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HomeMy WebLinkAbout08-461NOVEMBER 25, 2008 08 -461 RESOLUTION (CARRIED 7 -0 LOST LAID OVER WITHDRAWN ) PURPOSE: APPROVAL OF SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS / LUNDA CONSTRUCTION ASSOCIATED WITH THE WATER PLANT INTAKE PIPE INITIATED BY: LEGAL DEPARTMENT BE IT RESOLVED by the Common Council of the City of Oshkosh that the attached Mutual Release & Settlement Agreement between the City of Oshkosh, MWH America's Inc., Soils & Engineering Services, Inc., and Lunda Construction Company is hereby approved and the proper City officials are hereby authorized to execute and deliver the agreement in substantially the same form as attached hereto, any changes in the execution copy being deemed approved by their respective signatures, and said City officials are authorized and directed to take those steps necessary to implement the terms and conditions of the Agreement. BE IT FURTHER RESOLVED that money for this purpose is hereby appropriated from: Acct. No. 541 - 1810 - 1799 -00000 Water Utility — Construction Work in Progress MUTUAL RELEASE & SETTLEMENT AGREEMENT For and in consideration of the total sum of Three- Hundred Twenty -Five Thousand, Three - Hundred Seven and 77/100 dollars ($325,307.77) paid by the City of Oshkosh ( "the City "), MWH Americas, Inc. ( "MWH "), and Soils & Engineering Services, Inc. ( "SES "), to Lunda Construction Company ( "LUNDA "), and of which amount the sum of Three - Hundred Thousand, Three - Hundred Seventeen and 77/100 dollars ($300,307.77) is to be paid by the City as contract retainage, Twenty -Three Thousand Five - Hundred dollars ($23,500.00) is to be paid by MWH, and One - Thousand Five - Hundred dollars ($1,500.00) is to be paid by SES, the receipt and sufficiency of which payments is hereby acknowledged, LUNDA, the CITY, MWH and SES, on behalf of themselves and all of their respective officers, directors, agents, shareholders, parents, subsidiaries, affiliated entities, and all other persons or entities who may make claim by, through or on behalf of LUNDA, the CITY, MWH or SES, hereby mutually release, satisfy and forever discharge each other from any and all claims, counterclaims, cross - claims and third -party claims that are or could have been asserted in the matters o£ (1) Lunda Construction Company v. MWH Americas, Inc., Winnebago County Case No. Case No.: 08 -CV -1526, (2) Lunda Construction Company v. City of Oshkosh, et al., Winnebago County Case No. Case No.: 06- CV -212, (3) Lunda Construction Company v. City of Oshkosh, Winnebago County Case No. Case No.: 05 -CV -1297, and (4) Lunda Construction Company v. City of Oshkosh, et al., Winnebago Count Case No. Case No.: 05 -CV -270 (collectively "the State Court Actions "), together with all other claims, actions, causes of action and demands, of any kind or nature, in any way arising out of or relating to any work or services performed by Lunda, MWH or SES in connection with the City of Oshkosh intake and transmission main project. It is further understood and agreed that: (1) Lunda shall immediately cause the pending matter of Lunda Construction Company v. MWH Americas, Inc., Winnebago County Case No. 16440512v1 855523 54340 Case No.: 08 -CV -1526, in which MWH has neither been served nor otherwise appeared, to be dismissed on the merits, with prejudice, and without costs or fees to any party, (2) the City and Lunda shall immediately cause all remaining claims and counterclaims in the matter of Lunda Construction Company v. City of Oshkosh, et al., Winnebago County Case No. Case No. 06 -CV- 212 to be dismissed on the merits, with prejudice, and without costs or fees to any party, (3) none of the parties to this General Release and Settlement Agreement shall hereafter attempt to revive or reopen the matters of Lunda Construction Company v. City of Oshkosh, Winnebago County Case No. Case No.: 05 -CV -1297, or Lunda Construction Company v. City of Oshkosh, et al., Winnebago Count Case No. Case No.: 05 -CV -270, previously dismissed without prejudice, and (4) the parties irrevocably waive any right to appeal for any decision or order of the court in the matter Lunda Construction Company v. City of Oshkosh, et al., Winnebago County Case No. Case No.: 06 -CV -212. LUNDA and the CITY further understand that their total claims may be greater than the amount listed as consideration above, and knowing that their total claims are not being fully satisfied as if all potentially liable parties were settling at this time, LUNDA and the CITY hereby credit, satisfy and forever discharge that portion of the total amount of their claims allegedly caused by the conduct of any party released hereunder as may be determined in any subsequent trial or other disposition with other potentially liable persons or entities. It is the act and intention of LUNDA and the CITY to satisfy any judgment rendered in their favor, satisfying that fraction, portion or percentage of the judgment as the causal negligence or responsibility of any party released hereunder is adjudged to be of all causal negligence or responsibility. 2 16440512v1 855523 54340 If LUNDA or the CITY fail to immediately satisfy any judgment to the extent set forth above, the consent and agree that upon filing of a copy of this agreement, without notice, an order may be entered by the court in which said judgment is entered directing the clerk to satisfy the judgment to the extent of such fraction, portion or percentage of the negligence or responsibility as found against any party released hereunder This release and settlement agreement is intended to be interpreted and enforced in a manner consistent with Pierringer v. Hoger, 21 Wis. 2nd 182,124 NW 2nd 106 (1963). It is further understood and agreed that this settlement is a compromise of disputed claims and is not to be construed as an admission of liability on the part any party hereto. The parties hereto have had the benefit of the counsel of their own choosing to represent them concerning this General Release & Settlement Agreement, and in signing same the parties have not relied upon any representations made by any person or party hereby released or the agent of any person or party hereby released. Dated: The City of Oshkosh Dated: Dated: MWH Americas, Inc. Soils & Engineering Service, Inc. Dated: Lunda Construction Company. 3 16440512v1 855523 54340 CITY HALL 215 Church Avenue P.O. Box 1130 Oshkosh, 54903-1130 City of Oshkosh ( 0- OlHKQlH TO: Honorable Mayor and Members of the Common Council FROM: Lynn A. Lorenson, City Attorney DATE: November 20, 2008 RE: 08 -459 Approval of Settlement Agreement & Release of Claims/ Lunda Construction associated with the Water Plant Intake Pipe BACKGROUND The Common Council is being requested to approve a Release and Settlement Agreement which resolves pending litigation and any and all claims related to the construction of a water intake pipe for the City's Water Filtration Plant. In 2002, the City entered into a contract with Lunda Construction Company ( "Lunda ") for the construction of a city water intake and transmission line. The project involved digging a trench in the bed of Lake Winnebago, laying a pipe in the trench and then backfilling the trench. After the pipe was installed, the pipe failed structural tests and Lunda was notified by the project engineer that corrective action was required. Lunda repaired the problem and billed the City for the costs of that repair. Although the corrective work took an additional construction season, the repairs were completed satisfactorily per the project specifications. Lunda's request for payment was reviewed by the project engineer and was denied. The project engineer determined that the pipe movement was the result of defective work by Lunda and that the corrective work was therefore the responsibility of Lunda. Because of the dispute over the cause of the damage, the City withheld $300,307.77 from the original contract amount pending a resolution of this matter. Lunda denied any negligence and filed a co series of claims and lawsuits seeking damages in the amount of $1,976,588.60 against the City of Oshkosh for its costs to repair the damaged pipe. The City was represented in the litigation by Attorney Richard Carlson through the City's insurance carrier. Working with our office, attorney Carlson filed an answer to the lawsuit alleging, in addition to our various defenses to the action, that the City was owed money for additional engineering consultant fees which were necessary due to the corrective action required for the pipe and for liquidated damages. Those additional engineering fees totaled $294,090.00. On pretrial motions, the circuit court dismissed Lunda's claims against the City on procedural grounds, leaving the City's claims for engineering fees and other damages to proceed. ANALYSIS Throughout the course of this litigation, the City, Lunda, the City's engineering consultants and the soils consultants participated in settlement discussions. Under the proposed settlement, all of the parties would release their respective claims against each other. The City would pay to Lunda the contract retainage in the amount of $300,307.77 which had been retained under the original contract. In exchange for this consideration, Lunda would release all claims that it has or may have against the City. It should be noted that although this litigation was originally covered under the City's insurance policy, should the City not approve the settlement offer, any additional attorney fees or other litigation expenses would now be the City's responsibility as the covered claim has been dismissed at this point. The issues involved in this case are complex and would require the deposition and testimony of experts making this a more costly case to try. In addition, while we are confident in the arguments that were made and the court's decision to dismiss Lunda's claims, Lunda has indicated its intention to appeal the circuit court's decision if the case should proceed. Based upon these considerations, attorney Carlson and I are recommending that the Council approve the Settlement and Release. FISCAL IMPACT Under the terms of the proposed settlement, the City would pay the remainder of the original contract amount that had been retained during the pendency of this litigation. In addition, the City would not seek reimbursement of the additional engineering fees that had been incurred in the amount of $294,090.00. The City will be released from Lunda's claim for additional payment in the amount of nearly $2,000,000.00. RECOMMENDATION It is recommended that the Council approve the Release and Settlement Agreement. Re ectfully Submi d, Lynn . Lorenson City ttorney Approved: Mark A. Rohloff City Manager Council Proposed Budget and CIP Amendments November 25 2008 Council Meeting Section One — Operating Budget Items 2. 43 Proposed Budget Amendment #1 (Council Member Palmeri) — Eliminate Outside Legal Assistance: Motion to eliminate outside legal assistance for lead negotiation services with all City bargaining groups and to conduct negotiations using city staff up to the point of impasse,, unless otherwise authorized by the City Council, and to transfer monies budgeted for negotiations to the City's general fund. Administrative Services Reorganization Plan: Motion to eliminate via attrition the position of Purchasing Agent, remove request for new Communication Coordinator, and restore part-time production assistant in Media Services. Direct salary savings toward tax relief. #2 Council Training Budget: Motion to transfer $4,000 for City Council "Conference and Training" to Department of Community Development to be used to hire interns to assist with sustainability initiatives. 4. Proposed Budget Amendment #4 (Council Member Palmeri) — Citizen Led Budget Committee: Motion to direct City Manager and Mayor to develop a proposal for a citizen led Budget Committee. Section Two — Capital Improvement Program Items 1. Proposed CIP Amendment #1 (Deputy Mayor Bain) — grand Opera house Sprinkler Project: Motion to have the City fully fund the Grand Opera House sprinkler project. Rationale: The City owns the building, and I feel it is our obligation for maintenance and upkeep, and the sprinkler project certainly falls into that category. The Foundation Board should be focused on their projects to enhance the facility. Benefit — The experience that the citizens and patrons have when visiting the building. 2. Proposed CIP Amendment #2 (Council Member Palmeri) — Delay the 400 Block East Parking Lot Motion to delay renovation of 400 Block East Parking Lot (East of N. Main St.) until 2011. Use the $972,000 allocated in 2009 CIP for that purpose for highest priority street, sewer, and /or city garage needs. 3. Proposed CIP Amendment #3 (Council Member Palmeri) — Delete Riverside Park - Docking Faciliiy: Motion to delete Riverside ' P Park - Docking Facility from Capital Improvement Budget. Use $284,900 budgeted for that amount for high priority street and /or sewer projects.