Read the rulingView
A Hamilton County judge Friday dismissed a lawsuit against EPB by a former city contractor who claimed the utility had overcharged the city of Chattanooga millions of dollars for street lights over the past two decades.
Circuit Court Judge Jeffrey Hollingsworth ruled that EPB could not be sued by the contractor on behalf of the city because EPB and the city of Chattanooga are legally the same identity. In a 10-page ruling, Hollingsworth rejected claims by Global Green Lighting President Don Lepard that EPB was liable for overbilling the city under the False Claims Act.
"It is found that EPB, whatever its status, is an entity that is wholly owned by the city of Chattanooga," Hollingsworth said in his opinion. "The city of Chattanooga suing EPB is a case of the city suing itself."
Lepard, who contracted with the city under former Mayor Ron Littlefield to replace nearly 27,000 street lights in Chattanooga with more energy-efficient and controllable LED lights, sued EPB after discovering that many of the lights EPB was charging the city for were not actually on the poles. Under the False Claims Act, a party may sue on behalf of a public entity and get a portion of whatever savings are realized.
The city declined to join with Lepard in the lawsuit against EPB over the streetlight billing problems and Mayor Andy Berke declined to renew Lepard's three-year installation plan for new lights after the first year of the program. So Lepard filed his own lawsuit against EPB last July.
The lawsuit generated thousands of pages of testimony, motions and arguments and numerous court hearings over the past year. But in the end, Hollingsworth ruled that there wasn't a legal basis for the lawsuit to be filed since EPB and the city are the same.
"If a money judgment were rendered, Mr. Lepard and his attorneys would get part of that recovery," Hollingsworth said in his opinion. "The rest of the money would merely be transferred from one account of the city to another account of the city. As a matter of law, such an exercise in futility cannot be allowed."
Hollingsworth had earlier said he thought the question of whether EPB was a part of the city should be tried in court because EPB had filed charters of incorporation in 2009 as a nonprofit entity. But the Secretary of State said that the 2009 filing was typical of others filed by nearly two dozen other municipalities and city agencies which also filed as non-profit corporations. EPB said the filing did not in any way change EPB's status as an independent agency owned and controlled by the city of Chattanooga.
Lepard said Friday night he is "disappointed in the court's order," and he is considering an appeal.
"We acknowledge that this is a complex case," he said. "However, if the city and EPB are the same, why do they enter into agreements to buy and sell power at established rates? If those agreements cannot be enforced in courts of law, where is the accountability?"
Lepard contends that EPB overcharged the city for both energy and maintenance expenses for street lights in Chattanooga and then fought against his replacement program because the LED lights installed by Global Green Lighting would cut EPB power sales.
"The overcharges went into accounts containing EPB revenues, controlled by EPB," Lepard said. "If EPB were judged to have overcharged the city, the money to make things right would be paid by EPB into city accounts, benefiting taxpayers."
EPB spokesman J.Ed. Marston said the utility welcomed Hollingsworth's decision and said EPB "will continue to look for ways to find a resolution that is equitable to both the citizens of Chattanooga and EPB taxpayers" over the street light bills.
"The court's decision reconfirms what we have said all along that EPB is an independent board of the city of Chattanooga," Marston said.
A review last year of the billing by EPB for streetlights by City Auditor Stan Sewell found that EPB had charged the city for lights that were not on some street poles.
EPB acknowledged that some of its bills to Chattanooga for streetlights may have contained errors about the type of lights and amount of power used to keep the streetlights on. But the utility's auditor, Mauldin & Jenkins, found two types of mistakes in another review. That review found $1.53 million in overbilling for Chattanooga's energy costs and $1.52 million in underbilling, yielding $17,049 in overcharges.
Contact Dave Flessner at firstname.lastname@example.org or 423-757-6340.