Bankruptcy trips up Santa Fe’s water-meter lawsuit

SANTA FE – Santa Fe city government’s effort to recover $5 million spent on a faulty radio-controlled water meter-reading system and extract damages from the supplier has run into a roadblock.

Datamatic Ltd., the Texas company that sold the meter-reading devices and accompanying computer hardware and software to Santa Fe starting in 2004, has filed for Chapter 7 bankruptcy.

Under Chapter 7, a company stops all operations and goes completely out of business, and its assets are sold to pay off debt. In this case, it also means action in the city’s 2012 lawsuit against Datamatic is on hold.

In October, the company filed notice of the bankruptcy in state District Court in Santa Fe. The city sued Datamatic in August 2012.

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The city does plan to file a notice of claims in the bankruptcy, city spokeswoman Jodi McGinnis Porter said. But there is no guarantee the city’s claims will be covered or that there will be enough money from liquidation to pay Santa Fe along with any other Datamatic creditors.

Efforts to get comment from the company’s Plano, Texas, headquarters were unsuccessful. Efforts to reach a local attorney for Datamatic were not successful.

The company’s bankruptcy filing lists more than 100 creditors. The list does include Santa Fe, along with more than 25 other cities or utility systems around the country.

The filing says Datamatic’s assets in September were between $1 million and $10 million and its estimated liabilities were between $10 million and $50 million.

Santa Fe bought about 36,000 of Datamatic’s Firefly devices, which are intended to allow meter readers to use a laptop computer to check water meters without leaving their trucks.

Porter said Monday that about 20,000 of the devices are still working. She said that under a 10-year warranty, the water division returned about 1,000 for repair or replacement about a year ago and got no response.

“So we’re not bothering to send them back any more,” Porter said.

The city’s lawsuit asked for return of the $4.9 million the city spent on the devices, plus three times that amount in damages under the state’s Unfair Practices Act, as well as punitive damages.

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