Nesquehoning borough is seeking a judgment of over $2 million against Municipal Energy Managers Inc. (MEM), for failing to live up to its contract and receiving over $400,000 from the borough.
Yesterday Carbon County Judge Steven R. Serfass heard argument from borough solicitor Robert Yurchak for the judgment and heard testimony from a borough official about the monies expended on the failed contract with MEM.
MEM has been sued by several municipalities in the Carbon-Schuylkill area as well as in Northampton County where the district attorney has filed a criminal complaint against the Moscow, Lackawanna County, firm and its two top executives.
At the start of Monday's hearing, Serfass noted that MEM was not represented at the proceeding and that no legal counsel has entered an appearance on behalf of the firm since the filing of the complaint by the borough.
Serfass heard testimony from RoniSue Ahner, secretary-treasurer of the borough, that in March 2009 the borough entered a contract with MEM in which the firm would take over the street lighting from PPL Utilities.
The borough also entered into a loan agreement with a financial firm to pay MEM for its services. The loan amount was for $431,200. The payoff on the 30-year loan is $634,372.51.
According to Ahner the borough would realize a saving in service bills of $1,375,130 over the length of the contract.
Yurchak told Serfass that MEM has never performed any of the duties outlined in the contract. Yurchak said the borough is seeking not only the money for the loan, but also the projected savings outlined in the contract. He asked the court to enter a judgment in favor of the borough for $2,614,331.
Ahner said the borough refinanced the loan, with others, and it cost about $22,000 in fees, which Yurchak said the borough is also seeking in the judgment.
To date the borough has paid MEM $415,568.23, Yurchak said.
Serfass took the matter under advisement to give Yurchak an opportunity to file copies of the payments made and the documents concerning the refinancing of the loan.
The court will make a decision after reviewing the contract and the other filings of the borough, Serfass said.