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Friday, May 26, 2006

Ind. Decisions - Plaintiffs in toll road suit must post $1.9 billion bond

Tom Coyne of the AP reports:

SOUTH BEND, Ind. (AP) -- The plan to lease the Indiana Toll Road to foreign investors cleared a major roadblock Friday.

A judge ruled that a legal challenge of the state's plan to lease the toll road to private investors for 75 years is a public lawsuit and ruled the plaintiffs must post a $1.9 billion bond within 10 days to proceed. The amount is half of the $3.8 billion a foreign company wants to pay up front to lease the road. * * *

With Scopelitis' ruling, the seven plaintiffs, along with the Citizens Action Coalition of Indiana, suing to block the deal will have to post the bond to keep the challenge alive.

Here is a copy of the 83-page opinion.

I expect that an effort will be made to immediately appeal the trial judge's ruling on the bond to the Supreme Court, under Rule 56A, which provides in part:
In rare cases, the Supreme Court may, upon verified motion of a party, accept jurisdiction over an appeal that would otherwise be within the jurisdiction of the Court of Appeals upon a showing that the appeal involves a substantial question of law of great public importance and that an emergency exists requiring a speedy determination.
[More at 1:15 pm] Coyne's story has been updated:
A judge ruled Friday that a group suing to stop the state from leasing the Indiana Toll Road to foreign investors must post a $1.9 billion bond to proceed, except in two areas of the challenge.

St. Joseph Superior Court Judge Michael Scopelitis said the plaintiffs can proceed with the portions of the lawsuit that challenge whether the law creating the 75-year toll road lease was special legislation because it gave particular consideration to Perry Township south of Indianapolis and Interstate 69 from Martinsville to Indianapolis.

Arend Abel, an attorney representing the plaintiffs, said the ruling was mixed, and that he needed time to study the ruling before he could comment further.

Scopelitis' ruling that two parts of the lawsuit can proceed without the bond jeopardizes the lease, which has been signed. A stipulation in the lease lets the Spanish-Austrailian investors back out if litigation was pending when the deal closes June 30.

[More at 1:42 pm] Tom Coyne's story has been updated again:
"Whether or not the lease is a 'good deal' is irrelevant," St. Joseph Superior Court Judge Michael Scopelitis wrote in the 83-page ruling, which certified the case as a public lawsuit.

But Scopelitis left open the possibility of continued legal challenges, saying the plaintiffs could proceed with the portions of their lawsuit pertaining to Interstate 69. * * *

The road ahead could still be rocky, however. Scopelitis said the plaintiffs could challenge the part of the lease law that prohibits a section of the federally approved I-69 from running through Perry Township in southern Indianapolis without future legislative approval and another portion that bans tolls from being charged on I-69 between Martinsville and Indianapolis.

A stipulation in the lease, which has been signed, lets the investors back out if litigation is pending when the deal is scheduled to close June 30.

Lawyers earlier this month argued before Scopelitis over exactly what the Legislature meant by including a semicolon in its definition of a "municipal corporation."

The question was key to deciding whether the case is a public lawsuit.

Under Indiana law, public lawsuits are defined as challenges to the construction, financing or leasing of public improvements by a municipal corporation. One of the issues in the case was whether the finance authority is a municipal corporation.

Lawyers for the plaintiffs argued that the IFA is not a municipal corporation, meaning it cannot be protected by the public lawsuit statute. They also argued that the statute deals only with the creation or acquisition of public works, not their disposition.

Lawyers for the state said the IFA is unquestionably a municipal corporation because it is a public corporate body created by state law. They argued that the law was designed to keep harassing litigation from obstructing and delaying projects and called the toll road lawsuit a "harassing and meritless lawsuit."

Scopelitis said the IFA is a municipal corporation, noting it undertakes many of the same tasks cities and towns do, such as issuing bonds for public works projects. The lease, he said, constitutes a "public improvement."

Posted by Marcia Oddi on May 26, 2006 12:57 PM
Posted to Ind. Trial Ct. Decisions