City scrambles for legal help due to PGW's policy on liens

The city has hired an outside lawyer to defend itself from a federal class-action lawsuit alleging its policy of filing liens against landlords for their tenants' delinquent utility bills violates due process.

Jeffrey M. Scott, of the Archer & Greiner law firm, on Thursday filed an appearance on behalf of the city, which was sued last month by three landlords who were dunned by Philadelphia Gas Works for money owned by their deadbeat tenants.

Scott successfully defended the city two years ago in a federal civil rights jury trial in which a Northeast Philadelphia man accused city workers of targeting elderly residents for code violations in order to steal from their homes.

The PGW lawsuit was filed by lawyers Irv Ackelsberg and John J. Grogan, of the Langer Grogan & Diver law firm. Ackelsberg said Thursday that "numerous" landlords had contacted the firm since The Inquirer published a story Sunday about the suit.

The lawsuit alleges that PGW's practice of slapping liens on rental properties with little or no notification leaves the property owners scant recourse to defend themselves or to pressure their tenants to pay. In some cases, the tenants are long gone.

Unlike investor-owned utilities, the city-owned PGW has the power to place liens against properties to collect debts. Liens are legal encumbrances that must be settled when real estate changes hands.

In some cases, property owners say they discovered the liens only when they went to close a sale.

In recent years, PGW has more aggressively used liens to collect delinquent accounts. The utility has placed 90,000 liens worth about $126 million - some properties have more than one lien.

Many liens are placed on owner-occupied houses, but PGW's practice of dunning owners of residential and commercial rental properties has irked landlords.

About 22,000 residential landlords have enrolled 70,000 properties with PGW's five-year-old Landlord Cooperation Program, which gets landlords off the hook for future arrearages if PGW has access to the meters on rental dwellings. Only rental properties registered with the city are eligible.

"The Landlord Cooperation Program solves one of our most difficult challenges, which is to get access to meters," said Barry O'Sullivan, a PGW spokesman.

There is no comparable program for commercial landlords.

PGW in 2012 created a Commercial Lien Notification Program that gives registered landlords 30 days' notice of a lien on a commercial property.

But landlords say the notification often does not disclose which tenant in a multiunit building is delinquent. And they say the notification arrives too late for them to get the tenant to pay.

Commercial landlords who want to protect themselves against getting slammed with their tenants' delinquent utility charges have other means to protect themselves, O'Sullivan said.

The landlords can keep the gas bill in their own name and pass the cost on to their tenants in a monthly bill, O'Sullivan said.

They can also write their leases to require tenants to validate the landlord as a third party on the PGW account, so that the landlord has the right to monitor the account and learn whether the tenants are current with their payments.

Ackelsberg suggests that PGW should automatically allow landlords to access their tenants' utility accounts since the property owners have a financial interest.