Waterline company to sue city over contract
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Utility Line Security, LLC, plans to sue the Pittsburgh Water and Sewer Authority for $3 million for breach of contract, the pipe warranty firm indicated in bankruptcy filings Friday.
ULS on Friday filed a 35-page summary of its case, listing $3.7 million worth of assets, the largest being a $3 million "claim against PWSA for breach of contract and indemnification." In a status conference in bankruptcy court Friday morning, the firm's attorney did not signal its intention to file such a claim.
Utility Line hasn't filed a suit against PWSA, and the breach-of-claim assertion in the bankruptcy filing doesn't necessarily mean that it will, authority solicitor Mark Nowak said.
Mr. Nowak said he believes PWSA treated Utility Line fairly and doesn't know what grounds the company would cite in claiming breach of contract.
Until last month, ULS provided line warranties, for $5 a month, to all water authority residential customers, except for those who opted out. Competing warranty firms sued last year, and last month Allegheny County Court of Common Pleas Judge R. Stanton Wettick Jr. declared that the arrangement between ULS and the water authority was illegal.
That prompted the water authority to stop billing customers the $5 a month premium, driving ULS to declare bankruptcy.
The summary indicated that ULS had $4.77 million in business income in 2010, the first year of its opt-out warranty program with the water authority, which was its sole source of customers. ULS last year paid $192,396 to each of its top three officers, Christopher Kerr, Gregory Cerilli and Jacob Skezas, and $143,811 to Brian Hohman, another officer.
ULS listed $757,415 in liabilities, mostly money due to plumbing firms that it hired to fix lines.
Its top five creditors were Farbarik Plumbing, which is owed $155,807; Kept Co., $138,425; Terry's Plumbing, $121,227; Mercurio Plumbing, $91,762; and Vortex Sewer Inc., $69,948. Vortex is owned by John Klinger, a street maintenance supervisor with the city of Pittsburgh Public Works Department who is also a Democratic Party official.
The ULS program was beset by concerns that the company got the arrangement in part due to the relationship between Mr. Kerr and Michael Kenney, former water authority executive director.
Prior to joining the water authority, Mr. Kenney worked for the Municipal Authority of Westmoreland County, which is managed by Mr. Kerr under a contract with Resource Development and Management. Mr. Kenney and Mr. Kerr were friends, and Mr. Kenney did consulting work for RDM.
At the bankruptcy conference, attorney Kirk Burkley, representing ULS, said the firm had not yet decided whether to liquidate or market its product to individual customers. He said the company would appeal Judge Wettick's ruling.
The company and authority also face class-action lawsuits by customers seeking reimbursement of the $5 charge.
First Published April 16, 2011 12:00 am
