Business Owner-Turned-Attorney Gets Even

Douglas Ames wanted revenge.

When the energy storage company he founded went out of business four years ago, Ames blamed Southern California Edison, which he claimed reneged on a deal to pay him. His business shuttered, Ames enrolled in night classes at Western State Law School in Fullerton to start a new career.

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

“It’s taken many, many years to get to this day,” 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 Huntington Beach firm, which built and installed systems that 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 lawsuit alleged that Edison stopped paying Transphase money the utility had agreed to pay for a share of the money saved by its cooling system. Edison was to have paid Transphase $58,000 a month for seven years. When Edison stopped the payments, Transphase folded.

“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.”

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

Edison lead attorney Don Zell declined to comment on the verdict Tuesday 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.

Now that Ames, 40, 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.”

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 pending in U.S. District Court in Newark, N.J.

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

“The money 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.”