Two class action lawsuits filed in Candler County in May against Excelsior Electric Membership Corporation seek compensation for capital credits not refunded to members, past and present.
One suit, filed by Bobbie Dismuke, representing the estate of the late Fred Dismuke Jr., and Norma June Bowen, on behalf of the estate of the late Fred Irwin Bowen Sr., is a class action suit for all deceased or former members of Excelsior EMC, based in Metter. Attorneys Bobby T. Jones and Julian B. Smith with Jones & Smith PC of Metter and Thomas B. Tucker and John B. Long with Tucker, Long PC of Augusta are representing Dismuke and Bowen.
Fred Dismuke was a member since 1976, while Fred Bowen had been a member since 1953, until their deaths, according to the suit.
A second suit, filed by Bulloch County resident John T. Hodges, MD, is a class action suit on behalf of current Excelsior EMC members. Hodges is represented by L. Gregory Hodges, with Oliver Maner, LLC in Savannah.
Each suit states members and their representatives are seeking relief for “breach of contract, breach of fiduciary duties, violations of the Georgia EMC Act, and EMC bylaws.”
Excelsior EMC formed in 1938 as a nonprofit corporation owned by its members, serving portions of Bulloch, Bryan, Candler, Tattnall, Evans, Effingham, Emanuel and Jenkins counties.
Each suit claims capital credits have not been refunded to numerous members, alive and deceased, over a span of more than 50 years According to the lawsuits, the Rural Electricification Administration (now known as the RUS – Rural Utilities Service) ruled in 1964 that capital credits must be returned to customers on a revolving basis as the financial condition of the EMC allows.
However, “there is a reason for that,” said Gary Drake, Excelsior EMC manager. “The cooperation has never returned capital credits.” The money isn’t “sitting in a bank account somewhere,” but has been invested in the company through equipment, stations and other areas, he said.
Excelsior EMC is being represented in the case by Steve Minor of Tisinger Vance, PC of Carrollton.
As a non-profit cooperative, Excelsior EMC does not have “shareholders.” Instead, Excelsior EMC is owned by its customers, referred to as “members.” Each consumer who receives electric service from Excelsior EMC is a member.
“EMC members include individuals, private entities and, upon information and belief, governmental entities,” the suits read.
According to the lawsuits, the National Rural Electric Cooperative Association states an EMC has legal obligation to retire capital credits, but Excelsior EMC has “failed for decades to have a system of retirement or rotation.” The EMC must retire capital credits to members in order to “obey its own bylaws and to remain a nonprofit” organization.
Each EMC member has an account, creditor debit, that represents capital furnished for the cooperative’s use, and federal law demands the capital be returned to users, the lawsuit states.
Georgia law mandates that EMCs operate at cost by requiring they exist as nonprofits. The lawsuits allege that “EMC has $33 million in patronage capital on its books. “
Invest in company
Drake said the Excelsior EMC board decided to invest back into the company, as there was not a way to locate so many past members. Capital credits are to be refunded “first in, first out,” meaning credits are to be refunded to customers depending on the date of their initial service. Locating a member who may have had service a few decades ago would be virtually impossible, he said.
Excelsior EMC has not returned capital credits to members since 1963, for years 1948, 1949 and 1950, he said. Since 1964, the cooperative has not returned any capital credits. Drake did not know reasons why.
Credits, or money, owed to members that could not be located or who may be deceased would be treated as unclaimed money and must be returned to the state unless reinvested by the company, he said Wednesday.
“It’s not the best situation in the world, but when you get lemons, you have to make lemonade out of it,” he said.
If not for the capital credits reinvested in the company, “We would have had to borrow money” to continue operation, Drake said. “Excelsior EMC rates are among the lowest in the state, and have been for many years. Our rates are much lower than Georgia Power, and I am very proud of that.”
Greg Hodges said his clients hold a different view of the matter.
“It is our position that Excelsior EMC is holding its customers’ money,” he said. “They’ve not given credits to anyone that we know of.”
He said the EMC’s bylaws are clear in stating credits must be returned to members.
Both he and Drake referred to similar lawsuits against other EMCs, including one settled in Cobb County for “a significant sum of money,” Greg Hodges said.
Tommy Tucker, representing the Dismuke and Bowen suit, said the Cobb County case was settled awarding members with $98 million. He declined to speak further about the Excelsior EMC lawsuits. Neither Minor or other attorneys with Tisinger Vance, PC were available and did not return phone calls seeking comment.
However, Minor told the Metter Advertiser in May that “cases like this are becoming more common.
“This is the first time (Excelsior EMC) has been sued, but it is not the first time a lawsuit like this has been filed,” he told the Advertiser. ”There are a number of cases very similar in nature in Georgia and across the country with similar allegations.”
He said Excelsior’s Board must decide how to balance their financial structure in a way that meets customer’s needs.
“The board routinely looks at these factors – equity, debts and rates – to determine how best to serve the needs of the community,” he said, adding the EMC can opt to issue capital credits or to reinvest them into the business.
No court date has yet been set for the cases, according to the Candler County Clerk of Courts Office.
Holli Deal Saxon may be reached at (912) 489-9414.