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HomeMy WebLinkAbout2005-10-11; City Council; 18306; Settlement La Costa de Marbella HOA v CityCITY OF CARLSBAD - AGENDA BILL AB# 18,306 MTG, 1011 1/05 c, k 0 P a, k a, si c, a a, c, P a, u u a d .d u C 5 0 u In 0 I I 0 4 d d .- s 2 8 CI - .- 0 c 3 TITLE: REPORTING OUT THE TERMS AND CONDITIONS OF THE SETTLEMENT AS REQUIRED BY THE BROWN ACT IN LA COSTA DE MARBELLA HOMEOWNER’S ASSOCIATION V. CITY OF CARLSBAD, GIC 822967 1 DEPT. HD. CITY ATTY. CITYMGR. a I RECOMMENDED ACTION: There is no action the Council needs to take. ITEM EXPLANATION: The parties have now settled this lawsuit under the authority given to the City Attorney by the City Council at its closed session of August 9, 2005, and it has been dismissed. This item satisfies the Brown Act requirement to report the fact of a settlement of litigation approved in a prior closed session, and makes the terms and conditions of the settlement available to the public. FISCAL IMPACT: The cost to the City is $250,000. EXHIBITS: 1. Settlement Agreement DEPARTMENT CONTACT: Ronald R. Ball, (760) 434-2891 I SETTLEMENT AGREEMENT This Settlement Agreement (“Agreement”) is made and entered into effective as of the date of last signature on this Agreement by and between the La Costa de Marbella Homeowners’ Association (“HOA”) and the City of Carlsbad (“City“), with reference to the following facts: RECITALS A. On or about December 18,2003, the HOA filed a lawsuit against the City entitled La Costa de Marbella Homeowners’ Association v. Citv of Carlsbad, San Diego County Superior Court Case No. GIC 822967. The complaint alleged that on February 13,2003, a storm drain owned by the City, located within an easement that crossed the HOA’s property, ruptured, causing damage to property at the La Costa de Marbella condominium complex. The HOA further alleged that water escaping from the storm drain had previously caused earth movement in a slope located on the south border of the La Costa de Marbella condominium complex, requiring the expenditure of approximately $500,000 to repair the slope and affected condominium units. (This lawsuit is referred to herein as the “Storm Drain Lawsuit”.) The Complaint alleged causes of action against the City based on construction defect, negligence, inverse condemnation and nuisance. The City has denied the allegations of the Storm Drain Lawsuit, and denies that it bears liability for the HOA’s alleged damages. B. In or about February and/or March, 2005, a landslide occurred at the La Costa de Marbella condominium complex, which has resulted in major damage and non-habitability of eight (8) condominium units and has also resulted in damage to a portion of the City’s right of way on La Costa Avenue. On or about May 11,2005, the City and the HOA entered into an Agreement Regarding Abatement of Earth Movement (“Abatement Agreement”), whereby the City agreed to perform certain landslide Page 1 of 13 abatement work to stabilize the toe of the landslide. The Abatement Agreement is incorporated herein by this reference. C. Also on or about May 11 , 2005, the City and the HOA entered into a Mediation Agreement (“Mediation Agreement? whereby it was agreed, among other things, that the City would receive a credit for the cost of its work under the Abatement Agreement against any judgment that the HOA may obtain against the City with respect to the landslide. The Mediation Agreement is incorporated herein by this reference. D. On or about July 11,2005, the HOA filed a lawsuit against the City entitled La Costa de Marbella Homeowners’ Association v. Citv of Carlsbad. San Diego County Superior Court Case No. GIC 850408. The complaint alleged that the City breached the Abatement Agreement and Mediation Agreement, and that the City’s water system was a substantial factor in causing the landslide. (This lawsuit is referred to herein as the “Landslide Lawsuit”.) The Complaint alleged causes of action based on declaratory relief and inverse condemnation. The City denies the allegations of the Landslide Lawsuit. E. On or about July 22,2005, the City and the HOA entered into a Reinstatement Agreement (“Reinstatement Agreement*), reinstating the Abatement Agreement and the Mediation Agreement. The Reinstatement Agreement is incorporated herein by this reference. F. The City is prepared to commence construction on a retaining wall along La Costa Avenue pursuant to the terms of the Abatement Agreement, Mediation Agreement and Reinstatement Agreement. In mediation between the parties, the parties have agreed to settle the Storm Drain Lawsuit on the terms set forth in this Settlement Agreement, and have agreed that the HOA shall demolish the condominium units damaged by the landslide and perform certain grading work proposed by the HOA. Page 2 of 13 AGREEMENT NOW THEREFORE, in consideration of the foregoing, the parties do hereby agree as follows: The parties understand and agree that the execution of this Agreement constitutes a compromise of disputed claims involving legal and factual questions and is not to be construed as an admission of liability by any party. It is the desire and intention of the parties to effect a final settlement and resolution of all existing disputes and claims, regardless of their nature, arising out of the Storm Drain Lawsuit. A. IMPLEMENTATION 1. The City hereby agrees to pay $250,000 to the HOA as follows: a. The City shall remit the settlement funds to the Fund Control defined below in Section B of this Settlement Agreement per the following schedule: i. .. ll. iii. iv. The sum of $100,000 shd be paid upon execution of this Agreement. The sum of $50,000 shall be paid upon proof of the HOA’s execution of a contract for the demolition of the damaged condominiums pursuant to Paragraph A.2.c of this Settlement Agreement. The sum of $50,000 shall be paid upon proof of the HOA’s execution of a contract for regrading pursuant to Paragraph A.2.d of this Settlement Agreement. The sum of $50,000 shall be paid upon proof of the completion of the demolition and regrading work referred to Page 3 of 13 in Paragraphs A.2.c and A.2.d of this Settlement Agreement. b. This payment shall be allocated as follows: i. The sum of $100,000 shall be consideration for settlement of the Storm Drain Lawsuit. The sum of $150,000 shall be a credit in favor of the City against any settlement or judgment obtained by the HOA in the Landslide Lawsuit. The sum of $150,000 shall be deemed a “Cost” as that term is defined in Paragraph 2 of the Mediation Agreement. As provided in the Abatement Agreement, “the City of Carlsbad shall have a credit against any settlement or judgment rendered against the City of Carlsbad in favor of the HOA in either the pending lawsuit between the parties and/or any lawsuit relating to earth movement for its Costs.. . .” The Mediation Agreement, Abatement Agreement and Reinstatement Agreement contain other and further provisions regarding the City’s recovery of such Costs, which provisions shall apply to the $150,000 payment by the City to the HOA under the terms of this Settlement Agreement. .. u. c. The parties acknowledge that a Notice of Lien has been fded and served on each party by Naumann, Levine and Silldorf, prior attorneys for the HOA. The City’s payment obligation is contingent upon the withdrawal or expungement of any lien(s) on the settlement payments. If any known liens are not expunged or withdrawn, the City will be required to hold payment until such Page 4 of 13 2. withdrawal or expungement, or alternatively, the City may make the payment jointly to the HOA and to the lien claimant(s). The HOA agrees to perform each of the following: a. b. The HOA shall dismiss with prejudice the Storm Drain Lawsuit. The HOA shall dismiss with prejudice the First Cause of Action for Declaratory Relief of the Landslide Lawsuit. This shall not affect any other claims or remedies that the HOA may have against the City with respect to the Landslide Lawsuit. The HOA shall obtain all necessary and appropriate permits and contract with a licensed demolition contractor for the demolition of the damaged condominium buildings at the La Costa de Marbella condominium complex and removal of the debris from such demolition. 1. c. Said condominium buildings are commonly designated as 2405A, B, C and D La Costa Avenue and 2707A, B, C and D La Costa Avenue, Carlsbad, California. The demolition contractor shall be paid in accordance with the Fund Control provisions set forth below. The demolition contractor shall coordinate this demolition work with the City’s contractors that are constructing the retaining wall at the toe of the slope adjacent to La Costa Avenue pursuant to the terms of the Abatement Agreement and Reinstatement Agreement. The HOA agrees that any delay in the City’s construction of the retaining wall caused by the HOA’s demolition of the damaged condominiums shall not be deemed a breach of ii. iii. iv. Page 5 of 13 the Abatement Agreement, Mediation Agreement or Reinstatement Agreement. The City agrees to expedite the processing of any plans and permit applications submitted by the HOA for the demolition work described herein. v. @ The City agrees that the permit fees charged to the HOA and/or its contractor by the City of Carlsbad for the demolition work described herein shall not exceed $2,000.00. d. The HOA shall obtain all necessary and appropriate permits and contract with a licensed grading contractor for the regrading of the landslide scarp at the La Costa de Marbella condominium complex, in accordance with plans developed by and at the direction of the HOA’s geotechnical engineer, American Geotechnical. 1. The grading contractor shall be paid in accordance with the Fund Control provisions set forth below. The grading contractor shall coordinate this grading work with the City’s contractors that are constructing the retaining wall at the toe of the slope adjacent to La Costa Avenue pursuant to the terms of the Abatement Agreement and Reinstatement Agreement. The HOA acknowledges that the City makes no warranty, express or implied, or opinion as to whether the regrading work will in any manner strengthen the slope, improve drainage, prevent the intrusion of water into the slide .. u. iii. Page 6 of 13 plane, or otherwise prevent or inhibit further landslide activity at the site. The City agrees to expedite the processing of any plans and permit applications submitted by the HOA for the grading work described herein. iv. e. In the event that the settlement funds paid by the City pursuant to this Settlement Agreement are insufficient to pay for the full cost of the demolition and regrading referred to in Paragraphs A.2.c and A.2.d of this Settlement Agreement, the HOA shall pay the remaining balance and shall defend and hold the City harmless from any claims asserted by the HOA’s demolition or grading contractors. B. FUNDCONTROL 1. The parties agree to establish a Fund Control for the receipt and disbursement of the settlement funds. The City of Carlsbad shall remit the settlement funds to the Law Offices of Patrick E. Catalano, who shall act as the Fund Control and retain the settlement funds in a client trust account until the completion of the demolition and grading work referred to in Paragraphs A.2.c and A.2.d of this Settlement Agreement. The Fund Control may pay funds out of the settlement funds to the contractors referred to in Paragraphs A.2.c and A.2.d of this Settlement Agreement on the following conditions: a. 2. 3. The HOA’s geotechnical engineer, American Geotechnical, certifies that the work covered by the payment application has been performed in a satisfactory manner; Page 7 of 13 C. b. Counsel for the City is provided a copy of the payment application not less than two (2) business days prior to the date that payment is to be made; and No objection to the payment application is made by the City prior to the payment. c. 4. In the event that objection is made by the City to a payment application, the matter shall be immediately submitted to Mike Roberts, who shall make the hal determination as to whether the payment application should be paid. Upon completion of the demolition and grading work referred to in Paragraphs A.2.c and A.2.d of this Settlement Agreement and upon certification from all contractors confirming that they have been paid in full for said work, any funds remaining subject to the Fund Control shall be released to the HOA. 5. RELEASE OF CLAIMS 1. In consideration of the settlement of the above litigation and in consideration of the covenants, promises, terms, and conditions herein, the HOA, on behalf of itself and its members, fully releases and forever discharges the City and its former and present councilmembers, employees, successors, predecessors, assigns, ajates, attorneys, insurance companies, and agents, past and present, and each of them, hereinafter collectively referred to as "Releasees," of and from any and all claims, actions, causes of action, demands, rights, damages, losses, costs, attorneys' fees, loss of profits, expenses, and compensation whatsoever, which the parties now have or which may here after accrue, on account of or in any way growing out of any and all known and unknown and foreseen and unforeseen losses and damages and Page 8 of 13 consequences resulting or which may result from the incidents and matters pertaining to the Storm Drain Lawsuit entitled La Costa de Marbella Homeowners' Association v. City of Carlsbad, designated as San Diego County Superior Court case number GIC822967, and the HOA specifically releases and acknowledges full satisfaction of any obligation on the part of the entity and persons herein released. The HOA acknowledges that there is a risk that subsequent to the execution of this Agreement, it may discover, incur or suffer claims which were unknown or unanticipated at the time this Agreement is executed, including, without limitation, unknown or unanticipated claims which arise from, are based upon, or are related to the Storm Drain Lawsuit entitled La Costa de Marbella Homeowners' Association v. Citv of Carlsbad, designated as San Diego County Superior Court case number GIC822967, or some part or aspect thereof, which if known by the HOA on the date of this Agreement being executed, may have materially affected the HOA's decision to execute this Agreement. The HOA expressly assumes the risk of such unknown and unanticipated claims and agree that this Agreement applies to all such unknown claims. The HOA acknowledges that it is familiar with Section 1542 of the California Civil Code, which provides as follows: 2. 3. "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 to him, must have materially affected his settlement with the debtor." Page 9 of 13 The HOA hereby waives and relinquishes all rights and benefits which it has or may have under Section 1542 of the California Civil Code, or the law of any other state or jurisdiction to the same or similar effect to the fullest extent that each may lawfully waive all such rights and benefits pertaining to the subject matter of this Agreement. In executing this Agreement, the parties have consulted with and had the advise of counsel or an attorney duly admitted to practice in the State of California and that the parties execute this Agreement after independent investigation and without fraud, duress, or undue influence. The HOA has not assigned or otherwise transferred or subrogated any interest in any claims which are the subject matter hereto and which it may have against the City and agrees to defend and indemnify and hold the City harmless from any liabilities, losses, claims, demands, costs, expenses, or attorney's fees incurred by it as a result of any person or entity, including but not limited to underwriters and insurance carriers, asserting such assignment or transfer. This Agreement pertains to disputed claims and is the result of compromise. As such, it does not constitute and shall not be deemed as an admission of liability by the parties. Evidence of this settlement or of any damage or repair to the storm drain shall be inadmissible in any Litigation between the parties relating to the landslide. Each party shall bear its own attorney's fees and costs. 4. 5. 6. 7. 8. D. CALIFORNIALAW This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced, and governed under the laws of the State of Page 10 of 13 California. The language in all parts of this Agreement shall be in all cases construed as a whole according to its very meaning. E. FURTHERASSISTAIVCE The parties shall hereafter execute all documents and do all acts necessary, convenient or desirable, in the reasonable opinion of Releasees to effect the provisions of this Agreement. F. SUCCESSORS The provisions of this Agreement shall be deemed to obligate, extend to, and inure to the benefit of the parties, their heirs, successors, assigns, transferees, grantees, and indemnitees. G. INTERPRETATION Wherever the context so requires, the singular number shall include the plural; the plural shall include the singular; and the masculine gender shall include the feminine and neuter genders. H. CAPTIONS The captions by which the sections and subsections of this Agreement are identified are for convenience only and shall have no effect whatsoever upon its interpretation. I. SEVERANCE If any provision of this Agreement is held to be illegal or invatid by a court of competent jurisdiction, such provision shall be deemed to be severed and deleted; and neither such provision, nor its severance and deletion, shall affect the validity of the remaining provisions. J. INTEGRATION This Agreement (after full execution and delivery) memorializes and constitutes the entire agreement and understanding between the parties and supersedes and replaces all prior negotiations, proposed agreement and agreements, whether written Page 11 of 13 or unwritten. Notwithstanding the foregoing, the Mediation Agreement, Abatement Agreement and Reinstatement Agreement remain in full force and effect. K. ElrlFoRCEABILITY In the event any party hereto shall commence legal proceedings against the other to enforce the terms hereof, or to declare rights hereunder, as a result of a breach of any covenant of condition of this Agreement, the prevailing party in any such proceeding shall be entitled to recover from the losing party its costs of suit, as may be fmed by the Court. L. AUTHORITY The individuals executing this Agreement on behalf of a public entity or other private business entity each represent and warrant that they have the legal power, right and actual authority to bind their respective principals to the terms and conditions of this Agreement. "i(7- h, / DATED: LA COSTA DE MARBELLA HOMEOWNERS' ASSOCIATION CITY OF CARLSBAD r\ Ronald R. Ball, City Attorney APPROVED AS TO FORM AND C0N"E"k DATED: ?/ &7/ LAN0 OSTA DE MARBELLA HOA Page 12 of 13 BmLR L*EVERS 1 c By: Bradley Bartlett. Esa. Attorney for CITY OF CARLkBAD Page 13 of 13 RONALD R. BALL CITY ATTORNEY JANE MOBALDI ASSISTANT CITY ATTORNEY SUSANNE M. PARSONS DEPUTY CITY ATTORNEY RONALD KEMP DEPUTY CITY ATTORNEY CITY OF CARLSBAD 1200 CARLSBAD VILLAGE DRIVE CARLSBAD, CALIFORNIA 92008-1989 (760) 434-2891 FAX: (760) 434-8367 September 30,2005 RANDEE HARLIB ARDIS SEIDEL SECRETARY TO CITY AlTORNEY LEGAL SECRETARYPARALEGAL Bradley A. Bartlett, Esq Bartlett & Lievers 220 West Grand Avenue Escondido CA 92025 Re: Marbella HOA v Citv of Carlsbad Dear Mr. Bartlett: Enclosed, please find a copy the settlement agreement in this case which I have executed in accordance with your letter of September 27, 2005. I will place the settlement on the City Council's agenda for reporting out as required by the Brown Act and the original settlement agreement will be retained by the City Clerks office. I appreciate the hard work that you have done on this case and your creative ability to get it dismissed. Should you have any questions regarding the above, piease do not hesitate me. mTruly Yours -_ RONALD R. BALL City Attorney rn attachment