Citizens Action Coalition of Indiana, Inc. v. PSI Energy, Inc.

664 N.E.2d 401, 1996 Ind. App. LEXIS 636, 1996 WL 222132
CourtIndiana Court of Appeals
DecidedMay 3, 1996
Docket93A02-9409-EX-566
StatusPublished
Cited by17 cases

This text of 664 N.E.2d 401 (Citizens Action Coalition of Indiana, Inc. v. PSI Energy, Inc.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Citizens Action Coalition of Indiana, Inc. v. PSI Energy, Inc., 664 N.E.2d 401, 1996 Ind. App. LEXIS 636, 1996 WL 222132 (Ind. Ct. App. 1996).

Opinion

OPINION

GARRARD, Judge.

This case marks the conclusion of more than a decade of litigation challenging the efforts of PSI Energy, Inc. (PST) to recover, through electric rates, the costs of its ill-fated Marble Hill nuclear project. This appeal seeks review of the Indiana Utility Regulatory Commission's (hereinafter "commission") order awarding attorney fees and litigation expenses out of a common fund consisting of $150 million of eustomer refunds. Citizens Action Coalition of Indiana, Inc., et al. (collectively CAC) contends that the commission erred in refusing the parties' proposed supplemental settlement agreement regarding attorney fees and costs.

FACTS

In 1984, PSI abandoned construction of its Marble Hill nuclear power generating station. PSI then attempted to recover its $2.7 billion investment through increased rates. In a similar case involving the canceled Bailly nuclear project, however, our supreme eourt held that a public utility could not recover through rates its investment in a canceled nuclear project that was never "used and useful" in serving the public. Citizens Action Coalition of Indiana, Inc. v. *404 Northern Indiana Public Service Co., 485 N.E.2d 610, 614 (Ind.1985), cert. denied, 476 U.S. 1137, 106 S.Ct. 2239, 90 L.Ed.2d 687 (1986).

In the Marble Hill litigation, two later appeals held that PSI ratepayers were due refunds after PSI attempted to recoup the Marble Hill loss through certain "hidden charges." The first such instance occurred when the commission investigated the appropriate rate adjustments for Indiana utilities in light of the Tax Reform Act of 1986. Although the commission ordered a general reduction in utility rates, the order created an exception for PSI which allowed it to maintain its rates despite the tax decrease. Although this court initially affirmed the order, the Indiana Supreme Court reversed, finding the order permitted a hidden charge allowing PSI to recoup Marble Hill losses in contravention of its prior decision. Citizens Action Coalition v. Public Service Co., 582 N.E.2d 330, 335 (Ind.1991), reh'g. denied, 595 N.E.2d 255 (1992). The supreme court held that to the extent that PSI ratepayers overpaid by virtue of this hidden charge, they were due a refund. Id. at 337.

The second refund due PSI ratepayers resulted from the commission's order in April 1990 terminating PSI's emergency rates but allowing an "incentive" rate of return. This court reversed the commission's order since it found the incentive rate to be another hidden charge to recover the Marble Hill loss. Citizens Action Coalition v. Public Service Co., 612 N.E.2d 199, 202 (Ind.Ct.App.1993), trans. denied.

After evidentiary hearings were conducted regarding the ordered refunds, PSI and the Office of the Utility Consumer Counselor (OUCC), the statutory representative for the public interest, presented a settlement agreement for the commission's approval. The agreement produced two common funds with a combined value of $150 million. The agreement also provided that PSI would pay an amount determined by the commission to be fair compensation for attorney fees, litigation expenses, and court costs. Moreover, the agreement stated that PSI would not participate in the supplemental proceedings regarding attorneys' fees and costs. On August 25, 1993, CAC filed its motion requesting attorneys' fees and litigation costs in the amount of 9.5% of the common fund created for refunds to ratepayers. Before entering an order regarding attorney fees, the commission approved the settlement agreement and allowed the parties an opportunity to present more evidence regarding the hours expended and the reasonable rate for such legal work.

On April 26, 1994, the OUCC and CAC submitted a supplemental settlement agreement on attorneys' fees and costs to the commission for its approval. This supplemental agreement provided for an award of 9.5% of the common fund ($14.25 million) with the provision that $3 million of the award be used to establish a trust to fund future ratepayer representation. The commission performed its own calculation of attorneys' fees utilizing the "lodestar-multiplier" method 1 and found $3.1 million to be a reasonable award. The commission then determined that the supplemental settlement agreement for $14.25 million was so far afield as to be unreasonable. Thus, the commission rejected the supplemental agreement and ordered payment of attorney fees and costs of approximately $3.1 million. CAC contends that the commission exceeded its authority by rejecting a reasonable settlement agreement and by entering an order that is contrary to law.

ISSUES

I. Whether the commission erred in rejecting the supplemental settlement agreement regarding attorney fees and in ordering an award of $3.1 million out of a common fund consisting of $150 million of customer refunds.

*405 A. Lodestar-Multiplier Method v. Percentage Method.

B. Attorney Fees and Related Proceedings.

DISCUSSION & DECISION

1.

CAC correctly asserts that the Commission had authority to order an award of attorney fees to be paid out of the refunds due ratepayers. Although the general rule in Indiana is that all parties to a lawsuit are obligated to pay their own attorney fees, Indiana courts have carved out an exception for "common fund" situations. City of Hammond v. Darlington, 241 Ind. 536, 162 N.E.2d 619, 622 (1959) reh'g denied, (establishing common fund exception to rule that parties pay their own attorney fees); Greensburg Local No. 761 Printing Specialties v. Robbins, 549 N.E.2d 79, 80 (Ind.Ct.App.1990), reh'g denied, trans. denied; City of East Chicago, Ind. v. Broomes, 468 N.E.2d 231, 234 (Ind.Ct.App.1984), reh'g denied, trans. denied. 2 The award of attorney fees is paid from a common fund on the theory that those who benefit from the creation of the fund or from the creation of any other legal benefit should share in the expense of producing the benefit. Northern Indiana Public Service Co. v. Citizens Action Coalition of Indiana, Inc., 548 N.E.2d 153, 161 (Ind.1989). The rationale is an equitable one, designed to prevent "free riders" from taking advantage of the fund without paying their fair share. Id. The common fund exception is not limited to cases involving class actions or to cases before trial courts. Our supreme court specifically held that the commission had authority to order that attorney fees be paid out of a refund due ratepayers after an electric utility attempted to recover sunk costs for the abandoned Bailly nuclear plant. Id. at 162. Thus, we decline amicus curiae Indiana Electric Assoc.'s, et al. invitation to revisit the issue of whether the commission has authority to award attorney fees so recently after our supreme court rendered its decision.

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Bluebook (online)
664 N.E.2d 401, 1996 Ind. App. LEXIS 636, 1996 WL 222132, Counsel Stack Legal Research, https://law.counselstack.com/opinion/citizens-action-coalition-of-indiana-inc-v-psi-energy-inc-indctapp-1996.