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HomeMy WebLinkAbout1992-01-21; City Council; 11513; SettlementY CIT"~F CARMAD - AGEND.-WLL \B#- TITLE: MTQ. 1/21/92 DEPT. CA HOMES BY POLYGON V.CITY, N51309 SETTLEMENT OF LAWSUIT ENTITLED DEPT. HD. RECOMMENDED ACTION: It is recommended that the City Council authorize settlement of and authorize the this case by adopting Resolution No. 92 /K mayor to execute the Settlement Agreement and Mutual Release. - ITEM EXPLANATION This case arose when the developer of Vista Santa Fe sued the City for release of surety bonds following acceptance of the public improvements by the City and after the expiration of the one year developer warranty period. After pre-trial activities and discovery, the developer agreed to pay the City $12,500 to correct certain warranty defects and the City agreed to release the warranty bonds. The attached settlement agreement settles all claims arising under these bonds. This settlement is recommended by the City Engineer and City Attorney. FISCAL IMPACT Expenditures of staff time but no appropriations are necessary. EXHIBIT Resolution No. 7 2 - 18 Exhibit A - Settlement Agreement and Mutual General Release 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 RESOLUTION NO. 97 - 18 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA AUTHORIZING THE MAYOR TO EXECUTE THE SETTLEMENT AND RELEASE AGREEMENT TO SETTLE THE LAWSUIT ENTITLED HOMES BY POLYGON V. CITY OF CARLSBAD, N51309 WHEREAS, on recommendation of the City Attorney the City Council of the City of Carlsbad, California has determined that a settlement in the case entitled Homes by Polygon v. City is in the public interest; and WHEREAS, no funds will be necessary to settle this case, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the Mayor is authorized to sign the Settlement Agreement and Release which is hereby approved. 3. The City Clerk is authorized to release from the City of Carlsbad's files the originals of the five United Pacific Insurance Company Faithful Performance Bonds (Nos. U542188, U542185, U543054, U542192, and U542197) for Homes by Polygon Project CT 81-16, Units, 3, 4, 5 and 6 of Vista Santa Fe in the City of Carlsbad, California. 4. Aletha L. Rautenkranz, City Clerk, is authorized to sign the letter dated January 21, 1992 from the City of Carlsbad to Richard Pitt, Esq. and Mr. Peter Fjellstad regarding the full exoneration of United Pacific Insurance Comapny Faithful Performance Bonds (Nos. U542188, U542185, U543054, U542192, and U542197) for Homes by Polygon Project CT 81-16, Units 3, 4, 5 ant 6 of Vista Santa Fe in the City of Carlsbad, California and 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 transmit the originals of the five Faithful Performance Bonds identified in No. 3, above. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 21st day of January , 1992, by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Larson, Stanton and Nygaarc NOES: None ABSENT: None ATTEST: 2, City Clerk t City Clerk 2 SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE This Settlement Agreement and Mutual General Release ("Agreement") is entered into by and between Homes by Polygon, a California corporation ("HBP"), United Pacific Insurance Company, a Washington corporation ("UPIC"), on the one hand, and the City of Carlsbad, a California general law city (the "City"), on the other hand, and is intended by the parties hereto to settle fully and finally any and all obligations and/or differences between them, including, but in no way limited to, those differences embodied in the Complaint, Cross-Complaint, the five faithful performance bonds and the five Subdivision Improvement Agreements referred to hereinafter. E E c 1. T 4 L s: A. On or about December 7, 1984, HBP and the City entered into the first of five written Subdivision Improvements Agreements with respect to that portion of the residential Vista Santa Fe Project (the "Project") known as Carlsbad Tract 81-16, Unit 3, which agreement required HBP to install and complete certain designated public improvements ("Agreement 1"). Under the terms of Agreement 1, HBP was required to furnish a bond for the faithful performance of such improvements. On or about November 12, 1984, HBP furnished to the City Bond No. U54 21 85, in the amount of $317,700.00, issued by UPIC ("Bond 1"). True and correct copies of Agreement 1 and Bond 1 are attached hereto as Exhibit "A" and are incorporated by this reference. B. On or about November 12, 1984, HBP and the City entered into the second of five written Subdivision Improvement Agreements with respect to that portion of the Project known as Carlsbad Tract 81-16, Unit 4, which agreement required HBP to install and complete certain designated public improvements ("Agreement 2"). Under the terms of Agreement 2, HBP was required to furnish a bond for the faithful performance of such improvements. On or about November 12, 1984, HBP furnished to the City Bond No. U54 30 54, in the amount of $385,700.00, issued by UPIC ("Bond 2"). True and correct copies of Agreement 2 and Bond 2 are attached hereto as Exhibit "B" and are incorporated by this reference. C. On or about November 27, 1984, HBP and the City entered into the third of five written Subdivision Improvement Agreements with respect to that portion of the Project known as Carlsbad Tract 81-16, Unit 3, which agreement required HBP to install and complete certain designated public improvements ("Agreement 3"). Under the terms of Agreement 3, HBP was required to furnish a bond for the faithful performance of such improvements. On or about November 27, 1984, HBP furnished to the City Bond No. U54 21 88, in the amount of $266,800.00, issued by UPIC ("Bond 3"). True and correct copies of Agreement 3 and -2- Bond 3 are attached hereto as Exhibit "C" and are incorporated by this reference. D. On or about December 7, 1984, HBP and the City entered into the fourth of five written Subdivision Improvement Agreements with respect to that portion of the Project known as Carlsbad Tract 81-16, Unit 5, which agreement required HBP to install and complete certain designated public improvements ("Agreement 4"). Under the terms of Agreement 4, HBP was required to furnish a bond for the faithful performance of such improvements. On or about December 12, 1984, HBP furnished to the City Bond No. U54 21 92, in the amount of $99,000.00, issued by UPIC ("Bond 4"). True and correct copies of Agreement 4 and Bond 4 are attached hereto as Exhibit "D" and are incorporated by this reference. E. On or about December 27, 1984, HBP and the City entered into the fifth of five written Subdivision Improvement Agreements with respect to Carlsbad Tract 81-16, Unit 6, in the Project, which agreement required HBP to install and complete certain designated public improvements ("Agreement 5"). Under the terms of Agreement 5, HBP was required to furnish a bond for the faithful performance of such improvements. On or about January 2, 1985, HBP furnished to the City Bond No. U54 21 97, in the amount of $435,000.00, issued by UPIC ("Bond 5"). True and -3- correct copies of Agreement 5 and Bond 5 are attached hereto as Exhibit "E" and are incorporated by this reference. F. Bond 1, Bond 2, Bond 3, Bond 4 and Bond 5, inclusive, will hereinafter be referred to collectively as the "Bonds." Agreement 1, Agreement 2, Agreement 38 Agreement 4 and Agreement 5, inclusive, will hereinafter be referred to collec- tively as the "Subdivision Agreements." G. HBP filed a Complaint (the "Complaint") for Injunc- tive Relief, Specific Performance, Breach of Contract and Declaratory Relief entitled: po mes bv Polvuon v. The City o f Carlsbad, a nd Does 1 to 50 on May 13, 1991, in the San Diego County Superior Court, North County Branch, docketed therein as Case No. N51309 (the "Action"). The Complaint sought the com- plete exoneration of the Bonds held by the City under the Subdivision Agreements between HBP and the City. The City had previously released seventy-five percent (75%) of the value of the Bonds by letter dated June 14, 1989, as more particularly described in Paragraph 14 of the Complaint, which is incorporated by this reference. H. The City filed an Answer to the Complaint on July 18, 1991, contesting the allegations made by HBP. -4- I. The City filed a Cross-Complaint (the "Cross- Complaint") in the Action for Breach of Contract, Specific Performance, Indemnity and Declaratory Relief entitled: Citv o f Carlsbad v. Homes bv Polvuon. United Pacific Insura nce Coma nv and Does 1 throuuh 54 on July 18, 1991, in the Action. This Cross-Complaint sought either damages from HBP for alleged defects in the public improvements constructed by HBP under the Subdivision Agreements with the City or repair of the alleged defects. The Cross-Complaint also sought indemnity from UPIC, the surety of the Bonds, for the repair cost of the alleged defects. J. HBP and UPIC filed an Answer to the Cross-Complaint on September 5, 1991, contesting the allegations made by the City. K. HBP, UPIC and the City, in order to avoid the time, expense and uncertainty of continued litigation of the Action, have agreed to fully, finally and forever settle all of their differences, including the matters alleged in the Complaint, Cross-Complaint, the answers thereto, the Bonds and the Subdivi- sion Agreements, on the terms and in the manner set forth in this Agreement. -5- NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and good and valuable considera- tion, and intending to be legally bound, the parties hereto agree as follows: 1. Monetary Sett lement. Within 15 days of the execu- tion of the Agreement by the Mayor of the City of Carlsbad, HBP will pay to the City the total sum of Twelve Thousand, Five Hundred Dollars ($12,500.00) via a check for certified funds, delivered to counsel for City at the following address: Ronald R. Ball, Esq. Assistant City Attorney City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008-1989 The City will not negotiate the certifiecl check unt 1 the bwo Re- quests for Dismissal have been filed as described in Paragraph 2 and the Bonds have been exonerated as described in Paragraph 3. 2. Dismissal of the Co mDlaint and Cross-ComDlaint. Either upon approval of this Agreement by the City of Carlsbad City Council or the execution of the Agreement by the Mayor of the City of Carlsbad, whichever first occurs, the City will deliver to HBP a fully executed Request for Dismissal of the -6- Cross-Complaint, with prejudice, suitable for filing in the Action with the San Diego County Superior Court, North County Branch. The Request for Dismissal shall be delivered to HBP and UPIC's counsel at the following address: J. Craig Williams, Esq. Allen, Matkins, Leck, Gamble & Mallory 18400 Von Karman, Fourth Floor Irvine, California 92715 Upon receipt of the City's Request for Dismissal, HBP and UPIC will execute a Request for Dismissal of the Complaint, with prejudice, and thereafter file both Requests for Dismissal in the Act ion. 3. Release a nd Exonerat ion of the Bonds. Carlsbad, shall release and exonerate the Bonds from any and all remaining liability thereunder, as follows: Contemporaneously with the execution of this Agreement, the Mayor of the City of Carlsbad shall execute an original letter on the City of Carlsbad letterhead in substantially the same format and text as the letter attached hereto as Exhibit "F." Thereafter and at the same time as the City's delivery of the Request for Dismissal as described in paragraph 2, the City will deliver to HBP and UPIC's counsel the letter (Exhibit "F") and the originals of the five Bonds previously filed with the City of Carlsbad City Clerk pursuant to paragraph 4 of the Subdivision Agreements (Exhibits "A"-"E"). -7- 4. Mutual a nd Ge neral Releases . For and in considera- tion of the execution and delivery of this Agreement and the documents referred to herein, and of the mutual promises contained in this Agreement, HBP and UPIC on the one hand, and the City, on the other hand, hereby release, acquit, relieve and forever dis- charge each other and each of their respective predecessors, successors, heirs, assigns, employees, officers, directors, investors, shareholders, partners, partnerships, joint venturers, joint ventures, trusts, agents, representatives, consultants, attorneys, benefit plans, parent corporations, subsidiaries, divisions or affiliated entities, corporations or organizations, whether previously or hereinafter affiliated in any manner, from any and all claims, rights, actions, complaints, demands, causes of action (at law or in equity), suits, debts, indemnity or hold harmless obligations, liens, contracts, agreements, promises, liabilities, claims, demands, damages, losses, costs or expenses of any nature whatsoever, whether known or unknown, fixed or contingent, which the parties now have or may hereafter have arising from any matter, act or omission from the beginning of time to the last execution date of this Agreement, including, without limitation, the Project, Bonds, Subdivision Agreements, Complaint, Cross-Complaint and/or the Action. 5. Waiver of Civil Code Sect ion 1542. The parties hereto expressly waive and relinquish all rights and benefits they may have under Section 1542 of the Civil Code of the State of California. That Section reads as follows: -8- 2060/2JCW/H3994-117/11-18-91/~~ "w. release .I 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." [Certa in cla ims not a ffected by aeneral 6. Attorneys' Fees. Except as otherwise provided by this Agreement, the parties hereto agree to bear their own costs and attorneys' fees in connection with the Project, the Bonds, the Subdivision Agreements, Complaint, Cross-Complaint and/or the Action and all matters related to the execution of this Agreement. In the event that any action, suit or other proceeding is instituted to remedy, prevent or obtain relief from a breach of this Agreement, arising out of a breach of this Agreement, or pertaining to a declaration of rights under this Agreement, the prevailing party shall recover all of such party's attorneys' fees incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. Such attorneys' fees shall be deemed to mean the full and actual costs of any legal services actually performed in connection with the matters involved, calculated on the basis of the usual fee charged by the attorneys performing such services, and shall not be limited to "reasonable attorneys fees" as defined in any statute or rule of court. 7. Aareement Bindinu on and Benefits Success0 rs. This Agreement, and all the terms and provisions hereof, shall be binding upon and shall inure to the benefit of the parties and -9- their respective heirs, legal representatives, successors and assigns. 8. Governina Law. This Agreement shall be construed in accordance with and be governed by the laws of the State of California. 9. Severability. Should any portion, word, clause, phrase, sentence or paragraph of this Agreement be declared void or unenforceable, such portion shall be considered independent and severable from the remainder, the validity of which shall remain unaffected. 10. cou ntemarts. This Agreement may be executed in multiple counterparts, each of which shall be considered an original but all of which shall constitute one agreement. 11. Entire Aureement;. This Agreement constitutes the entire agreement between the parties and supersedes any and all other agreements, understandings, negotiations, or discussions, either oral or in writing, express or implied, relative to the matters which are the subject of this Agreement. The parties hereto acknowledge that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by any party hereto, or anyone acting on their behalf, which are not embodied in this Agreement, that they have not executed -10- this Agreement in reliance on any such representation, inducement, promise, agreement or warranty, and that no representation, inducement, promise, agreement or warranty not contained in this Agreement including, but not limited to, any purported supplements, modifications, waivers or terminations of this Agreement shall be valid or binding unless executed in writing by all of the parties. 12. No ImDlied Waiver. Failure to insist on compliance with any term, covenant or condition contained in this Agreement shall not be deemed a waiver of that term, covenant or condition, nor shall any waiver or relinquishment of any right or power contained in this Agreement at any one time or more times be deemed a waiver or relinquishment of any right or power at any other time or times. 13. Go nstruction. The parties to this Agreement, and each of them, acknowledge (i) this Agreement and its reduction to final written form is the result of good faith negotiations between the parties through their respective counsel, (ii) said counsel have carefully reviewed and examined this Agreement before execution by said parties, or any of them, and (iii) any statute or rule of construction that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. -11- 14. Warranty of Authority. Each party whose signature is affixed hereto in a representative capacity represents and warrants that s/he is authorized to execute this Agreement on behalf of and to bind the entity on whose behalf his/her signa- ture is affixed. The City of Carlsbad has authorized its Mayor, Claude A. Lewis, to sign this Agreement pursuant to City of Carlsbad Resolution No. 92-18 , dated January 21, 1992 . 15. IncorPoration of Recitals. The foregoing RECITALS are expressly made a part of this Agreement. IN WITNESS WHEREOF, the undersigned have executed this Settlement Agreement and Mutual General Release on the dates set forth hereinafter. HOMES BY POLYGON DATED : I 1991 By: , President UNITED QACIFIC INSURANCE COMPANY DATED : , 1991 By: Vice President By: -12- c 14. Warranty o f Authority. Each party whose signature is affixed hereto in a representative capacity represents and warrants that s/he is authorized to execute this Agreement on behalf of and to bind the entity on whose behalf his/her signa- ture is affixed. The City of Carlsbad has authorized its Mayor, Claude A. Lewis, to sign this Agreement pursuant to City of Carlsbad Resolution No. , dated 15. Incorporation of Recitals. The foregoing RECITALS are expressly made a part of this Agreement. IN WITNESS WHEREOF, the undersigned have executed this Settlement Agreement and Mutual General Release on the dates set forth hereinafter. HOMES BY PO GO a a1 fornia corporation 7 ‘fi 6, DATED : DATED : DATED : December 16 , 1991 , 1991 , 1991 By: J!bmELK UNITED PACIFIC INSURANCE COMPANY By: Wayne B. Anderson, Assistant Vice President CITY OF CARLSBAD By: Claude A. Lewis, Mayor -12-