New Power Source

Douglas Ames wanted revenge.

Four years ago, the energy storage company he founded went out of business and Ames blamed Southern California Edison, which he claimed reneged on a deal to pay him.

After Ames, 40, was forced to shutter his Huntington Beach business, he signed up for night classes at Western State Law School in Fullerton to start a new career.

He passed the bar exam last June and on Tuesday, Ames won his very first case: a $6-million verdict against . . . Southern California Edison.

“It’s taken many, many years to get to this day,” an elated Ames said outside the courtroom. “I wanted to have my fate in my own hands. There’s a lot of personal vindication here.”

Ames’ lawsuit, filed in Orange County Superior Court, alleged that the utility slashed rebates for energy conservation, undercutting business for his company, Transphase Business Inc. The firm, which built and installed systems that dramatically cut cooling costs and electrical use at hospitals and other large facilities, had 50 employees and annual sales of more than $5 million before collapsing, the suit said.

The battle between Edison and Ames began a decade ago, when the utility was seeking millions from the state to spend on its energy-efficiency programs.

Ames contended that state money for such programs should go directly to companies like his.

After Ames argued his case before the Public Utilities Commission, Edison agreed to pay Transphase $58,000 a month for seven years. The payment represented energy savings from Transphase’s products.

But the utility began cutting back payments, eventually eliminating them altogether, the lawsuit alleged. After the payments dried up, Transphase folded. The company had financed several systems based upon the money coming in from Edison, Ames said.

“There was a lot of underlying animosity,” Ames said. “That resentment has come back to haunt them. They don’t want power savings, they want power sales.”

After a seven-week trial, a jury of seven women and five men agreed Tuesday that Edison had breached its contract with Transphase and acted with malice by interfering with two of the company’s clients. Jurors awarded Transphase $5.9 million in general damages then later in the day awarded the company $400,000 in punitive damages.

Ames said he hoped the jury’s verdicts would “send a loud and clear signal and message to Edison management.”

Edison lead attorney Don Zell declined to comment on the verdict, but did say the company plans to appeal.

During his closing arguments on the punitive phase, Zell said he thought the damages already awarded in the case were “excessive” and made clear that he felt he was fighting a losing battle.

“I don’t feel I have any credibility with any of you,” Zell said to the jury.

Now that Ames is an attorney instead of a business executive, he said his future is beginning to take shape.

“All I’ve thought about was just getting past this case,” he said. “But now I think I’m really going to practice law and focus on helping other small companies. I think small companies really get taken advantage of by the big guys.”

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But first, Ames has another trial across the country--a civil lawsuit against Jersey Central Power and Light, the New Jersey utility he says also ran him out of business. The case is currently pending in U.S. District Court in Newark.

Ames was assisted on the California case by his father, Walter Ames, a Washington D.C.-based patent attorney.

Ames said money awarded by the jury “will ultimately go to the shareholders and I’m very, very happy about that,” Ames said. “These are people that stuck with Transphase for 15 years, mainly family and friends. They will finally see some return in their investment.”

Beyond the personal satisfaction, Ames said the verdict could have bigger ramifications.

“With the so-called deregulation, there are a lot of little companies who will be trying to sell electricity to Edison customers,” he said. “But every one of those companies has to contract with Edison to get the power.

“Hopefully, they will treat these companies fairly and allow for competition in a free marketplace,” he said. “That’s the only way that the electricity cost will truly get reduced.”