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CGE Ford Heights L.L.C. v. Miller

August 04, 1999

CGE FORD HEIGHTS, L.L.C.*FN1, AND CGE FULTON, L.L.C.,
PLAINTIFFS-APPELLANTS,
V.
DAN MILLER*, RUTH KRETSCHMER, WILLIAM DICKSON*, RICHARD KOLHAUSER AND KARL MCDERMOTT*, IN THEIR INDIVIDUAL AND OFFICIAL CAPACITIES AS MEMBERS OF THE ILLINOIS COMMERCE COMMISSION,
DEFENDANTS-APPELLEES
(COMMONWEALTH EDISON COMPANY, DEFENDANT).
THE VILLAGE OF ROBBINS AND ROBBINS RESOURCE RECOVERY PARTNERS, L.P.,
PLAINTIFFS-APPELLANTS,
V.
JAMES EDGAR*FN2, IN HIS OFFICIAL CAPACITY AS THE GOVERNOR OF THE STATE OF ILLINOIS; WILLIAM DICKSON*, RICHARD KOLHAUSER, RUTH KRETSCHMER, KARL MCDERMOTT*, AND DAN MILLER*, IN THEIR OFFICIAL CAPACITIES AS COMMISSIONERS OF THE ILLINOIS COMMERCE COMMISSION; KEN ZEHNDER*, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE DEPARTMENT OF REVENUE,
DEFENDANTS-APPELLEES
(COMMONWEALTH EDISON COMPANY, DEFENDANT).



Appeal from the Circuit Court of Cook County Nos. 96 CH 2560 and 96 CH 12873, Consolidated Honorable Robert Boharic, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Cahill

MODIFIED ON DENIAL OF REHEARING

Plaintiffs appeal the dismissal of several counts of their complaints for lack of subject matter jurisdiction. The counts were directed to the governor, members of the Illinois State Commerce Commission (ISCC) and the Director of the Department of Revenue. In response to a motion under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1996)), the trial court dismissed the state defendants based on sovereign immunity. Counts against Commonwealth Edison (ComEd) remain pending in the trial court. We affirm dismissal of some of the counts on grounds other than sovereign immunity, reverse the dismissal of others, and remand with directions.

Plaintiffs, CGE Ford Heights L.L.C., CGE Fulton, L.L.C. (CGE), the Village of Robbins, and Robbins Resource Recovery Partners (Partnership), filed two separate complaints, seeking declaratory and injunctive relief to prevent what they allege is retroactive application of Public Act 89-448. Pub. Act 89-448, §5 (eff. March 14, 1996). Public Act 89-448 took effect on March 14, 1996, amending a section of the Public Utilities Act commonly referred to as the "Retail Rate Law" (220 ILCS 5/8-403.1 (West 1996)).

The "Retail Rate Law" was first amended in 1987 to encourage burning used tires as a source of energy. The 1987 amendment authorized qualified solid-waste-to-energy facilities (QSWEF) to enter into 20-year contracts with Illinois electrical utilities for the sale of electricity generated by incinerator plants. The statute and the parties refer to these incinerator plants as "QSWEFs." For lack of a livelier acronym, we will live with QSWEF in this opinion, but will more often call them "plants." The "retail rate" is substantially higher than the wholesale rate the utilities would otherwise pay for electricity bought from private generators of electricity. Under the statutory scheme, ComEd receives tax credits from the state equal to the difference between the retail rate ComEd pays the plants and the wholesale rate. The law further requires the plants to reimburse the state for the amount of the tax credits, but only after the debt incurred to build the plant is retired.

Public Act 89-448 abolished subsidies for tire burning plants. The amendment redefined QSWEFs as plants that use methane gas generated from landfills. Plaintiffs, which burn tires, no longer qualify as QSWEFs under the amendment and are not entitled to the retail rate. While the legislation was pending, ComEd notified plaintiffs that if the bill became a law, ComEd would no longer pay them the retail rate for electricity. On the date Public Act 89-448 took effect, each of the plaintiffs had in hand signed contracts with ComEd to supply electricity at the retail rate. Two of the three plants were up and running. One was in the planning stage. Each contract, appended to the complaints, contained the following clause: "Service and billing, hereunder, *** shall continue for 20 years from the date Customer's Qualified Solid Waste to Energy Facility begins commercial operations, unless terminated by the written agreement of the parties, the Customer loses its status as a Qualified Solid Waste to Energy Facility *** or the company ceases to obtain full Public Utilities Revenue tax Credits *** associated with the purchase under this contract for any reason." (Emphasis added.)

Plaintiffs never refer to this contract clause in their briefs. The day after the law was signed, ComEd stopped paying the retail rate.

Plaintiffs allege in their complaints that they built their plants in reliance on the old law. Plaintiffs allege that, without the retail rate, their plants cannot meet daily operating expenses or service their loans.

The Robbins plant was certified by the ISCC as a QSWEF on February 20, 1992. The plant began to generate electricity in October 1996, about six months after Public Act 89-448 became law. Full commercial operation began in 1997.

CGE Ford Heights was certified by the ISCC as a QSWEF on June 2, 1992. Ford Heights entered into a 20-year contract with ComEd and started up in December 1995. Twelve days after the 1996 amendment became law, the Ford Heights plant closed and the owners filed for chapter 11 reorganization. Ford Heights remained a debtor-in-possession during the bankruptcy proceedings. Ford Heights is now reorganized and known as "New Heights."

CGE Fulton entered into a 20-year contract with ComEd on January 26, 1995, effective when the plant began to generate electricity. To date, the plant has not been built. The complaint alleges that funding for construction of the plant "unraveled" after the amendment became law.

CGE filed a six-count complaint on March 14, 1996. Counts I and II allege breach of contract claims against ComEd. Count III alleges that retroactive application of Public Act 89-448 to CGE's plants violates due process rights. Count IV alleges that retroactive application of Public Act 89-448 impairs CGE's contracts with ComEd. Count V alleges that retroactive application of Public Act 89-448 impairs CGE's rights under a contract with the state. Count VI alleges that Public Act 89-448 was passed by the General Assembly in violation of the three-readings rule. Ill. Const. 1970, art. IV, §8(d).

The Partnership filed a similar action in federal court that was dismissed on eleventh amendment grounds. The Partnership then filed a nine-count complaint in circuit court in November 1996. Count I asks the court to declare that Public Act 89-448 does not apply to electrical service contracts executed before it was enacted. Count II alleges an impairment by the state of a contract between the Partnership and ComEd in violation of article I, section 10, of the United States Constitution and article I, section 16, of the Illinois Constitution. U.S. Const., art. I, §10; Ill. Const. 1970, art. I, §16. Count III alleges that the disparate treatment of incinerator plants under the present law is an equal protection violation under the fourteenth amendment of the United States Constitution, and article I, section 2, of the Illinois Constitution because the distinction is not rationally related to a legitimate government purpose. U.S. Const., amend. XIV; Ill. Const. 1970, art. I, §2. Count IV is similar to count II in that it alleges Public Act 89-448 "abrogates" the contract between the Partnership and ComEd in violation of the United States Constitution and the Illinois Constitution. It also alleges that Public Act 89-448, in creating a subsidy for methane fuel incinerators and denying a subsidy to incinerators that burn tires, creates an unconstitutional classification unrelated to a governmental purpose, violating the fourteenth amendment of the United States Constitution, and article I, section 2, of the Illinois Constitution. U.S. Const., amend. XIV; Ill. Const. 1970, art. I, §2. Count V alleges that Public Act 89-448 amounts to an unconstitutional "taking" of private property in violation of the fifth and fourteenth amendments of the United States Constitution insofar as the plaintiff cannot generate a profit under an electrical service contract without the retail rate. U.S. Const., amends. V, XIV. Count VI alleges that Public Act 89-448 is special legislation prohibited by article IV, section 13, of the Illinois Constitution. Ill. Const. 1970, art. IV, §13. Count VII alleges a violation of the three readings rule. Ill. Const. 1970, art. IV, §8. Count VIII is directed to ComEd and alleges that ComEd's refusal to pay the retail rate is in violation of the Public Utilities Act (220 ILCS 5/8-403.1 (West 1996)) and the Illinois Administrative Code. Count IX alleges a section 1983 violation against both the state defendants and ComEd. 42 U.S.C.A. §1983 (West 1984). The allegation against the state defendants in count IX is unclear, but seems to allege that the state defendants "intend" to enforce Public Act 89-448, and that the enforcement will violate the Partnership's federal constitutional rights and section 1983. 42 U.S.C.A. §1983 (West 1984). Count IX also alleges that ComEd will comply with the new law, violating the Partnership's rights under section 1983. 42 U.S.C.A. §1983 (West 1984). Insofar as count IX alleges a section 1983 violation against ComEd, an enforceable contract with ComEd is presumed.

The state defendants, the Governor, and the named commissioners of the ISCC, alleged in their motion to dismiss that the State Lawsuit Immunity Act (745 ILCS 5/1 (West 1996)) deprived the circuit court of jurisdiction over the claims and vested exclusive jurisdiction in the Court of Claims.

The state defendants also moved to dismiss the section 1983 claim made by the Partnership, contending it is barred both by sovereign immunity and the eleventh amendment. The trial court granted the motions after a hearing and dismissed all counts against the state for lack of subject matter jurisdiction based on sovereign immunity. The ...


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