United States District Court, E.D. Pennsylvania
LEA AUGUSTIN, GERARD AUGUSTIN, THOMAS MCSORLEY, DONNA MCSORLEY RICHMOND WATERFRONT INDUSTRIAL PARK, LLC Plaintiffs
CITY OF PHILADELPHIA Defendant
write now relative to the final motion of the
plaintiffsin 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:
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).
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).
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).
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,
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).
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).
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).
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.
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.
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).
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).
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. (Plaintiffs' Compendium of
Deposition Excerpts and Declarations in Support of
Plaintiffs' Motion for Summary Judgment, Exhibit 2, pp.
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).
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).
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).
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).
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.
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).
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).
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.
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).
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).
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).
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).
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”) database. Although these
properties can be liened manually, it is not uncommon for
this blocker to delay the pre-lien notices from ...