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HomeMy WebLinkAbout2013-06-18; City Council; 21274; Reporting Settlement Dominion of Canada InsuranceCITY OF CARLSBAD / CARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL 13 AB# 21,274 REPORTING OUT THE SETTLEMENT BETWEEN THE CITY, CMWD AND DOMINION OF CANADA GENERAL INSURANCE COMPANY DEPT. DIRECTOR 6/18/13 REPORTING OUT THE SETTLEMENT BETWEEN THE CITY, CMWD AND DOMINION OF CANADA GENERAL INSURANCE COMPANY CITY ATTORNEY DEPT. CA REPORTING OUT THE SETTLEMENT BETWEEN THE CITY, CMWD AND DOMINION OF CANADA GENERAL INSURANCE COMPANY CITY MANAGER ^ RECOMMENDED ACTION: There is no action to be taken by the City Council or the CMWD Board of Directors. ITEM EXPLANATION: The parties have now settled this issue under the authority given to the City Attorney by the City Council and CMWD Board of Directors at its closed session of May 21, 2013. This item satisfies the Brown Act requirement to report the fact of a settlement approved in a prior closed session and makes the terms and conditions of the settlement available to the public. FISCAL IMPACT: The total amount ofthe settlement paid by Dominion is $1.65 million. ENVIRONMENTAL IMPACT: Reporting out the fact of Settlement is not a "project" within the meaning of CEQA and therefore environmental review is not required pursuant to CEQA Regulation 15061(b)(3). EXHIBITS: 1. Settlement and Release Agreement on file with the City Clerk. DEPARTMENT CONTACT: Celia A. Brewer 760-434-2891 celia.breweracarisbadca.qov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED • DENIED • CONTINUED • WITHDRAWN • AMENDED • CONTINUED TO DATE SPECIFIC • CONTINUED TO DATE UNKNOWN • RETURNED TO STAFF • OTHER - SEE MINUTES Council received the report. SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ("RELEASE") is made as of this 15*'^ day of May 2013, by and among Plaintiffs City of Carlsbad and the Carlsbad Municipal Water District (collectively, "Plaintiffs") and The Dominion of Canada General Insurance Company ("The Dominion") (all collectively referred to as the "PARTIES"), on behalf of themselves, their parent, affiliated and subsidiary companies, officers, directors, partners, employees, attorneys, reinsurers, servants, stockholders, representatives, antecedents, successors, former, present and future assigns, spouses and heirs, with reference to the following: RECITALS A. WHEREAS, The Canadian Indemnity Company, through its United States Branch, issued two liability policies to the City of Carisbad. The first policy, Policy No. 73 MC-521540, was effective from July 1, 1981 to March 16, 1983 and provided $1,000,000 in limits of liability for any one occurrence arising out of, among other things, property damage, less a retained limit of $100,000. The second policy, Policy No. 73 MC-621586, was effective from March 16,1983 to March 16,1984, and also provided $1,000,000 in limits of liability for any one occurrence arising out of, among other things, property damage, less a retained limit of $100,000. (These policies will collectively be referred to as "the CIC POLICIES".) No other or additional policies of insurance are available to Plaintiffs by or through The Dominion or The Canadian Indemnity Company. The CIC POLICIES were canceled or terminated effective March 16,1984. B. WHEREAS, effective March 16,1984, the City of Carisbad secured liability coverage from another insurer that is not a party to this RELEASE. C. WHEREAS, the CIC policies did not provide any coverage to the Carisbad Municipal Water District. D. WHEREAS, The Dominion is a Canadian property and casualty insurer headquartered in Toronto, Ontario, and it has never had a principal place of business in any state in the United States, nor has it ever been licensed as an insurer in any state in the United States. E. WHEREAS, The Canadian Indemnity Company was also a Canadian property and casualty insurer headquartered in Winnipeg, Canada, but, as recited above, its United States Branch did sell property and casualty insurance In certain states in the United States, including California. F. WHEREAS, The Dominion purchased the stock of The Canadian Indemnity Company, the Canadian property and casualty insurer, on April 29, 1985. The Canadian Indemnity Company continued to operate as an insurance company in Canada. G. WHEREAS, effective January 31,1986, The Canadian Indemnity Company sold all of the assets and liabilities of its United States Branch to a company named Canadian Insurance Company of California, and, with the permission ofthe California Department of Insurance, The Canadian Indemnity Company, United States Branch, withdrew from transacting insurance in California. H. WHEREAS, on May 31,1989, The Canadian Indemnity Company was amalgamated into The Dominion. I. WHEREAS, subsequently, the Citation Insurance Group purchased Canadian Insurance Company of California and its name was changed to Citation General Insurance Company. J. WHEREAS, Citation General Insurance Company later became insolvent and went into liquidation, which was handled by the California Department of Insurance, with the Santa Clara County Superior Court issuing an Order of Liquidation on August 24,1995. K. WHEREAS, in 2005, a landslide occurred in the City of Carlsbad that caused damages to the Mariaella condominium complex on La Costa Avenue, which resulted in the filing of six lawsuits against Plaintiffs (the "underlying lawsuits"). L. WHEREAS, Plaintiffs notified a number of their liability insurers of the underlying lawsuits, alleging that the damages alleged in the underlying lawsuits resulted from continuous property damage going back to the 1970's. Virtually all ofthe Plaintiffs' liability insurers denied coverage for the underlying lawsuits. M. WHEREAS, Plaintiffs notified The Dominion of the underlying lawsuits on or about December 20, 2006, based on Plaintiffs' contention that The Dominion was the successor in interest to The Canadian Indemnity Company that had issued the CIC POLICIES. N. WHEREAS, The Dominion contended that is was not responsible to provide coverage for the underlying lawsuits and directed Plaintiffs to the California Insurance Guarantee Association. O. WHEREAS, in 2007 Plaintiffs settled the underlying lawsuits for $11,384,000, and over the course of the next several years recouped all of their defense costs and $2 million in indemnity for property damages. P. WHEREAS, on June 6, 2011, Plaintiffs filed a lawsuit against those J insurers who had not paid any money toward the defense and indemnity of the underlying lawsuits, including The Dominion, suing those insurers for breach of contract only and seeking reimbursement for the balance of the indemnity Plaintiffs had not recovered with respect to the underlying lawsuits. This lawsuit is captioned City of Carlsbad and ttie Carlsbad Municipal Water District, Plaintiffs V. Pacific Indemnity Company; 21st Century Preferred Insurance Company; Jefferson Insurance Company; Stonewall Insurance Company; The Dominion Of Canada General Insurance Company; First State Insurance Company; Twin City Fire Insurance Company; Specialty National Insurance Company; Great Lakes Reinsurance (UK) PLC, and DOES 1 througf) 10, Defendants, San Diego County Superior Court, Case No. 37-2011-00092451-CU-IC-CTL. (This lawsuit will be referred to as the "ACTION," and all ofthe papers and pleadings filed in the litigation are incorporated herein by reference. Q. WHEREAS, the PARTIES have agreed to resolve all issues in any way related to the ACTION and/or the CIC POLICIES arising out of or in any way related to the ACTION and/or the CIC POLICIES, as more fully set forth below. R. WHEREAS, the above Recitals are incorporated by reference into the RELEASE below. NOW, THEREFORE, for good and sufficient consideration, the receipt and sufficiency of which is acknowledged, the PARTIES agree: AGREEMENT 1. RELEASE 1.1 Plaintiffs release and forever discharge any and all claims that they may have against The Dominion, including, but not limited to, any and all causes of action, claims, allegations of liability, damages, restitution, equitable, legal and administrative relief, interest, demands or rights whatsoever, including, without limitation, for all claims of actual monetary damages, for claims of injunctive or equitable type of relief, and/or punitive or exemplary damages, whether such claims are based on federal, state, or local law, statute, ordinance, or regulation (including, without limitation, federal or state insurance laws or regulations), contract, common law, or any other source, that were asserted or could have been asserted against The Dominion in the ACTION or before any court, arbitration panel, or regulatory or administrative agency with respect to the CIC POLICIES. 1.2 The release set forth in Paragraph 1.1 above inures to the benefit of The Dominion's past, present, and future officers, directors, employees, general agents, agents, attorneys, its parent, sister, subsidiary or related corporations or entities, and all of its successors, affiliates, insurers, reinsurers, and assigns. The persons and/or entities released in Paragraph 1.1 above do not include any ofthe other defendants named in the ACTION. 2. SETTLEMENT PAYMENT 2.1 In consideration of the covenants and agreements herein contained and in order to fully and finally resolve, settle and release ail claims among them with respect to the ACTION and/or the CIC POLICIES, The Dominion will pay Plaintiffs the sum of Three Million Dollars ($3,000,000), within ten days after the full execution of this RELEASE. The settlement check will be made payable to "Law Offices of Craig A. Miller and the City of Carisbad." 2.2 The Dominion's payment of $3,000,000 exhausts by payment of judgment or settlement the full amount ofthe applicable limits of liability ofthe CIC POLICIES, and The Dominion shall not have any further obligation to pay any claim, settlement or judgment in connection with the underlying lawsuits. Any and all such obligations under the CIC POLICIES are terminated by The Dominion's payment ofthe CIC POLICIES' limits of liability. 2.3 This Settlement amount was approved by the City Council of the City of Carisbad on May 21, 2013, subject to the City Attorney's approval of this from of release as evidenced by the City Attomey's signature on this RELEASE." 3. ACTION TO BE DISMISSED WITH PREJUDICE In exchange for the payment set forth in Paragraph 2.1, Plaintiffs will dismiss with prejudice all claims they possess in the ACTION against The Dominion. Counsel for Plaintiffs will provide counsel for The Dominion with a fully-executed Request for Dismissal with prejudice ofthe ACTION within one (1) business day after the City Council approves the RELEASE and/or the RELEASE is fully-executed, whichever comes later. Counsel for The Dominion will hold the fully-executed Request for Dismissal with prejudice in trust until such time as the settlement check referenced in Paragraph 2.1 is sent to counsel for Plaintiffs. 4. RELEASE OF UNKNOWN CLAIMS It is understood by Plaintiffs that there is a risk that subsequent to the execution of this RELEASE, Plaintiffs may incur or suffer loss, damage or injuries which are in some way caused by or related to matters which are the subject of this RELEASE, but which are unknown or unanticipated at the time of the execution of this RELEASE. Further, there is a risk that the loss or damage presently known may be or become greater than Plaintiffs now expect or anticipate. Plaintiffs assume this risk and the release set forth above shall apply to all unknown or unanticipated results, as well as those known and anticipated, and Plaintiffs waive all rights against The Dominion pursuant to California Civil Code Section 1542, which section reads 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." 5. DISCLAIMER OF LIABILITY 5.1 Plaintiffs agree and acknowledge that they accept payment of the sum specified in Paragraph 2.1 of this RELEASE as a full and complete compromise of matters involving disputed issues, that neither payment of this sum by The Dominion, nor any event occurring during the negotiations of this settlement, nor any statement or communication made in connection therewith by The Dominion, its attorneys, or representatives, shall be considered an admission of any wrongdoing of any kind by The Dominion and that Plaintiffs and their counsel further acknowledge that no past or present wrongdoing on the part of The Dominion shall be implied therefrom. 5.2 This settlement is made with the understanding that it is not to be construed as an admission of liability by The Dominion and that it is made solely for the purpose of compromising all issues pending among the PARTIES, of avoiding litigation and buying their peace. 6. NO ASSIGNMENTS The PARTIES acknowledge that they have not heretofore assigned or transferred or purported to assign or transfer to any person any released matter or any part or portion thereof, and agree to indemnify and hold harmless each other from and against any claim, demand, controversy, damage, debt, liability, account, reckoning, obligation, cost, expense, lien, action or cause of action (including the payment of attorney's fees and costs actually incurred whether or not litigation be commenced) based on, in connection with, or arising out of any assignment or transfer or claimed assignment or transfer. 7. RESPONSIBILITY FOR ATTORNEY'S FEES AND COSTS Other than as set forth in this RELEASE, each of the PARTIES shall be responsible for the payment of its own attorney's fees and costs, If any. 8. ENTIRE AGREEMENT This document contains the entire agreement and understanding concerning the subject matter between the PARTIES and supersedes and replaces all prior negotiations, proposed agreements and agreements, written and oral. The PARTIES acknowledge that none ofthe PARTIES, their agents or attorneys have made any promise, representation or warranty whatsoever. express or implied, not contained herein concerning the subject matter hereof, to induce the PARTIES to execute this instrument, and acknowledge that the PARTIES have not executed this instrument in reliance on any such promise, representation or warranty not contained herein. 9. NO OTHER KNOWN CLAIMS AGAINST THE DOMINION Plaintiffs represent that they do not know of any other claims that they may have against The Dominion and/or the CIC POLICIES. 10. SEVERABILITY The provisions of this RELEASE are severable and, if any part of it is found to be unenforceable, the remainder of this RELEASE shall remain in full force and effect. 11. BINDING EFFECT This RELEASE shall be binding upon and inure to the benefit ofthe PARTIES and their respective executors, administrators, heirs, successors, and assigns. 12. CONSTRUCTION UNDER CALIFORNIA LAW The PARTIES acknowledge that certain of the agreements that relate to the subject matter of this RELEASE may purport to require the application of the laws of states other than the State of California. Notwithstanding this fact, the PARTIES agree that this RELEASE shall in all respects be interpreted, enforced and governed by and under the laws ofthe State of Califomia applicable to instruments, persons and transactions which have legal contacts and relationships solely with the State of California. 13. REPRESENTATION OF COMPREHENSION OF DOCUMENT 13.1 In entering into this RELEASE, the PARTIES represent that they have relied upon the legal advice of attorneys of their own choice. The PARTIES further represent that the terms of this RELEASE have been completely explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them after the consultation with their attorney. 13.2 This RELEASE was negotiated at arm's length, with each party receiving advice from independent legal counsel of its own choosing, and shall be deemed to have been drafted jointly by the PARTIES. No rule of construction or interpretation shall apply against any particular party based on a contention that the RELEASE was drafted by one ofthe PARTIES, and in this regard the provisions of California Civil Code Section 1654 are hereby waived. 13.3 The PARTIES have read and fully understand the provisions of this RELEASE, including especially Paragraph 4 above. 14. EXECUTION BY COUNTERPARTS/FACSIMILE This RELEASE may be executed In one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Instmment. This RELEASE may be executed by means of facsimile or scanned and e-mailed, and each copy of this RELEASE bearing the facsimile transmitted or scanned and e-mailed signature of either PARTY'S authorized representative shall be deemed an original. IN WITNESS WHEREOF, the PARTIES have executed this RELEASE as of the date set forth above. City of Carlsbad Its rr-^if^z-^/^^ne/^^ Carlsbad Municipal Water District Approved as to Form and Content City Attorney for the City of Carlsbad Celia A. Brewer Law Offices of Craig A. Miller By Craig A. Miller Attomeys for City of Carlsbad and Carisbad Municipal Water District / 13.3 The PARTIES have read and fully understand the provisions of this RELEASE, including especially Paragraph 4 above. 14. EXECUTION BY COUNTERPARTS/FACSIMILE This RELEASE may be executed In one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This RELEASE may be executed by means of facsimile or scanned and e-mailed, and each copy of this RELEASE bearing the facsimile transmitted or scanned and e-mailed signature of either PARTY'S authorized representative shall be deemed an original. IN WITNESS WHEREOF, the PARTIES have executed this RELEASE as of the date set forth above. City of Carlsbad By Its Carlsbad Municipal Water District By Its Approved as to Form and Content City Attorney for the City of Carlsbad By Celia A. Brewer Law Offices of Craig A. Miller By Craig j^.wliller AttomV^ for City of Carisbad and Carisbad Municipal Water District 9 Approved as to Form and Content Law Office pf Jacque^^. J^frch Bv JacaiifestrrKTrch AQcfrneys for City of Carlsbad and risbad Municipal Water District The Dominion of Canada General Insurance Company By Its Approved as to Form and Content Barger & Wolen LLP By _ Larry M. Golub Attorneys for The Dominion of Canada General Insurance Company 8 /d ^Appf<)\red. asio;;Form Law Office of Jacq ue$ J^ Kirch • iv: . Jacques J. Kirch Attorneys fbr City of Carlsbad and Carlsbad Munidpal Water District The Dominion of Canada General Insurance Company By "t Its Apfitby^d;^^-:t*>^^ •#a:rgirJfc^o|e:F<::^ Larry MJGolub (T^ Attomeys for The Dominion of Canada General Insurance Company //