Harrisburg skyline. Photo: Sean Pavone/Shutterstock.com

Four Pennsylvania law firms are among a group of businesses facing a new lawsuit over a failed Harrisburg incinerator project that racked up $360 million in debt, causing the city to go into receivership.

Buchanan Ingersoll & Rooney, Eckert Seamans Cherin & Mellott, Obermayer Rebmann Maxwell & Hippel and Foreman & Caraciolo (formerly Foreman & Foreman) were all named defendants in the suit, in which the plaintiffs called the incinerator project “the worst municipal financial disaster in the history of the commonwealth of Pennsylvania.”

The plaintiffs, including the commonwealth of Pennsylvania, the city of Harrisburg and the Harrisburg Authority, sued the law firms on Monday along with RBC Capital Markets Corp., Public Financial Management Inc. and engineering company Buchart Horn. The suit, filed in Pennsylvania Commonwealth Court by lawyers from Harris, Wiltshire & Grannis in Washington, D.C., alleges unjust enrichment, among other counts.

Obermayer Rebmann, Buchanan Ingersoll and Eckert Seamans all face breach of fiduciary duty and legal malpractice claims. Obermayer and Eckert Seamans are also facing fraud and negligent misrepresentation claims.

“Between 1993 and 2007, the Harrisburg Authority dumped more than $360 million of debt into Harrisburg's waste-to-energy combustion facility,” the complaint asserts. “When the authority defaulted, the full load fell onto the city's and commonwealth's taxpaying citizens, and an insolvent Harrisburg entered the commonwealth's first and only municipal receivership.”

Most of that debt was incurred from 2003 to 2007, the complaint said, after the original incinerator failed and the Harrisburg Authority decided to build a new one. To do that, the authority obtained $260 million in debt. According to the complaint, the planned incinerator was “significantly larger” than any other such facility the engineering firm, Barlow Projects, had built.

The first $100 million in debt was incurred because the incinerator was unable to generate enough revenue to pay expenses, the complaint said.

The suit alleges that in 2003, the law firms and other defendants led the city to take on $130 million in debt to rebuild the facility, but failed to disclose certain defects in their financial plan. The complaint said the attorneys at multiple stages told the Harrisburg government that the city could continue to classify incinerator debt as self-liquidating, a designation meant for projects that at least break even.

Additionally, the complaint alleged that Andrew Giorgione of Obermayer Rebmann took on another $25 million loan in 2006, without required approval from the city council.

And in 2007, the complaint said, the authority was already more than a year behind schedule and had to issue almost $60 million in additional debt to pay a new contractor.

Ultimately, the authority defaulted on its debt and Harrisburg had to foot the bill. The city became insolvent and was declared a distressed municipality in 2010.

In a statement Monday, Eckert Seamans CEO Timothy Hudak said the lawsuit's allegations are unfounded and inaccurate.

Hudak said Eckert Seamans' only role in the 2007 representation was to provide legal advice to the Harrisburg Authority, not to provide engineering or financial analysis that was used to make decisions. And in 2003, the firm said, its clients were the bond underwriters, not the authority, city or Dauphin County. In addition, Eckert Seamans' statement said, the Pennsylvania Department of Community and Economic Development reviewed and approved the 2007 financing.

“Throughout all of the investigations into the city of Harrisburg's finances over the past seven-plus years, Eckert Seamans cooperated fully. Even when others did not, we produced every document requested, accommodated every request for an interview of our attorneys, and voluntarily appeared before a Senate Committee,” Hudak said. “Eckert Seamans cooperated fully with the investigations because we are confident that the firm represented its clients professionally, competently, and ethically.”

RBC Capital Markets declined to comment on the complaint.

The other defendants did not respond to requests for comment by press time Monday.