Philadelphia landlords urged a federal judge Tuesday to nullify all outstanding gas liens linked to deadbeat tenants, a move PGW said could drastically alter its business and increase the bills of customers in good standing.

Lawyers for five landlords asked a federal judge to include all city landlords in his March ruling, which declared that Philadelphia Gas Works' manner of placing liens on rental properties for debts owed by tenants is unconstitutional.

U.S. District Judge J. Curtis Joyner ruled in March that landlords did not receive due process when the city-owned PGW failed to provide sufficient notice that their tenants were behind in payments, and that landlords would be held liable.

A lawyer representing the landlords encouraged Joyner to make a broad decision and declare the case a class action.

"When a constitutional violation has been found, the court has an obligation to remedy it," said John J. Grogan, of the Langer Grogan & Diver law firm, who represented the landlords along with Irv Ackelsberg.

Lawyers for the city, which owns PGW, argued that the judge's ruling should pertain only to the landlords named in the lawsuit, and not be declared a class action.

They also said that if PGW could not collect the debts from landlords, the $6 million a year the city now recovers from liens would have to be paid by increasing rates of PGW's other customers.

"Five hundred thousand PGW customers are going to be affected by a group of landlords who failed to take responsibility," said the city's lawyer, Jeffrey M. Scott, of the Archer & Greiner law firm.

While the judge ruled that PGW's method of putting legal encumbrances on property was unconstitutional, Scott argued that the landlords had not proven that an injury had occurred, prompting a sarcastic response from the judge.

"If a lien were placed on your property, would you feel you were injured by that, or is that something that would make you happy, content?" Joyner said. "Tell me."

PGW, as a municipal utility, has the authority to place liens on private property to recover uncollected bills. Investor-owned utilities, such as Peco, have no equivalent power. Liens are legal encumbrances that must be settled when real estate changes hands.

The suit was brought in 2014 by landlords Lea and Gerard Augustin, Thomas and Donna McSorley, and Richmond Waterfront Industrial Park L.L.C., which is owned by investor David Wolf. PGW dunned them for tenant debts ranging from $1,000 to more than $27,000. Some landlords complained that they were unaware of the liens until they tried to sell their properties.

Joyner's ruling in March rejected PGW's practice of imposing liens without adequate notice, leaving property owners scant recourse to defend themselves or to pressure their tenants to pay.

The judge's ruling could affect about 24,000 active gas liens totaling $27.6 million on residential rental properties, and 4,300 liens totaling $7.5 million on commercial rental properties, according to testimony.

About three dozen spectators attended Tuesday's hearing, including the plaintiffs and several landlords who said they wanted to join the class action. The spectators also included representatives of the Philadelphia Gas Commission, the city's oversight body, and some PGW executives.

PGW said that if it were forced to tell landlords that specific tenants were in arrears it might place the utility into conflict with PUC regulations protecting the confidentiality of customer information.

PGW says that landlords are sufficiently notified about tenant debts through its Landlord Cooperation Program, which holds registered residential landlords harmless for future tenant arrearages if PGW has access to the tenants' meters.

But there is no comparable program for commercial landlords. In 2012, PGW created a Commercial Lien Notification Program, which gives registered landlords 30 days' notice of a lien on a commercial property, but landlords say the notifications arrive too late for them to get tenants to pay. PGW has already decided to appeal.

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