Five Burbank and Glendale residents have filed two separate lawsuits accusing the suburban municipalities of refusing to pay interest on most security deposits for electricity service.
The Glendale suit says residents who are required to pay security deposits ranging from $100 to $999 are being deprived of the interest accrued on those deposits, while customers who pay security deposits of $1,000 or more earn interest.
In the Burbank complaint, residents contend that the city refuses to pay interest on all security deposits, which have a $20 minimum.
The plaintiffs filed the suits Feb. 18 in U.S. District Court in Los Angeles and have asked the court to certify their complaints as class actions.
The lawsuits request that residents be compensated for the interest they would have been paid if the deposits had been placed in an interest-bearing account and that the cities be required to pay interest on all security deposits for electrical services.
No damages were specified. Court papers say the cities' practices violate clients' rights under the U.S. Constitution's 5th Amendment, which states that no private property should be taken for public use without just compensation.
Plaintiffs' attorney Stephen Gargaro said Burbank and Glendale residents who don't meet the cities' credit criteria are required to pay a security deposit, which is either applied to the account or returned after a year of making on-time payments.
"But they don't return all of the deposits with interest," he said, "and we have a lot of clients who are upset about that."
By contrast, the Los Angeles Department of Water and Power pays interest on security deposits made by customers who do not meet credit criteria, said spokeswoman Gail Harris.
Burbank Assistant City Atty. Richard Morillo said that the city has a long-standing practice of not paying interest on security deposits, but that he doesn't "believe that what we are doing is in violation of law."
Glendale City Atty. Scott Howard could not be reached for comment Friday because city offices were closed.
Plaintiffs Armen Poghosyan and Adrine Manvelyan sued on behalf of all Burbank residents. The suit names as defendants the city, Mayor David Laurell, Burbank Water and Power General Manager Ron Davis, City Manager Robert R. "Bud" Ovrom, and City Treasurer Donna Anderson.
Glendale residents Armenak Mkrtchian, Svetlana Martirosyan and Ernie Babanian are named as plaintiffs in the complaint brought on behalf of all city residents. The city, Mayor Rafi Manoukian, Glendale Water and Power Director Ignacio Troncoso, City Manager James E. Starbird, and City Treasurer Ronald Borucki, are named as defendants.