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HomeMy WebLinkAboutSunesys, LLC - 2008-08-18 �J CITE' OF HUNTINGTON BEACH Interdepartmental Communication TO: J(OAN FLYNN, City Clerk FROM: JENNIF'ER MCGRATH, City Attorney DATE: August 20,2008 SUBJECT: Sunesys, LLC v City of Hunfington Beach Threatened Litigation At the August 18, 2008, Closed Session, the City Council approved the settlement with Sunesys, LLC, and authorized the City Administrator to sign the settlement agreement in the above-referenced case. Attached please find two executed, original duplicates of the Settlement Agreement with the request that you keep one agreement on file in your office and return the other to Assistant City Attorney Scott Field so that he may forward it to Synesys. Thank you for your cooperation in this matter. JENNIFER McGRATH City Attorney Attachments: Duplicate Originals of Settlement Agreement 08-1757/25646 SETTLEMENT AGREEMENT This Settlement Agreement ("Agreement") is made and entered into as of August 19, 2008, between Sunesys, LLC ("Sunesys") and the City of Huntington Beach ("City") in settlement of a threatened lawsuit by Sunesys against the City. Sunesys and City are sometimes referred to herein individually as a "Party" and collectively as the "Parties." Recitals WHEREAS, Sunesys proposes to install a digital fiber optic communication network between the schools and buildings of the Fountain Valley School District (the "Project'). As part of the Project, Sunesys intends to attach fiber optic lines to existing utility poles where available,and where unavailable,underground the lines;and On June 10,2008, Sunesys filed a Notice of Proposed Construction("NPC")with the Energy Division of the California Public Utilities Commission to install the Project; and On July 9,2008,Sunesys submitted the NPC to the City;and On July 1, 2008, the Energy Division of the California Public Utilities Commission issued to Sunesys allotice To Proceed("NTP")to install the Project,and on July 2,2008,the Energy Division issued a clarification of the July 1't NTP;and Chapter 17.64 of the Huntington Beach Municipal Code sets forth the regulations of the City pertaining to undergrounding of utilities,including communications lines like those involved in the Project(the"Undergrounding Regulations"). On July 16,2008,the City notified Sunesys that pursuant to Section 17.64.050 of the Undergrounding Regulations, all fiber optic lines of the Project must be installed underground and could not be attached to existing utility poles;and On July 30,2008,Sunesys notified the City that it would file suit in Federal Court if the City refused to issue permits to attach fiber optic lines to existing utility poles. Sunesys claims in part, that Sections 253(a) and 253(c) of the Federal Telecommunications Act("TCA")and Sections 7901 and 7901.1 of the California Public Utilities Code preempt the Undergrounding Regulations. The City claims the Undergrounding Regulations are valid under State and Federal Law. Together, the claims of Sunesys and the City will be referred to as the"Claims;"and In the case entitled NexIG v. City of Huntington Beach,U.S.District Court for the Central District of California6 Case No. SACV 07-1471 (the "Action"), on March 7, 2008, the Court enjoined the City from enforcing the Undergrounding Regulations in circumstances that Sunesys contends are similar to its own situation;and Page 1 of 7 25143 The Action is currently on appeal to the Ninth Circuit (Ninth Circuit Court of Appeals Case No. 08-55403)with oral argument set for September 12, 2008. Further, in a related matter, Sprint v. County of San Diego, Case Nos. 05-56076 and 05-56435 ("Sprint"),the Ninth Circuit is conducting an en Banc rehearing. The City contends that the decision in one or both cases may be applicable to the Claims;and Sunesys desires to install its facilities in the City on existing utility poles as soon as possible. The City desires to obtain appellate decisions in the Action and in Sprint to assist in determining whether to defend its Undergrounding Regulations in a legal action. The City is agreeable to processing Sunesys permit applications for the Project and authorizing the installation of fiber optic lines on existing utility poles, subject to both Parties retaining all legal rights, including Sunesys' right to file a legal action, and the City's right to enforce the Undergrounding Regulations even as to any fiber optic lines installed pursuant to this Agreement. Accordingly,the Parties enter into this Agreement. Agreement NOW THEREFORE, in consideration of the execution of this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged,and subject to the terms and conditions hereof,the Parties hereby agree as follows: 1. Tolling of Limitation Periods. Subject to the conditions set forth below, Sunesys and the City agree that all periods of limitation(statutory or otherwise)affecting the Claims either Party has against the other concerning the Project shall be tolled from August 19, 2008, until the later of one year after the Ninth Circuit issues a written decision in the Action or Sprint (the "Tolling Period"). After the expiration of the Tolling Period, any time remaining under any applicable statutes of limitations shall commence to run. 2. Processing of Encroachment Permit Applications. Sunesys submitted encroachment permit applications for the Project on August 6, 2008 (the "Permit Applications"). The City shall process the Permit Applications without reference or enforcement of Section 17.64.050 or any other provisions of the Undergrounding Regulations. The City further agrees to timely process the Permit Applications,to consider them in good faith and in an expeditious manner, and if issued, permit the Project to be installed in compliance with the issued permits. I Enforcement of Undergrounding Regulations. (A) At any time during the Tolling Period, but no sooner than 30 days after Sunesys has completed installation and construction of the Project, the City may choose to enforce the Undergrounding Regulations, against Sunesys and the Project. The City Page 2 of 7 25143 may choose to enforce the Undergrounding Regulations as they currently read or as they may be amended during the Tolling Period. By way of example, based upon the appellate ruling in the Action or in Sprint, the City may choose to enforce the Undergrounding Regulations against the Project as they currently read. Alternatively, based upon the appellate ruling in the Action or in Sprint,the City may choose to amend the Undergrounding Regulations and then enforce them against the Project as amended. (B) If the City chooses to enforce the Undergrounding Regulations, including any amendments thereto, during the Tolling Period, Sunesys has ninety (90) days from the date the City issues its enforcement order to determine whether to comply with the Regulations and the City's enforcement, or file a lawsuit, such as a declaratory relief action, to determine whether the Undergrounding Regulations and enforcement are preempted by State or Federal Law. If Sunesys does not file a lawsuit within the ninety (90) day period, it shall bring the Project into compliance with the Undergrounding Regulations within ninety (90) days of the City's issuance of necessary encroachment permits for such underground installation. (C) If the City chooses not to initiate enforcement of the Undergrounding Regulations,including any amendments thereto, during the Tolling Period,then any City permits issued during the Tolling Period and the Project installed thereto shall be deemed issued in compliance with all City laws in place through the end of the Tolling Period (D) By entering into this Agreement, neither Party waives any claim it had prior to or arising during the Tolling Period, including the City's right to assert against Sunesys that any of its claims began to run prior to the start of the Tolling Period. It is the express purpose and intent of the Parties to preserve all claims and all defenses, and cross-claims that any Party had or could have asserted as of August 19, 2008. Furthermore, the Parties agree that nothing in this Agreement permitting Sunesys to submit the Permit Applications and thereafter install the Project shall give it any legal or equitable defense,including but not limited to any claim of vested rights to maintain the Project, should the City choose to enforce the Undergrounding Regulations, including any amendments thereto. 4. Effect of Agreement. It is understood and agreed that this Agreement is the compromise of disputed claims made by Sunesys, and that the terms of this Agreement are not to be construed as an admission of liability on the part of the City,which expressly denies any such liability. This Settlement Agreement is entered into solely for the purpose of settling the Claims. The terms of this Agreement shall not be admissible in any arbitration,litigation,or other proceedings for any purpose,except as required to enforce this Agreement. Page 3 of 7 25143 5. Releases. If the City chooses not to initiate enforcement of the Undergrounding Regulations, including any amendments thereto, during the Tolling Period, then each Party to this Agreement hereby releases the other from all claims, demands,actions, and causes of action of any nature whatsoever which are currently known regarding the matters which are the subject of this Agreement and the Claims, as well as to all claims, demands, actions and causes of action that the Parties do not know or suspect to exist in i., their respective favors as of the date of this Agreement, which, if known at the time of executing this Agreement, might have affected the Agreement as set forth herein. Each of the Parties to this Agreement also hereby specifically waives the protections of California Civil Code section 1542,which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release,which if known by him or her must have materially affected his or her settlement with the debtor. 6. Exceptions to Release. Nothing herein shall be construed as a release by any Party of any obligation or claim arising out of a breach of this Agreement. 7. Binding on Successors and Assigns. This Agreement shall inure to the benefit of and bind and be binding upon the agents, officers, directors, employees, partners, successors, and assigns of the undersigned Parties. S. Advice of Counsel. Each of the Parties to this Agreement represents and warrants that it has engaged separate counsel to represent it with respect to this Agreement and all matters covered herein, that it has been fully advised by its attorneys with respect to its rights and with respect to the execution of this Agreement and as to all matters which are subject to the mutual releases contained herein, and that it has read this Agreement and understand the terms thereof. 9. Attorneys'Fees and Costs. The Parties agree to bear their own attorneys' fees and costs in connection with the preparation and negotiation of this Agreement,as well as any fees and costs incurred in the Claims. Page 4 of 7 25143 10. Complete Agreement This Agreement, including the Recitals, constitutes the entire, full, and complete Agreement between the Parties hereto,and supersedes all prior agreements.,if any. 11. Enforcement. In the event of a breach of the terms of this Agreement, this Agreement shall be enforced in the Orange County Superior Court. The terms of this Agreement are contractual, not merely recitals, and shall be interpreted, enforced, and governed under the laws of the State of California. This Agreement is the result of negotiations between the Parties, each of which has participated in the drafting hereof. In the case of any proceeding to enforce this Agreement, each Party shall bear its own attorneys' fees and costs. No Party shall be subject to damages of any kind for breach of this Agreement. 12. No Undisclosed Principals. Each of the Parties to this Agreement represents and warrants to the other that no other person,firm,corporation,estate,or entity has had or now has any interest in any of the claims released herein. 13. Execution of Documents. The Parties agree to execute any and all documents reasonably necessary to effectuate the terms,conditions,and purposes of this Agreement. 14. No Prior Assignments or Transfers. Each of the Parties to this Agreement further represents and warrants to the other that it has not heretofore assigned or transferred,or purported to assign or transfer,to any person, firm, corporation, estate, insurance carrier, or other entity whatsoever any claim, controversy, right, promise, debt, liability, demand, obligation, cost, expense, action, or cause of action herein released or purported to be released. The Parties to this Agreement agree that, if any assignment or transfer, or any purported assignment or transfer of any of the claims, controversies, rights, promises, debts, liabilities, demands, obligations, costs, expenses, actions, or causes of action released herein has been made,the Party that made or purported to make such transfer or assignment shall indemnify and forever hold the other Parties harmless against all claims and liabilities, including reasonable attorneys' fees and costs incurred in connection therewith,which may be asserted by any third Party relating to the subject matter of the assignment or transfer,or any purported assignment or transfer. Page 5 of 7 25143 15. Warranty of Authority. In executing this Agreement, each person executing this Agreement further represents and warrants that he or she has the authority to bind their respective principals, and that those Party-principals have the right and authority to compromise, settle, and release and discharge all the claims released herein. The execution of this Agreement by the City Administrator of the City shall be deemed to evidence legally proper approval by the City Council of this Agreement. 16. Written Modifications Only. The terms of this Agreement shall not be modified or amended except in writing, signed by all Parties or their designated representatives for such purpose. 17. Time is of the Essence. Time is of the essence in this Agreement. 18. Duplicate Originals and Counterparts. This Agreement shall be executed in duplicate originals,with each Party to retain a fully-executed duplicate original. This Agreement may be executed in counterparts, which when taken together shall constitute one binding Agreement. Facsimile signatures shall be considered as binding as original signatures. 19. Effective Date of Agreement. This Settlement Agreement shall be deemed effective on the date executed by the managing member of Sunesys and executed by the City,whichever shall occurs later. Page 6 of 7 25143 20. Severability If one or more of the provisions of this Agreement is determined to be illegal or unenforceable, the remainder of this Agreement shall not be affected thereby and each remaining provision or portion thereof shall continue to be valid and effective and shall be.enforceable to the fullest extent permitted by law. SUNESYS,LL CITY OF HUNTINGTON BEACH 11--) A Name: By: Pa Emery, Interim ity Administrator Its: Ls��--� APPROVED AS TO FORM: APPROVED AS TO FORM: DAVIS WRIGHT TREMAINE LLP OFFICE OF THE CITY ATTORNEY CITY OF HUNTINGTON BEACH By: By: T. Scott Thompson,Esq. Jennifer McGrath,City omey Page 7 of 7 25143 ° SUNESYS, LLC SECRETARY'S CERTIFICATE 1, Paul T. Bradshaw, do hereby certify that: 1. I am a duly elected and qualified Assistant Secretary and keeper of the records of Sunesys, LLC (the"Company"), a single member limited liability company organized and existing under the laws of the State of Delaware. 2. Lawrence P. Coleman has been duly elected by the sole Member of the Company to the office of President of the Company. 3. As President of the Company, Lawrence P. Coleman is fully authorized and empowered to (i) execute and deliver all such agreements, instruments, filings, amendments, certificates and other documents relating or which are incidental to the Company's business, and (ii) do or cause to be done all such further acts as shall be necessary, desirable or appropriate to carry out the intent and purpose of the foregoing authority. IN WITNESS WHEREOF, I have hereunto set my hand this 14`h day of August, 2008. ul T. Bradshaw Assistant Secretary