Meter Mix-Up Is Shock to Firm Facing Power Bills
F. Kent Weber, the president of Modulite Corp., was flabbergasted two years ago when he received a $30,000 electricity bill for three months of operation at the light fixture firm’s new location. Weber expected a bill less than half that size.
“That alarmed us,” Weber said. An investigation showed that, indeed, Modulite had not used all that power but the company was getting the bill because neighboring firms were connected to a common power line under Modulite’s account.
After two years and numerous court hearings, Weber figures that his neighbors--Ecom Systems Inc. and Refuse Trucks Inc.--owe him more than $100,000 in unpaid power bills.
But Southern California Edison Co. and the state Public Utilities Commission say that that is not their problem. They say the situation is a landlord-tenant dispute and have declined to get involved.
Weber says he may soon resign himself to absorbing the loss because he has spent $28,000 in attorneys’ fees to collect just $26,700 in mostly court-ordered payments. He said he hesitates to spend any more on legal action.
“We’re sitting here facing a huge loss of cash that was not in our budget,” Weber said in a recent interview. “It’s been a real drain.”
Power to Be Turned Off
As a last resort, Weber is prepared to try a new tactic. He has asked Southern California Edison to turn off electricity to the complex. The power is to be shut off Monday. Weber said he will then rent a huge generator to supply his firm with power.
“We’ll see who can last longer,” Weber said.
The president of Ecom Systems, Kenneth Miles Burdge, failed to return telephone requests for comment. In an unrelated action, a federal grand jury last month indicted Burdge, 49, on charges that he bribed a buyer for a major aerospace manufacturer to win space shuttle contracts worth an estimated $1 million.
Refuse Trucks manager Ashok Bhardwaj said: “We have been paying our bills to Modulite; we may be a couple of months behind.”
Subleased Building
Modulite’s power problems began when the firm moved from Canoga Park to a 125,000-square-foot building on Union Street in late 1984. The building was subleased to Modulite by Lex Service San Francisco Inc. of Stamford, Conn.
Lex leased the building from R.G.G.L. Corp., an Irvine-based property management firm. R.G.G.L leased other buildings on the same lot to financially troubled Kaiser Steel, which subleased space to Ecom Systems and Refuse Trucks, said attorney Richard Conn, who represents Lex and R.G.G.L.
Weber said that when he signed the sublease, he had no idea he would be responsible for paying the power bills for the entire complex, which now includes Ecom Systems and Refuse Trucks as tenants.
But Conn said Modulite should have been alerted to the electricity situation by a section in the lease agreement that said power was commonly delivered but separately metered.
“It’s not a very clear provision but it certainly should have put Modulite on notice if Modulite were careful,” Conn said.
Weber counters that the section is unclear and led him to believe each customer would be billed separately. “Two attorneys of ours have read that and believe we had our own separate meter in here,” Weber said.
Weber said he appealed to Southern California Edison Co. in 1985 to collect energy bills directly from the other tenants. But the utility responded that it would be impossible because the complex was a single customer--Modulite. The power to the other buildings flows through Modulite’s meter.
“We basically informed Modulite that we had nothing to do with those other parties,” said Edison spokesman Eli Sandoval. “We don’t get involved in customer disputes.”
Issue Dismissed by State
Modulite--which Weber says manufactures decorative lighting fixtures and had $11 million in sales last year--pleaded its case to the Public Utilities Commission, which also dismissed it as a landlord-tenant dispute last November, said PUC spokeswoman Dorothy Taylor.
The R.G.G.L buildings were constructed in the 1950s and used by various aircraft manufacturers producing for the Korean War, said R.G.G.L. Vice President Gary Di Sano. Kaiser Steel, one of the most recent tenants, was manufacturing truck frames on its portion of the site before it pulled out and began subleasing, Di Sano said.
Kaiser and Lex used an internal metering system and a formula to share the electric bills from the common power source without problem, Conn, the attorney, said.
“The agreement was carried out in good faith and consistently for a period,” Conn said. “There was never a dispute in the way it would work.”
Modulite filed suit in Los Angeles Superior Court in June, 1985, seeking reimbursement for the electric bills. The complaint named Ecom Systems, which subleased from Kaiser Steel, and Kaiser Steel. Later complaints included Refuse Trucks Inc., which also subleased from Kaiser, and Gene Di Sano, president of R.G.G.L., and Lex.
Court-Ordered Payments
The court ordered Ecom to make $1,000 a month in payments to Modulite until an expert could determine the energy costs due each company. Ecom paid $18,250 before it stopped payments in August, 1986, Weber said.
Superior Court Judge Jack M. Newman granted a preliminary injunction requiring Ecom and Refuse Trucks, which began operations last year, to properly meter their electricity usage and pay Modulite their portion of the bill, said attorney James A. Dumas Jr., who represents Modulite.
The firms have not met the terms of the injunction, Dumas said. But, he said, Superior Court Judge Warren H. Deering found ambiguities in the injunction and declined to hold the firms in contempt of court.
“We may have to go back and remove some of the ambiguities,” Dumas said.
Modulite has paid more than $281,000 it has been billed by Southern California Edison since the beginning of 1985, Weber said. He calculates his firm’s usage accounts for a little more than half of the bill, or about $146,000. Ecom Systems’ and Refuse Trucks’ portion is more than $135,000, of which they have paid about $18,250 and $8,508, respectively, Weber said.
Meanwhile, R.G.G.L. has filed a Superior Court complaint seeking to terminate the lease agreements with Ecom Systems, Refuse Trucks and other tenants, said attorney William D. Herz. R.G.G.L. contends that Kaiser, which is under the protection of Chapter 11 of the U.S. Bankruptcy Code, illegally subleased space to the firms.
Lex and Gene Di Sano have also filed a cross complaint to the Modulite suit, contending that Modulite made unauthorized modifications to its building. Weber said Modulite would return the building to its original condition if he is forced to move when the lease expires at the end of June. Weber said he would like to renew the lease because Modulite has spent about $150,000 on building improvements.
Di Sano, the R.G.G.L vice president, said the firm is seeking a larger company for the building.
