November 14, 2013

City wins state supreme court case

Justices: Consequential order not necessary for agreement process

by Mitchell Kirk

---- — The Indiana Supreme Court has ruled in favor of Logansport Mayor Ted Franklin and City Council in a lawsuit that alleged the city did not have the authority to enter into negotiations with a power plant developer.

The suit was first filed in Cass County Superior Court II in March by Logansport resident Julie Kitchell, represented by attorney Jim Brugh. It claimed legislation authorizing the city to negotiate with power plant developer Pyrolyzer LLC was invalid because it was adopted out of order in a sequence defined by state statutes.

After being dismissed at the county level, Kitchell appealed to the state appellate court. Before the court could come back with a response, the city's attorneys filed a request with the state supreme court, which heard oral arguments in September.

The suit alleged an ordinance authorizing the city to engage in the public-private agreement process with Pyrolyzer is invalid because it was adopted after issuing a request for proposals regarding the power plant project.

In the suit, Brugh cites the Indiana Code's Home Rule Act, which states "If there is a constitutional or statutory provision requiring a specific manner for exercising a power, a unit wanting to exercise that power must do so in that manner." He applies this to the state's public-private agreement provision, concluding that the city had to first adopt the provision before issuing the request for proposals.

"The question in this case is whether the 'specific manner' required before a city may exercise the power to enter a public-private agreement includes a sequencing requirement," the state supreme court's opinion states. "We think not."

"...Nowhere does the act require a political subdivision to 'adopt' the act before taking any further action consistent with the act," the ruling continues.

Franklin said the opinion confirms what he, council members and their attorneys have "said all along."

"We didn't go into this thinking we'd have 100 percent support, but we felt all along everything we did was legal and proper and this confirms it," Franklin said.

John Molitor, an Indianapolis-based attorney who represented city council in the case, said the ruling was "vindication for how the city has handled this whole matter."

Brugh said while the court's decision states the city's ordinance allowing it to negotiate with Pyrolyzer is valid, it doesn't mean the same for the company's claims to provide Logansport with electricity using refuse-derived fuel.

"My appeal made this technical point of law that was not previously stated in any book," he said. "The supreme court was not persuaded by my reference to a municipal law treatise on the point. So be it."

Brugh went on to refer to the beginning of the opinion, which offers a history of the state legislature's motivation behind creating provisions to limit local public debt.

"That history should remind people of the importance of keeping track of how the city and the utility end up on the hook for Pyrolyzer debt," Brugh said.

Since the suit was first filed, Franklin and the city's attorneys have called the charges frivolous to the degree of justifying seeking the city's attorneys' fees from Kitchell.

The state supreme court opinion addresses this, stating, "the city makes no argument and cites no authority that would support an award in these circumstances," going on to decline an exercising of its authority to award the city its attorney's fees for work completed at the appellate and supreme court levels.

However, the city can still seek its attorneys' fees at the county level. Franklin said he and city council will be meeting to determine whether to seek the fees.

"If they want to pursue it, we will," he said.

Franklin went on to say such a move might thwart similar lawsuits from happening in the future.

"There needs to be an understanding that we don't take this kind of thing lightly," he said.

About $60,000 has been spent on the case, about half of that at the county level, Franklin said.

Mitchell Kirk is a staff reporter at the Pharos-Tribune. He can be reached at 574-732-5130 or Follow him: @PharosMAK