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HENDRICKSON v. PHILADELPHIA GAS WORKS

October 6, 1987

Margaret Hendrickson, et al.
v.
Philadelphia Gas Works, et al.



The opinion of the court was delivered by: GILES

 GILES, J.

 FACTUAL BACKGROUND

 In this action, plaintiffs, who are residential gas users or applicants for such service, challenge certain policies and practices of the Philadelphia Gas Commission, Philadelphia Gas Works ("PGW") and the Philadelphia Facilities Management Corporation ("PFMC") as being violative of various constitutional rights. Plaintiffs have also sued several individual officers and employees of defendants.

 Essentially, the claims fall into three categories: 1) entitlement to pretermination due process hearing, with written notice of reasons in all circumstances, regardless of considerations of unauthorized use of gas or evidence of meter tampering at the property serviced or other safety considerations; and 2) entitlement of an occupant of a premises, other than the named customer, to obtain or continue service in his own name without first satisfying another's indebtedness for non-payment for gas service; and 3) entitlement to be free of the arbitrary denial of gas service at employee discretion under the guise of "good and sufficient reasons", in violation of the defendants' own regulations.

 Plaintiffs filed this action in May, 1984 as a class action and seek both compensatory and punitive damages as well as injunctive relief as to the alleged offending practices. Promptly following the commencement of the lawsuit, the court presided at a temporary restraining order hearing wherein the five named plaintiffs sought immediate relief from the cessation, or non-extension, of gas service. Solutions were found for the immediate needs of the plaintiffs without prejudice to the claims or defenses raised by the litigation. The court urged the Gas Commission and PGW to adopt specific regulations and procedures which would address generally the notice, hearing and other concerns evident from the complaint. This was done with the hope that the parties would resolve their disputes without the need for further litigation. In November, 1985, the Gas Commission promulgated new customer service regulations. *fn1"

 In addition to filing a motion for class certification, plaintiffs filed a motion for partial summary judgment. The defendants have opposed the class certification and have themselves moved for summary judgment claiming that the named plaintiffs had no protectable property interest under the circumstances presented and that, in any event, the constitutional issues are moot in light of the new regulations.

 DISCUSSION

 A. The Philadelphia Gas Commission, PFMC and PGW Are Municipal Entities Synonymous With the City of Philadelphia for All Purposes Under 42 U.S.C. § 1983

 The Philadelphia Gas Commission is an operating arm of the City of Philadelphia responsible for the setting of rates and operating regulations by reason of Article III, §§ 3-100 and 3-309 of the City's Home Rule Charter. Dawes v. Philadelphia Gas Commission, et al., 421 F. Supp. 806, 815 (E.D. Pa. 1976). It oversees the general operations of PGW which is not, itself, an identifiable entity. Id. at 811, fn. 1. It is merely a collective name for the real and personal property used to furnish gas service to customers within the City. Id. PFMC is a non-profit corporation which manages PGW for the "sole and exclusive benefit" of the City pursuant to municipal ordinance. Id. at 815. Although it has the status of a "private" non-profit corporation, PFMC was organized by the City and is devoted to carrying out governmental functions of the City and is, therefore, a municipal authority for the purpose of managing the City's gas service. (Amended Complaint, para. 5). The Chief Executive Officer of PFMC is alleged to be the overall manager of PGW.

 Contrary to plaintiffs' contentions, the Philadelphia Gas Commission is not a public utility regulated by the Pennsylvania Utility Commission pursuant to the Public Utility Code, 1978, July 1, P.L. 598, Act No. 116, 66 Pa. C.S.A. § 101, et seq. Municipal corporations, which include all cities of the Commonwealth and any entity of public character which exists for the purpose of rendering service similar to that of a public utility, are exempt from regulation under the Public Utility Code so long as the service is provided within the City's corporate limits as a public service. Borough of Phoenixville v. Pennsylvania Public Utility Commission, 3 Pa. Cmwlth. 56, 280 A.2d 471 (1971).

 Plaintiffs argue that inasmuch as the court in Dawes v. Philadelphia Gas Commission, supra, ruled that the municipal agencies here were subject to regulation under the Public Utility Code, the principles of collateral estoppel mandate that this court regard that ruling as a finding of fact binding upon them here. See, Dawes at 817. I decline to follow plaintiffs' urging because the ruling constituted no finding of fact but an impression of law, which was erroneous. As a matter of state statutory law, *fn2" the City's gas service system is exempt from state regulation.

 Plaintiffs' claim of a constitutionally protected "property interest" necessarily derives from the municipal regulations under which gas service is extended to residents of the City. *fn3"

  The unrebutted evidence *fn4" profferred through affidavits from defendants is that evidence of meter tampering or diversion of gas through the installation of unauthorized equipment constitutes inherent imminent danger to the health and safety of the serviced premises and occupants, as well as surrounding properties and the general public, requiring immediate remedial action. (Affidavit, Frank S. Gorman, PGW Supervisor, Technical Services). Moreover, it is undisputed that unauthorized and untrained persons who tamper with meters, piping equipment and appliances in a property can create safety hazards by using improper installation methods and apparatus which fail to meet industry standards and City licensing standards. Further, it is undisputed that theft and tampering incidents pose safety hazards because they either create apparent gas leaks or present unacceptable risks of an undetectable gas leak which cannot be left unremedied because of danger of explosion, asphixiation, or further tampering to attempt to cover up the unauthorized use.

 B. THE NAMED PLAINTIFFS

 1. Sigfredo Cruz

 Plaintiff Sigfredo Cruz complains that he was denied due process of law when, upon discovering a tampered meter in his basement and without prior notice, PGW terminated the gas service to his property. *fn5" He did not receive post-termination written notice from PGW either explaining the shut-off or advising him of any procedure by which he could protest the action taken or the conditions under which he could obtain a restoration of service. He seeks to represent a subclass of customers or occupants of serviced premises who have been similarly affected by what he perceives as a taking of a property interest in continued service without due process of law. He contends that he was entitled to pretermination notice and hearing after PGW discovered the tampered meter but before any shut-off could occur. He further contends that termination of service could occur only if there was a factual determination that he was the person responsible for the tampering and unauthorized use of gas. The facts of the Cruz claim are as follows.

 On March 27, 1984, during a routine check by a PGW leak survey crew, a leak was found in the sidewalk curb box that serviced the Cruz residence. The box was located directly in front of the property. It contained a shutoff valve that could be used to turn the service on and off. Gas detection instruments inserted into the curb box showed a reading of 100%, indicating a potentially explosive mixture of gas and air. Upon such a finding, PGW has the right under its Tariff to enter adjacent properties to check for accumulations of gas, even by forcible means. *fn6" PGW took immediate steps to enter the property. No one responded to PGW's attempts to gain entry by consent, that is, knocking at the door or ringing a doorbell. A serviceman gained access to the basement where the meter was expected to be located by prying open a basement screen. A gas detection instrument reading in the basement showed no detectable gas accumulation. The remainder of the house was not inspected as there was no basis to do so.

 PGW left no notice at the residence advising that the gas meter had been removed or as to why the gas service had been shut off. Cruz deduced that PGW had terminated the service and promptly contacted lawyers at Community Legal Services ("CLS"). Cruz' Deposition N.T. 15, 16, 19. The CLS attorneys promptly contacted PGW on Mr. Cruz' behalf. It was PGW's policy and practice at the time to give customers like Cruz the post-termination opportunity to contest the proposed restoration of service charges and to present any evidence that might warrant relief from or modification of the charges. CLS had post-termination discussions with the Claims and Insurance Department. *fn7" In such discussions, Cruz, through counsel, was advised of the reasons for the shut-off, was given the opportunity to respond, and was told of the charges to be paid to have the service restored. He was required to pay a standard by-pass charge, a $ 172.00 deposit representing two months of average gas usage and $ 152.05 representing one-half owed for actual meter gas consumption. An agreement was reached whereby, in return for the immediate restoration of service, Cruz paid $ 372.05, with the balance payable in later installments.

 On March 26, 1984, PGW issued a $ 687.80 bill based upon a meter reading by Cruz. He complained about the bill to a local PGW office because it was significantly greater than billings for the same season of the previous years. Cruz testified at his deposition in this case that he read the gas meter in his basement and called in the readings to PGW. It is from this reading that his protest as to the billing arose. (Cruz Deposition, N.T. 7, 8). He claims that he had asked PGW to come out to read the meter. Prior to that occurring, the reversed meter was discovered. Cruz was asked if the PGW photographs taken of the meter facing the foundation wall accurately portrayed the meter as it existed in March, 1984 when he claims that he read it. He was also asked how he was able to read the meter, since the dial face was against the foundation wall. (Id. at 37-38, 25). He was instructed by his attorney not to answer these questions on the grounds that his answers might tend to incriminate him, invoking privilege under the Fifth and Fourteenth Amendments of the United States Constitution. Similarly, he was asked if he was aware that gas was being stolen at the property and whether anyone acting on his behalf moved the meter. Again, he invoked his Fifth Amendment privilege. (Id. at 18-19, 20).

 It is clear that Cruz was not prepared before termination or thereafter to offer any explanation as to how the meter found by PGW in a reversed position got that way or even to deny that there was meter tampering and gas theft either by him or someone on his behalf. Without a sufficient explanation of the situation, the gas service to the Cruz property would have been cut off after a post termination hearing. *fn8" As a matter of law, plaintiff Cruz would be unable to prove at trial that he suffered any compensatory loss by reason of the termination of service without prior notice and hearing. *fn9"

 Not every "property interest" invasion by a state or municipality requires prior notice and hearing. *fn10" Where there are serious concerns which must be abated, the due process requirements are satisfied if the "notice and rudimentary hearing . . . follow as soon as practicable." Goss v. Lopez, 419 U.S. 565, 583, 42 L. Ed. 2d 725, 95 S. Ct. 729 (1974). In Goss, the Court found that since Ohio statutorily extended to the students in question the right to public education, they had a property and liberty interest in continuing their education such that the state could not withdraw that right without grounds of misconduct and absent fundamentally fair procedures to determine whether the misconduct had occurred. Id. at 573-574. However, the Court recognized that there are recurring situations where prior notice and hearings cannot be insisted upon. "Students whose presence poses a continuing danger to persons or property or an ongoing threat of disrupting the academic process may be immediately removed from school," Id. at 582, so long as a prompt post-removal notice and hearing is given. In the issue at bar, the undisputable safety concerns presented by the tampering at the Cruz property and the unavoidable duty upon the service provider to take immediate steps to abate the hazard warranted termination without prior notice and hearing.

 Assuming that Cruz had a property interest in continuing service at the time of investigation of the gas leak, the question remains as to what process was due. Goss v. Lopez, supra, at 577, quoting Morrissey v. Brewer, 408 U.S., 471, 481, 33 L. Ed. 2d 484, 92 S. Ct. 2593 (1971). Application of the due process clause is an "intensely practical matter," Goss at 578, that "negates any concept of inflexible procedures universally applicable to every imaginable situation." Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 6 L. Ed. 2d 1230, 81 S. Ct. 1743 (1961). Plaintiff's insistence that no abatement action can be taken in hazardous situations determined by PGW to require shut off until there has been written notice, a hearing and a determination of fault is entirely misplaced. Safety considerations constituting emergency conditions carve an exception out of the ordinary notion of pretermination notice and hearing procedure.

 Plaintiffs cite Dawes v. Philadelphia Gas Commission, supra, and Myers v. City of Alcoa, 752 F.2d 196 (6th Cir. 1985) for the proposition that in every situation there must be prior notice and hearing before termination of a utility service supplied by a state or municipality. Dawes, supra and Myers supra, do not purport to address the emergency safety concerns presented in the Cruz situation. Dawes is limited by its facts. The Dawes court prohibited the termination of gas service for alleged non-payment of bills without adequate notice and opportunity for predetermination hearing. It had no occasion to address the safety exception recognized in Goss. Likewise, Myers,11 did not concern imminent danger presented by continuation of the utility service. In that case, the supplier of the service determined that there had been an unlawful removal of its meter and replacement with a stolen metering device of another utility company. The customer denied any knowledge or participation in the unlawful acts. In Myers the plaintiff's action did not present safety concerns for the customer, the public or the utility. Moreover, the Myers court recognized that imminent danger considerations could justify departure from prior notice and hearing requirements. Id. at 199-200, citing Jackson v. Davis, 530 F. Supp. 2 (E.D. Tenn. 1981), aff'd, 667 F.2d 1026 (6th Cir. 1981) (building unsafe because of defective or dangerous electric wiring system and service disconnected where continuation of service presented safety and health hazard). Here, the undisputed evidence is that continuation of service through a tampered meter presented an unacceptable risk of catastrophe. Therefore, termination was a necessary and responsible precaution undertaken by PGW.

 Finally, Cruz' claim that he was entitled to continued gas service despite evidence of meter tampering and unauthorized usage erroneously assumes that the source of his property interest is the Pennsylvania Public Utility Code, 66 Pa. C.S.A. § 1501. The Code mandates that "every public utility shall furnish and maintain adequate, efficient, safe and reasonable service and facilities [and] such service shall be reasonably continuous and without unreasonable interruption and delay." Id.12 Dawes, supra. As a matter of law, the Philadelphia Gas Commission and its subsidiary instrumentalities, are exempt from regulation under the state Code, 351 Pa. Code § 3.3-100, 3-909. Plaintiff's property interest, if any, derives from the regulations promulgated by the Philadelphia Gas Commission. Cruz had no property right based on statute or PGW regulation to continuation of service where a dangerous condition or unauthorized use of gas existed.

 After obtaining service, plaintiff became entitled to be free of arbitrary or irrational action by the utility through receipt of notice and hearing as soon as practicable after abatement of the conditions giving rise to the claim of apparent or potential hazards. *fn13" This court finds that Mr. Cruz was not entitled to pretermination notice and hearing, but was entitled to a prompt post termination hearing. *fn14" Cruz was accorded a post termination hearing where he was accompanied by counsel. *fn15"

 The Philadelphia Gas Commission has amended its regulations to provide that the termination of service without notice shall be limited to safety reasons, which shall include gas leaks or other potentially hazardous conditions, unauthorized interference with, or diversion or use of gas delivered to the dwelling, installation of unauthorized or prohibited equipment, tampering with meters or any other condition which may endanger the safety of any person or property or may prove harmful to the energy delivery system of the company. PGW Regulation 4.11.

 Effective December 25, 1985, the Philadelphia Gas Company adopted regulations requiring that written notice be left at the property stating the reasons for the shutoff and a statement of the rights and procedures available to the customers of record to dispute the shutoff if they choose to contest the action. In the case of a gas leak or other no-fault condition, the service will be restored when the necessary repair is made. In all instances of possible intentional misconduct, the customer must call PGW to schedule a hearing at a telephone number given or come to a given address. A decision on resumption of service must be made in writing within two business days of the customer's application for continued service. PGW Regulation 2.4 (March 7, 1986). The two day time period is reasonable for all parties concerned. The time period allows PGW to complete an investigation and allows the customer to obtain legal counsel if desired since the factual basis for terminating service because of intentional misconduct could suffice for criminal charges.

 For these reasons, defendants are entitled to summary judgment on plaintiff Cruz' claim. Cruz suffered no violation of his constitutional due process rights. He offered no proof that PGW erred in concluding that he knew that the meter had been tampered with and that gas was being stolen. Therefore, he offered no proof to support the claim of a loss of an entitlement. Because the regulations as adopted meet the prompt notice and hearing ...


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