Opinion ID: 1958552
Heading Depth: 1
Heading Rank: 2

Heading: .. The Eastdale Mall Matter

Text: The Roberts shareholders suit charges that the compromise agreement worked out in August, 1976 between the Company and the developers of Eastdale Mall, among other things, resulted in the willful and wrongful dissipation of corporate assets of Alabama Power Company. It is alleged that the cost borne by the Company in the course of providing original service to Eastdale Mall was excessive in the amount of $96,000. This amount according to Roberts would have been paid by the developer if Company policy had been properly applied. Admittedly, operation Bulletin 425 had been promulgated in 1975 a few months prior to the commencement of the construction of Eastdale Mall. If this bulletin had been strictly applied, the Company would have paid some $57,568. The developers of Eastdale contended that they had computed their construction costs and formulated leases based on the terms of a previous guideline or policy which became effective in 1971. A compromise was worked out, resulting in the Company paying some $153,568 toward the installation. This was $96,000 more than it would have borne if operation Bulletin 425 had been strictly applied. We feel that this compromise was purely a management decision. Under the circumstances, this Committee believes that the developers of Eastdale Mall could have made a strong case against the Company for damages. The compromise rather obviously avoided a possible lawsuit, or at least a decision by the developers to go less than total electric. The soundness of the business decision is further justified by the fact that the initial combined annual billing for the Eastdale Mall was approximately $400,000 and for the 12 month period prior to March 20, 1979 was $788,978.87. This return against an investment of $96,000 speaks for itself. Furthermore, our investigation reflected that operation Bulletin 425 was not intended to be strictly applied to the construction of malls. Company policy recognizes that malls are unique in the sense here involved, and in each situation a mutually satisfactory business arrangement for the proration of initial installation costs is contemplated.