to FOSDC on August 23, 1973. The deed contained no reservations and warranted against any encumbrances. Blossman, the principle of FOSDC, testified that American Capital never informed him it intended to use the course holding pond to receive sewage effluent.

 When deeded to FOSDC, the golf course was mostly complete. Construction of the sewer system also had begun, but the record is not clear at this time to what extent the sewage pipes were laid from the treatment plant to the lagoon. Engineer Ransom apparently never communicated with Pete Dye and Associates, the golf course architects, concerning the effluent discharge into the lagoon.

 There was evidence tending to establish that the plant was operational a full year before July 1975, though no permit was actually issued until 1978, after American Capital sold Gulf Park.

 FOSDC originally intended to lease to someone else, but eventually leased the golf course to Donald C. Armbrust, president of American Capital.

 Thus, from the time the plant became operational sometime in 1974, until sometime in 1977, apparently sewage effluent from American Capital's water company was sprayed onto the golf course leased by the president of American Capital.

 Two things happened as a result of American Capital going into bankruptcy, however. First, Armbrust defaulted on the lease, and the golf course returned to FOSDC. Second, the stock of Gulf Park was acquired by Aristide LeFeve and Templeton Fowlkes.

 Blossman, on behalf of FOSDC, initially allowed the local Y.M.C.A. to operate the course, then leased the golf course to Pine Island, of which Blossman owns 75%. Martin Reeves, the course manager and pro, owned the remaining 25%.

 Before leasing the course to LeFeve and Fowlkes, however, Blossman either first learned of, or first became ...


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