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Home My WebLink About5I SEH Council Agenda Report Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: July 15, 2019 AGENDA #: 5I PREPARED BY: SARAH SCHWARZHOFF, CITY ATTORNEY PRESENTED BY: SARAH SCHWARZHOFF AGENDA ITEM: CONSIDER APPROVAL OF A SETTLEMENT AGREEMENT RESOLVING THE CITY’S CLAIMS AGAINST SEH RELATING TO THE 150TH STREET PROJECT GOAL AREA AND OBJECTIVE: Transportation & Mobility 1. Maintain quality local street system based on a financially stable plan that meets Overall Condition targets. DISCUSSION: Introduction The purpose of this agenda item is to request City Council approval of a settlement agreement with SEH relating to the 150th Street Project. Current Circumstances In 2014 through 2016 the City of Prior Lake and the City of Savage worked with MnDOT to complete the 150th Street Project. SEH was hired by the Cities to provide preliminary design, final design and construction services. The project has been completed but throughout the project it became clear that SEH had made numerous errors in providing its services. The City and SEH have engaged in numerous discussions and negotiations, including formal mediation, in an attempt to settle the City’s claims against SEH. SEH has made a “final offer” of $40,000 to settle all of the City’s claims. The City Council met in closed session to discuss the offer and recommended that the City Attorney negotiate a settlement agreement with SEH for Council consideration. If the City approves the proposed settlement agreement the City will receive $40,000 from SEH, in exchange the City will release all claims against SEH related to the 150th Street Project. FINANCIAL IMPACT: While the settlement does not cover all of the cost overruns incurred by the City for the project it does provide additional funds and does cover the City’s cost in relation to the negotiations, mediation and settlement. ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve a settlement agreement resolving the City’s claims against SEH relating to the 150th Street Project. 2. Motion and a second remove this item from the consent agenda for additional discussion. RECOMMENDED Alternative #1 ATTACHMENTS 1. Settlement Agreement SETTLEMENT AGREEMENT AND RELEASE THIS SETTLEMENT AGREEMENT AND RELEASE (“Agreement”) is fully effective as of June ___, 2019 (“Settlement Date”) and is entered into by the following Parties on behalf of themselves and their employees, representatives, commissioners, subrogees, insurers, sureties, attorneys, administrators, subcontractors, Project designers and consultants, successors, predecessors, assignees, directors, employees, elected officials, members, managers, officers, shareholders, agents, affiliated and parent corporations, and persons identified in interest with all of the foregoing (“Released Parties”): A. The City of Prior Lake (“City”); and B. Short Elliott Hendrickson, Inc. (“SEH”). The parties identified in Paragraphs A and B above are hereinafter collectively referred to as “the Parties.” RECITALS A. The City and SEH have a dispute regarding SEH’s plans and specifications used and services provided for a project known as the concept design, redesign, and re-routing of Trunk Highway 13 and 150th Street (“Project”); B. The City has claimed that SEH breached its contract and/or was negligent in the services it performed in the design and estimating of the Project; C. SEH has denied all the claims and damages alleged by the City arising out of the Project; and D. The Parties now desire to settle all of the Released Claims as that term is hereinafter defined. FOR GOOD AND VALUABLE CONSIDERATION, the Parties incorporate the recitals above by reference and agree as follows: 1. BINDING EFFECT. The terms of this Agreement shall be binding upon and be enforceable against and shall inure to the benefit of the Released Parties hereto jointly and severally, including successors and assigns of each. 2. RELEASE OF CLAIMS. A. In consideration of and upon SEH’s payment of $40,000.00 (Forty Thousand Dollars and No Cents) to the City, to be paid within thirty (30) calendar days of the date of this Agreement, the sufficiency of which is hereby acknowledged, the City and SEH hereby unconditionally release and forever discharge each other, and their respective officers, shareholders, members, elected officials, employees, directors, representatives, insurers, attorneys, agents, owners, successors and assign, from any and all claims/allegations that were communicated to the other up to the Settlement Date or which were known or should have been known by a party as of the Settlement Date , including specifically but not limited to the claims of the City outlined in the letter dated August 9, 2018 and attached hereto as Exhibit A. All of the claims released herein as described above are collectively referred to as the “the Released Claims.” The damages released by this Agreement shall include all damages, past, present or future, whether known or unknown, foreseen or unforeseen, arising out of the Released Claims. The City expressly reserves its rights to bring claims arising out of the Project that are not Released Claims. B. The Parties acknowledge that no promise or inducement has been made or offered except as set forth herein, that the Parties execute this Agreement without reliance upon representations or statements by anyone as to the nature and extent of the losses, injuries or damages or the possible consequences thereof. C. The Parties agree that if either Party to this Agreement brings a claim arising out of the Released Claims against any third party, and that claim results either directly or indirectly in a claim against either Released Party hereby, the Party bringing the claim against a third party shall indemnify, defend, and hold harmless such other Released Party from any claims asserted by such third party, including reasonable attorney’s fees and costs. 3. NO ADMISSION OF LIABILITY. The Parties recognize and agree that this settlement is the compromise of disputed claims and that the consideration accepted and paid hereunder is not intended nor shall it be construed by anyone to be an admission of liability by or on behalf of any of the Parties, by whom all such liability is expressly denied, said Parties intending by this settlement merely to avoid litigation and buy their peace. 4. ENTIRE AGREEMENT. The Parties further understand and agree that this document contains the entire Agreement between the Parties with respect to the Project, and that the terms of this Agreement are contractual and not a mere recital. By their signatures below the Parties each represent that it has carefully read this document, know and understand the terms and effect hereof, has fully discussed the terms and effect of this document with its attorneys, and has signed this Agreement as its free and considered act. This Agreement is subject to approval by the City of Prior Lake, and if executed signifies that the City has duly approved the Agreement. 5. EXECUTION OF AGREEMENT. This Agreement may be executed by the Parties in counterpart so that the collection of the counterparts shall constitute a fully executed and enforceable agreement. A facsimile copy of any execution of a counterpart shall have the same force and effect as if the same were an original. Each signatory hereto represents and warrants that they have the full, sufficient and continuing power, authorization and right to bind the Party to the terms of this Agreement on whose behalf their signature is affixed. 7. PAYMENT. Payment shall be made payable to the City of Prior Lake 4646 Dakota Street SE, Prior Lake, MN 55372. . Date: CITY OF PRIOR LAKE By: Its: Date: SHORT ELLIOTT HENDRICKSON, INC. By: Its: