For Whom the Bill Tolls: Board Sues AT&T for 18 Years' Cell-Tower Electricity
July 27, 2012 — Calling AT&T: Why have we been paying your electric bill for 18 years?
That's the question the condo board of The Leonori condominium — where residents include the actor Samuel L. Jackson and former Morgan Stanley CEO John Mack — has put to the telecommunications giant after discovering the building has been paying to power the cell-phone towers on its roof all this time. Even more to the point, that's the question asked in the lawsuit that the condominium filed on July 18. The case is instructive for any condo or co-op board as a reminder to really look at your monthly bills.
Leonori Lease
In October 1992, AT&T entered into a lease with The Leonori — a landmarked, 13-story condo at 26 E. 63rd Street / 701 Madison Avenue in Manhattan, completed in 1902 under architects Buchman & Fox — to rent rooftop space for cell-phone towers. The towers, now operated by what the lawsuit describes as AT&T subsidiary New Cingular Wireless, became operational two years later. In March 2003, the lease was extended to 2018.
"This lease agreement required that AT&T establish a direct meter and account with Con Ed," says Mark Freyberg, of The Freyberg Law Group, the board's attorney. "We gave them permission, while they were establishing their direct account, to submeter from us temporarily. And we, of course, would bill them and they'd reimburse us."
But, Freyberg says, "They never established their direct account." The Leonori never discovered it until it had an energy audit conducted last summer "and through this process it was determined that Defendant has failed to arrange for its own metered electrical supply to measure its electrical consumption," the lawsuit reads — and so until last October, the building continued to pay the wireless company's electric bill to the tune of what the lawsuit estimates "in excess of the sum of $750,000, with interest thereon."
AT&T, however, interprets the lease differently. A spokesperson told Habitat in a statement, "Under the terms of the lease, Leonori approved a submeter and was required to read it and bill us for electricity used. For reasons unknown to us, they never sent us a bill until last year. We've been paying the bills since then, and for months now have been trying to resolve their claim for electricity used, but not billed, before then."
When 18 Equals 6
AT&T has offered to reimburse a much smaller amount, covering only the last half-dozen years. "When I spoke with their attorney, their position is that the statute of limitations in breach-of-contact lawsuits is six years," says Freyberg.
He counter-argues that, "We believe this was intentionally concealed from us, and the lawsuit alleges not only breach of contract but also fraud and unjust enrichment, which would not bind us to a six-year statute of limitations. They do not dispute the basic fact," he notes, " that their electric bill was paid for by the condo for almost 20 years, yet they have resisted owning up to their bill."
One might ask, Why did the condo board or the management company realize this years ago? " This is something that the managing agent at the time, who's long gone, did not pick up on," concedes Freyberg, who's working with co-counsel Mitchell Goldberg, of Ochs & Goldberg. "It wasn't noticed at the beginning and then we changed management companies [and] nobody followed up." The former management company, which he declined to name but is given as Walter & Samuels, Inc., in court documents, is not part of the lawsuit.
New Cingular Wireless has 30 days to answer the Summons and Complaint. The condo board, of course, had 20 years to get its act together — but better late than never.
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