LYNNFIELD — The ongoing saga between the town and Perley Burrill property owner Joseph P. Pedoto may finally be resolved this week.

In an interview with the Villager Jan. 2, Town Counsel Tom Mullen said a hearing on the case will tentatively take place in Essex Superior Court in Lawrence on Thursday, Jan. 8. Mullen said the hearing will potentially decide which penalty Pedoto will face for failing to comply with an outstanding court order to remove five underground storage tanks at the 906-914 Salem St. property.

Mullen said he will recommend Pedoto be sent to jail for failing to comply with a court order issued by Essex Superior Court Judge Paul D. Wilson last August. Mullen is recommending jail time because the Perley Burrill property owner has failed to pay fines issued by both the town and the Massachusetts Department of Environmental Protection in the past.

“We have fined him and the state has fined him,” said Mullen. “He simply does not pay the fines.”

While Mullen is going to recommend Pedoto serve time in jail, he said there are two factors that may hinder that decision. He said he has been engaged in discussions with Pedoto’s attorney, Joseph Brodigan, who informed Mullen that his client may have the tanks removed before the hearing takes place.

“If that happens, I will not be seeking jail time,” said Mullen.

Mullen also said if Pedoto files for bankruptcy, the hearing will be postponed. Mullen has said repeatedly dealing with a bankruptcy trustee would be easier than dealing with Pedoto.

Selectmen updated

As of Monday night’s selectmen’s meeting, Town Administrator Bill Gustus informed Selectmen Chairman Dave Nelson and Selectman Phil Crawford that the town was not aware of any change in status with Pedoto regarding either a bankruptcy petition or tank removal. Selectman Tom Terranova recused himself due to a past business relationship with Pedoto.

“The judge found the individual in contempt so it is not a question of whether the owner has committed contempt; he’s been adjudged to have done so. This hearing on the 8th is to determine what penalty should be imposed upon the owner,” Gustus said.

Gustus added, “The penalties range from going to jail to paying a significant fine to a combination of the two and town counsel will be attending that hearing with Captain Feinberg of the Fire Department who will give testimony that the application was late and the tanks still have not been removed and it is time to impose penalties on both of those contempt charges.”

Gustus explained that the hearing scheduled prior to Christmas was put off because town counsel had received “information from the owner that they would post the $75,000 bond to secure performance.” However, the person who was suppose to post that bond failed to do so, forcing Mullen to reschedule the hearing again.

Therefore, Gustus said, Mullen has been given “explicit instructions not to listen to any more proposals” from Pedoto.

Two separate findings of contempt against Pedoto are slated to be heard Jan. 8 for violating a court order to pull an application to remove the tanks in a timely fashion and for failing to actually remove them in a timely fashion, Gustus said.

Cat-and-mouse game

The judgment issued against Pedoto last August stipulated that he needed to apply for a permit from Fire Chief Mark Tetreault to remove the five underground tanks within 30 days after the judgment was issued. He would then have another 60 days to remove the tanks.

Mullen sought a permanent injunction against Pedoto due to local officials’ concerns about the five underground storage tanks. The single-walled tanks have not been in use since December 2011 and the monitoring system designed to determine any leakage only works if the power is on. Mullen believes the power is currently off and town officials are concerned the tanks are leaking into the ground and groundwater.

After Pedoto missed the Sept. 14 deadline to pull the permit from the fire department, Mullen filed another complaint against him for failing to comply with the court order. During an early October court hearing on the matter, Mullen learned Pedoto had filed five applications for tank removal with the fire department. The judge issued a finding that Pedoto was in contempt for failing to comply with the court-ordered deadline to pull the permit but decided to give him more time to remove the storage tanks.

Pedoto failed to comply with the court order by the Dec. 8 deadline. Subsequently, a hearing was scheduled for Dec. 18 but a potential agreement between the town and Pedoto over removing the five tanks broke down. During a court hearing on Dec. 11, Pedoto told Mullen he was close to finalizing a deal to sell the property.

“Mr. Pedoto has been talking about selling the property as long as I have been involved with this case but he has failed to find a buyer who will commit to purchasing the property,” said Mullen.

Gustus told Nelson and Crawford that if Pedoto fails to appear in court on Jan. 8 “it will result in the issuance of a summons for his arrest.”

Crawford said it is his “understanding that there is a strong possibility that (Pedoto) will file bankruptcy before the state.”

“That has always been our hope,” Gustus said. “In conversations that town counsel has had with the owner’s attorney, the owner was trying to avoid that eventuality, if all possible. But if we continue to pursue the course that we have pursued that would likely be the only way that he could avoid the sanctions that may issue from the court for his contempt.”

Gustus added that he believes bankruptcy “would be a far less painful alternative” for Pedoto while the town would benefit more from having a “responsible trustee controlling that property” than the current owner.

Crawford asked what the procedure would be if Pedoto files for bankruptcy.

Gustus explained than an “automatic stay” would stop all litigation against the debtor, a trustee would be appointed within 45 days and creditors would conduct an examination of the debtor “to determine his financial condition.”

Pedoto must provide “a schedule of all of his creditors together with a breakdown of his financial resources. He has to show that on paper he is insolvent or has been for the last 60 days,” Gustus said, adding, “Then the creditors have the chance to ask you questions.” After the court gathers all the debtor’s assets, he said “the trustee is charged with the responsibility of disposing of the estate.”

The Perley Burrill site includes about 3.5 acres of land, Gustus said, and he believes “the best way for the trustee to gain as much value out of the property as possible would be to clean it up first and sell it.” The more value the land has to the purchaser, the more funds would be available to distribute to Pedoto’s creditors, which includes the town, Gustus said. According to the town treasurer’s office, Pedoto owes the town nearly $170,000 in back taxes going back to 2007.