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HomeMy WebLinkAboutC-6349 - Settlement Agreement and Mutual Release of ClaimsT f'n Ki SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS This Settlement Agreement and Mutual Release of Claims ("Agreement") is entered into by and between: Big Canyon Country Club, a California nonprofit corporation ("Claimant") on the one hand, and City of Newport Beach, a California municipal corporation and charter city ("City") on the other hand. Claimant and City may be referred to singularly as "Party" and collectively in this Agreement as "Parties." RECITALS A. Claimant is located in Newport Beach, California and receives recycled water to irrigate the grass and plant material at its property. This water originates from the Orange County Water District ("OCWD") through a pipeline to a pump station located to the west of the golf course off of Jamboree Road. B. On July 26, 2011, the City and Claimant negotiated and entered into an agreement that outlined the ongoing recycled water purchase and use relationship ("Water Agreement"). This Water Agreement detailed what the City would charge Claimant for recycled water. Section 5 of the Water Agreement outlines that the price of recycled water shall not exceed the lower of: a) 80% of the potable water variable rate; b) the lowest rate then offered by City to any purchaser of recycled water; or c) the cost to City to provide and transport recycled water to the golf course as shall be reasonably analyzed and determined by the City from time to time. From August 2011 through September 2014, Claimant was charged water rates in accordance with option (a). At the time the Water Agreement was entered into, the rate in accordance with option (b) did not exist as no other rate was available, and the rate pursuant to option (c) had not yet been analyzed or determined. C. On August 12, 2014, a completed water rate study by HF&H Consultants, LLC ("HF&H") was presented to the City Council and a public hearing was conducted that concluded a forty-five (45) day public comment period in compliance with Proposition 218. The HF&H study recommended a revised rate structure that included a fixed fee component consistent with the amount generally paid by water users in the City, a commodity charge, and a pump station charge if the recycled water is provided by a pump station that is maintained by the City. In the absence of a majority protest from recycled water customers pursuant to Proposition 218, the City Council agreed that the recommended rate structure should be implemented, and the City Council introduced Newport Beach Municipal Code Chapter 14.13 "Recycled Rates Established" and adopted the Ordinance on September 9, 2014. D. On October 9, 2014, the recycled water rates in the City were lowered to those determined in the study results, based upon the City Council's adoption of Resolution 2014-78 A Resolution of the City Council of the City of Newport Beach Adding Recycled Water Rates to the City's Master Schedule of Fees, that removed the existing recycled water commodity rate and added the approved adjusted rates. Thus, the water rates charged to Claimant from October 9, 2014 onward include a charge for water commodity costs, a fixed rate and a pump station charge. E. Claimant acknowledges the appropriateness of the commodity cost and the fixed rate, but believes the Water Agreement does not authorize a pump station charge. F. On April 7, 2015, Claimant submitted a claim against the City of Newport Beach, dated March 31, 2015 ("Claim"), stating that, between the three (3) water rate options pursuant to Section 5 of the Water Agreement, the lowest of the three (3) possible rates is "(iii) [sic] the cost to City to provide and transport Recycled Water to the Site as shall be reasonably analyzed and determined by the City from time to time." Claimant states that it requested City to conduct an analysis of the cost to provide and transport recycled water to Claimant on or about the date of the Water Agreement ("Analysis"). The Analysis took approximately forty (40) months to complete and implement, which resulted in a reduction of the rate being charged to Claimant of approximately 50% of the charge imposed by the City from the date of the Water Agreement. Thus, Claimant claims it was overcharged for recycled water from the date of the Water Agreement to the date the rate reduction was implemented by the City in October 2014. Further, Claimant claims that the recycled water rates charged to Claimant were in violation of Proposition 218, because the City charged more for goods and services it provides than what those good and services cost. Claimant states that the City and its consultants failed to complete the Analysis in a timely fashion to the detriment of Claimant. Nonetheless, Claimant believes that date from which to calculate any damages should be the date of the Water Agreement because Claimant believes there was nothing that needed to be analyzed. NOW THEREFORE, for and in consideration of the mutual promises, representations, covenants and understandings contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the Parties agree as follows: AGREEMENT AND RELEASE 1. Consideration. a. The City Council of City shall consider, at a duly noticed public hearing, this Agreement to resolve any and all claims by Claimant described in the Claim and involving the rate charged by City in supplying recycled water to Claimant under the Water Agreement prior to the date hereof, including, but not limited to, any fees related to the pump station ("Released Claims"). b. If the City Council, in the exercise of its discretion, approves this Agreement, the City agrees to pay Claimant the total amount of Two Hundred Twenty Two Thousand Seven Hundred Seventy Dollars and 00/100 ($222,770.00) ("Settlement Amount") within fifteen (15) business days of the City Council approval. The Settlement Amount is based upon adjustments that would refund the appropriate funds to equal a nineteen and one-half (19 '/2) month settlement by subtracting the amount paid for water use and fixed charges from the middle of March 2013 to the end of October 2014 against the use and fixed rates established in the Analysis. In addition, commencing with the effective date of this Agreement, the City shall cease to include a pump station charge in the rate charged to Claimant as provided in the Water Agreement. C. If the City Council, in the exercise of its discretion, does not approve this Agreement, all terms of this Agreement shall be null and void and the Parties shall proceed with the Claim which is the subject of this Agreement. 2. Dismissal. Within three (3) business days after the receipt of full payment of the Settlement Amount as set forth in Section Lb, Claimant shall withdraw its Claim of March 31, 2015 submitted to the City, attached hereto as Exhibit 1. The City may issue a press release announcing the settlement of this matter, in a form that is reasonably acceptable to Claimant. 3. Effective Date. The Effective Date of this Agreement shall be the date that this Agreement has been signed by all the Parties. 4. Mutual Release of Claims. In exchange for the consideration set forth in this Agreement, the Parties, on behalf of themselves and any associated persons or entities, their successors and assigns, current and former employees, directors, officers, agents, representative, insurers, subrogors, and subrogees, do fully and forever release and discharge one another and their respective representatives, predecessors, and successors in interest, heirs, assigns, and their past, present and future principals, officers, directors, shareholders, servants, members, partners, subsidiaries, affiliated companies, insurers, agents, former and current employees, employers, assignees, devisees, representatives, experts and attorneys from the Released Claims, and relinquish any and all known and/or currently existing claims, demands, obligations, consequential damages, general damages, express or implied obligations, indemnity, liabilities, costs, losses, expenses, and compensation, whether based on tort, contract, or other legal or equitable theories of recovery arising from or relating in any way, known or unknown, asserted or unasserted, contingent or non - contingent, suspected or unsuspected that the Parties had or may acquire, arising out of the Released Claims. Waiver of California Civil Code Section 1542. The Agreement includes a release of future and unknown damages arising out of or related to the Released Claims. The Parties represent, acknowledge, and agree that they have been informed of, have read, are familiar with, understand, and do hereby expressly waive, all rights that they have or may have under Section 1542 of the California Civil Code. Section 1542 provides as follows: 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. In waiving all rights and protections afforded by California Civil Code Section 1542 and similar rights, the Parties acknowledge that, after the date of this Agreement, they may discover facts different from or in addition to the facts they now know or believe to be true with respect to the Released Claims. The Parties agree that these releases shall be and remain in effect as complete, general and mutual releases, notwithstanding any such different or additional facts. Further, the Parties expressly acknowledge that there is a risk that they have or may have claims or causes of action against a Party of which they are currently unaware, and that they may incur, suffer or sustain injury, loss, damage, costs, attorneys' fees, expenses, or any of these, as a result of actions or omissions of a Party which are currently unknown or unanticipated at the time this Agreement is executed, or which are not presently capable of being ascertained. The Parties further acknowledge that there is a risk that the damages that are presently known may become more serious than they now expect or anticipate. Nevertheless, the Parties expressly acknowledge that this Agreement has been negotiated and agreed upon in light of those realizations and that the general releases provided and waiver of all rights under California Civil Code Section 1542 is an essential and material term of this Agreement. Each Party has had the opportunity to confer with legal counsel concerning this waiver, and knowingly and voluntarily waives its rights as set forth herein. 5. No Admission of Liabilitv. In entering into this Agreement, no admission of liability, responsibility or wrongdoing of any kind is made or should be inferred with respect to the Parties related to this action. In making this Agreement, the Parties to this Agreement do not admit the sufficiency of any claims, allegations, assertions, contentions or positions of any other party, or the sufficiency of any defenses to any such claims, allegations, assertions, contentions, or positions. In making this Agreement, the Parties agree that the covenants and releases comprising this Agreement are not intended to be admissions or concession of any liability whatsoever on the part of the Parties. This Agreement is and represents a compromise of disputed claims by and between the Parties, and their execution of this Agreement is not intended to and shall never constitute nor be construed as an admission of wrongdoing or liability by any Party. Any such wrongdoing or liability is expressly denied by each Party. 6. No Assignment. Each Party represents and warrants that they are the legal owners of the Released Claims and that they have the authority to release those claims with respect to and on behalf of their predecessors, heirs, executors, administrators, successors and assigns. Each Party farther represents and warrants that no Released Claim has been conveyed, assigned or otherwise transferred to any third party, including by way of subrogation or operation of law or otherwise, and that it is the legal and beneficial owner of all Released Claims. In the event that any Released Claim should be made or instituted against a Released Party hereto because of any such purported or actual assignment, subrogation, or transfer, or any such purported or actual claim not stated herein, each Party agrees to indemnify and hold harmless the released Party against such Released Claims, including necessary and reasonable expenses of investigation and attorneys' fees and costs. 7. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, and each of their respective executors, administrators, representatives, successors, assigns, devisees, partners, parents, subsidiaries, affiliated and related entities, officers, directors, principals, and agents. 8. Governing Law. This Agreement shall be construed in accordance with and governed in all respects by the laws of the State of California without regard to conflict of law principles. Venue shall be in the County of Orange. 9. Integration. This Agreement constitutes a single, integrated written contract expressing the entire agreement of the Parties hereto relative to the subject matter hereof. No covenants, agreements, representations or warranties of any kind whatsoever have been made by any Party hereto which have been relied upon by any other Party or which acted as an inducement for any other Party to enter into this Agreement. All prior discussions, negotiations and agreements, whether written or oral, have been and are merged and integrated into, and are superseded by, this Agreement. 10. Modification. No modification or amendment of this Agreement shall be of any force or effect unless in writing and executed by each Party that would be affected by the modification or amendment. 11. Counterparts. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. A signature page transmitted by email (as a PDF attachment) or facsimile shall be deemed and treated as an original for all purposes. 12. Incorporation of Recitals. The recitals set forth above are incorporated in this Agreement as if fully set forth herein. 13. Attorneys' Fees and Costs. Each Party agrees that it shall bear its own attorneys' fees and costs incurred in the prosecution, defense, settlement, and dismissal of the Action and the preparation of this Agreement. 14. Representation by Counsel. Each Party acknowledges and agrees that it has had a reasonable opportunity to discuss this Agreement with its counsel. Each Party farther represents and warrants that it has the authority and capacity to execute this Agreement, does so knowingly and voluntarily, and does so in the absence of any mistake, duress or coercion. Each Party also acknowledges and agrees that the provisions of this Agreement have been fully negotiated by the Parties and their counsel, and no statute or rule of interpretation requiring construction against the drafter of the contract shall apply to this Agreement. 15. Authority. Each of the individuals executing this Agreement represents and warrants that he or she has the authority to enter into this Agreement on behalf of the entities below. 16. Severability. In the event that any provision of this Agreement (other than Section 1) or the application thereof is held invalid, the invalidity shall not affect the remaining provisions of this Agreement that can be given effect without the invalid provisions, which shall remain in full force and effect. 17. Joint Product. This Agreement is the product of bargained -for, arms - length negotiations between the Parties and their counsel, and shall not be construed for or against any Party or its representative(s). 18. Signature on Behalf of a Corporation. Any corporation signing this Settlement Agreement represents and warrants that such execution is in compliance with any required resolution of its Board of Directors, duly adopted at a meeting of such Board of Directors. Any individual signing this Settlement Agreement on behalf of another individual, a corporation or a partnership represents and warrants that he or she has full authority to do so. 19. Sole Holder of Claims. The Parties represent and warrant that they are the sole holder of the claims released in this Agreement and that this representation constitutes a material inducement for Parties to enter into this Agreement. 20. Representations. The Parties represent that they have not sold, transferred, conveyed, assigned, hypothecated and/or subrogated any of the rights or claims released herein. 21. Good Faith Settlement. The Parties acknowledge, stipulate, and agree that this Agreement has been entered into in good faith, as defined in Code of Civil Procedure Section 877.6, without any fraud, collusion or duress. 22. No Third Party Beneficiaries. No third party beneficiaries, with exception to those identified as "Parties" in this Agreement, are created or intended to be created by the provisions of this Agreement, and any such intention is expressly disclaimed by the Parties. 23. No Other Lawsuits or Complaints. Other than the claims identified above, the Parties verify that they have not filed any other civil claims against each other as of the date of signing this Agreement. In addition, the Parties promise never to initiate, request or file any future claims, actions, lawsuits or any other legal proceeding with any court or tribunal or to file any charge or complaint with any government agency against each other, asserting any claim that is released in this Agreement. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE AND WAIVER OF ALL KNOWN AND UNKNOWN CLAIMS. THE SETTLING PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT AND ARE VOLUNTARILY ENTERING INTO IT. IN WITNESS WHEREOF, the undersigned have executed this Agreement and mutual release on the date affixed by their signatures. Dated: October—, 2015 City of Newport Beach, a California municipal corporati9n and charter city By:`-S.nzV,, Edward D. Selich Mayor Dated: October f 2015 Big Canyon Country Club, a California nonprofit corporation By:_,�� /ter Name: Its: 7 c By: L Name: Mae �. �itve AFF Its: APPROVED AS TO FORM CITY OF NEWPORT BEACH: Dated: Octobers 2015 ATTEST: CITY OF NEWPORT BEACH Dated: October Gv, 2015 By: Aaron C. arp City Attorney for City of Newport Beach �y: 4� X. Leilani I. Brown City Clerk for City of Newport Beach EXHIBIT 1 ID CLAIM AGAINST THE CITY OF NEWPORT BEACH (FOR DAMAGES TO PERSONS OR PERSONAL PROPERTY ALLOWABLE UNDER THE CALIFORNIA GOVERNMENT CODE -TORT CLAIM ACT) Received by_ via U.S. Mail ❑ Inter -Office Mail ❑ Counter ❑ (FAX Not Accepted) CLERK'S DATE a: TIME STAMP A claim must be filed with the City Clerk of the City of Newport Beach Within 6 months after which the incident or event occurred. Be sure your claim is against The City of Newport Beach, not another public entity. Where space is insufficient, please use additional paper and identify information by paragraph number. Complete claims must be mailed or delivered to: The City Clerk, City of Newport Beach, City Hall 100 Civic Center Drive, P.O. 1768, Newport Beach, CA 92658-8915. Type or print in blue or black ink (no pencil). This document is a public record and may be posted on the internet. TO THE HONORABLE MAYOR AND CITY COUNCIL, The City of Newport Beach, California The undersigned respectful ly submits the following claim and information relative to damage to persons and/or personal property: 1. NAME OF CLAIMANT: Big Canyon Country Club a. ADDRESS OF CLAIMANT: One Big Canyon Drive, Newport Beach CA 92660 STREET ADDRESS Crr'Y,STATE ZIP CODE b. PHONE NO.: (949) 644-5404 c. DATEOFBIRTH: d. DRIVER'S LIC. Mailing Address: 2. Name, telephone and post office address to which claimant desires notices To be sent if other than above: 3. Occurrence or event from which the claim arises a. DATE: N/A b. TEO& c. PLACE (exact and specific location): d. How and under what circumstances did damage or injury occur? Specify the particular occurrence, event, act or omission you claim caused the injury or damage (use additional paper if necessary): See Attached e. Names and addresses of all witnesses to this incident: N/A f. What particular action by the City, or its employees, caused the alleged damage or injury? See Attached GUTAIMFORM-1106 g. Names of City employees involved: N/A h. Give the names of any other party or parties involved in causing the alleged injury and/or damage: N/A 4. Give a description of the injury, property damage or loss, so far as is known at the time of this claim. If there were no in pries, state "no injuries." o Injuries S. Name and address of any other person injured for which you arc the parent or legal guardian: N/A 6. Name and address of the owner of any damaged property: 7. The amount of damages you are requesting to resolve your claim: See Attached a. Amount claimed as of this date: S b. Estimated amount of future costs: $ c. Total amount claimed: S d. Basis for computation of amounts claimed (include copies of all bills, invoices, estimates, etc.): Names and addresses of all hospitals, doctors, medical providers (physical therapy), etc. N/A a. b. C. d. 9. Any additional information that might be helpful in considering your claim: IF FAILURE TO PROVIDE ANY OF THE ABOVE INFORMATION MAY RESULT IN THE RETURN OF YOUR CLAIM FOR INSUFFICIENCY AND MAY UNECESSARR,Y DELAY THE CITY'S PROMPT RESPONSE TO YOUR CLAIM. WARNING: IT IS A CRIMINAL OFFENSE TO FILE A FALSE CLAIM! (Penal Code §72; Insurance Code §556.1) I have read the matters and statements made in the above claim and I know the same to be true of my own knowledge, except as to those matters stated upon information or belief and as to such matters I believ7rt me to be true. I certify under penalty of perjury that the foregoing is TRUE and CORRECT. Signed this 3 / day of March __2015 at ?lewpSeach Office of the City Clerk l y j " rn// ,, Newport Beach, California T CLAIMANTS SIGNATURE David Voorhees, General Manager OLCLAIMFORM-1103 Claim Against City of Newport Beach March 16, 2015 3 d. The City and the Claimant are parties to that certain Agreement for Delivery and Sale of Recycled Water to Big Canyon Country Club dated July 26, 2011 (the "Water Agreement'). Pursuant to sections of the Water Agreement, the Claimant is obligated to pay the City for recycled water used by the Claimant at a rate that is the lower of (i) 80% of the cost of potable water; (ii) the lowest rate charged by the City to other recycled water users in the City or (iii) "the cost to the City to provide and transport Recycled Water to the Site as shall be reasonably analyzed and determined by the City from time to time." The lowest of those three possible rates is the rate In (iii). Claimant requested that the City conduct an analysis of the cost to provide and transport recycled water to Claimant on or about the date of the Water Agreement (the "Analysis"). The Analysis took approximately 40 months to be completed and implemented. The Analysis resulted in a reduction of the rate being charged to the Claimant of approximately 50% of the charge Imposed by the City from the date of the Water Agreement. Based upon the facts presented, Claimant claims that Claimant was overcharged for recycled water from the date of the Water Agreement to the date the rate reduction was implemented by the City in the fall of 2014. Further, under Proposition 218, the City is restricted from charging more for goods and services it provides than what those good and services cost. The City's own analysis established the rate was significantly higher than it should have been. 3. f. The City and its consultants failed to complete the Analysis in a timely fashion to the detriment of Claimant which delay had the result of redounding to the benefit of the City. Therefore, the failure to honor the claim of Claimant would have the result of the City receiving a windfall because the amount R charged for recycled water exceeded the cost to the City of procuring recycled water. 7. Damages can only be ascertained by applying the water rate as adjusted in the fall of 2014 to the water usage from a date the City should have completed and implemented the Analysis. Claimant believes that date should be the date of the Water Agreement because Claimant believes there was nothing that needed to be analyzed for two reasons: First, there is no transportation cost in bringing recycled water to the Claimants property since it is transported in pipes not owned or maintained by the City, and second, the cost of recycled water to the City is the amount charged by the City's provider of that recycled water (Orange County Water District), which sets the rate from time to time.