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Augustin v. City of Philadelphia

United States District Court, E.D. Pennsylvania

January 4, 2017

LEA AUGUSTIN, GERARD AUGUSTIN, THOMAS MCSORLEY, DONNA MCSORLEY RICHMOND WATERFRONT INDUSTRIAL PARK, LLC Plaintiffs
v.
CITY OF PHILADELPHIA Defendant

          DECISION

          JOYNER, J.

         We write now relative to the final motion of the plaintiffs[1]in this ongoing civil rights matter - that seeking the entry of permanent injunctive relief against the City of Philadelphia and its wholly-owned gas utility, Philadelphia Gas Works. Specifically, Plaintiffs now move to forever enjoin Defendant from filing any liens on real property where those liens are for unpaid gas services provided to PGW customers who do not own the property being liened using PGW's current methods for doing so. Following hearings on the instant motion and Plaintiffs' Motion for Class Certification on July 26 and 27, 2016, we now make the following:

         FINDINGS OF FACT

         1. Plaintiffs Lea and Gerard Augustin are adult individuals residing at 221 Cadwalader Avenue, Elkins Park, Montgomery County, Pennsylvania. (Trial Exhibit D-22, 3/3/15 Deposition of Lea Augustin, pp. 8-9).

         2. Mr. and Mrs. Augustin are also the owners of several parcels of residential real estate in the City and County of Philadelphia, located at 5105 Wayne Avenue, 2013 Stenton Avenue, 6174 North 17th Street, and 2147 Medary Avenue, all of which they are presently renting and/or in the past have leased out to tenants. Several of those properties are multi-unit buildings, containing more than one apartment and more than one gas service meter. (Trial Exhibit D-22, pp. 8-10, 12-15, 78-79).

         3. Plaintiffs Thomas and Donna McSorley are adult individuals residing at 204 Blair Road, Warminster, Bucks County, Pennsylvania. (Trial Exhibit D-20, 2/19/15 Deposition of Thomas McSorley, p. 7; Trial Exhibit D-20).

         4. Mr. and Mrs. McSorley are also the owners of two parcels of real property situate in the City and County of Philadelphia at 1916 Griffith Street and 1903 Grant Avenue, both of which are residential rental properties containing more than one unit and more than one gas service meter. (D-20, pp. 7-9, 22-23, 31).

         5. Plaintiff Richmond Waterfront Industrial Park, LLC is a Pennsylvania Limited Liability Corporation with offices at 10901 Dutton Road, Philadelphia, Pennsylvania. (Trial Exhibit D-10; Pl's Class Action Complaint and Defendant's Answer thereto, ¶ 8; Trial Exhibit D-21, 6/26/15 Deposition of David Wolf, p. 12).

         6. Richmond Waterfront Industrial Park, LLC (hereafter “Richmond”) is the owner of some 10 parcels of commercial/industrial real estate in the City and County of Philadelphia. Among these is a 256, 000 square foot facility located at 2950 Kirkbride Street, a/k/a 4701 Bath Street in Philadelphia, which is also subdivided into separate rental units with separate meters for the gas service provided to each unit. (D-21, pp. 8, 11-13, 16-20).

         7. Defendant City of Philadelphia is a municipal subdivision of the Commonwealth of Pennsylvania, the owner of Philadelphia Gas Works, and as such acts under color of state law. PGW is the entity through which the City of Philadelphia provides gas services to residences and businesses within the City limits. (Pl's Complaint and Defendant's Answer thereto, ¶s 9-10;D-20, pp. 23-24).

         8. Since July 1, 2000, PGW has had the legal status of a public utility subject to the jurisdiction of the Pennsylvania Public Utility Commission. (N.T. 7/26/16, 75; 66 Pa. C.S.A. §2212(b)).

         9. Following the passage of Act 201 amending the Public Utility Code, 66 Pa. C.S.A. §1401, et. seq. which took effect in December 2004, PGW, as a “city natural gas distribution operation furnishing gas service to a property” became “entitled to impose or assess a municipal claim against the property and file as liens of record claims for unpaid natural gas distribution service and other related costs, including natural gas supply in the court of common pleas of the county in which the property is situated or, if the claim for the unpaid natural gas distribution service does not exceed the maximum amount over which the Municipal Court of Philadelphia has jurisdiction, in the Municipal Court of Philadelphia, pursuant to sections 3 and 9 of the ... Municipal Claim and Tax Lien Law... (66 Pa. C.S.A. §2201, et. seq).” 66 Pa. C.S.A. §1414(a).

         10. Initially, PGW voluntarily agreed to delay implementation of the landlord lien provision of Act 201 until approximately December 14, 2005, one year after the effective date of the Act while it conducted a series of meetings and discussions with a “Landlord Task Force, ” which was made up of representatives from the Greater Philadelphia Association of Realtors, the Homeowners Association of Philadelphia, the Pennsylvania Residential Owners Association and small business investors and city residents in an effort to reach some type of agreement regarding how to best use Act 201 in a way that would benefit PGW's customers and provide a “reasonable, though perhaps distasteful process for landlords.” (Declaration of John Grogan, annexed to Plaintiffs' Motion for Summary Judgment (“MSJ”), Exhibit 1; Grogan Decl., Exhibit 6).

         11. Eventually, the result of the meetings and discussions between the Landlord Task Force and PGW was the adoption of the Landlord Cooperation Program in or around July, 2005. Under that program, residential landlords who fulfilled certain criteria (such as having valid and up-to-date landlord licenses issued by the City's Department of Licenses and Inspections) could register their properties through PGW's website. Provided the landlords were “fully cooperative, ” no liens would be imposed upon their registered properties while they were in the program and they could receive notification when a tenant directed PGW to shut off an account, possibly “skipping out” on a lease. (Grogan Declaration to Pl's MSJ, Exhibits 1, 7, 8, 11; Pl's SJ Exhibit 5, pp. 98-99).

         12. For the next several years, between 2005 and 2008, PGW “at times” placed liens for its customers' unpaid gas bills on the real properties at which the gas had been provided pursuant to Act 201 and the Municipal Claim and Tax Lien Law (“MCTLL), irrespective of the fact that the customers were not the owners of the properties liened. Defendant did so using a “slightly automated” but primarily manual system.[2] (Plaintiffs' Compendium of Deposition Excerpts and Declarations in Support of Plaintiffs' Motion for Summary Judgment, Exhibit 2, pp. 43-44, 49-51).

         13. In 2009, PGW began utilizing the computerized system for automatically liening real estate which it had developed, called the “Lien Management System” or “LMS.” (Pl's Compendium, Exhibit 2, p. 43). The goal of this system, which is entirely automated, is the processing of some 200-300 liens per day, more quickly, less expensively and with fewer human errors than the “manual” method. (Pl's Compendium, Exhibit 1, pp. 37-42, Exhibit 2, p. 43).

         14. At present, LMS functions by automatically “trolling” the account data in PGW's Customer Billing and Collections Database (“BCCS”) to identify accounts as “lien eligible” depending upon the extent of the account arrearage and the length of time it has gone unpaid. (Pl's SJ Exhibit 1, pp. 21, 51-52, 99). To illustrate, in the case of a typical residential account, once an arrearage reaches $300 and more than 91 days have elapsed since the last payment was made, it is considered to be eligible for liening and an automated pre-lien notification letter sent to the owner of the property where the gas service was provided. (Pl's SJ Exhibit 2, pp. 18-22).

         15. There are, however, circumstances under which this process can disrupted manually, i.e., someone in the business or crediting collections departments must intervene and make an adjustment into the system to prevent, for example, a pre-lien letter from being sent or to vacate a lien. (Pl's SJ Exhibit 1, 76-77, 229). These adjustments, which PGW refers to as “exceptions” or “blockers” differ depending upon whether the property at issue is residential or commercial in nature. (Pl's SJ Exhibit 2, pp. 37-39).

         16. Thus, once an account is determined by the Lien Management System to be lien-eligible, the system will further automatically check to see whether there any blocking conditions which are attached to the account. If there are no “blockers, ” and if the system can identify a property owner's name and an address, LMS sends the lien information to the Court, after first activating the mailing of the Pre-Lien Notice. However, if a “blocker” does exist on the account, the liening process, including the mailing of the Pre-Lien Notice, is suspended until such time as the blocking conditions have been resolved either in the BCCS or by the manual intervention of PGW collection personnel. (Pl's SJ Exhibit 1, 117-120).

         17. Although they are similar, exceptions and blockers do differ - there are some blockers which are not exceptions and some exceptions which are not blockers. (Pl's SJ Exhibit 2, pp. 31-32). Generally speaking, blockers are put on in the BCCS system and will block an account from being liened automatically, although they can be overridden manually. (Pl's SJ Exhibit 1, p.

         229; Pl's SJ Exhibit 2, p. 29). Exceptions, on the other hand, are put on in the LMS and likewise operate to prevent an account from being liened (Pl's SJ Exhibits 1 and 2, at pp. 229 and 29, respectively). Examples of exceptions include being a registered landlord in the Landlord Cooperation Program (“LCP”), a customer being designated as a member of the Customer Responsibility Program (“CRP”), i.e., they are low income, or as having some type of medical condition such that PGW cannot turn off service. (Pl's SJ Exhibit 1, pp. 47-48, 51-52). Blockers can also arise where a customer has entered into a negotiated payment arrangement for an overdue account or where there is a “name mismatch” such that the property owner's name and the property's user's name are not the same. (Pl's SJ Exhibit 1, pp. 117-120).

         18. At present, there are at least 7 different “lien models” provided for in the LMS system, which govern when a lien is selected to be or may be filed against a property. (Pl's SJ Exhibit 2, pp. 16-17). These models are subdivided into those governing when to lien a commercial property and when to lien a residential property and are further categorized by such variables as the length of time the account has been in arrears, the amount of the arrearage, whether the account or service agreement has been closed and/or written off, whether the gas service to the property has been shut off and whether the property has been recently sold. (Pl's SJ Exhibit 2, pp. 17-22). Although the models have been changed from time-to-time, neither the models themselves nor the changes thereto have ever been made public. (Pl's SJ Exhibit 2, pp. 41-42).

         19. As a result of the many exceptions and/or blocking conditions placed into the system, it is not uncommon for there to be significant delays in the processing of a lien that extend well beyond the date that LMS first flags an account as lien eligible, resulting in the filing of many liens well in excess of the $300 threshold. (Pl's SJ Exhibit 2, pp. 54-58).

         20. Again, if there are no blockers or exceptions on an account, then the system will commence the liening process which starts with the sending of an automated pre-lien notice letter. (Exhibit X to Defendant's Motion for Summary Judgment, p. 89). Once a pre-lien letter is sent, unless the amount indicated in the letter is paid within the time period provided, the LMS automatically sends the lien information to the office of the Prothonotary and the lien is recorded against the property. (Pl's SJ Exhibit 1, pp. 82, 117-120). It is apparently not uncommon for a pre-lien and a subsequent post-lien notification letter to be sent to the service address (i.e., the address at which service is provided and the property which is liened) rather than the landlord/property owner's registered mailing address, despite the fact that this address is what must be listed on the landlord's rental license. As a result, some landlords do not receive these notifications until long after a lien has been placed upon their property(ies). (Pl's SJ Exhibit 1, pp. 122-124; Pl's SJ Exhibit 8).

         21. Prior to November 2012, LMS was programmed to provide a period of 11 days from the time a pre-lien letter was sent to the time that properties were liened; since that time, 30 days' notice is now afforded. (Pl's SJ Exhibit 1, pp. 82-84; Pl's SJ Exhibit 2, pp. 38-40).

         22. Presently, LMS operates by automatically creating a file which is uploaded to PGW's contracted mailing company, KUBRA, and it is KUBRA which then actually mails the pre- and post-lien notices to the property owners via U.S. Mail notifying them that PGW has liened their property. (Pl's SJ Exhibit 1, pp. 91-95; Grogan Decl., Exhibit 3).

         23. However, if there are blockers on the account, the liening process is suspended until such time as the blockers are removed, after which any debt on the account can be liened. (Pl's SJ Exhibit 2, pp. 97-99, 142-144). A customer can continue to receive service and accrue debt on his or her account while a blocker is in place - a blocker will only operate to forestall the sending of notice and the placement of a lien on the property where the service was provided. (Pl's SJ Exhibit 1, pp. 125-134, 218-219, 221; Pl's SJ Exhibit 2, p. 63).

         24. Among the blockers which can prevent a property from automatically being liened is the “name mismatch” and “address mismatch” blockers, which arise where the name on the delinquent account and the service address listed in the BCCS does not match with the name and/or address identified as belonging to the property owners in the City of Philadelphia's Office of Property Assessments (“OPA”)[3] database. Although these properties can be liened manually, it is not uncommon for this blocker to delay the pre-lien notices from ...


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