[CITE: Squaw Creek Coal v. Musgrave, 13 CADDNAR 253 (2014)]
[VOLUME 13, PAGE 253]
Cause #: 13-055R
Caption: Squaw Creek Coal v. Musgrave
Administrative Law Judge: Jensen
Attorneys: Griggs (Squaw Creek); Eckerle (Musgrave)
Date: April 29, 2014
[See Editor’s note at end of this document regarding change in the decision’s original format.]
FINAL ORDER
124. SCCC’s Fee Petition is dismissed.
FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH FINAL ORDER
Historical Background, Procedural Summary and Jurisdiction:
1. On March 15, 2013, Squaw Creek Coal Company (“SCCC”) submitted to the Department of Natural Resources (“Department”) its fee petition seeking to recover “reasonable attorney’s fees and costs” in the total sum of $327,299.24 from Bil Musgrave (“Musgrave”). SCCC’s fee petition was filed under the authority of Ind. Code § 14-34-15-10 and 312 IAC 3-1-13.
2. The events leading to SCCC’s initiation of the instant proceeding relate to Musgrave’s request for administrative review of the Department’s February 1, 2008 determination to approve a reclamation bond release request made by SCCC in conjunction with Permit S-008. Musgrave’s administrative review petition was heard by the Natural Resources Commission (“Commission”) which affirmed Phase I and Phase II bond release for portions of the Permit S-008 mine area but which reversed the Department’s decision to approve Phase III bond release for other portions of the Permit S-008 mine area. Musgrave v. Squaw Creek Coal Co. and DNR, 12 CADDNAR 192, (2009). SCCC sought judicial review of the Commission’s final order in the Marion Superior Court, which issued a reversal of the Commission’s final order as to the Phase III bond release. Squaw Creek Coal Company and Indiana Department of Natural Resources v. Bil Musgrave, Cause No. 49D07-1001-MI-003153. The Marion County Superior Court’s reversal of the Phase III bond release was affirmed by the Indiana Court of Appeals on March 21, 2012. Musgrave v. Squaw Creek Coal Company and Indiana Department of Natural Resources, 964 N.E.2d 891, (Ind. Ct. App. 2012). The Indiana Supreme Court denied transfer on September 27, 2012. (Hereinafter the proceeding commenced with the Commission along with the proceedings before the Marion Superior Court, the Indiana Court of Appeals and the Indiana Supreme Court will be collectively referred to as the “Underlying Proceeding”.)
3. The Commission delayed issuance of an order compliant with the decision of the Indiana Court of Appeals to afford Musgrave full opportunity to consider seeking certiorari to the United States Supreme Court. See “Entry with Respect to Respondent, Squaw Creek Coal Company’s, Notice of Remand After Judicial Review” in Musgrave v. Department of Natural Resources and Squaw Creek Coal Company, Administrative Cause Number 08-034R. Musgrave did not ultimately seek transfer to the United States Supreme Court.
4. The Commission’s “Final Order Following Remand” in the Underlying Proceeding, implementing the release of the Phase III Bond as ordered on judicial review and affirmed on appeal was issued on February 13, 2013.
5. Pursuant to 312 IAC 3-1-13(g), Musgrave submitted his response in opposition to SCCC’s fee petition to the Department on March 28, 2013.
6. Department Director, Robert E. Carter, Jr. referred SCCC’s fee petition and Musgrave’s response to the Commission for purposes of conducting a proceeding under Ind. Code 4-21.5 et seq. on April 1, 2013.
7. A prehearing conference was scheduled and conducted on May 1, 2013 at which the Department orally moved to be dismissed as a party to the instant proceeding. Also during the prehearing conference SCCC argued that 312 IAC 3-1-13(d)(4)’s limitation on a permittee’s ability to obtain a fee award to circumstances in which a person initiated… or participated in a proceeding in bad faith for the purpose of harassing or embarrassing the permittee” was inconsistent with the enabling statute, Ind. Code § 14-34-15-10. SCCC’s position was strenuously opposed by Musgrave.
8. The Department was dismissed as a party to the instant proceeding.
9. It was concluded that a determination as to the validity of 312 IAC 3-1-13(d)(4) was threshold to a consideration of SCCC’s petition for fees. The parties were permitted to brief the issue and an order establishing the validity of 312 IAC 3-1-13(d)(4) was issued on September 5, 2013. See “Order Affirming Validity of 312 IAC 3-1-13(d)(4); Providing Evidentiary Parameters and Establishing Briefing Schedule”, hereinafter referred to as the “Procedural Order”. That order, attached, is incorporated as if set forth herein and is hereby made ripe for judicial review as if a part of this order.
10. SCCC chose not to avail itself of the opportunity afforded to supplement its fee petition See “Squaw Creek Coal Company’s Evidentiary Submission in Support of Fee Petition”, Filed October 7, 2013, pg. 16.
11. The parties each timely filed their written evidentiary submissions relating to SCCC’s petition for a fee award.
12. In relevant part 312 IAC 3-1-2 provides as follows:
(b) ….an administrative law judge is the ultimate authority for an administrative review under the following:
(1) An order under IC 14-34, except for a proceeding:
(A) concerning the approval or disapproval of a permit application of permit renewal under IC 14-34-4-13; or
(B) for suspension or revocation of a permit under IC 14-34-15-7.
(2) An order granting or denying temporary relief under IC 14-34 or an order:
(A) voiding;
(B) terminating;
(C) modifying;
(D) staying; or
(E) continuing;
an emergency or temporary order under IC 4-21.5-4.
13. The instant proceeding is authorized at I.C. 14-34-15-10. Neither the instant proceeding, nor the Underlying Proceeding upon which it is based, involves the approval or disapproval of a permit application or a permit renewal, suspension or revocation under I.C. 14-34-4-13 and I.C. 14-34-15-7. For that reason it is determined that the administrative law judge serves as the ultimate authority, as that term is defined at Ind. Code § 4-21.5-1-15, for the instant proceeding initiated under Ind. Code § 14-34.[1]
Additional Interpretation of 312 IAC 3-1-13(d)(4):
14. The Procedural Order previously issued established the validity of 312 IAC 3-1-13(d)(4), which specifies:
(d) Appropriate costs and expenses, including attorney fees, may be awarded under IC 14-34-15-10 only as follows:
…
(4) To a permittee from a person where the permittee demonstrates that the person initiated a proceeding under IC 14-34-15 or participated in the proceeding in bad faith for the purpose of harassing or embarrassing the permittee.
[VOLUME 13, PAGE 254]
15. Further support for the determination set forth in the Procedural Order is provided by Alternate Fuels, Inc. v. Office of Surface Mining Reclamation and Enforcement, 103 IBLA 187, (1988). In Alternate Fuels, the permittee in seeking a fee award against the Office of Surface Mining Reclamation and Enforcement (“OSM”) wished avoid the necessity to establish that OSM acted in bad faith for the purpose of embarrassing or harassing the permittee, as set forth at 43 CFR 4.1294, arguing that the regulation is inconsistent with and beyond the authority granted by section 525(e) of the Act (30 U.S.C. 1275(e)). Judge Irwin, in writing the opinion for the Interior Board of Land Appeals (“IBLA”) upholding the applicability of the bad faith requirement established at 43 CFR 4.1294, states that section 525(e) of the Act “does not require a showing of bad faith and improper purpose for a permittee to receive an award from the government for participating in an administrative proceeding, neither does it preclude it” noting further that 43 CFR 4.1294 “was duly promulgated and has the force and effect of law.”
16. Similarly, I.C. 14-34-15-10 neither authorizes, nor precludes the bad faith requirement established by 312 IAC 3-1-13(d)(4), which was lawfully adopted by the Commission. For these reasons, in addition to the rationale set forth in the “Procedural Order”, 312 IAC 3-1-13(d)(4)’s requirement that SCCC establish Musgrave acted in bad faith for the purpose of harassing or embarrassing SCCC is reaffirmed.
17. SCCC, in its evidentiary submission sought endorsement of an interpretation of 312 IAC 3-1-13(d)(4) as providing “two distinct means for a permittee to demonstrate its right to receive an award of appropriate costs and expenses.” SCCC proceeds to explain its position that a person who initiates a proceeding under Ind. Code § 14-34-15 may be responsible for a permittee’s costs and expenses simply by initiating the action whereas a person who did not initiate such a proceeding but, nonetheless, participated in the proceeding may be liable for a permittee’s costs and expenses only if they participated in “bad faith for the purpose of harassing or embarrassing the permittee.”
18. SCCC bases its proposition upon the fact that the
word “or” is disjunctive and “demonstrates legislative intent to establish
distinct or alternative statutory provisions.” In Re ITT Derivative
Litigation v. ITT Corp., 932 N.E.2d 664, 670, (Ind. 2010). However,
the Indiana Supreme Court, in ITT also favorably cited Prewitt v.
State, 878 N.E.2d 184, 186, (Ind. 2007), which states:
The best evidence of legislative intent is
surely the language of the statute itself, and courts strive to give the words
in a statute their plain and ordinary meaning. A statute should be examined as
a whole, avoiding excessive reliance upon a strict literal meaning or the
selective reading of individual words.Sales v. State,723 N.E.2d 416 (Ind.2000). The Court presumes that the
legislature intended for the statutory language to be applied in a logical
manner consistent with the statute's underlying policy and goals. B.K.C. v. State,781 N.E.2d 1157
(Ind.Ct.App.2003). Whereas the disjunctive "or" normally
expresses a legislative intent that only one of the enumerated options is
permitted, we have recognized that this normal interpretation of the
disjunctive should not be followed rigidly in all cases. For example, in Dague
v. Piper Aircraft Corp., 275 Ind. 520, 418 N.E.2d 207 (1981), we
interpreted a product liability statute of limitations that used the
disjunctive "or" as if the statute had instead used the conjunctive
"and." Id. In doing so, we stated, "the term ‘or’ should
not be given its ordinary meaning when such an application flies in the face of
a clearly contrary legislative intent. . . . Moreover, we are at liberty to
make minor substitutions of words where necessary to give vitality to the
legislative intent." Id.
19. As
was established in the Procedural Order previously issued:
Clearly 312 IAC 3-1-13(d) provides for the recovery of costs and expenses under [I-SMCRA, or the Indiana Surface Mining Control and Reclamation Act] in a manner that is consistent with the ability to recover costs and expenses under [SMCRA, or the federal Surface Mining Control and Reclamation Act]. The validity of 312 IAC 3-1-13(d) is also consistent the Indiana General Assembly’s expression of intent to establish a program to “implement and enforce the federal Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1201 through 1328)” (I.C. 14-34-1-3), which required the establishment of “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of [SMCRA]” as well as the establishment of “rules and regulations consistent with regulations issued by the Secretary pursuant to [SMCRA].”
20. Just as the validity of 312 IAC 3-1-13(d)(4) required consideration of SMCRA and federal regulations, so shall 312 IAC 3-1-13(d)(4) be interpreted consistent with the goals of Ind. Code §§ 14-34 in order to comply with Prewitt’s principal for “statutory language to be applied in a logical manner consistent with the statute's underlying policy and goals.” citing B.K.C. v. State, 781 N.E.2d 1157 (Ind.Ct.App.2003).
21. Applying the disjunctive meaning to the use of the word “or” as found on two occasions in 312 IAC 3-1-13(d)(4) is not only supported by the Indiana Supreme Court in ITT, it is also consistent with the overriding purposes of Ind. Code 14-34 et seq.
22. Literal interpretation of each use of the word “or”, as found in 312 IAC 3-1-13(d)(4), in the disjunctive actually results in four equally valid alternative interpretations by which a permittee might recover costs and expenses. A permittee could gain compensation from:
a. A person who initiated a proceeding in bad faith for the purpose of embarrassing the permittee;
b. A person who initiated a proceeding in bad faith for the purpose of harassing the permittee;
c. A person who participated in a proceeding in bad faith for the purpose of embarrassing the permittee; and
d. A person who participated in a proceeding in bad faith for the purpose of harassing the permittee.
23. Under any of the possible interpretations SCCC must establish that Musgrave acted in bad faith.
24. Because, in this instance, Musgrave both initiated as well as participated in the Underlying Proceeding, SCCC is open to establish that Musgrave acted “in bad faith” to either embarrass or harass SCCC through either his initiation or his participation in that action.
25. SCCC espoused the position that 312 IAC 3-1-13(d)(4) could be interpreted to allow a person to “harass and embarrass a permittee in patent bad faith but that person would be immune from a fee petition by the permittee unless the person also initiated a proceeding under Ind. Code § 14-34-15”, which SCCC correctly proclaims would be an absurd result. Squaw Creek Coal Company’s Evidentiary Submission in Support of Fee Petition, pg 5. (emphasis added). Interestingly, the absurdity to which SCCC directs attention is entirely manufactured by SCCC’s replacement of the disjunctive word “or”, as actually found in 312 IAC 3-1-13(d)(4), with the conjunctive words “and” as well as “also”.
26. SCCC also maintains that simply because Musgrave initiated a proceeding to recover fees and expenses from SCCC following his initial success before the Commission, that Musgrave is “now subject to a similar request by the permittee.” Because 312 IAC 3-1-13(d)(4) authorizes the initiation of a proceeding to recover fees and expenses associated with a proceeding initiated under I.C. 14-34-15 and a petition to recover fees and expenses is authorized by I.C. 14-34-15-10, one must conclude that SCCC is correct. The correctness of SCCC’s position in no manner relieves SCCC of the requirement that SCCC establish Musgrave’s initiation of or participation in the proceeding was in “bad faith” for the “purpose of harassing or embarrassing” SCCC.[2]
27. 312 IAC 3-1-13(d)(4) is not ambiguous and is therefore not open to statutory construction. F. D. McCrary Operator, Inc. v. DNR, 10 CADDNAR 73, 79 (2005).
28. To prevail in its effort to recover costs and expenses, including attorney fees, SCCC is required to demonstrate that Musgrave initiated or participated in a proceeding under I.C. 14-34-15 in bad faith for the purpose of harassing or embarrassing SCCC.
Defining “Bad Faith for the Purpose of Harassing or Embarrassing”:
29. The Procedural Order discusses the concept of “bad faith for the purpose of harassing or embarrassing.” It is not the intent to repeat that discussion here; however, a degree of duplication is inevitable as supplementation of that discussion is necessary for clarity.
30. “Because our first goal in construing a statute is to give effect to the intent of the legislature, … we will look to SMCRA and the federal rules adopted under it as we analyze the Reclamation Act's exemption to the permit requirement.” Indiana Department of Natural Resources v. Krantz Brothers Construction Corp., 581 N.E.2d 935, 937, (Ind. Ct. App. 1991), (Internal Citations Omitted). Similarly, the manner in which SMCRA and related federal regulations relating to the award of costs and expenses have been interpreted and applied to factual situations is a relevant consideration with respect to the proper application of I.C. 14-34-15-10 and 312 IAC 3-1-13(d)(4) to the factual situation presented here.
31. Diligent search reveals only two instances in which the IBLA has reviewed decisions of the Interior Board of Surface Mining and Reclamation Appeals (“IBSMA”) related to fee petitions requiring proof that the underlying proceeding was initiated or participated in “in bad faith and for the purpose of harassing or embarrassing” the permittee. Delta Mining Corp. v. OSM, 3 IBSMA 252, (1981), Dennis R. Patrick v. OSM, 1 IBSMA 248, (1979).
32. It is acknowledged that in each of these instances the permittees sought fee awards from OSM following litigation involving notices of violation and/or cessation orders issued by OSM; however, the proof of bad faith for the purpose of harassing or embarrassing the permittee, required to support an award of fees in Delta and Patrick is identical to the proof SCCC must provide here.
33. In Delta, the IBLA announced:
The fact that a permittee prevailed before the Hearings Division does not establish that OSM’s enforcement action was undertaken in bad faith and for the purpose of harassing or embarrassing the permittee.
at 252. This premise is further supported by RL Turner Corporation v. Town of Brownsburg, 949 N.E.2d 372, 385 (Ind. Ct. App. 2011) citing N. Elec. Co. v. Torma, 819 N.E.2d 417, 431, (Ind. Ct. App. 2004), trans. denied (2005), stating “it is well settled that claims are not rendered frivolous, unreasonable, or groundless simply because a party loses on the merits.”
34. In Delta, the permittee based its claim of bad faith and harassment upon the fact that the enforcement action taken against it was based upon alleged violations of a type that had, in a previous case [3], involving a different permittee, been deemed beyond the scope of OSM’s authority. Delta Mining Corp. maintained that OSM’s issuance of the notices of violation and cessation order for matters known to be beyond its authority amounted to an “attitude of bureaucratic arrogance.” The IBLA, in rejecting Delta Mining Corp.’s petition for fees, noted that “OSM is not required to change its policies on the basis of an adverse decision from the Hearings Division” observing further that the previous decision of the Hearings Division had recently been reversed.
35. In Patrick, the petitioner made the following charges:
That OSM enforcement actions against him were politically motivated; that he received conflicting information from OSM concerning citizen complaints; that OSM contributed to a newspaper article specifically to embarrass him; that OSM unfairly refused to settle his case, and that another individual who was involved in a similar operation and was cited by OSM for violations of the Act was treated more favorably than petitioner.
at 446. In this case while the IBLA recognized;
it is possible that, rather than attempting to embarrass petitioner, OSM was trying to be cooperative with the media. We note, however, that OSM used less than good judgment in discussing the results of petitioner’s minesite hearing with the newspaper reporter prior to informing petitioner or petitioner’s counsel of the minesite hearing decision.
Ultimately, the IBLA determined that petitioner’s claims of bad faith; harassment and embarrassment were founded upon his perception of the motivating factors behind OSM’s actions and concluded:
Especially in a situation such as this in which the final order of the Department resolves a difficult issue and the outcome is close, bad faith must be proved by more than assertions of personal belief.
Id.
36. The Indiana Supreme Court has observed that I.C. 34-52-1-1[4] “strikes a balance between respect for an attorney’s duty of zealous advocacy and ‘the important policy of discouraging unnecessary and unwarranted litigation.’” Kahn v. Cundiff, 533 N.E.2d 164, 170, (Ind. Ct. App. 1989).
37. Justice Boehm recognized that application of the statutory authority for recovery of attorneys’ fees under Indiana Code section 34-52-1-1 must leave breathing room for zealous advocacy and access to the courts to vindicate rights. Mitchell v. Mitchell, 695 N.E.2d 920, 925, (Ind. 1998)
38.The overriding interest of Indiana’s Supreme Court in preserving “zealous advocacy” while contemporaneously “discouraging unnecessary and unwarranted litigation” for the purpose of facilitating creative legal arguments leading to the evolution of the law is similar to the interest of OSM in establishing the fee shifting provisions of SMCRA that were carried through to I-SMCRA.
39. This similarity is most prominently recorded in the 1977 discussion of the United States Senate:
In many, if not most, cases in both the administrative and judicial forum, the citizen who sues to enforce the law, or participates in administrative proceedings to enforce the law, will have little or no money with which to hire a lawyer. If private citizens are to be able to assert the rights granted them by this bill, and if those who violate this bill’s requirements are not to proceed with impunity, then citizens must have the opportunity to recover the attorneys’ fees necessary to vindicate their rights. Attorneys’ fees may be awarded to a permittee or government when the suit or participation is brought in bad faith.
65 FR 46389.
40. Indiana eventually endorsed a similar philosophy with respect to I-SMCRA in adopting 310 IAC 0.6-1-13(a), the predecessor to the current administrative rule 312 IAC 3-1-13. The Department of the Interior recognized that as originally proposed 310 IAC 0.6-1-13 would authorize “an award made to a permittee from another person under circumstances other than of bad faith” and determined that such a result rendered the proposed rule “less effective than the Federal regulations at 43 CFR 4.1294.” 56 FR 1915.
41. In assessing the application of I.C. 34-52-1-1, subsection (b)(3), which allows a court to award attorney fees to the prevailing party upon a determination that the other party “litigated the action in bad faith”, bears most significantly upon this proceeding.
42. Discussion of I.C. 34-52-1-1(b)(3) provides that “scrutiny of the motive or purpose of the non-prevailing party” is required, adding from Watson v. Thibodeau, 559 N.E.2d 1205, 1211, (Ind. App. Ct. 1990) quoting Young v. Williamson, 497 N.E.2d 612, 617, (Ind. App. Ct. 1986):
Bad faith is not simply bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. It is different from the negative idea of negligence in that it contemplates a state of mind affirmatively operating with furtive design or ill will.
Mitchell at 924, (Ind. 1998).
43. In Mitchell, the parties had previously entered into an agreement resolving issues associated with the administration of an estate. The prevailing party commenced the litigation seeking specific performance of the agreement after two years of inaction on the part of the non-prevailing party. In determining bad faith on the part of the non-prevailing party the court reflected that the non-prevailing party asserted groundless defenses, denied the existence of items she knew she possessed that were required to be turned over to the prevailing party and failed to even dispute that her failure to comply with the agreement was in bad faith. The non-prevailing party was described by the court as:
a recalcitrant defendant who made a contract to settle a dispute – presumably so that all involved could avoid ratcheting the conflict to the level of a lawsuit – and then in part through outright misrepresentation and unjustified refusal to comply with clear obligations proceeded to refuse to honor the agreement, even after a lawsuit was brought to enforce it.
The Indiana Supreme Court concluded that the “statute was designed to deter precisely this sort of needless drain on the resources of the prevailing party and the judicial system.” Id at 925.
44. Consistent with Mitchell, in 2012, Judge Riley, writing the Indiana Court of Appeals opinion in Neu v. Gibson, 968 N.E.2d 262, (Ind. Ct. App. 2012) reversed a trial court’s refusal to award attorney’s fees to the prevailing party stating:
Bad faith, for purpose of an award of attorney fees, implies the conscious doing of a wrong because of a dishonest purpose or moral obliquity. In St. Joseph’s College, et al. v. Morrison, Inc., 158 Ind. App. 272, 302 N.E.2d 865, 871 (1973), we stated that in order to constitute bad faith under the statute, the conduct must be ‘vexatious and oppressive in the extreme.’ The reason for such a strict standard is that the nature of an attorney fee award under the bad faith exception is punitive and designed to reimburse a prevailing party who has been dragged into baseless litigation and thereby subjected to great expense. Cox v. Ubik, 424 N.E.2d 127, 129, (Ind. Ct. App. 1981) (citing Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702, (1973).
at 279.
45. In Neu, Gibson held a promissory note for $350,000 secured by second mortgages in two parcels of property, one being an Indiana property and the other a Michigan property. Litigation involving both the properties ensued with respect to the promissory note. Gibson ultimately obtained a foreclosure judgment against the Michigan property that through sheriff’s sale had been fully satisfied on May 14, 2007. However, on July 27, 2007 in his proceeding against the Indiana property, Gibson failed to disclose the Michigan judgment or the satisfaction of the judgment and on November 5, 2007 Gibson requested a foreclosure judgment on the Indiana property as well. Finding support from SJS Refractory Co., LLC v. Empire Refractory Sales, Inc. 952 N.E.2d 758, (Ind. Ct. App. 2011), the court concluded:
Gibson’s withholding that a sheriff’s sale had occurred where Gibson had purchased the Michigan Real Estate was material, deceptive, and based on bad faith. If a full disclosure of the Michigan proceedings had occurred, the proceedings pertaining to the Indiana Real Estate could have reasonably finalized shortly thereafter. Instead, Appellants were deprived of the opportunity to avoid litigation and became embroiled in potentially unnecessary proceedings before this court and our supreme court. Accordingly, by blatantly ignoring the discovery rules in 2007 and continuing to engage in questionable litigation tactics, Gibson overstepped the boundaries of zealous advocacy and entered the realm of vexatious litigation.
at 280 & 281
46. The initiation and maintenance of multiple forms of litigation against the same entity over a lengthy period of time is not, alone, evidence of bad faith or of intent to harass or embarrass that entity. Turner v. Board of Aviation Comm’rs., 743 N.E.2d 1153, (Ind. Ct. App. 2001). In Turner, the litigation that had endured for four years included “simultaneous lawsuits before the trial court, the United States Court of Appeals for the Seventh Circuit, and the Federal Aviation Administration (‘FAA’)”.
47. The Turner Court, observing that reasonable arguments citing authority for support were made in each instance and further noting a lack of evidence to substantiate “ill will”, an “intent to harass”, or “malicious intent”, determined that the trial court’s judgment against Turner requiring the payment of the opposing party’s attorney fees should be reversed.
Whether Musgrave’s Actions Rise to the Level of “Bad Faith for the Purpose of Harassing or Embarrassing” SCCC:
48. At issue here is whether SCCC, as the permittee, has demonstrated that Musgrave initiated a proceeding or participated in a proceeding in bad faith for the purpose of harassing or embarrassing SCCC. See 312 IAC 3-1-13(d)(4).
49. Through the Procedural Order SCCC’s evidentiary submission in support of its bad faith claim is not limited except “that such evidence must be relevant and material to the administrative law judge’s determination.” No particular type of evidence was precluded from submission.
Public Statements “Aimed at Besmirching SCCC and Alcoa’s Reputation in the Local Community”:
50. SCCC cites five occasions it maintains Musgrave initiated meetings and offered public statements as evidence of his “public relations campaign” against SCCC and Alcoa. SCCC supports its contentions by providing copies of seven newspaper articles.
51. SCCC maintains that on January 12, 2004 Musgrave “led a group” of additional miners in carrying out these activities through a public hearing conducted by the Department pertaining to a renewal of SCCC’s mining permit. SCCC Evidentiary Submission, pg. 8. The newspaper article cited as support, Mark Wilson, No Squaw Creek mining until safety concerns addressed, Evansville Courier & Press, April 9, 2004, fails to support SCCC’s allegation. SCCC’s Evidentiary Submission, Exhibit 4. Nothing contained within the article indicates that Musgrave led other miners, acted as a spokesperson for other miners or in any manner organized other miners’ attendance at the public hearing. In fact, from the article it is impossible to ascertain that Musgrave spoke at the public hearing or, for that matter, even attended the public hearing.
[VOLUME 13, PAGE 256]
52. SCCC maintains that miners challenged the bond release request. Mark Wilson, UMW seeks delay in return of $500,000, Evansville Courier & Press, July 8, 2004 and Nathan Blackford, UMWA trying to block bond release, Boonville Standard, July 15, 2004. SCCC’s Evidentiary Submission, Exhibits 5 & 6. The newspaper articles, which constitute the only evidence presented by SCCC on this point, clearly identifies the UMW Local 1189, the President of which is identified in the article as Larry Morton, as the entity requesting the Department to deny the requested bond release. The articles make no reference to Musgrave.
53. SCCC maintains that other miners who have also sued Alcoa attempted to support Musgrave’s claims through a meeting conducted by the Indiana Department of Environmental Management. Mark Wilson, Workers tell of experiences with Alcoa’s ‘green goo’, Evansville Courier & Press, July 27, 2004. SCCC’s Evidentiary Submission, Exhibit 7. The article, the only evidence SCCC provides in support of this allegation, is wholly insufficient. The article contains no evidence that the other miners in attendance at the meeting have sued Alcoa. In fact, article does not identify any miner who was in attendance at the meeting. The record is void of any support for SCCC’s claim that other miners spoke at the meeting for the purpose of bolstering Musgrave’s claims. SCCC’s evidence fails to support the conclusion that Musgrave attended the meeting.
54. Finally, SCCC refers to an editorial board article, ‘Green Goo”, Evansville Courier & Press, August 1, 2004. SCCC Evidentiary Submission, Exhibit 8. The editorial makes no mention of Musgrave or any statement attributable to Musgrave. The article recounts much of the content of the article discussed in the Evansville Courier & Press article of July 27, 2004, offering the reasonable conclusion that “there are some troubling aspects to this story.”
55. SCCC’s only supportable allegations relate to a news release issued by the UMW Local 1189 “demanding that Alcoa remove the hazardous waste” that was referred to as “toxic soup”. Maureen Hayden, UMW wants Alcoa to remove waste, Evansville Courier & Press, January 9, 2014. SCCC’s Evidentiary Submission, Exhibit 2. Although the article identifies Musgrave as a “UMW local leader”, it does not identify him as the author of the news release. Musgrave is attributed with having made the following statement:
This harmful waste dumped by Alcoa gives residents of Warrick County problems that could have serious impact on our future health and safety, including groundwater contamination and the future development of Warrick County. The right thing for Alcoa to do is to move all of this waste to a hazardous waste landfill.
A second occasion in which SCCC’s cited newpaper article identifies Musgrave as a participant involves the Department’s public hearing to consider the renewal of SCCC’s permit. Nathan Blackford, Local toxic waste site under scrutiny, Boonville Standard, January 15, 2004. SCCC’s Evidentiary Submission, Exhibit 3. Again, Musgrave is quoted as having made the exact statement that is attributed to him in the January 9, 2004 Evansville Courier & Press article.
56. Musgrave’s statement, quoted in each of the two articles, expresses concern for Warrick County and its citizenry, is tempered and reasonable. From the fact that on each occasion Musgrave’s statement is identical one might reasonably conclude that the statement was even prepared in advance.
57. The January 9, 2004 and January 15, 2004 articles make it unclear what position Musgrave held with the UMW Local 1189. In the latter of these two articles Larry Morton is clearly identified as the President, which is consistent with the July 8, 2004 Evansville Courier & Press article and the July 15, 2004 Boonville Standard article (discussed previously). The latter of these two articles identifies Musgrave as only a member despite the former article’s identification of Musgrave as a “UMW local leader.”
58. Of the newspaper articles cited by SCCC, only two contain any statement proved to be attributable to Musgrave. Nathan Blackford, Local toxic waste site under scrutiny, Boonville Standard, January 15, 2004 and Maureen Hayden, UMW wants Alcoa to remove waste, Evansville Courier & Press, January 9, 2014. SCCC’s Evidentiary Submission, Exhibits 2 & 3. The remainder of the articles cited by SCCC are deemed irrelevant and immaterial as evidence of Musgrave’s bad faith or purpose of harassing or embarrassing SCCC.
Musgrave’s Initiation of and Participation in All Aspects of the Underlying Proceeding:
59. While acknowledging Musgrave’s success before the Commission, SCCC nonetheless maintains that Musgrave’s initiation of the Underlying Proceeding constituted “bad faith for the purpose of harassing and embarrassing” SCCC for the reason that the action “caused the reclamation bond to be held for an additional six years” because Musgrave “asserted that releasing the reclamation bonds would allow Alcoa to avoid its responsibility to clean up the chemicals buried at Squaw Creek.” SCCC’s Evidentiary Submission, pg. 10.
60. The original proceeding initiated by Musgrave before the Commission resulted in the issuance of a final order on December 28, 2009 in which the Commission determined that in consideration of the waste constituents disposed of within the SCCC mine site “the Department failed to properly evaluate SCCC’s Phase III bond release application in terms of the entirety of Indiana Code §§ 14-34 et seq. and 312 IAC 25 et seq. as required by 312 IAC 25-5-16 and Indiana Code § 14-34-6-9.”[5] Musgrave v. Squaw Creek Coal Company and DNR, 12 CADDNAR 192, 208, (2009).
61. While the Commission’s final order was contrary to Musgrave’s position regarding SCCC’s Phase I and Phase II bonds, those bonded areas involved only a combined total of 317.64 acres whereas the Commission’s final order reversing the Department’s decision to release SCCC’s Phase III bond applied to over 950 acres of the SCCC mine site. Clearly, the Commission’s final order favored Musgrave’s position.
62. The Commission’s final order reflects that Musgrave successfully overcame a motion to dismiss filed by SCCC in that proceeding, which indicates that the matter was deemed meritorious as filed.
63. That Musgrave’s initiation of the proceeding before the Commission resulted in inconvenience to SCCC does not support a conclusion that the proceeding was initiated in bad faith or for any purpose of harassing or embarrassing SCCC.
64. SCCC next alleges that Musgrave acted in bad faith for the purpose of harassing or embarrassing SCCC when he “opposed the verified petition for judicial review filed by SCCC seeking to overturn the [Commission’s] determination that the Phase 3 bond release by [the Department] was in error” alleging further bad faith resulted from Musgrave’s appeal of the trial court’s reversal of the Commission Final Order and by his efforts to seek transfer to the Indiana Supreme Court. SCCC Evidentiary Submission, pgs. 10 - 11.
65. Musgrave was successful before the Commission in having the Department’s decision to release the Phase III bond to SCCC set aside. SCCC’s claims that Musgrave’s efforts to utilize all available legal recourse to maintain or to re-establish the success he had achieved before the Commission amounts to bad faith is absurd. These claims are unworthy of further consideration.
66. The Underlying Proceeding addressed a matter of first impression in which Musgrave initially achieved success before the Commission. In reversing the Commission’s final order, the Marion Superior Court addressed the matter in a nine page opinion writing detailed findings and conclusions regarding the Department’s and the Commission’s jurisdictional limits and the interrelationship between the authority and responsibility of those agencies as compared to the authority and responsibility of the Indiana Department of Environmental Management. The Commission’s final order was not summarily reversed. Similarly, the Indiana Court of Appeals seriously considered the legal arguments raised by the parties, recognizing that “the parties dispute the meaning of several of the I-SMCRA’s reclamation terms…” necessary to a determination of bond release and providing an interpretation of those terms in this case of first impression.
67. The fact that both the Sierra Club and the Hoosier Environmental Council, two prominent environmental protection, preservation and advocacy organizations filed Amicus Curiae Briefs in support of Musgrave’s attempt to obtain transfer to the Indiana Supreme Court further exemplifies the importance of the issues under consideration.
68. Frank J. Deveau, SCCC’s witness, recognized that “Musgrave’s arguments were novel…”, which is exactly the type of “zealous advocacy” that the courts and OSM strive to support. SCCC’s Evidentiary Submission, Exhibit 30, 65 FR 46389 and Mitchell, supra.
69. The Underlying Proceeding brings to bear the conclusion reached in Patrick, supra, wherein the IBLA determined that when a “final order of the Department resolves a difficult issue and the outcome is close, bad faith must be proved by more than assertions of personal belief.”
Musgrave’s Petition for Fees:
70. On January 27, 2010 Musgrave initiated Musgrave v. SCCC and the Department of Natural Resources, Administrative Cause Number 08-034R, seeking an award of fees following the Commission’s issuance of its final order on December 28, 2009. SCCC’s Evidentiary Submission, Exhibits17 & 19.
71. SCCC alleges in support of its claim that Musgrave acted in bad faith for the purpose of harassing or embarrassing SCCC as follows:
1. At the very moment that a glimmer of success reached Musgrave in the form of a decision saying he was only two-thirds wrong, he immediately tried to cash in.
2. The fee petition sought to recover in excess of $50,000 plus at least another $10,000 for supplemental fees and expenses.
3. Musgrave sought to make it as costly for SCCC and Alcoa as possible even to the point of attempting to shift his own litigation costs onto them.
4. Musgrave’s fee petition was filed despite the fact that SCCC had already filed a verified petition for judicial review with the Marion Superior Court to appeal the Phase 3 bond release issue.
SCCC Evidentiary Submission, pg. 12./p>
72. The fee petition proceeding initiated by Musgrave, as well as the fee petition proceeding initiated by SCCC here, is controlled by 312 IAC 3-1-13, which specifies in relevant part as follows:
(g) A party who wishes to seek litigation expenses must petition the director within thirty (30) days after the party receives the notice of final agency action….
73. A “final agency action” is:
(1) the entry of an order designated as a final order under this article; or
(2) any other agency action that disposes of all issues in a proceeding for all parties after the exhaustion of all available administrative remedies concerning the action.
[VOLUME 13, PAGE 257]
74. The final order issued by the Commission on December 28, 2009 was the final agency action and its date of issuance constituted the beginning of the thirty (30) days within which Musgrave was permitted to initiate his petition for fees.
75. It is irrelevant to the application of 312 IAC 3-1-13(g) that SCCC had filed its petition for judicial review. If Musgrave intended to initiate a proceeding to recover his litigation expenses he was obligated to do so not one day later than he did.
76. The fact that Musgrave availed himself of the statutorily authorized ability to recover fees and expenses in the sum of approximately $60,000 associated with the proceeding before the Commission is exactly the type action that SCCC now undertakes. How Musgrave’s action in commencing a proceeding to recover fees and expenses may be characterized as bad faith is incomprehensible.
77. Musgrave’s proceeding to recover fees was stayed by the Commission until all appeals had been exhausted and near in time to the Commission’s issuance of its “Final Order Following Remand” Musgrave’s proceeding to recover fees from SCCC was dismissed.
78. There is nothing in the record to support the belief that Musgrave’s initiation of or participation in a proceeding to recover fees from SCCC was based in bad faith with the intent to harass or embarrass SCCC.
Musgrave’s Request for OSM Review of Indiana’s I-SMCRA Regulatory Program:
79. In a letter dated January 30, 2013, following notification that the Indiana Supreme Court had rejected Musgrave’s petition for transfer, Musgrave’s attorneys submitted a request to OSM seeking review of Indiana’s I-SMCRA regulatory program in light of the Court of Appeals interpretation of various portions of Ind. Code §§ 14-34.
80. Musgrave’s solicitation for OSM to review and for a declaration that the State of Indiana’s regulatory program under I-SMCRA “requires immediate amendment to conform with” the federal SMCRA was based upon the rationale that “Indiana’s courts recently imposed an interpretation of state law that is inconsistent with the federal SMCRA regime.” Musgrave’s purpose in seeking OSM review of the I-SMCRA regulatory program is clearly stated as follows:
Mr. Musgrave requests that you evaluate Indiana’s program in light of the recent court decision, find that [the Department] is not effectively implementing, administering, maintaining, or enforcing its bond-release authority, and notify [the Department] that it must take remedial action, including any necessary amendment, or risk substitution of direct federal enforcement or withdrawal of the Secretary’s approval of Indiana’s program.
SCCC’s Evidentiary Submission, Exhibit 28 pg. 8.
81. It is acknowledged that the correspondence sent by Musgrave to OSM offers background information citing the Indiana Court of Appeals interpretation of various portions of Ind. Code §§ 14-34 and referencing facts established through the Underlying Proceeding. However, the outcome of the review sought by Musgrave would serve only to the detriment of the State of Indiana and the Department; Musgrave sought no recourse against SCCC.
82. In any event, 30 C.F.R. 733.12(a)(2) authorizes and requires as follows:
(2) Any interested person may request the Director to evaluate a State program. The request shall set forth a concise statement of the facts which the person believes establishes the need for evaluation. The Director shall verify the allegations and determine within 60 days whether or not the evaluation shall be made and mail a written decision to the requestor.
In light of the expectation that citizens would be afforded the ability to assert the rights provided them by federal SMCRA, Musgrave certainly cannot be chastised in this proceeding for availing himself of the opportunity (provided by federal SMCRA) to assist in assuring the State of Indiana’s compliance with the federal SMCRA. See 65 FR 46389
83. It is concluded that Musgrave’s action in seeking OSM review of the State of Indiana’s I-SMCRA program is neither relevant, nor material to the determination whether Musgrave acted in bad faith for the purpose of harassing or embarrassing SCCC.
Musgrave’s Petition for Administrative Review of the Liberty Mine Permit:
84. On February 24, 2012 Musgrave filed correspondence with the Commission seeking administrative review of the Department’s issuance of Permit # S-366 to Liberty Mine. Musgrave v. Department of Natural Resources and Liberty Mine, LLC, Natural Resources Commission Administrative Cause Number 12-045R.
85. SCCC does not clearly explain how Musgrave’s initiation of an administrative proceeding seeking review of the Department’s issuance of a mining permit to Liberty Mine on the basis that additional mining may “exacerbate the pre-existing materials placed by Alcoa, could have any impact upon SCCC. SCCC’s Evidentiary Submission, Exhibit 26. In fact, within the nine page petition for administrative review Musgrave filed, he spends only five sentences addressing anything remotely related to SCCC. In those five sentences Musgrave explains that the bond release issue being addressed in the Underlying Proceeding remained pending and questions how the Department had authority to issue Liberty Mine a permit for mining on land that remained the subject of that pending litigation.
86. SCCC offers that Musgrave’s action involving the Liberty Mine permit “placed additional strain on the persons and companies trying to begin a mining operation and to keep a schedule.” SCCC was not alleged to be one of those persons or companies.
87. SCCC further alleges that Musgrave’s action “placed into jeopardy the coal supply needed to operate Alcoa’s Warrick plant and the profits to be made by Liberty Mine’s owners and operators.” SCCC’s Evidentiary Submission, pg. 12. However, SCCC fails to offer even one claim that SCCC would, in any manner, be impacted by Musgrave’s petition for administrative review of the Department’s issuance of the Liberty Mine permit.
88. SCCC bears the burden of proof in this proceeding. Its failure to provide clear information pertaining to the relationship between SCCC, Alcoa, Peabody and Liberty Mine or clearly demonstrate that action against Liberty Mine was, in some manner, impactful to SCCC is to its detriment.
89. From SCCC’s statement that Musgrave’s efforts to harass and embarrass “extended to SCCC’s minority owner, Peabody Coal, when its latest mining permit was issued” one might infer that Peabody Coal is associated with Liberty Mine but SCCC fails to clearly establish this fact. Other references by SCCC to the resulting lack of coal supply to Alcoa indicates that Liberty Mine’s coal production bore a direct correlation to Alcoa’s energy demands but, again, this fails to establish a connection to SCCC. SCCC’s Evidentiary Submission, pg. 7. There is simply no evidence to support a conclusion that any action involving Liberty Mine bears any relationship to SCCC.
90. Even if a relationship could be clearly identified the actions occurring through the proceeding initiated by Musgrave against Liberty Mine reveals no inappropriate motive.
91. It is acknowledged that Musgrave, who was acting pro se, did not present the most cogent statement of issues for consideration by the Commission. It is further acknowledged that even after being afforded an opportunity to amend his petition, an identification of issues was difficult with several issues ultimately being determined to be outside the Commission’s jurisdiction.
92. However, five matters were deemed appropriate for Commission administrative review. One of those issues related to the sufficiency of the Department’s evaluation of Liberty Mine’s ability to complete appropriate reclamation, the determination of which bore a direct correlation to the primary issues that were so ardently and passionately litigated in the Underlying Proceeding. With respect to that issue the parties, including Musgrave, agreed to defer action until the conclusion of the Underlying Proceeding at which time Musgrave, respectful of the final outcome in the Underlying Proceeding, voluntarily moved to dismiss this portion of his petition for administrative review. Musgrave’s Corrected Response, Exhibit 30.
93. The remaining four issues were resolved on summary judgment in favor of Liberty Mine. The summary judgment order reveals Musgrave’s lack of skill and ability in researching, interpreting and applying statutes and administrative rules but this does not equate to a conscious effort to harass or embarrass SCCC or constitute action undertaken in bad faith. With respect to four of the five issues disposed of on summary judgment:
a. One issue involved an administrative rule that would have supported Musgrave’s position except for the fact that, unbeknownst to Musgrave, the rule had been repealed.
b. A second matter involved Musgrave’s failure to consider one, single, word contained within the administrative rule. That rule required notices of violation received by an owner/operator that remained “outstanding” on the date of application, to be disclosed on the application. With respect to Liberty, an owner/operator had received the notice of violation identified by Musgrave but the notice of violation did not remain “outstanding” at the time Liberty submitted its application;
c. In the third instance Musgrave alleged that Liberty Mine had failed to properly identify the groundwater classification for the permit area, when, in fact, the groundwater in the area had not been classified. It ultimately became clear that what Musgrave actually sought was to have the groundwater classified and he cited appropriate administrative rules authorizing such classification. However, the action to obtain groundwater classification is a responsibility of the Indiana Department of Environmental Management and Musgrave’s request was before the incorrect agency.
d. Only the fourth matter raised by Musgrave provides a hint of pettiness. For unexplained reasons Musgrave maintained that although Alcoa was identified as an “owner or controller” of Liberty Mine under one administrative rule, Alcoa should have been identified as a “controller” under a different administrative rule. While Musgrave failed to establish a rationale for his argument; the fact that administrative rules provide alternative means by which owners and/or controllers may be identified indicates that a reason must exist. On this issue Musgrave simply failed to carry his burden of proof.
SCCC’s Evidentiary Submission, Exhibit 27.
94. During the period of time the four issues were being disposed of on summary judgment the Underlying Proceeding remained pending before the Indiana Court of Appeals so the matter progressed as efficiently as possible.
95. While Musgrave’s action against Liberty Mine was awkward at times and matters under consideration were not refined as if presented by an attorney, the allegations were supported by legal arguments and citation to appropriate administrative rules. Musgrave’s claims were not frivolous or based upon misrepresentation. Even if the evidence supported a connection between the Liberty Mine permit and SCCC, there is nothing about Musgrave’s initiation of or participation in this proceeding that indicates bad faith as a motive.
[VOLUME 13, PAGE 258]
Administrative Review before the Office of Environmental Adjudication:
96. Musgrave initiated a pro se proceeding before the Office of Environmental Adjudication under Cause Number 10-W-J-4439 associated with the issuance of an NPDES permit to Alcoa[6] by the Indiana Department of Environmental Management.
97. Similar to the proceeding Musgrave initiated to contest the Liberty Mine Permit before the Commission, Alcoa responded to Musgrave’s petition for administrative review with a motion to dismiss. However, two of Musgrave’s allegations were retained for further administrative adjudication.
98. The environmental law judge concluded with respect to two of Musgrave’s allegations that he “stated sufficient facts, if taken as true, that would support a conclusion that the general NPDES permit was improperly issued” and that his “claims contain sufficient specificity to survive the motions to dismiss.” This evidences the lack of bad faith associated with Musgrave’s initiation of that action.
99. SCCC’s representation that the “petition lacked any merit” and conclusory “implication…that even if no attorney will touch such a frivolous appeal, Musgrave is willing to file the appeal himself” is not supported by this evidence. SCCC’s Evidentiary Submission, pg. 11./p>
100. The issues retained by the environmental law judge were not determined to be “non-justiciable” as SCCC maintains.
101. However, a Final Order of Default was entered on August 30, 2011 following Musgrave’s failure to appear for a status conference on August 9, 2011 and subsequent failure to respond to a notice of proposed default. It is troublesome to this court that Musgrave would consume a party’s and a tribunal’s time and resources by initiating a proceeding and prevailing in the face of a full motion to dismiss only to fail to appear. The sole evidence in the record of this proceeding that might offer an explanation of Musgrave’s failure to appear is the Final Order of Default, and unfortunately it provides no insight as to the basis of Musgrave’s failure to adequately pursue the administrative proceeding. SCCC’s Evidentiary Submission, Exhibit 25. In fact, SCCC does not expressly allege Musgrave’s failure to appear as an act of bad faith.
Musgrave’s Personal Injury Claim Against Alcoa:
102.In 2006, Musgrave and his wife initiated a personal injury claim against Alcoa alleging that Musgrave’s contact with the waste disposed of by Alcoa at the SCCC mine site caused the development of his cancer and emotional distress on behalf of both Musgrave and his wife. Musgrave v. Aluminum Company of America, et al., Warrick Circuit Court, Cause No. 87 C01-0601-CT-006. The trial court granted Alcoa’s 12(b)(1) motion to dismiss with respect to Musgrave’s work related exposures concluding that the Workers Compensation Act provided Musgrave’s sole means of compensation. Alcoa subsequently filed its 12(b)(6) motion seeking dismissal of both Musgrave’s and his wife’s emotional distress claims. Alcoa’s motion was denied as to Musgrave’s emotional distress claim but the emotional distress claim of Musgrave’s wife was dismissed. SCCC Evidentiary Submission, Exhibit 12. Retained for consideration by a jury at a trial lasting three weeks at which 24 total witnesses testified and over 1,500 pages of exhibits were admitted into evidence were Musgrave’s claims of emotional distress and claims that his exposure to Alcoa’s waste products as a consequence of recreational pursuits on land owned by Alcoa that was contaminated with Alcoa’s industrial waste resulted in his development of cancer. Id. Through a general verdict, the jury returned a verdict contrary to the Musgraves’ position. The jury’s verdict was upheld by the Indiana Court of Appeals in Musgrave v. Aluminum Company of America, et al, 995 N.E.2d 621, (Ind. Ct. App. 2013) and the Musgraves’ Petition to Transfer to the Indiana Supreme Court remained pending at the time the parties’ briefs in this matter were filed. Musgrave’s Corrected Response, pg. 36.
103. SCCC highlights various assertions made by Musgrave against Alcoa in the personal injury suit to which SCCC attributes distressing implications. SCCC Evidentiary Submission, pg. 9. For instance, SCCC points out that “Musgrave asserted that the materials deposited by Alcoa at the Squaw Creek Mine were dangerous to human health and the environment. The implication attributed to Musgrave’s statement by SCCC is that “Alcoa is a major polluter and a bad public citizen.” Id.
104. It has never been significantly disputed that the material disposed of by Alcoa at SCCC’s mine site is hazardous to human health and the environment. In fact SCCC, itself, did not dispute the conclusions reached in the Underlying Proceeding “…that the wastes disposed of by Alcoa at [Squaw Creek Mine], many of which have constituents listed as hazardous wastes under RCRA, are likely to, at minimum, impair or be injurious to biota in the area…” Musgrave v. Squaw Creek Coal Company and DNR, 12 CADDNAR 192, 207, (2009). In fact, evidence of the potentially hazardous characteristics of the wastes disposed of by Alcoa exists within the numerous environmental assessments commissioned by Alcoa that were admitted as evidence in the Underlying Proceeding. Furthermore, the facts cited by SCCC upon which it ascribes Musgrave’s intent to harass and embarrass SCCC are “supported by evidence, including expert opinions and Alcoa’s own documents.” Musgrave Corrected Response, pg. 34 and Exhibits 16 - 19.
105. In fact, SCCC does not contend that Musgrave’s statements and allegations are untrue or misleading. SCCC does not maintain that Musgrave’s statements misrepresent the facts stated or state the facts in inappropriate contexts.
106. Inasmuch as a truthful statement may cause a degree of embarrassment, the making of such a statement does not constitute bad faith. Nor does making the complained of statements in Musgrave’s personal injury complaint against Alcoa amount to harassment of SCCC. Regardless of the inferences that SCCC may ascribe to them there is nothing about the particular statements highlighted by SCCC that support a conclusion that Musgrave’s motive in offering the information was in bad faith or for the purpose of harassment or embarrassment.
107. SCCC maintains that a “jury returned a verdict in favor of Alcoa, completely rejecting Musgrave’s case” and that “Musgrave’s arguments on appeal were rejected” unanimously and in so doing SCCC promotes the perception that the jury deemed Musgrave’s assertions unbelievable or untrue. That perception is not established by the available evidence.
108.,span style='font-size:7.0pt'> The jury returned a general verdict from which the basis of the verdict cannot be ascertained. Musgrave’s Corrected Response, Exhibit 21.
109. On appeal, the court, in a 19 page decision, fully considered two of three issues raised by Musgrave with the first involving the jury instruction on the statute of limitations and the second relating to the trial court’s dismissal of Musgrave’s work related claims. Musgrave v. Aluminum Company of America, et al, 995 N.E.2d 621, (Ind. Ct. App. 2013).
110. The Court of Appeals fairly summarily dispenses with Musgrave’s contention that the jury instruction was an incorrect statement of the law. Further, while Musgrave maintains that the evidence was insufficient to support the giving of the jury instruction in question, the Court of Appeals concludes that Musgrave failed to properly preserve the issue for appeal.
111. However, in addressing the trial court’s dismissal of Musgrave’s work related claims, Justice Najam, who wrote the unanimous opinion, fully considered and determined the business and contractual relationship existing between Alcoa and Peabody with respect to SCCC in evaluating and ascertaining the applicability of Indiana’s Worker’s Compensation Act. Through that thorough consideration it was concluded that Alcoa, as a jointly and severally liable member of the joint venture, enjoyed SCCC’s immunity with respect to Musgrave’s personal injury claims and that the trial court’s dismissal of that claim was proper. Full discussion and consideration was afforded Musgrave’s claim that he was an employee of Peabody “borrowed” by SCCC such that the Worker’s Compensation Act should not act as a bar to his action against Alcoa.
112. While Musgrave fails to prevail before the Court of Appeals, the opinion reveals complete consideration of contentions and arguments by both Musgrave and Alcoa and evidences legal support for the positions advanced by Musgrave.
113. There is nothing in the record of Musgrave’s personal injury case indicative of bad faith, frivolity or malicious intent towards Alcoa or SCCC.
Conclusory Findings
114. It is acknowledged that Musgrave has initiated and participated in multiple proceedings involving SCCC, Alcoa, the Department and IDEM, all of which related in some manner to the waste disposal that historically occurred at SCCC’s mine site.
115. While the Underlying Proceeding and Musgrave’s petition for the recovery of fees and expenses directly involved SCCC. The remainder of the proceedings SCCC proclaims to provide proof of Musgrave’s bad faith and intent to harass and embarrass SCCC were initiated against Alcoa, Liberty Mine and the Department. These latter proceedings bore no direct relation to SCCC.
116. Even if each of the actions initiated by Musgrave bore a direct correlation and association to SCCC, the fact that Musgrave initiated and participated in numerous, lengthy legal proceedings fails to establish that his actions were undertaken with “malicious intent” or “ill will”. See Turner, supra.
117. There is nothing contained in the record here to indicate Musgrave’s initiation of or participation in the personal injury action against Alcoa involved a “state of mind affirmatively operating with furtive design or ill will” required to establish Musgrave’s bad faith. Mitchell at 924.
118. SCCC has failed to establish that evidence associated with Musgrave’s administrative action against Liberty Mine or his request for OSM review of Indiana’s regulatory program are relevant or material to this proceeding. Alternatively, however, there is nothing about Musgrave’s claims in those actions or his overall participation in those actions indicative of a “conscious doing of a wrong because of dishonest purpose or moral obliquity” on the part of Musgrave. Id.
119. SCCC offers the perception that Musgrave, who initiated his personal injury claim against Alcoa in 2006, initiated the additional proceedings against SCCC, Liberty Mine, the Department and IDEM in an effort to support that personal injury claim. SCCC’s Evidentiary Submission, pg. 2. While the potential accuracy of SCCC’s assertion is acknowledged the record is void of any evidence for support. SCCC’s personal belief, without more, is insufficient. Patrick, supra.
120. Alone, the fact that Musgrave ultimately failed to prevail in the Underlying Proceeding does not constitute evidence of bad faith. This is particularly true where Musgrave initially did prevail before the Commission in a proceeding addressing matters of first impression. Patrick, Delta Mining Corp and RL Turner Corporation, supra.
121. A determination of bad faith for the purpose of harassing or embarrassing must be based upon a “scrutiny of the motives” of Musgrave and be established by more than assertions and personal inferences of SCCC. Watson, Mitchell and Patrick, supra.
122. The relevant and material evidence of record in this proceeding along with inferences that may be drawn from that evidence fails to support SCCC’s contention the Musgrave has acted in bad faith for the purpose of harassment or embarrassment of SCCC.
123. SCCC’s petition for the recovery of fees and expenses should be and is denied.
[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format. The Final Order, Paragraph 124, has been relocated to the “Final Order” section at the beginning of this document.]
[1] On only one
previous occasion has the Commission been called upon to consider Ind. Code §
14-34-15-10. Hoosier Environmental Council v. DNR, 10 CADDNAR 324,
(2006). In that instance, the litigation giving
rise to the fee petition involved the Department’s approval of a permit
amendment, controlled by Ind. Code § 14-34-4-13. The Commission was
required to serve as the ultimate authority for that underlying action, 312 IAC
3-1-2(b)(1)(A), and while the administrative law judge offers no conclusion in
this respect, the Commission was, for that reason, arguably the appropriate
entity to serve as the ultimate authority with respect to the resulting fee
petition. In any event, the parties to that proceeding stipulated that
the Commission would serve as the ultimate authority. Because the Commission
served in that role upon stipulation of the parties in a matter wholly
different from the matters at issue here, the Commission’s service as the
ultimate authority in that instance is distinguished. [2]
Interestingly, while SCCC maintains that it may recover fees and expenses
associated with Musgrave’s initiation of a proceeding to recover fees and
expenses, SCCC expressly removed those fees and expenses from its
request. See Example: Squaw Creek Coal Company’s Fee Petiton, Exhibit 5, Invoice 1335475, pg. 2. [3]Old Home
Manor, 3 IBSMA 241, (1981) [4] Previously
I.C. 34-1-32-1 [5] Waste
material disposed of at the SCCC’s mine site was an important consideration in
the Commission’s reversal of the Department’s release of the Phase III
bond. That the entity responsible for the waste disposal was Alcoa is of
no significance; consideration of the issues would have been the same
regardless of the identity of the entity responsible for the waste disposal. [6] The
administrative law judge notes SCCC’s misrepresentation that the NPDES permit
was issued to SCCC. See SCCC Evidentiary Submission, pg. 11, section
e.