Citizens Energy teams with city, state leaders to announce trio of lawsuits aimed at ‘bad actor’ apartment owners

The city of Indianapolis, Indiana Attorney General Todd Rokita’s office and local utility Citizens Energy Group on Wednesday announced a trio of lawsuits targeting the owners of several dilapidated apartment complexes.

The landlords are many months and more than $2 million behind on utility bills, putting more than a thousand households at risk of homelessness should Citizens cut utility services to the complexes.

“Today we stand united, stepping in ahead of what would otherwise be a mass eviction on a scale yet unseen in this community,” Mayor Joe Hogsett said at a news conference Wednesday. “Together we will take this property owner to court three times over with the goal of securing responsible ownership for these properties.”

Indianapolis-based Citizens Energy Group previously disconnected water service to two apartment complexes on Feb. 17: Berkley Commons Apartments at 8201 Madison Ave. (owned by Berkley Commons IN LLC) and Capital Place Apartments at 4100 Continental Court (owned by not-for-profit JPC Affordable Housing Foundation Inc.).

In business and tax filings, the owners of both properties appear to be affiliated.

Citizens agreed to restore service the next day, after the city of Indianapolis fronted $850,000 toward the unpaid bills.

But Citizens alleges that the owners haven’t made utility payments at Berkley Commons and Capital Place since at least spring 2021, and that another JPC property, the Woods at Oak Crossing at 3120 Nobscot Drive, has also stopped paying.

Unpaid bills have crept past $1.3 million again. Citizens is hoping to recoup the money through its lawsuit filed April 6 in Marion Superior Court. Citizens will otherwise pass costs on to its customer base, which President and CEO Jeffrey Harrison said he wanted to avoid.

According to the lawsuit, all three properties collect money from tenants for utilities, but the owners haven’t passed those funds on to Citizens.

In its lawsuit, the utility company also asked to create a constructive trust over the funds the owners collect from residents for utilities.

Harrison said that Citizens hadn’t succeeded in contacting the owners since arranging its latest ill-fated payment agreement.

“They’ve ghosted everyone,” Harrison said of the owners.

The city of Indianapolis, meanwhile, filed a lawsuit Wednesday seeking to claw back its $850,000 from what it called “bad actor landlords.”

Donald Morgan, senior counsel with Taft Stettinius & Hollister LLP’s Indianapolis office, said the city hoped to secure a judgment “in months, not years.” A judgment against the owners would open up more legal tools for the city to use, he said.

Rokita’s office filed its own lawsuit Tuesday. It seeks to dissolve JPC, appoint receivers for its properties, permanently remove JPC’s board of directors and appoint interim leaders. The filing also seeks punishment for Berkley Commons and targets property management company Aloft Management for allegedly operating without a license.

“In their corporate charters and applications for tax-exempt status, Defendants’ claim to exist to provide housing for qualified low-income residents,” Rokita’s office wrote of JPC. “Their actions, however, reveal a years-long scheme to extract profits from the backs of low-income tenants all over the country—while allowing the properties that they claim to hold in public trust to deteriorate, crumble, and burn. Instead of providing a public benefit, Defendants have become an immense public burden and a direct threat to the health, safety, and well-being of thousands of their residents.”

In a statement Wednesday, Rokita said state law didn’t leave many options to go after negligent landlords.

“Despite some fairly weak laws in Indiana for state government involvement in this area, we continue our efforts to protect tenants who are being unfairly treated and who are being subject to downright dangerous conditions,” Rokita said. His office filed a suit in July against two other JPC properties, but it was dismissed in September.

The high-profile collaboration has Hogsett’s administration of moderate Democrats working with the conservative Republican Rokita, along with Citizens. But there’s still a real risk of disconnection, according to Citizens, because of the potential impact on other ratepayers.

Harrison said the utility company would notify residents at least 30 days in advance of a disconnect. The owners are also behind on utility bills at other Indianapolis properties, but haven’t yet reached “disconnect status,” according to Citizens.

Four properties previously under the same ownership group have recently changed hands, including Lakeside Pointe at Nora, Fox Club Apartments, the Estates at Crystal Bay Apartment and Woodhaven Park Apartments. New York-based Genesis Housing Foundation Inc. now owns them.

An ownership switch is also the goal for the properties named in the most recent round of lawsuits, according to Hogsett.

“I would hope that we could convince the current property owner to sell the properties to a more responsible property owner,” Hogsett said. “But we are taking this unprecedented, coordinated legal action to seek resolution of this issue.”

Neither Berkley Commons nor JPC responded to IBJ’s requests for comment on Wednesday afternoon.

Editor’s note: This article has been corrected.