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Home My WebLink AboutTRAVELERS CASUALTY & SURETY CO. - 2006-11-06 266 OCT 3 1 Rl 1: 25 Council/Agency Meeting Held: (o fSG C'ti 1c, , "�` Deferred/Continued to: E W,!T 1111 G T 0�141 r"=It �kAp r ved ❑ Conditionally Approved ❑ Denied tity erk's gnature It =10 Council Meeting Date: 11/6/2006 Department ID Number: PW 06-075 CITY OF-HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members 17 SUBMITTED BY: Jennifer McGrath, City Attorney s, PREPARED BY: Jennifer McGrath, City Attorney Robert F. Beardsley, PE, Director of Public Works-- SUBJECT: Approve agreement and appropriate funds for payment of general , release for completion of Overmyer Reservoir Statement of issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment] Statement of Issue: The original contractor for Overmyer Reservoir was unable to complete the project. The bonding company, Travelers Casualty & Surety Company (Travelers), provided a contractor to complete the construction. Agreement has been reached for settlement of claims and general release. Funding Source: Appropriate funds in the amount of $407,450 from the Water Master Plan fund balance 507.31100 to Overmyer Reservoir,Contingency Account No. 50791007.79100. Recommended Action: Motion to: 1. Approve and authorize the Mayor and City Clerk to execute the Agreement for Settlement of Claims and General Release 2. Appropriate $407,450 from the Water Master Plan Fund balance to complete the terms of the agreement. Alternative Action(s): Do not approve the agreement. REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 11/6/2006 DEPARTMENT ID NUMBER: PW 06-075 Analysis:" In 2002, the City Council awarded the construction'of Overmyer Reservoir to JW Contracting, Inc., as the lowest responsive, responsible bidder. Before completion of the project, the contractor filed for bankruptcy protection. The contractor had provided a performance bond through Travelers, who then arranged for completion of the reservoir. The City Attorney and legal counsel have negotiated a final agreement with Travelers to close' out the project and resolve all claims. This agreement will release Traveler's and the city from further obligations regarding the bonds for construction of Overmyer Reservoir. Included in the agreement is the requirement to make payment on or before December 1, 2006 Project contingency funds were returned to the Water Master Plan in September 2005. The bond`release is an unanticipated expense, and must be appropriated from the Water Master Plan fund balance. Environmental Status: Not applicable. Attachment(s): City Clerk's Page Number No. Description -77 ._, 1. Agreement between the City of Huntington Beach and Traveler's Casualty Insurance for Release of Bonds and Retention for Overmyer Reservoir 2. Fiscal Impact Statement, Water Master Plan -2- 10/31/2006 10:05 AM ATTACHMENT # 1 AGREEMENT FOR SETTLEMENT OF CLAIMS AND GENERAL RELEASE 1. PARTIES. This Agreement for Settlement of Claims and General Release ("Agreement")is entered into by and between CITY OF HUNTINGTON BEACH, a municipal corporation ("CITY") and TRAVELERS CASUALTY & SURETY CO. OF AMERICA, a corporation ("TRAVELERS") with respect to the following work of improvement: Overmyer Reservoir and Booster Pump Station Rehabilitation, CC 1104,Huntington Beach, California(the"Project"). 2. FACTUAL SETTING. On or about September 3, 2002, CITY entered into a written contract with J.W. Contracting Corporation ("JW") for the construction of the Project (the "Contract"). In accordance with the requirements of the Contract, TRAVELERS, as surety, provided the Payment and Performance Bonds to JW. During the course of the Project, JW filed for protection under the Bankruptcy Code and TRAVELERS engaged another contractor to complete the work described in the Contract. As a result thereof, TRAVELERS asserts that it has subrogation rights under the terms of the General Agreement of Indemnity ("GAI") entered into by TRAVELERS and JW as a condition to TRAVELER's issuance of bonds for the Project. At this time, the parties would like to "close-out" the Project and resolve any and all claims "arising from and/or related to the Project. NOW,THEREFORE,the parties agree as follows: 3. CONSIDERATION. CITY shall pay to TRAVELERS the sum of Four Hundred and Seven Thousand, Four Hundred Dollars and Sixty-One Cents($407,400.61) (hereinafter the"Settlement Sum") in full and complete satisfaction of any and all amounts due JW and/or TRAVELERS on the Project. The Settlement Sum shall be made payable by check to "Travelers Casualty & Surety Co. of America"and shall be directed to: Deana Norris Travelers Casualty& Surety Co. 33650 6`h Avenue South Suite 200 Federal Way, Washington 98003 The settlement sum shall be paid on or before the later of the following; (i) December 1, 2006; or(ii)within ten(10) days of CITY's receipt of an executed Agreement from TRAVELERS. l of 5 294341.3 4. GENERAL RELEASE. TRAVELERS for itself, its officers, directors and shareholders, does,hereby release and absolutely and forever discharge CITY and its officers,directors, agents, attorneys and employees of and from any and all claims, demands, damages, debts, receivables, liabilities, costs, expenses, actions and causes of action of every kind and nature, whether now known or unknown, suspected or unsuspected, which TRAVELERS now has, owns, asserts or holds, or which TRAVELERS may hereafter have, own, assert or hold, based upon the Project, whether related to or by reason of any contract (express, implied in fact,;or implied by law), trust, liability, stop notice, bond, matter, cause, thing, act or omission occurring or existing between said parties at any time prior to the date of this Agreement. 5. WAIVER OF SECTION 1542. TRAVELERS acknowledges TRAVELERS' awareness of Section 1542 of the Civil Code of the State of California,which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing ;the Release, which if known by him must have materially affected his settlement with the debtor. TRAVELERS waives and relinquishes any right or benefit which TRAVELERS has or which TRAVELERS may have under Section 1542 of the Civil Code of the State of California. 6. INDEMNIFICATION. In consideration of CITY making the payment set forth in Paragraph 3, TRAVELERS agrees to indemnify, defend and hold CITY harmless as a result of naming TRAVELERS alone as payee on the check or warrant for the settlement sum. TRAVELERS also releases all Stop:Notice Rights and agrees to indemnify, defend and hold CITY harmless from any and all claims asserted by any and all Stop Notice claimants per the terms of TRAVELERS Performance and Payment Bonds. 7. MUTUAL REPRESENTATIONS,COVENANTS AND WARRANTIES Each of the parties to this Agreement represents,warrants and agrees as follows: (a) Each party has received independent legal advice from its attorney with respect to the advisability of making the settlement provided for herein and the advisability of executing this Agreement. (b) Each party has entered into this Agreement freely and voluntarily and has made an investigation of the facts pertaining to this settlement, this Agreement and of all the matters relating thereto. 2of5 294341 3 (c) Each party or responsible officer or agent thereof has read this Agreement and understands the contents hereof. Each of the persons executing this Agreement on behalf of the respective parties is empowered to do so and thereby binds his respective party. Further, each party to this Agreement agrees to indemnify and hold the other harmless from any liability,; claim, demand, damage, expense and attorney's fees incurred by the other as a result of any person asserting that the person who executed this Agreement was not authorized to do so. (d) Each party hereto represents and warrants that there has been no assignment, sale or transfer, by operation of the law or otherwise,of any claim, right, cause of action,demand, obligation,liability or interest released or reserved by any of them as provided herein, 8. CONDITION PRECEDENT. The General Release, Waiver of Section 1542 and the promise to indemnify CITY (paragraphs 4, 5 and b)are expressly, conditioned on TRAVELERS' receipt of the Settlement Sum within the time parameters set forth in paragraph 3. This Agreement shall be null and void if TRAVELERS has not received payment within said time parameters. 9. MISCELLANEOUS, (a) This Agreement and the releases, payments and other terms provided for herein are made, executed, given and accepted as part of a compromise and settlement of disputed claims. No provision(s) of this Agreement, nor any acceptance of the benefits thereof by or on behalf of any of the parties hereto shall be construed or deemed to be evidence of any admission of fact, matter, thing or liability of any kind to any other party. Each of the parties hereto denies any liability of any kind to any other party for any purpose, and this settlement is made solely and entirely as"a compromise and for the purpose of fully and finally resolving the disputed matters referred to herein. Neither this Agreement nor any term(s) thereof shall be offered or received as evidence in any proceeding in any forum as an admission of any liability or wrongdoing on the part of any of the parties hereto. (b) Each party hereto shall be responsible for its own attorneys' fees and costs arising from and or related to the Contract and the Project and specifically waives any and all claims for the recovery of the same. (c) This Agreement and the exhibits hereto are the entire agreement between the parties with respect to the resolution of TRAVELERS' claims on the Project and supersedes any and all prior or contemporaneous oral and written agreements and discussions between or among any of them. The parties hereto acknowledge and agree that there are no conditions, covenants, agreements or understandings between or among any of them except as set forth in this Agreement. This Agreement may be amended only by a further signed writing. (d) This Agreement is binding upon and shall inure to the benefit of each of the parties hereto and their respective' parent companies, subsidiaries, affiliates, predecessors, 3 of 5 294341.3 1.b'31/lbbb 167:59 2539451559 ST PAUL TRAVELERS PAGE 05/06 successors, divisions, shareholders, directors, officers, employees, `attorneys, agents, representatives,heirs and:assigns, (e) This Agreement shall be governed, construed and enforced in accordance with the laws of the State of California,without regard to principles of choice of law. Venue for any action to enforce the terms of this Agreement shall be Orange County, California, (f) Each of the parties hereto has cooperated and participated in the drafting and preparation of this Agreement. Accordingly, the parties hereby acknowledge and agree that this Agreement shall not be construed or interpreted in favor of or against any parry by virtue of the identity of its preparer. (g) This Agreement may be executed in counterparts and when signed by each of the parties hereto with signed copies delivered to the other party, or their attorney, shall be deemed in full force and effect executed as set forth below, Dated: we e m b e n ,2006 CITY OF H�.'7�TING'fQT�'BEACH a Califomia municipal corporation Mayor ly REVI ED AND APPROVED: PPROVED A5 TO FORM: r City Administrator Cit Attorney b t7 � INITIATED AND APPROVED: Director of Public Works SIGNATURES CONTINUED ON NEXT PAGE 4of5 zx,a.� 10/31/2006 08:03 2539451559 ST PAUL TRAVELERS PAGE 06/06 Dated- October ,2006 TRAVELERS CASUALTY AND SURETY CO. OF AMERICA By: Name cw Title:_ tL,' APPROVED AS TO FORM: Dated: October 3 ! ,2006 WATT, TIEDER,HOFFAR&FiTZOERALD, LLP By:_ ROBERT NEISLEY Attorneys for TRAVELERS CASUALTY t& SURETY C O. OF AMERICA COUNTERPART 5 of S 794341 3 Dated: October 2006 TRAVELERS CASUALTY AND SURETY CO. OF AMERICA B • Y� Name: l� i Title: . APPROVED AS TO FORM: Dated: October , 2006 WATT,TIEDER, HOFFAR&FITZGERALD, LLP By: ROBERT NEISLEY Attorneys for TRAVELERS CASUALTY SURETY C O. OF AMERICA COUNTERPART 5of5 294341.3 ATTACH MEN T #2 CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: PENELOPE CULBRETH-GRAFT,DPA, CITY ADMINISTRATOR FROM: DAN T. VILLELLA, CPA, FINANCE DIRECTOR SUBJECT: FIS 2006-07-4 Agreement for Bond Release Overmyer Reservoir DATE OCTOBER 24,2006 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for"Agreement for Bond Release-Overmyer Reservoir." If the City Council approves this action (total appropriation$407,450) the estimated fund balance of the Water Master Plan Fund at September 30,2007 will be reduced to$36,942,000. Dan T. Villella Finance Director V r1) '4 2040 Main Street WATT, TIEDER, HOFFAR Suite 300 ' Irvine,CA 92614 FITZGERALD, LL.P Telephone:949-ss2-6700 ATTORNEYS AT LAW Facsimile:949-261-0771 www.wthf.com Robert C. Niesley- rniesley®wthf.com October 31, 2006 E E , Via Federal Express NOV 0 1 200 Paul D'Alessandro, Esq. Assistant City Attorney City of Huntington Beach City of Huntington Beach cityAttorney'soffice 2000 Main Street Huntington Beach, California 92648 Re: Phase 11 Overmyer Reservoir& Booster Pump Station Rehabilitation Principal: J.W. Contracting Corporation Bond Type: C.S. Performan File No.: 091-SC-TO301038-RG (Travelers) Our File No. 101963-16 Dear Mr. D'Alessandro: Pursuant to the request of Mr. Locher, enclosed please find two original Agreements for Settlement of Claims and General Release regarding the above- referenced matter signed by me. Travelers is sending its original signatures separately. Should you have any questions regarding the above, please do not hesitate to contact the undersigned. Very truly yours, WATT, TIEDER, HOFFAR & FITZGERALD, L.L.P. Robert C. Niesley RCN/Imf Enclosures cc: William D. Locher, Esq. (without enclosures) #109532v1 McLean, VA San Francisco, CA Washington, D.C. Florence, Italy Frankfurt, Germany TRAVELERS ELERS 33650 6th Avenue So.,Suite 200 Deana Norris Federal Way,WA 98003 Sr.Bond Claim Representative Travelers Bond Claim Phone:(253)943-5815 Fax:(866)842-9201 October 31, 2006 Paul D'Alessandro,Esq. NOV O 1 2006 Assistant City Attorney City of Huntington Beach 2000 Main Street rvity of Hunting' Beach Attorneys Office Huntington Beach,CA 92648 VIA OVERNIGHT MAIL, Re: SETTLEMENT AGREEMENT Bond No.: 086-SB-103373725 Principal: J.W.Contracting Corporation Obligee: City of Huntington Beach Project: Phase II Overmyer Reservoir & Booster Pump Station Rehabilitation Dear Mr.D'Alessandro: Enclosed please find two executed original copies of the Agreement For Settlement of Claims and General Release per the instructions`in Mr. William D. Locher's letter of October 30, 2006. Best Regards, ILt oil Deana Norris Enclosures Rev 04/25/05 C-09b CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK JOAN L. FLYNN CITY CLERK it November 17, 2006 Robert C. Niesley Watt, Tieder, Hoffar& Fitzgerald, LLP 2040 Main Street Irvine, CA 92614 Dear Mr. Niesley: Enclosed for your records is a copy of the Agreement for Settlement of Claims and General Release for Phase 2 Overmyer Reservoir & Booster Pump Station Rehabilitation. Sincerely; Joan L. Flynn City Clerk JF:pe Enclosure: agreement I G:fo1Iowup.agrmt(tr (Telephone:714536-5227) CITY OF HUNTINGTON BEACH 2000'MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK JOAN L. FLYNN CITY CLERK November 17, 2006 Travelers Casualty & Surety Co. 33650 6t"Avenue South Suite 200 Federal.Way, Washington 98003 Attn: Deana Norris Dear Ms. Norris.- Enclosed for your records is a duplicate original of the Agreement for Settlement of Claims and General Release for Phase 2 Overmyer Reservoir and Booster Pump Station Rehabilitation. Sincerely, Joan L. Flynn City Clerk JF:pe Enclosure: Agreement G:followup:agrmtltr (Telephone:714536-5227)