Business and Economics

Appeals Court: Hardy Cannot Face Criminal Charges

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May 2, 2014 —

INDIANAPOLIS – The Indiana Court of Appeals ruled unanimously to uphold a Marion County Superior Court judge’s ruling that former Indiana Utility Regulatory Commission Chairman David Lott Hardy could not be criminally charged for ethical violations that took place during his time with the agency.

Although the Appeals Court ruling affirmed the trial court’s decision to dismiss the charges facing Hardy, the reasoning behind its decision is not the same.

“We conclude that the trial court properly granted Hardy’s motion to dismiss, although our rationale differs from the trial court’s,” said Appellate Court Judge Rudolph Pyle III in the court’s written decision.

In August 2012, Hardy was charged by the state with four counts of official misconduct – all class D felonies. The first charge accused Hardy of inappropriately assisting former Indiana Utility Regulatory Commission employee Scott Storms pursue an employment opportunity with Duke Energy, while the second, third and fourth charges claimed he participated in secret acts of communication with Duke executives.

The alleged violations took place between 2008 and 2010 and occurred during pending IURC proceedings involving Duke Energy’s Edwardsport facility.

Last fall, Marion Superior Court Judge William Nelson dismissed the charges facing Hardy and a month later, the office of the Attorney General filed a notice appealing the decision.

Nelson dismissed the charges against Hardy based on an amendment passed by the Indiana General Assembly to correct a poorly written law.

Before the amendment, the law allowed for any violation of procedure – even one noncriminal in nature – to be charged as official misconduct.

After Indiana Inspector General David Thomas filed a report in 2010 noting problems with the legislation, lawmakers quickly refined it to only include criminal behavior.

During the Court of Appeals hearing less than two months ago, representatives for both the state and Hardy based their respective arguments on whether or not the amended legislation – which became effective the summer of 2012 – could be applied retroactively to include Hardy’s violations during 2008-2010.

The panel of three Appeals Court judges – Cale Bradford, Paul Mathias and Rudolph Pyle II – concluded that Hardy’s charges were inappropriate even under the original wording of the law prior to amendment.

“In its order granting Hardy’s motion, the trial court found that the Inspector General’s report was conclusive evidence that the legislature had intended its 2011 amendment to be remedial in nature,” said Pyle in the Court of Appeals’ written decision. “Based on this finding, the trial court determined that the current amended version of the official misconduct statute should apply retroactively to Hardy. However, we need not go so far as to interpret the Inspector General’s report or the nature of the 2011 amendment because Hardy’s charges were also improper under the former version of the statute.”

The Appeals Court cited State v. Dugan – a 2003 trial involving an Indiana State Excise Police officer charged with official misconduct after allegedly “accepting gratuities from the owner of two companies that were permitted to sell alcoholic beverages” – as a primary source backing its ruling.

In the Dugan case, the Indiana Supreme Court drew from Indiana law to reach the conclusion that “a charge for misconduct must rest upon criminal behavior that is related to the performance of official duties.”

The Court of Appeals used this case to determine that the state’s charges against Hardy of official misconduct were incorrect due to a lack of criminal behavior.

“The Supreme Court’s holding in Dugan was controlling law eight years prior to the legislature’s 2011 amendment, as well as during the time period when each of the violations underlying Hardy’s charges occurred,” said Pyle in his written ruling.

“Because our Supreme Court has interpreted the official misconduct statute to require a charge of official misconduct to rest upon criminal behavior that is related to the performance of official duties, we conclude that the trial court did not abuse its discretion when it dismissed the state’s charges against Hardy,” he said. “We need not address any of the state’s or Hardy’s remaining arguments.”

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