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HomeMy WebLinkAboutCOUNTY OF ORANGE HBPOA SCOTTSDALE INSURANCE AMERICAN STATES INSURANCE - 2005-03-21• J.j fe Lee CITY OF HUNTINGTON BEACH Inter -Department Communication TO: JOAN FLYNN, City Clerk FROM: JENNIFER McGRATH, City Attorney DATE: January 8, 2007 SUBJECT: City of Huntington Beach v. HBPOA At the March 21, 2005 Closed Session, the City Council authorized the City Administrator to approve settlements up to $25,000 with users of the Gun Range in the above -mentioned case. Attached please find original, fully executed Settlement Agreement between the City of Huntington Beach and the County of Orange in the Gun Range litigation, with the request you keep this Agreement on file in your office. / Y` NNIFER McGRATH 5 City Attorney 0r J/ p Z Attachments r � , HB CITY OF HUNTINGTON BEACH INTERDEPARTMENT COMMUNICATION CONFIDENTIAL ATTORNEY -CLIENT PRIVILEGE TO: CLOSED SESSION FILE FROM: JENNIFER McGRATH, City Attorney DATE: March 21, 2005 SUBJECT: City of Huntington Beach v. HBPOA; U.S. District Court Case No. SA 01-1125 JVS; and Scottsdale Insurance Company v. HPBOA, and the related counterclaim, American States Insurance v. City of Huntington Beach, United States District Court Case No. SA 03-1143 JVS. [Gun Range] On Monday, March 21, 2005, the City Council convened in closed session to discuss the referenced matter pursuant to the litigation exception contained in Government Code Section 54956.9(a). All seven members of the Council were present, including Mayor Jill Hardy, Dave Sullivan, Cathy Green, Gil Coerper, Debbie Cook, Keith Bohr, and Don Hansen. Also present were City Attorney Jennifer McGrath, City Administrator Penelope Culbreth-Graft, Police Chief Kenneth Small, and Director of Community Services Jim Engle. Council voted to adopt the Guidelines for settling the City's claims against the Users of the Gun Range as set forth in the attached Lawsuit Status Sheet. Vote: 7-0. Name Moved (M)/2nd Aye No Abstain Did Not Participate Bohr X Coerper X Cook M X Green, C. 2nd X Hansen X Hardy X Sullivan X Voting Tally 7 0 dNIFER McGRATH City Attorney Attachments: 1. Closed Session Notices 2. Lawsuit Status Sheet 9Disclosure Recommended ❑ Disclosure Not Recommended Legal Justification: ❑ Disclosure would interfere with service of process ❑ Disclosure would impair ability to settle Explanation: Item 2, only, was reported out in open session of Citv Council on March 21, 2005. closed/05memoMBPOA — Gun Range Approved as an emotion to the Ralph M. Brown Aft City of Huntington Beach v. HBPOA 4MIOER subject: (Gun Ran-gel.and related cases TH, C* AtOrney STATEMENT FOR MAYOR PRIOR TO CLOSED SESSION ACTION OF CITY COUNCIL Date: arch 2QQ5 1. X MOTION TO RECESS TO CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 549%.9(9) TO CONFER WITH ITS ATTORNEY REGARDING PENDING LITIGATION WHICH HA�BEEN INITIATED FORMALLY AND TO WHICH THE CITY IS A PARTY. (CHECK ONE.) X The title of the litigation is City of Huntington Beach v. Huntington Beach Police Officers Association; United States District Court Case No. SA 01-1125 JVS; and Scottsdale Insurance Company v. Huntington Beach Police Officers Association, and the related counterclaim, American States Insurance v. City of Hunfington,8each, , United States District Court Case No. SA 03-1143 JVS. Identification of such litigation would jeopardize the City's ability to effect service of process upon one or more unserved parties; or Identification of such litigation would jeopardize the City's arty to cont:We existing settlement to its advantage. 2. MOTION TO RECESS TO CLOSED SESSION TO CONFER WITH ITS CITY ATTORNEY REGARDING MMING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION: 54956.9(b)(3)(A) (Facts and circumstances that might result it litigation against the lord age y:taut wt9ch the local agency believes are not yet known to,s potential.plakrtiff or plaintifts, w#kh facts and circumstances need not be disclosed.) Number of Potential Cases 54956.9(b)(3)(B) (Facts and circumstances, including, but not limited to, an accident disaster, Incident or transactional occurrence that might result in litigation against the and that. *re known to a potential plaintiff or plaintiffs, which facts or circumstances shag be publicly stated on the agenda or announced.) 54956.9(c) (Based on existing facts and circumstances, the legislative body of the local agency has decided to initiate or is deciding whether to initiate litigation,.) Number of Potential Cases 3. MOTION TO RECESS TO CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 64066.8 TO 431VE INSTRUCTIONS TO THE CrI Y'S NEGOTIATOR, . , REGARDING NEGOTIATIONS WITH CONCERNING THE PURCHASE / SALE I EXCHANGE / LEASE OF THE PROPERTY:LOCAnTED AT Instruction will concern: Price Terms of Payment Both 4. MOTION TO RECESS TO CLOSED SESSION TO MEET WITH ITS DESIGNATED REPRESENTATIVES REGARDING LABOR RELATIONS MATTERS PURSUANT TO GOVERNMENT CODE SECTION 54957.6. Agency Negotiator: Name Employee Organizations Unrepresented Employees 5. MOTION TO RECESS TO CLOSED SESSION TO CONSIDER PERSONNEL MATTERS PURSUANT TO GOVERNMENT CODE SECTION 54957. 6. MOTION TO RECESS TO CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54957 TO MEET WITH THE CHIEF OF POLICE REGARDING MATTERS OF PUBLIC SECURITY. VOTE: Name City of Huntington Beach v. HBPOA subject: [Gun Rangel. and related cases CONFIDENTIAL MEMORANDUM FROM THE CITY ATTORNEY CONCERNING A CLOSED SESSION BEFORE THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL PENELOPE CULBRETH-GRAFT, City Administrator FROM: JENNIFER McGRATH, City Attorney SUBJECT: CLOSED SESSION TO DISCUSS PENDING LITIGATION (Govemment Code Section 54956.9) The reasons and legal authority for holding a closed session on March 21, 2005, for the purpose of conferring with and/or receiving advice from its legal counsel concerning pending litigation are as follows: X Litigation has been formally initiated to which the City is a party. The title of said litigation is City Of Huntington Beach v. Huntington Beach Police Officers Association, United States District Court Case No. SA 01-1125 JVS; and Scottsdale Insurance Company v. Huntington Beach Police Officers Association, and the related counterclaim, American States Insurance v. City of Huntington Beach, United States District Court Case No. SA 03-1143 JVS. Said closed session is held under the authority of Califomia Govemment Code Section 54956.9(a). 2. Facts and circumstances that might result in litigation against the local agency but which the local agency believes are not yet known to a potential plaintiff or plaintiffs, which facts and circumstances need not be disclosed. Said closed session is held under the authority of Califomia Govemment Code Section 54956.9(b)(3)(A). 3. Facts and circumstances, including, but not limited to, an accident, disaster, incident, or transactional occurrence that might result in litigation against the agency and that are known to a potential plaintiff or plaintiffs, which facts or circumstances shall be publicly stated on the agenda or announced. Said closed session is held under the authority of California Govemment Code Section 54956.9(b)(3)(B). 4. Based on existing facts and circumstances, the legislative body of the local agency has decided to or is deciding whether to initiate litigation. Said closed session is held under the authority of Califomia Govemment Code Section 54956.9(c). STATEMENTS OF FACTS AND CIRCUMSTANCES SUPPORTING THE HOLDING OF A CLOSED SESSION UNDER PARAGRAPHS 3 OR 4, ABOVE: Dated: .ail2 bl�g INIFER McG ATH, City A rney NOTE: This document is protected by the attorney -client privilege and is exempt from disclosure pursuant to Government Code Section 54956.9. The form itself must be submitted prior to the closed session, if feasible, or at least one week thereafter. HB HUNTINGTON BEACH CITY ATTORNEY CONFIDENTIAL LAWYER -CLIENT COMMUNICATION LAWSUIT STATUS SHEET TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: JENNIFER McGRATH, City Attorney DATE: Council Meeting — Mare 21, 2005 CASE: City of Huntington Beach v. Huntington Beach. Police Officers Association; United States District Court, Case No. SA 01-1125 JVS; and Scottsdale insurance Company v. Huntington Beach Police Offiicers Association, and the relaftd counterclaim, American States Insurance v. City of Huntington'Beach, United States District Court, Case No. SA 03-1143 JVS This Lawsuit Status Sheet incorporates the City Attorney's recommendation and attached outside counsel analysis as appropriate. CITY ATTORNEY RECOMMENDATION FOR COUNCIL ACTION: 1. That the City Council adopt the following Guidellnes for settling the City's claims against the Useirs of the Gun Range: SETTLEMENT GUIDELINES FOR FORIMI�R GUN RANGE USERS. A. The City Administrator is authorized to approve settlements in the amount of $8,500 by State, County and local police departments and similar Gun Range Users that provide evidence Indicating that the Huntington Beach. Gun -Range was not their primary location for firearms training between 1971 and 1999. B. In exchange for the payment to the City, the City will: (1) Dismiss with prejudice its suit against the User. (2) Defend and indemnify the User and hold it harmless against any claim arising out of City of Huntington. Beach vs. Huntington Beach Police Officers Association, of al., inclg ft the complaint the Huntington beach Police Officer's AAsoc brought against the User. (3) Apply for Court approval of the settlement agreement as a "good faith" settlement with the User. The User shall support the application. If approved, the good faith finding would bar anyone (including the POA) from suing the User regarding the cost of cleaning up the Gun Range. If the Court denies the ,application, the GACL0SED\LAWSTAT\2005\Gune Range 3-21:DOC settlement would require the City to defend the user against claims by the POA, and any other future third parties, such as other Users. C. Subject to the above Guidelines, the City Administrator is authorized to approve settlements up to of $25,000 by other third party Users. Any settlement in excess of $25,000 will require Council approval. 2. That the City Council further authorize the City Administrator to enter into settlements with the following Users in the amounts set forth below: A. City of Cypress - $8,500 B. City of Westminster - $8,500 C. City of Fountain Valley - $8,500 D. City of Orange - $8,500 E. City of Costa Mesa - $8,500 F. Silverado Sportsman Club - $7,500 G. Yavapai Firearms Academy, Ltd. - $2,800 3. That the City Council further authorize the City Attorney to file a State Court action against the State of California, Golden West Police Academy and Fullerton Police Academy. (Last Fall, the City Council authorized these parties to be sued as part of the Federal suit. However, state immunity requires the City to sue these parties in state court.) NATURE OF CASE: A. Background. From 1973 to 1997, the City leased five acres of Huntington Central Park to the Huntington Beach Police Officers Association ("HBPOA") to operate a police and public gun range. At the time of the closure of the range in 1996, the City's consultant opined that the likelihood of lead contamination was low, but recommended further testing. Subsequently, a November 1998 site investigation discovered extensive lead contamination. The present estimate for site remediation is $2,100,000, although this estimate could easily go up or down. The costs to date to obtain regulatory approval of the clean-up plan are $175,000 to date, and at least an additional $75,000 will be required to obtain final approval. In November 2001, the City sued the POA to recover the cost for site remediation: City of Huntington Beach v. Huntington Beach Police Officers Association [Case No. SACV 01-1125 (JVS)] (the "Liability Action"). The suit is principally based upon CERCLA, a Federal statute that authorizes owners of contaminated property to recover from other parties responsible for the contamination their "fair share" of the cost of the clean-up. To date, approximately $1,000,000 has been spent in legal fees in prosecuting this suit. American States (one of two insurers that included the City as an additional insured on the POA's insurance policy) had paid the City $200,000 towards legal fees, but last summer, obtained a Court order finding that the POA's then -claims against the City did not trigger City coverage. Consequently, the Court ordered the City to reimburse American States $200,000. GACLOSED\LAWSTAT\2005\Lune Range 3-21.DOC 2 Since then, the POA filed a claim against the City, which Scottsdale lnsuraw* agreed to defend. Last week, the first payment of $24,000 for the City's August 2004 legal bills was approved. B. The Liability Suit. After the Liability Suit was filed, on December 15, 2003, pursuant to summary adjudication, the Court determined that the POA, (as,well as the City) was liable for remediating the site under the Federal CERCLA law, at ft.ugh the Court did not establish the actual cost of remediation. (This ruling was partially reversed by the Supreme Court's decision in Cooper v. Aviall (12/14/04) 125 S.Ct. 577, holding that a private party, that had not already been sued to compel a clean-up could not seek contribution from other responsible parties. This Supreme Court decision significantly hampers our ability to force. other responsible parties to contribute to the cost of dean -up, and will be `the subject of a April 25, 2005 hearing.) In July 2004, the POA named the U.S. Government,,, as well as a number of locat cities and gun clubs, as third party defendants (the "Shooters") on the basis.that they hoo,used the Gun . Range. Case law supports holding the Shooters as welt as the operator of the Gun Rangeas responsible parties for the cost of rernediation. The City folkmed~ suit, and named 24 Shooters as defendants in December 2004. (The City also intends to separately - State of California, and the Police Academies at Gohdenwest and Fullerton � in,State Court.) The Shooters filed a motion to dismiss the City's-suit on February 8, 2005, they motion will be heard on Apra 25, 2005. Once this motion is decided, the Court will set, a trial date. C. Insurance Coverageandthe Coves Action. The POA has, $6W,000 of insurance coverage for property damage claims for the period 1971 through 1983 (Anwican States policies) and an additional $2,000,000 in insurance coverage for props damage for the period 1984 through 1986 (Scottsdale policies). (The su uent-insurance policies are irrelevant because they contained express pollution exclusions.) . . The POA's insurance is their principal asset to satisfy any judgmental* City_. .. However, the policies exclude from coverage: (1) any pollution that did not occur 'suddenly and accidentally," and (2) pollution to property "owned or le by the d." , Bad upon these two exclusions, Scottsdale Insurance filed the "Coverage Action" to dahmOne if the POA had coverage: Sc Its I Association, and the related counterclaim, 6W(ann S_t s lsuranf v% City Qj hldniin rton Beach {Case No. SA 03-1143 (JVS)] (the "Coverage Action"). However, because the pollution exclusion issues will not be tried unfit a terthe Liability Action, we -canriot expect that the Insurers will contribute anything close to the $2,600,000 in policy limits in any settlement. To establish coverage, the POA (and the City) must show that = ite the fad,* lead was deposited over the 25-year operating period of the Range, it was still! "sudden and accidental." To prove sudden and accidental, .the Citywill attempt to show that ;the lead contamination was the result of individual bullets that occasionally -exploded and produced minute lead shavings that could not be recovered, and contaminated the site. Td prove contamination of property other than the site itself, the City must demonstrate the lead contamination is impacting the ground water, which is owned by the State of CaWorNa. Proving both these two facts, particularly "sudden and accWentail" cmAzimin "' n, •will be difficult. GACLOSEDTAWSTAM005\Gune Range 3-21.DOC 3 D. Attorneys Fees. The City is an "additional named insured" under the POA's insurance policies. As an additional insured, the City may be entitled to a defense and indemnification if anyone sues the City regarding the Gun Range. Shortly after the City sued the POA, the POA asserted numerous "affirmative defenses" against the City, including that the POA's own liability to remediate the site was "offset" by the City's liability to contribute to the site remediation. The City then argued to American States and Scottsdale that the POA had effectively sued the City. Initially, American States (but not Scottsdale) agreed to pay a portion of the City's legal fees. However, American States later stopped the reimbursements, and successfully filed a motion finding it had no duty to defend the City. Consequently, on May 17, 2004, the Court ordered the City to reimburse American States attorney's fees of $207,573. In July 2004, the POA counter -sued the City. Scottsdale (but not American States) agreed to defend the City, although for months, they paid nothing. On March 15, 2005, Scottsdale stated that they would pay $24,000 towards the August through November 2004 attorney fees bills of $86,100. There is also a dispute between the Insurers, who are paying the POA's cost of defense, and the POA's attorneys, Castle, Petersen & Krause, over -what attorneys fees are covered,. particularly fees associated with the POA's third party complaint against the Shooters. On March 7, 2005, the Insurers successfully brought a motion which eliminated any obligation of the Insurers to pay attorney's fees for POA's investigation and pursuit of other third parties or defense of the Coverage Action. Although this should significantly reduce the ability of the POA to recover their claimed attorney's fees, it is not anticipated that the POA will change their litigation posture. It should be noted that on two occasions in the last two years, the POA attorneys fees demands have frustrated settlement opportunities. E. Liklihood of Success. The total cost of remediation, including administrative costs, is less than $3,000,000. At this time, it will be difficult to even recover the attorneys fees already spent, let alone the cost of remediation. In reaching this assessment, we have considered the following factors: • The difficulty in proving that the POA's liability is covered by insurance. • The difficulty in pursuing recovery after the Supreme Court decision in Cooper v. Aviall holding that a the City may not recover from third parties the cost of hazardous waste clean- up until it has been sued by the EPA or the State to compel the City to clean-up the site. • The difficulty in apportioning responsibility for the lead contamination. The POA was contractually responsible for the entire site. However, under CERCLA, the POA is liable as the operator, but the City is liable as a user. Similarly, all the other Shooters are liable as users. • The legal costs of the Liability Action and the Coverage Action have been exceedingly high. Over $1,000,000 has been spent on legal fees. In addition, the City must reimburse American States approximately $205,000. The likelihood of substantially recovering these attorneys fees is low. • Our likelihood of achieving a substantial recovery against any one Shooter is not good for a number of reasons. First, the HBPOA operated the Gun Range site, and as the operator, bears substantial responsibility for the lead remediation. Second, undoubtedly the single largest user was the City of Huntington Beach through its Police Department. • The cost of litigating the judgment against the HBPOA, and litigating the pollution exclusions is substantial. We estimate that if we continue with the current firm representing the City, the cost could be anywhere from $500,000 to $1,000,000. In other words, we would GACL0SED\LAWSTAT\2005\Gune Range 3-21.DOC 4 be.spending between $500,000 to $1,000,000 to mover $1,000,000 to $1,5011wjth a relatively low probability of success. This is not a ooQd invotcnent.. • To improve our likelihood of a positive recovery, we have, substantially feduced the cost Of continuing the suit. Beginning last Fall, and now in full effect, the City Att s Office has assumed the lead counsel position in the litigation. F. Settlement. The City is actively pursuing settlement- The City had reached a tentative settlement with the insurance companies that would involve a payment to the City of approximately $400,000 and eliminate the obligation to reimburse the $205,0,00 to American States. The Council approved this settlement on September 7 2004. ver; the POA has not agreed to this settlement and it is unclear if they ever will- agree to it. The City is also actively trying to settle its claims against the Shooters. The Guidelines for settlements with the User are set forth above. To date, we have tentaUvely,resched settlement for $52,800.00 from seven users. In -addition, the Department of C re#ions has indicated a willingness to settle mire the City files suit. While we strongly recommend approval of the User Settlement Guidelines, we should highlight one risk. In particular, because ofthe ri ted:with an adverse ruling at an April 25, 2005. hearing on the:Usee.s motion to doss, we recommend offering:.ear y settlements now. However, if the Court later reams the good faith settlement motion, the City will be required to defend the Users from the POA's third party action: W1i#e this is a significant risk, we believe it is worth taking. 2. DEFENDANT & CO-DEFENDANTS: Li#i<bil : Q2ftoftLt - Huntington Beach Police Officers Association; Third Party QgNm4aft -- United States of America (Department of Justice, et. al.); the County of Orange; City of Buena Park; City of Bell, City of ; City of La Palma; City of Westminster; City of Costa Mesa; City of Gardena.; City of.Fountain Valley; City of Fullerton; City of Garden Grove; City. of Saerda Ana; Gun � Training Center, Huntington. Beach Gun Club, Dean's Security Professionals, Competitive Edge ,Siluerado Sportsman Club, Singleton International, The Centunon:Croup; andYavapaifirearms, . Academy, Ltd. Cover a Action: Defendants - Huntington Beach Police Officers Association; American States insurance Company; �&'untg Defendant — City of Huntington Beach 3. PLAINTIFF & CO -PLAINTIFFS: Liability & n: City of Hurtington Beach; Counter elaintiff - Huntington Beach Police tJfficws As n Coverer Action: Plaintiff - Scottsdale Insurance Company 4. BEING HANDLED INTERNALLY OR EXTERNALLY: Externally and Interrially 5. IN-HOUSE ATTORNEY LIAISON: Scott Field 6. OUTSIDE FIRM: Jeffer, Mangels, Butler & - Marmaro LLP 7. FUNDS APPROVED BY COUNCIL TO COVER COSTS OF SUIT: Litigation Defeme Account 10015101.69375 GACLOSED\LAWSTAM005\Gune Range 3-21.DOC 5 8. 9. FUNDS EXPENDED TO DATE: AMOUNT OF ADDITIONAL FUNDS ANTICIPATED Total - $996,758. Liability Action: $792,179 (Legal fees - $760,776; Costs - $31,403) Coverage Action: $204,579. Liability Action: $150,000. Coverage Action: $50,000. Total: $200,000 10. DATE SUIT FILED AND COURT: November 26, 2001; United States District Court --Central District of California (Honorable James Selna) 11. TRIAL DATE: To be set after the April 25, 2005 Court hearing. 12. ANTICIPATED DATE OF RESOLUTION OF SUIT: Unknown 13. SETTLEMENT OFFER FROM DEFENDANT: See discussion above. 14. IS OUT -OF -COURT SETTLEMENT LIKELY: Yes, with at least some parties. 15. SETTLEMENT AUTHORITY: See Recommended Action. In addition, on September 7, 2004, the Council authorized a settlement of its claim against the POA and the Insurers on the following terms: A. The City will be paid $387,000. B. Scottsdale will reimburse the City from $0 to $50,000 for attorney's fees incurred by the City from June through August 2004. C. HBPOA will be dismissed from the lawsuit. D. The City and HBPOA will dismiss their claims against each other. E. The City would agree to defend and indemnify HBPOA against any future claims by a third party or regulatory agency regarding the Gun Range. F. The City and the Insurers would dismiss their claims against each other. 16. LIKELIHOOD OF WINNING SUIT: 17. FINANCIAL IMPACT IF WE WIN SUIT: 18. FINANCIAL IMPACT IF WE LOSE SUIT: 19. ARE PUNITIVE DAMAGES ALLEGED: 20. COMMENTS: See discussion above. See discussion above. See discussion above. Statutory treble damages are alleged on the City's ninth cause of action for waste. None. GACL0SED\LAWSTAT\2005\Lune Range 3-21.DOC 6 21. INSURANCE: 22. CITY DEPARTMENT(S) INVOLVED: JENNIFER McGRATH, City Attorney See discussion above - Police Department, Community Service Date: c: Penelope Culbreth-Graft,, City Administrator Robert F. Beardsley, Acting Assistant City Administrator Kenneth Small, Chief of Police Jim Engle, Director of Community Services GACL0SED\LAWSTAT\2005\Gone Range 3-2LDOC 7 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNIFER MCGRATH, City Attorney (Bar No. CA 179917) SCOTT F. FIELD, Assistant City Attorney (Bar No. CA 105709) Box 190, 2000 Main Street Huntington Beach, California 92648 Telephone: 714 536-5555 Facsimile: (714) 374-1590 E-mail: sfield@surfcity-hb.org Hal D. Goldflam, Esq. (Bar No. CA 179689) FRANDZEL ROBINS BLOOM & CSATO, L.C. 6500 Wilshire Boulevard, 17th Floor Los Angeles CA 90048-4920 Phone: 323-952-1000 Facsimile: 323-651-2577 Email: hgoldflam@frandzel.com Attorneys for Plaintiff CITY OF HUNTINGTON BEACH UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California and charter city duly created and existing under the laws of the State o California, Plaintiff, vs. HUNTINGTON BEACH POLICE OFFICERS ASSOCIATION, a California mutual benefit corporation, et al., Defendants. COMPANY, an Ohio corporation, Plaintiff, vs. HUNTINGTON BEACH POLICE OFFICERS ASSOCIATION; AMERICAN STATES INSURANCE COMPANY, a Washington corporation; and DOES 1 through 10, inclusive, Defendants. CASE NO. SACV 01-1125 JVS (ANx) SETTLEMENT AGREEMENT BY AND BETWEEN PLAINTIFF CITY OF HUNTINGTON BEACH AND DEFENDANT COUNTY OF ORANGE [PROPOSED] ORDER AND JUDGMENT CASE NO. SACV 03-1154 JVS (ANX SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 THIS SETTLEMENT AGREEMENT AND RELEASE is entered into by and between the Plaintiff, City of Huntington Beach ("City") on the one hand, and Defendant, County of Orange (the "County"). The City and the County shall be referred to collectively as the "Settling Parties," and sometimes individually as a "Settling Party." No other person or entity is a party to this Agreement. WHEREAS, Plaintiff, City of Huntington Beach on November 25, 2001 filed that certain lawsuit entitled City of Huntington Beach vs. Huntington Beach Police Officers Association, United States District Court, Case No. SACV 01-1125 JVS (Anx) (the "Action") in which it seeks contribution and other relief arising under the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. § 6901 et seq., the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq., the California Hazardous Substance Account Act ("HSAA"), Calif. Health & Safety Code § 25300 et seq., as well as breach of contract, nuisance, trespass, waste, negligence, contribution, and indemnity; WHEREAS, the Action concerns a parcel of land located at 18211 Gothard Street in Huntington Beach, California (the "Property"). The City alleges that the Property was deeded by Defendant County of Orange to the City in 1963. Prior to the County deeding the Property to the City, the County operated a landfill on the Property. The County capped the landfill with a layer of clay before deeding the Property to the City; WHEREAS, from 1968 to 1997, the Property was leased from the City by Defendant Huntington Beach Police Officer's Association (the "POA") for the purpose of operating and maintaining a gun range on the site (the "Gun Range"); WHEREAS, the POA has answered and asserted counter -claims against the City in the Action; WHEREAS, on August 12, 2002, the County of Orange was joined as an indispensable party to the Action; 2 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, on or around April 30, 2003, Scottsdale filed an action against the POA, entitled Scottsdale Insurance Co. v. Huntington Beach Police Officers Association, et al., United States District Court, Central District of California Case No. SACV 03-1154 JVS (ANx), seeking a determination of its rights and obligations under the Known Policies at issue and for declaratory relief against American States for equitable contribution (the "Coverage Action"). On September 5, 2003, the POA filed a First Amended Counterclaim against the County in the Coverage Action; WHEREAS, in July 2004, the POA applied to the Court and was granted leave to join as Third Party Defendants various entities that previously used the Gun Range for firearms training, including the County. Then on December 2, 2004, the City was granted leave to directly sue these same entities and additional persons as defendants. On December 14, 2004, the City filed its Third Amended Complaint ("TAC") adding as Defendants: United States of America; County of Orange; City of Bell; City of Buena Park; City of Costa Mesa; City of Cypress; City of Fountain Valley; City of Gardena; City of Garden Grove; City of Huntington Park; City of La Palma; City of Manhattan Beach; City of Orange; City of Irvine; City of Santa Ana; City of Westminster; Santa Ana Unified School District; Dean's Security Professionals; Competitive Edge; Silverado Sportsman Club; Singleton International; The Centurion Group; Yavapai Firearms Academy, Ltd.; and Westec Security, Inc. (collectively, "Shooters"); WHEREAS, the Shooters have generally denied the substantive claims and allegations in the TAC and in the related counter -claims, cross -claims, third party claims, and further denied any use or significant use of the Property, and contended that any use was an invited use; WHEREAS, City alleges (reference to these allegations in this Agreement shall not be construed as an adoption or admission by the County) as follows: 1. During the POA's ownership and operation of the Gun Range, the POA allowed approximately 12,000 peace officers from no less than seventy (70) law enforcement agencies to discharge an estimated one million 3 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 rounds of lead ammunition per year at the Property. As part of its range maintenance program, the POA attempted to mine and recover the numerous spent ammunition rounds, slugs, and/or shell casings by sifting the soil on the site and recovering spent bullets for recycling, and that this screening procedure recovered .38 caliber bullets, and perhaps smaller 9-mm bullets. However, smaller fragments, shards, particles and dust that resulted from bullets exploding at the range on impact were too small to be recovered by the POA's mining and recovery procedures. 2. During the POA's tenancy and the POA's and Shooters' use of the Property, hazardous substances and materials were released on the Property, causing contamination of the soil and groundwater. Further, as a proximate result of the POA's and Shooters' activities on the Property, the City has incurred and will continue to incur response costs regarding the Property. 3. The City has incurred costs and damages in connection with the investigation and cleanup at the Property of various hazardous substances as a result of the operation of the Gun Range (as defined in Section III below, hereafter "Hazardous Substances"). The City will incur additional costs and damages in the future on account of the Hazardous Substances at the Property. The City is entitled to recover those costs and damages pursuant to the combined operation of CERCLA, HSAA and various common law theories. The City is entitled to injunctive relief to compel Defendants to remediate the Property pursuant to RCRA and various common law theories. 4. Since the POA vacated the Property in January 1997, the City has been engaged in an ongoing effort to rehabilitate the Property so that the public can safely use it for park and recreational uses. Specifically, on or about December 8, 1998, the City received a lead contamination assessment from Americlean Environmental Services, Inc., which 4 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 describes pervasive lead contamination throughout the Property. As a result of the contamination, the City was legally compelled to take the necessary steps to remediate it and report the contamination to the Orange County Health Care Agency ("OCHCA"). 5. In December 2000, the City began drafting an environmental impact report ("EIR") in order to determine the scope of contamination and evaluate remedial alternatives and future reuse of the Property. In order to investigate the scope of contamination and evaluate remedial alternatives, the City conducted several environmental assessments of the Property, which confirm that the soil at the Property is heavily contaminated with lead. The lead contamination is classified as a "hazardous waste" under RCRA and -as "hazardous substances" under CERLCA and HSAA. 6. As a result of the contamination, the environmental assessment, cleanup, and remediation of the Property are being directed and overseen by OCHCA. The City has obtained from OCHCA an approved Remedial Action Plan ("RAP"). 7. The City conducted a Bench Scale Feasibility Study to further test and investigate the Property to determine more accurately the remediation cost for the Property. The study was completed in July 2003, and based on the most recent estimates, the cost to remediate the Property is $2,100,000. This cost is based upon excavating approximately 19,000 tons of soil, and achieving a minimum cleanup standard of 750 parts per million ("ppm"). If the California Department of Toxic Substances Control ("DTSC") and/or Santa Ana Regional Water Quality Control Board impose a more restrictive cleanup based upon a health risk assessment or other criteria, the volume of soil to be excavated could increase substantially, and the cleanup cost could significantly and materially increase above and beyond the current estimate. 5 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8. In addition to the $2,100,000 estimate in the Feasibility Study, the cost to date for regulatory approvals, including preparation of a draft EIR and RAP is $175,000. At the recommendation of DTSC, the City will prepare a risk assessment analysis, which may cause revision of the RAP. The cost of remaining regulatory approvals is estimated to be $75,000. Taking into account contingencies, the estimated cost of remediation is $3,000,000; WHEREAS, the County maintains that it was not liable for any claims for relief asserted in the TAC or the POA's First Amended Cross -Claims and Third -Party Claims (the "FAC") and alleges (reference to these allegations in this Agreement shall not be construed as adoption or admission of these allegations by the City) as follows: 1. The City owned and permitted the use of its Property as a Gun Range, and failed to properly inspect and regulate its use to ensure the permitted activity complied with all environmental laws. 2. The City's police department was the primary user of the Gun Range throughout the period it was in operation and, thereby, was the primary contributor to the alleged contamination. 3. Knowing that the Property would be used as a shooting range, the City failed to properly regulate and restrict the use of non -lead free bullets. 4. The City invited and encouraged other police departments to use the Gun Range as part of joint training sessions conducted for the benefit of City's police department, and thereby represented all such activities were lawfully undertaken. 5. With the City's knowledge and approval, the bullets used at the Gun Range were supplied by and purchased from the POA, City's tenant. 6. The City financially benefited from operating peace officer firearms courses at the Property where it directed course participants to use the 6 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gun Range and the bullets supplied by the POA, and thereby represented all such activities were lawfully undertaken. 7. The City failed to properly maintain the Property to prevent the alleged disposal release or threatened release of hazardous waste or hazardous substances. 8. The City has unreasonably delayed in remediating the Property, and negligently inspected and tested the Property so as to cause the spread and migration of the alleged contamination. 9. The County's use of the Property, if any, was insignificant. 10. The sole cause of the alleged contamination of the Property was the City's and the POA's actions and inactions. 11. The County is neither owner, operator, nor arranger, as those terms are defined under the environmental laws, including RCRA, CERCLA, and HSAA, and its activities on the Property, if any, do not constitute the disposal or release or threatened release of hazardous waste or Hazardous Substances (as the latter term is defined in Section III below and RCRA, CERCLA and HSAA); WHEREAS, prior to entering into this Settlement Agreement, there have been various initial disclosures, supplemental initial disclosures, and responses to public records requests; WHEREAS, the settlement terms as reflected in this Settlement Agreement have been reached by the City of Huntington Beach and the County; WHEREAS, without admitting any issues of fact or law, the Settling Parties agree that the settlement memorialized in this Settlement Agreement reflects the Settling Parties' shared desire to avoid the expense and risk inherent in continued litigation of the Action, and is a good faith effort to advance the public interest by ending the litigation -related expenditure of government funds while providing funds toward the cleanup of the Property; 7 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, the Settling Parties anticipate that the Court (as defined below in Section I) will review and approve this Settlement Agreement and enter the Order and Judgment attached as Exhibit A, or a substantially similar Order and Judgment; NOW, THEREFORE, in consideration of the foregoing recitals and in exchange for the promises contained herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Settling Parties agree as follows: I. JURISDICTION The Settling Parties agree that the United States District Court for the Central District of California (Hon. James V. Selna presiding) (the "Court") has jurisdiction over the Settling Parties and jurisdiction over the subject matter of the Action and Coverage Action pursuant to CERCLA Section 113(b) (42 U.S.C. § 9613(b)), and 28 U.S.C. §§ 1331 and 1367(a). For purposes of the Court's review, approval and enforcement of this Settlement Agreement, the Settling Parties waive any and all objections and defenses they may have to the jurisdiction of the Court, to venue in this District, or to service of process. II. PARTIES BOUND This Agreement applies to, is binding upon, and inures to the benefit of each of the Settling Parties, and each of their agents, officers, directors, elected officials, appointed officials, administrators, representatives, predecessors, successors, and assigns. Each Settling Party has indicated its acceptance and approval of the terms and conditions hereof by having a duly authorized representative execute this document below. III. HAZARDOUS SUBSTANCES As used in this Agreement, the term "Hazardous Substances" includes hazardous substances and hazardous waste as those terms are used in the TAC and FAC and shall include, without limitation, all substances defined as hazardous substances in CERCLA section 101(14), 42 U.S.C. § 9601(14) and in Section 25316 of the California Health & Safety Code, and all waste defined as hazardous waste in 8 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RCRA Section 103 (5) and (27), 42 U.S.C. § 6903(5) and (27), or in other statutory or decisional environmental law, as heretofore or hereafter amended. The term "Hazardous Substances" excludes substances deposited on the Property as part of the operation of the landfill, and is limited to only substances resulting from the operation of the Gun Range. The term Hazardous Substances includes those substances deposited in the landfill, but released as a result of the remediation of the Property in connection with the Gun Range. IV. SETTLEMENT PAYMENT A. Amounts. Subject to and consistent with the terms and provisions of this Agreement, the County shall pay Three Thousand, Five Hundred Dollars ($3,500.00) to the City of Huntington Beach. B. Payment. The County shall deliver the settlement payment to counsel for the City at counsel's address listed in Section XIG (Notice), within ten (10) business days after both of the Settling Parties have executed this Agreement and Plaintiff s initial motion or application for approval of this Agreement. Payment shall be in the form of a check or checks from the County, made payable to "City of Huntington Beach." V. DISMISSAL AND RELEASE A. Dismissal of the Entire Action. The Settling Parties hereby agree that the City shall use its best efforts to cause the dismissal with prejudice of the entire Action against the County, including without limitation, seeking the Court's approval of this Agreement and dismissal with prejudice (in the form of the contemplated Order) of any and all claims under federal, state and other law asserted against each other in the Action, or which could have been asserted in the Action based on the facts alleged, including without limitation, claims for (1) the recovery of costs incurred including any interest thereon, and/or costs to be incurred in connection with preparing or implementing measures to clean up or abate the Hazardous Substances at the Property, (2) damages arising from or related to the Hazardous Substances at the Property, (3) statutory and equitable contribution and 9 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 indemnification arising from or related to the Hazardous Substances at the Property, and (4) attorneys' fees and costs and expert costs and fees. This dismissal shall include, without limitation, all claims asserted, or which could have been asserted, by the County against each other party in the Action for which there is a comparable dismissal of that party's claims against the County. B. Dismissal of the TAC. The City agrees that in the event it is unsuccessful in obtaining Court approval of this Agreement through entry of the Order or, if submitted, modified Order, the City shall file a voluntary dismissal with prejudice of the TAC in favor of the County, within fifteen (15) business days of the denial of the Order or, if submitted, within five (5) business days of the denial of the modified Order, and thereafter shall defend and indemnify the County as provided in Section VII. C. Release. Save and except for claims arising from alleged breaches of this Settlement Agreement, or fraud in the declaration referred to at Section VIA, and except for claims expressly or preserved in this Settlement Agreement, the Settling Parties hereby release each other (and each of their agents, officers, directors, elected officials, appointed officials, administrators, representatives, predecessors, successors and assigns) from any and all claims, demands, actions, and causes of action arising from or relating to Hazardous Substances at, on, under, or emanating from the Property, whether such claims, costs, demands, damages, actions, attorneys' fees, causes of action and/or rights arise from, or are directly or indirectly related to, connected with, or caused by the incidents and alleged contamination which gives rise to the Action and any alleged Hazardous Substances at, on, under, or emanating from the Property whether such claims, demands, actions, and causes of action are asserted and/or could have been asserted in the Action, are presently known or unknown, or are presently suspected or unsuspected. Nothing in this Release is intended to Release the County from liability, if any, associated with the -County operation of a landfill on the Property. Further, nothing in this Release is intended to change or affect existing law concerning claims or 10 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 actions for fraud against or involving a public entity or a public employee and shall not be construed as such. This Release includes, without limitation, a release of claims by the County against each other party to the Action for which there is a comparable release of that party's claims against the County. Nothing in this Release shall be construed as waiving or releasing the right of the Orange County Health Care Agency ("OCHCA") to bring claims against the City. In the event OCHCA brings such a claim, nothing in this Agreement acts as a waiver or release of any defense, counterclaim, or other claim that the City may have with regard to any such claims. D. No Release of Non -Settling Defendants by the City. It is expressly agreed that the City's release provided herein to the County does not and shall not extend to or benefit any person or entity that is not a signatory to this Settlement Agreement. All claims against non -signatories, whether asserted in the Action or not, are expressly preserved. City expressly reserves its rights to bring or continue any action against any person or entity that is not a signatory to this Agreement to recover costs, damages, and attorneys' fees incurred by the City in connection with the Property or the Action. E. Assignment to the City of County's Claims Against Non -Settling Parties. It is expressly agreed that the County's release provided at Section V.C. as to each other party to the Action for which there is a comparable release of that party's claims against the County, does not and shall not extend to or benefit any other person or entity. All County's claims against any non -settling person or entity, whether a party in the Action, or otherwise, and whether asserted in the Action or not, are expressly preserved. In consideration of the City's release of its claims against the County, the County transfers and assigns to the City all of the County's right, title and interest in and to any cause of action it may have against any non -settling person or entity, including but not limited to, the POA, to recover costs, damages, and 11 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 attorneys' fees incurred by the County in connection with the Property or the Gun Range. The City may bring such claims against any non -settling person or entity, including but not limited to, the POA, as both a cross -complaint and an affirmative defense in connection with any action in which the City is defending and indemnifying the County pursuant to Section VII, or the City may bring such claim in a separate action or proceeding. VI. COURT APPROVAL AND PROTECTION AGAINST CLAIMS A. Good Faith Compromise. Based upon the previously made disclosure of the County, including any Declarations provided by employees of the County who reviewed documents most readily available concerning shooting ranges used by its police departments for firearms training between 1971 and 1997, the Settling Parties acknowledge and agree that the payments and other undertakings pursuant to this Agreement represent a good faith compromise of disputed claims and that the compromise (1) represents a fair, reasonable, and equitable resolution of their respective claims arising out of the release at the Property of Hazardous Substances, and (2) also benefits the public interest by ending the litigation -related expenditure of government funds while providing funds to support the cleanup of the Property. With regard to any claims for costs, damages, or other relief asserted, or which could have been asserted, against the County by any person or entity that is not a signatory to this Agreement on account of the release(s) of Hazardous Substances on, under, or at the Property, the Settling Parties agree that upon approval of this Settlement Agreement by the Court, the County is entitled to the full benefit of any and all applicable provisions of federal and state law, whether statutory, common law, decisional, or otherwise, including but not limited to California Code of Civil Procedure Sections 877 and 877.6 and CERCLA Section 113(f), 42 U.S.C. § 9613(f)(2), extinguishing or limiting the County's alleged liability to persons or entities that are not signatories to this Settlement Agreement. The Settling Parties further agree that claims for relief arising from the alleged disposal, release or threatened release of Hazardous Substances on, under, or at the 12 SETTLEMENT AGREEMENT 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Property, and the claims made in the Action are matters addressed in this Agreement. The Settling Parties acknowledge and agree that the dismissal of claims as described in Section V and elsewhere in this Agreement, and the protection from contribution and indemnity claims under all applicable state and federal laws and authorities, including without limitation contribution and indemnity claims, are integral and non - divisible aspects of this Agreement and as such are necessary and material terms in the Order. As promptly as reasonably practicable after this Agreement has been executed, the City shall undertake, and the County through its respective counsel shall join in, a mutually acceptable joint motion or other appropriate legal proceeding(s) as may be necessary or appropriate to secure the Court's approval of this Agreement, the contribution protection contemplated herein, and the dismissal of claims contemplated herein. B. Revised Application If Court Denies Motion. If for any reason the Court declines to approve the terms of this Agreement through entry of the Order, the City shall seek direction and clarification from the Court concerning those aspects of the motion, application, Settlement Agreement, and/or Order it finds unacceptable. The Settling Parties then shall meet and confer, telephonically or in person within fifteen (15) business days following such denial, to discuss the items found unacceptable by the Court and attempt in good faith to agree upon amendments to this Agreement, the motion or application to approve this Agreement, and/or the Order so as to make them acceptable to the Court. Promptly thereafter, if agreement is reached and as provided herein, the City shall apply, and the County shall join in the application, for approval of the modified Settlement Agreement and/or modified Order from the Court. Nothing in this Settlement Agreement shall require the Settling Parties to modify or submit a modified Settlement Agreement and/or Order if, after negotiating in good faith, they are unable to agree on mutually acceptable modifications. Nothing in this Agreement shall be read, interpreted or construed as requiring the 13 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 County to modify the settlement amount, the City's commitment to obtain an order of dismissal or voluntarily dismiss the action with prejudice, and the City's duty to defend and indemnify the County once a dismissal is entered. If the Settling Parties are unable to agree to any modifications -within said fifteen (15) business day period, the City shall file a voluntary dismissal with prejudice of the TAC in favor of the County. If the Settling Parties agree to modify either the motion, or application or Settlement Agreement or Order, the City shall reapply for approval of the Settlement Agreement and/or Order, as modified, from the Court within fifteen (15) business days after the Settling Parties agree to the modifications. If the Court declines to approve the motion or application or Settlement Agreement and/or Order, as modified, the City shall file a voluntary dismissal with prejudice in favor of the County within five (5) business days after the Court so declines. If the modified Order and Judgment is reversed on appeal, this Agreement does not require the Settling Parties to pursue further modifications to the Settlement Agreement and/or the Order and Judgment. Further, nothing in this Agreement shall require or preclude the City's defense of the Order and Judgment in the United States Supreme Court. C. Dismissal With Preiudice If Court Denies Application. This Agreement shall remain binding and in effect regardless of whether 1) the Court declines to approve the terms of this Agreement and the Settling Parties cannot, in good faith, agree on the terms of a modified motion, application, Settlement Agreement and/or Order, or 2) if the Settling Parties do agree to modify the motion, application, Settlement Agreement and/or Order and the Court declines to approve the terms of a modified Settlement Agreement through entry of the Order or Modified Order. In such an eventuality, the City shall dismiss with prejudice the Action against the County and all claims for relief filed by City against the County as provided in Section VB and Section VIB. 14 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VII. INDEMNIFICATION A. City's Duty To Defend And Indemnify. City agrees it shall, upon entry of the Order contemplated in this Agreement or a voluntary dismissal with prejudice of City's operating pleading (currently the TAC) in favor of the County, whichever occurs first, indemnify, protect, defend and hold harmless the County from any and all claims under federal, state or other law asserted against the County in the Action, or in any other proceeding (whether in equity, law or administrative), including without limitation, claims for (1) the recovery of costs incurred including any interest thereon, and/or costs to be incurred in connection with preparing or implementing measures to clean up or abate Hazardous Substances resulting from operation of the Gun Range at the Property, (2) damages arising from or related to Hazardous Substances at the Property, (3) statutory and equitable contribution and indemnification arising from or related to Hazardous Substances at the Property, and (4) attorneys' fees and costs and expert costs and fees. Such claims shall include, but not be limited to, all claims asserted by or that may be asserted by the POA and the non -Settling Defendants against the County. B. City Duty to Defend and Indemnify Conditional Upon Cooperation. The City's duty to defend and indemnify the County shall be governed by Sections V, VII and VII1. The City shall defend the County with counsel selected from the staff of the Office of the Huntington Beach City Attorney or other competent counsel ("Designated Counsel"), to be chosen in the sole discretion of the City. The County agrees that as long as the City shall defend, indemnify and hold the County harmless, the same counsel that represents the City may represent the County in this Action or other proceeding involving the Property and its alleged contamination. By separately initialing here, the County waives any actual or potential conflict of interest of its defense counsel, and acknowledges and agrees that there has been a full disclosure and informed consent by all the Settling Parties within the meaning of State Bar Rule 3-310(B), (C) and (E) permitting dual representation of clients and 15 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 j 27 28 further permitting the representation of interests adverse to a client or former client with the informed written consent of the client. The City's duty to defend and indemnify the County shall be conditional upon the County's reasonable cooperation with and assistance to Designated Counsel as follows: 1. In any proceeding where the City has a duty to defend and indemnify the County pursuant to Section VIIA, or the City is proceeding against a person or entity pursuant to Section VE, the County shall cooperate with Designated Counsel in said proceeding by testifying at trial and submitting to a properly noticed oral deposition, providing declarations necessary to the efficient prosecution of the proceeding and assisting in responding to written discovery requests (Interrogatories, Requests for Admission and Requests for Production) properly propounded upon the County. The time expended by the County in connection with attending the deposition or assisting Designated Counsel in the preparation of necessary declarations or responses to written discovery shall not be charged to Designated Counsel. To the extent allowed by law, Designated Counsel shall seek reimbursement of the County's internal costs and expenses, including costs associated with attending oral depositions and assisting with and providing responses to written discovery. 2. To the extent they exist, can be located and are in the County's possession, the County shall cooperate with Designated Counsel in locating and identifying documents that relate to firearms training at the Property and provide hard copies to Designated Counsel. To the extent allowed by law, Designated Counsel shall seek reimbursement of the County's costs and expenses from the person or entity, other than Designated Counsel, requesting the documents. To the extent possible, 16 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the hard copies will be provided within 30 days after the request is received from Designated Counsel. 3. The County may be required, at its own cost, to expend funds in performance of the obligations contained in this Subsection B, including but not limited to personnel time and expense, incidental transportation, parking, telephone, fax and mailing costs, which funds shall not be reimbursed by the City. VIII. APPEAL A. Reversal Of Order And Appeal. If the Court approves this Agreement through entry of the contemplated Order (including a modified version of the Order) and the Order is appealed, the County agrees to cooperate with the City in defending the Order, at City's expense, through a final judgment in the Ninth Circuit Court of Appeal. Nothing in this Agreement shall require the County to meet and confer to modify or submit to the Court a modified Settlement Agreement and/or Order in the event of an appeal and/or reversal of the Order. If an appeal is undertaken or the Order is reversed on appeal, the City may dismiss with prejudice the TAC against the County or, at its expense, pursue further court review. The City's duty to defend and indemnify the County pursuant to Section VII arises at the time of entry of the Order (including a modified version of the Order) and continues thereafter, regardless of whether any appeal or challenge to the Order is undertaken or whether the Order is reversed on appeal. Nothing in this Agreement shall require or preclude the Settling Parties' defense of the Order in the United States Supreme Court. IX. EFFECTIVE DATE OF SETTLEMENT This Settlement Agreement shall become binding and effective on the City and the County upon the "Effective Date," which is the date by which the Settling Parties have executed the Settlement Agreement. 17 SETTLEMENT AGREEMENT 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 X. CONTINUING JURISDICTION The Settling Parties agree that the Court specifically retains jurisdiction over the subject matter of this Action and the Settling Parties for the purpose of (1) resolving any disputes arising under this Settlement Agreement, (2) issuing such further orders or directions as may be necessary or appropriate to construe, implement, modify, or enforce the terms of this Settlement Agreement, and/or the Order, and (3) for granting any further relief as the interests of justice may require. The Settling Parties further agree that if there is a dispute over the terms of this Settlement Agreement or performance of the obligations arising from this Settlement Agreement which the disputing Settling Parties cannot resolve among themselves, such dispute shall be heard and resolved by the Court. XI. ADDITIONAL TERMS A. Representations of Non-Assignment/Transfer. The Settling Parties represent and warrant that they have not assigned or otherwise transferred any claim, cause of action, or other right which has been released in this Agreement. The Settling Parties agree to hold each other harmless, and to indemnify each other from and against any claim made by any person or entity who purports to be the recipient of an assignment or other transfer of any claim, cause of action or right by the Settling Parties in connection with the Action or the incident which gave rise to the Action. B. Assumption of Risk. It is understood and agreed by the Settling Parties that the facts may hereafter turn out to be other than or different from the facts now known to be or believed to be true. Subject to the fraud exception described in Section VC, the Settling Parties expressly assume the risk of the facts turning out to be different than they now so appear, and that this Agreement shall be, in all respects, effective and not subject to termination, rescission, alteration, or other such action by reason of any such difference in facts. C. Waiver of Section 1542 There is a risk that, after the execution of this Agreement, the Property will manifest new damages resulting from the operation 18 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the Gun Range, the scope, location, and/or character of which is unknown and/or not discovered at the time this Agreement is signed. There is a risk that the Hazardous Substances of which the Settling Parties are presently aware that resulted from the operation of the Gun Range may become more serious, or otherwise increase in magnitude (qualitatively and/or quantatively). The Settling Parties shall, and hereby does, assume the above -mentioned risks. The Release set forth in this Agreement is expressly intended to cover and include all future damages, defects, and discoveries, due to Hazardous Substances. The Settling Parties are aware of the provisions 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." The Settling Parties hereby expressly waive the provisions of Civil Code section 1542 as to all damages resulting from Hazardous Substances. The Settling Parties hereby warrant and guarantee that they have full and complete authority to release all such claims on behalf of themselves, and their agents, representatives, heirs, assigns, and successors in interest. D. No Admission of Liability. It is understood and agreed that this Settlement Agreement is a compromise of disputed claims, and that the agreements made herein are not to be construed as an admission of liability on the part of the County, and that the County denies liability and intends merely to avoid continued litigation, and that this Agreement is entered into solely by way of compromise and settlement. E. Settling Parties Bear Own Costs And Fees. The Settling Parties shall bear all attorney's fees and costs arising from the actions of their own counsel in connection with the Action, through the preparation and execution of this Agreement and entry of a dismissal, whether by court order or voluntary dismissal with 19 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 prejudice, of the operative complaint (currently City's TAC) and all claims for relief filed by City against the County. F. Notice. All notices and other communications, and payments, pertaining to this Agreement shall be in writing and shall be deemed received when delivered personally, by overnight courier, or by facsimile to the Settling Party or Settling Parties, as the case may be, at the following addresses (or such other address for a Settling Party as shall be specified by that Settling Party in a notice pursuant to this Section). AS TO THE CITY OF HUNTINGTON BEACH: Huntington Beach City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Fax: (714) 374-1557 With Copy To: Scott F. Field, Assistant City Attorney City of Huntington Beach 2000 Main Street, P. O. Box 190 Huntington Beach, CA 92648 Fax: (714) 374-1590 AS TO COUNTY OF ORANGE Sunny Bittle, Claims Administrator County of Orange, Administrative Office, Risk Management 12 Civic Center Plaza, Rm. 324 PO Box 327 Santa Ana, CA 92702 With Copy To: John H. Shimada, Esq. LEWIS, BRIBOIS, BISGAARD & SMITH LLP 221 N. Figueroa, Suite 1200 Los Angeles, CA 90012-2601 20 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Fax: (213) 250-7900 G. Cooperation. Each of the Settling Parties agrees to take such further acts or execute any and all further documents that may be necessary or appropriate to make this Settlement Agreement legally binding and to effectuate its purposes. H. Settlement Agreement May be Executed in Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument; however, all such counterparts shall comprise but one Settlement Agreement. I. Entire Agreement. This Agreement constitutes the full and entire agreement between the Settling Parties, and the Settling Parties acknowledge that there is no other agreement, oral and/or written, between the Settling Parties hereto relating to the Action. J. Authority to Enter Agreement. Each person signing this Agreement on behalf of one of the Settling Parties hereto acknowledges that he/she has the full authority to bind said Party. K. Final Agreement. The Settling Parties acknowledge that this Agreement and its reduction to final form is the result of good faith negotiations between the Settling Parties, and that the Settling Parties have had the opportunity to discuss this Agreement with counsel. When signed, this Agreement is intended to be the final Settlement Agreement between the Settling Parties regarding the subject matter hereof L. Interpretation of Agreement. This Agreement is made and entered into in the State of California, and shall be interpreted, enforced, and governed by and under the laws of the State of California. If it becomes necessary to interpret any of the provisions of this Agreement, it shall be assumed that this Agreement was jointly drafted by the Settling Parties. M. Modifications. This Agreement may be amended or modified only by a writing signed by all Settling Parties. 21 SETTLEMENT AGREEMENT 1 2 3 C! 5 6 7 8 9 10 11 12 13 14 15 16, 17 18 19 20 21 22 23 24 25 26 27 28 N. No Inducement. The Settling Parties warrant that no promise or inducement has been made or offered by the Settling Parties other than those set forth herein, and that this Agreement is not executed in reliance upon any statement or representation of any such Settling Parties, or their representatives. The Settling Parties further represent that they have been represented by legal counsel during the course of the negotiations leading to the signing of this Agreement, and that they have been advised by legal counsel with respect to the meaning of this Agreement and its legal effect. Dated: December 5, 2006 Dated: // 2006 Dated: , 2006 CITY OVHUNTINGTON BEACH, Plaintiff By: PENELOPE CULBRETH-GRAFT, City Administrator APPROVED AS TO FORM: By: SC TT F. FIELD, Assistant City Attorney COUNTY OF ORANGE Defendant By: APPROVED AS TO FORM: Dated: 12006 By: JOHN H. SHIMADA, ESQ. 22 SETTLEMENT AGREEMENT I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 N. No Inducement. The Settling Parties warrant that no promise or inducement has been made or offered by the Settling Parties other than those set forth herein, and that this Agreement is not executed in reliance upon any statement or representation of any such Settling Parties, or their representatives. The Settling Parties further represent that they have been represented by legal counsel during the course of the negotiations leading to the signing of this Agreement, and that they have been advised by legal counsel with respect to the meaning of this Agreement and its legal effect. Dated: 2006 Dated: , 2006 Dated: /.2 - 7 , 2006 Dated: 12-21 , 2006 CITY OF HUNTINGTON BEACH, Plaintiff By: PENELOPE CULBRETH-GRAFT, City Administrator APPROVED AS TO FORM: By: SCOTT F. FIELD, Assistant City Attorney C0fT9TY OF RANGE Defendant By: sccnAy 'S/ lU APPROVED AS TO FORM: Lo 22 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EXHIBIT A JENNIFER MCGRATH, City Attorney (Bar No. CA 179917) SCOTT F. FIELD, Assistant City Attorney (Bar No. CA 105709) Box 190, 2000 Main Street Huntington Beach, California 92648 Telephone: (714) 536-5555; Facsimile: (714) 374-1590 E-mail: sfield@surfcity-hb.org HAL D. GOLDFLAM, ESQ (Bar No. 179689) FRANDZEL ROBINS BLOOM & CSATO, L.C. 6500 Wilshire Boulevard, 17th Floor Los Angeles, CA 90048-4920 Telephone: (323) 852-1000; Facsimile: (323) 651-2577 E-mail: hgoldflam@frandzel.com Attorneys for Plaintiff CITY OF HUNTINGTON BEACH UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California and charter city duly created and existing under the laws of the State o California, Plaintiff, vs. HUNTINGTON BEACH POLICE OFFICERS ASSOCIATION, a California mutual benefit corporation, et al., Defendants. COMPANY, an Ohio corporation, Plaintiff, vs. HUNTINGTON BEACH POLICE OFFICERS ASSOCIATION; AMERICAN STATES INSURANCE COMPANY, a Washington corporation; and DOES 1 through 10, inclusive, Defendants. CASE NO. SACV 01-1125 JVS (ANx) [PROPOSED] ORDER AND JUDGMENT 23 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER AND JUDGMENT THE COURT HAS CONSIDERED THE FOREGOING Settlement Agreement by and between Plaintiff, City of Huntington Beach ("City") and Defendant and Third Party Defendant, County of Orange (the "County"). Upon consideration of the Settlement Agreement and the Motion to Approve the Settlement Agreement, the pleadings on file herein, and the arguments of counsel, IT IS HEREBY ORDERED, ADJUDGED AND DECREED, as follows: 1. The Motion to Approve the Settlement Agreement By and Between Plaintiff, City of Huntington Beach, and Defendant, County of Orange, is granted in its entirety. 2. The Settlement Agreement previously filed with the Court in Case No. 01-1125 is approved and adopted as the Judgment of this Court resolving Case No. 01-1125 as between the City and the County. The Court finds and decrees that there is no just reason for delay and accordingly directs the Clerk of the Court to enter this Order and Judgment as the Judgment of this Court. 3. The Settlement Agreement is fair and reasonable, both procedurally and substantively, and was and is made in good faith, pursuant to all relevant federal and state law including without limitation California Code of Civil Procedure Section 877 and 877.6, 42 U.S.C. § 9613, and federal common law. 4. The Settlement Agreement is in the public interest in that it avoids further expenditure of government funds on protracted litigation and makes funding available to resolve alleged environmental contamination at 18211 Gothard Street, Huntington Beach ("the Property") that is the subject of the action entitled City of Huntington Beach vs. Huntington Beach Police Officers Association, United States District Court, Case No. SACV 01-1125 JVS (ANX) (the "Action"). 5. Pursuant to federal and state law, including but not limited to California Code Civil Procedure Sections 877 and 877.6, 42 U.S.C. § 9613, and federal common law, the County is entitled to protection from, and is protected from any and all claims under federal, state or other law asserted against the County in the Action, 24 SETTLEMENT AGREEMENT 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or in any other proceeding (whether in equity, law or administrative), including, without limitation, claims for (1) the recovery of costs incurred including any interest thereon, and/or costs to be incurred in connection with preparing or implementing measures to clean up or abate Hazardous Substances (as that term is defined in the Settlement Agreement) at the Property that resulted from the operation of the Gun Range, (2) damages arising from or related to Hazardous Substances at the Property that resulted from the operation of the Gun Range, (3) statutory and equitable contribution and indemnification arising from or related to Hazardous Substances at the Property that resulted from the operation of the Gun Range, and (4) attorneys' fees and costs and expert costs and fees. Such claims shall also include, without limitation, all claims asserted by or that may be asserted by the Third Party Plaintiff, Huntington Beach Police Officers Association, and the other non -settling parties to the Action, or future parties to this Action or parties to other proceedings (whether in equity, law or administrative) brought against the County that arise from, relate to, or are connected with the subject matter of the Action and the Property and its alleged contamination. 6. As set forth in the Settlement Agreement, all claims, cross -claims, counterclaims, and/or third party claims asserted against the County by any and all parties in Case Nos. 01-1125 and 03-1124 are hereby dismissed with prejudice. All claims asserted against the City by the County, and all claims asserted by the County against any other defendants that may have settled pursuant to a comparable settlement agreement, are also hereby dismissed with prejudice. 7. All claims, cross -claims, counterclaims, or third party claims which have been, or could have been, asserted by any person or entity against the County in Case Nos. 01-1125 and 03-1124, including all claims described at paragraph 5 above, are hereby barred. 8. The Court shall retain jurisdiction over the Settling Parties and jurisdiction over the subject matter of Case Nos. 01-1125 and 03-1124 for purposes of enforcing the Settlement Agreement, and this Order and Judgment of Dismissal. 25 SETTLEMENT AGREEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. Except as otherwise provided herein, each Settling Party shall bear its own litigation costs and expenses, including attorneys' fees. Upon entry of the Order and Judgment of Dismissal, the City shall have the duty to defend and indemnify the County pursuant to the terms of the Settlement Agreement and Release. IT IS SO ORDERED AND JUDGMENT IS SO ENTERED. Dated: United States District Court Judge 26 SETTLEMENT AGREEMENT