Opinion ID: 2635264
Heading Depth: 3
Heading Rank: 3

Heading: Collateral Estoppel Provides an Independent Basis for Affirming the Judgment.

Text: We next turn to Chugach's cross-appeal of the superior court's decision that collateral estoppel did not apply to the Commission's decision. On cross-appeal, Chugach argues that Chugach's 2000 Rate Case  which included extensive discovery, a multi-week hearing with direct and cross-examination and a long written decision by a three-commissioner panel  was more than an adequate substitute for a judicial procedure. Collateral estoppel precludes the relitigation of MEA's Mismanagement Claim. MEA argues that there is no identity of the issues between the Commission's decision that the costs of the rate lock are an allowable cost and a determination whether Chugach violated its contractual duties to MEA under good faith and prudent utility practices and that therefore collateral estoppel does not apply in this case. The doctrine of collateral estoppel is applicable where: (1) the party against whom the preclusion is employed was a party to or in privity with a party to the first action; (2) the issue precluded from relitigation is identical to the issue decided in the first action; (3) the issue was resolved in the first action by a final judgment on the merits; and (4) the determination of the issue was essential to the final judgment.[ [21] ] We have recognized that [p]rinciples of finality may be applied to the decisions of administrative agencies if, after case-specific review, a court finds that the administrative decision resulted from a procedure that seems an adequate substitute for judicial procedure and that it would be fair to accord preclusive effect to the administrative decision. [22] A comparison of the issues reveals that precisely the same questions that would be considered by the superior court in adjudicating MEA's breach of contract claim were resolved through the Commission's Order 26. MEA filed a statement of issues with the Commission asking it to consider the following with respect to Chugach's financial management:  Whether the expenses related to [Chugach's] acquisition of the speculative hedging instruments known as the rate lock were prudently and necessarily incurred.  Whether [Chugach] acted contrary to the prudent utility practices standard by consolidating nearly all of its total indebtedness in two large, fixed-rate bond offerings[.]  Whether [Chugach] acted contrary to the prudent utility practices standard by failing to diversify its debt consistent with sound financial management principles.  Whether [Chugach] acted contrary to the prudent utility practices standard by failing to refinance high cost debt to take advantage of changing interest rates and provide its consumers with the lowest debt costs.  Whether [Chugach] acted contrary to the prudent utility practices standard when it purchased speculative hedging instruments known as the rate lock.  Whether [Chugach] violated the prudent utility practices standard by failing to manage the rate lock instruments consistent with sound financial management practices. MEA thus squarely placed before the Commission the question whether Chugach's actions were consistent with prudent utility practices. Chugach also filed a statement of issues with the Commission on November 5, 2002. Chugach argued that its debt management practices with respect to the rate lock were prudent. And the Commission decided the issue of the prudence of Chugach's actions in its decision. The Commission noted Chugach's use of financial advisors and the Board's use of an independent consultant before entering into the rate lock. The Commission found it was reasonable for Chugach to be concerned about the risk of rising interest rates, and this warranted the use of the hedging mechanism. The Commission's determination that Chugach's actions were reasonable was essential to its decision to allow Chugach to recover rate lock expenses by amortizing them. Because the issues were vigorously contested before the Commission, it is fair to apply the doctrine of collateral estoppel to the question whether Chugach complied with prudent utility practice. [23] Therefore, we conclude that the grant of summary judgment to Chugach was appropriate based on collateral estoppel grounds. [24]