Scranton Sewer Authority approves $7M settlement of lawsuit over 600 missing sewer-line easements

SCRANTON — The Scranton Sewer Authority today approved a $7 million settlement of a 3-year-old class-action lawsuit over 619 missing sewer-line easements. The settlement first must gain approval from a Lackawanna County Court judge and undergo procedural steps before plaintiffs receive compensation for their easements, authority solicitor Jason Shrive said.

The pact also would result in dismissal of a related lawsuit claiming the authority’s disbursement of $87 million in proceeds to Scranton and Dunmore from the 2016 sewer sale violated state law.

Putting two-bed these two lawsuits, which were filed in 2016 and 2017, resolves the skeleton authority’s two main problems and brings the agency closer to finally ceasing to exist.

The easement lawsuit stemmed from issues raised in mid-2016 when the sewer sale to Pennsylvania American Water was in development. Before the $195 million sewer sale closed Dec. 29, 2016, the authority discovered it never secured over 600 sewer-line easements on private properties for quick access for emergency repairs to sewer lines underground, if ever needed.

The authority offered affected property owners a choice of $100 per easement or condemnation. But many homeowners had no idea that sewer lines ran under their properties or in some cases, directly under their homes. They saw the $100 offers as pittances for properties they now viewed as greatly devalued.

In November 2016, several homeowners filed the suit as a potential class action against the SSA, and on behalf of the class of 600, over the values of the missing easements.

Another attorney for the SSA, Stanley Yorsz of the Buchanan, Ingersoll, Rooney law firm of Pittsburgh, who participated in the meeting Thursday via teleconference, explained details of the settlement:

– All homeowners would each receive at least $500 for an easement, but some would get significantly more, depending on appraisals that take into account locations of sewer lines and other relevant factors.

– The subject properties are grouped into three categories: least affected, moderately affected and most affected.
There are about 300 properties in the least-affected group; 158 moderately impacted; and 161 most affected.

– Homeowners would receive notices about the suit and settlement.

– Homeowners would be able to “opt-out” of the case and instead go it alone regarding their easements.

“No one is being forced to be in this settlement,” Yorsz said.

Homeowners who stay in the class would be able to object to the terms of the settlement, as well as contest their group classification or appraisals. If 20% of homeowners opt-out of the settlement, the authority gets the option of terminating or keeping the pact.

The authority voted 4-0 — with Chairman Michael Parker, Kevin Whelan, and Keleena McNichols, all of Scranton, and Michael Dempsey of Dunmore, all in favor — to approve the settlement.

Next, a judge will hold hearings on certifying the case as a class action, crafting notices to send to affected owners, and setting deadlines for participation in the settlement.

Meanwhile, the other suit that would get dismissed was filed in October 2017 by resident Anthony Moses, who is a plaintiff in the class-action easement suit. The Moses suit, filed as leverage for the easement suit, sought to force the city and borough to return their sewer sale proceeds, and for the two law firms involved in the sale — Abrahamsen, Conaboy & Abrahamsen for the city and Cummings Law for the borough — to return their legal fees to the authority until it resolves the easement lawsuit.

Contacted after the meeting, plaintiff’s attorney Patrick Howard, who also represents Moses in the second suit, said they are glad to have resolved both cases and hope to receive money for their easements by the summer.

“We believe the $7 million settlement will provide real and just compensation to these property owners,” Howard said in an email. “At the same time, this resolution ends not only this long outstanding (easement) litigation, but also the Moses litigation, which sought to claw back all of the sewer settlement authority asset sale funds.”

The $7 million for the easement settlement also contains enough money to pay as-yet-undetermined plaintiff legal fees, Shrive said. The $7 million will come from a $12 million set aside of sewer sale proceeds put in escrow for securing the missing easements, he said. About $11.4 million of the $12 million escrow remains, Shrive said.

Meanwhile, a different escrow of $5 million was set aside as an indemnity fund.

After the authority settles all of its matters and ceases, any remaining escrow funds would go to Scranton and Dunmore on an 80/20 share basis, with Scranton receiving the larger share.

Related Practice Areas

Ready for a free confidential case evaluation?

Contact us TODAY. Timing is critical for your case.