The city of Scranton, the Borough of Dunmore in Lackawanna County and two law firms that represented them during the sale of the Scranton Sewer Authority have been sued by a property owner alleging they unlawfully raked in over $87 million from the sale.
Scranton resident Anthony R. Moses filed his complaint in the Lackawanna Court of Common Pleas Oct. 5. Moses was formerly part of a class action seeking compensation from the Scranton Sewer Authority (SSA) over the existence of undisclosed sewer lines running under residents’ properties without an easement.
His complaint alleges that while the SSA was sold to Pennsylvania American Water in 2016 for $195 million and was supposed to dissolve after the closing of the asset sale, the authority still exists.
After the sale, the SSA placed $17 million in escrow, $12 million of which was set aside for litigation over undisclosed sewer lines. Additionally, Moses alleged the SSA transferred the proceeds of the sale to Scranton and Dunmore—$70 million and $17 million, respectively—in violation of Pennsylvania law prohibiting agencies from spending money outside of that designated for their mission.
“Indeed, the SSA was not permitted to transfer the money it received from the sale to the city or borough until the certificate of termination was filed with the commonwealth and Lackawanna County and all of its outstanding claims were settled, including the pending litigation related to the easements,” the complaint said.
In addition to seeking the return of the money from the municipalities, Moses is going after the money paid to their lawyers as well—$200,000 to Scranton’s counsel at Abrahamsen, Conaboy & Abrahamsen, and $256,000 to Dunmore’s counsel at Cummings Law.
Moses is represented by Philadelphia-based Saltz Mongeluzzi Barrett & Bendesky, which also represented 600 class members in the prior class action.
“The SSA’s payment for ‘special counsel’ for the city and borough as part of the sale of the SSA’s assets was not part” of its mission, the complaint said.
Edwin A. Abrahamsen, co-founder of Abrahamsen Conaboy, and Thomas P. Cummings, of Cummings Law, did not immediately respond to calls seeking comment.
“It remains a mystery as to why the SSA was quick to distribute these funds and leave so many loose ends in its wake,” Saltz Mongeluzzi lawyer Patrick Howard said in a statement released by the firm. “We are now acting to protect the interests of Mr. Moses and the other residents affected by these sewer lines. We want to make sure these funds are handled appropriately and administered consistent with state law.”
P.J. D’Annunzio can be contacted at 215-557-2315 or firstname.lastname@example.org. Follow him on Twitter @PJDannunzioTLI.