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HomeMy WebLinkAbout09441 ORDINANCE NO. 9441 AN ORDINANCE APPROVING A SETTLEMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND INSITUFORM TECHNOLOGIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, AND AUTHORIZING THE MAYOR TO EXECUTE SAME BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The attached Mutual Release and Settlement Agreement (“Agreement”), a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. The Mayor is authorized to execute the Agreement in the name of the City, and the Acting City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 2. The officers of the City are authorized and directed to perform any and all acts consistent with the intent of this Ordinance and the attached Agreement to effectuate the policies and procedures described therein. SECTION 3. This Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on March 11, 2019 . Final adoption of Ordinance by City Council on March 25, 2019 . President of City Council Action by the Mayor: Approved on March 28, 2019 ☒ □ Disapproved on based on the following objections: _ Mayor Action by City Council After Disapproval by the Mayor: □ Council did not act to override the Mayor's veto. □ Ordinance re-adopted on a vote of , on □ Council action on _______ failed to override the Mayor’s veto. President of City Council ATTEST Acting City Clerk City Clerk’s Office Item # R-8 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: March 11, 2019 TO: President Dennis E. Flores and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Brenda Armijo, Acting City Clerk FROM: Robert P. Jagger, Sr. Asst. City Attorney Nancy Keller, Wastewater Director SUBJECT: AN ORDINANCE APPROVING A SETTLEMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND INSITUFORM TECHNOLOGIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, AND AUTHORIZING THE MAYOR TO EXECUTE SAME SUMMARY: The proposed Ordinance approves a settlement agreement with respect to a construction contract dispute. The proposed settlement agreement reflects the most the City could obtain without filing legal action and also releases the City from liability with respect to any claims of the contractor. Specifically, the City would keep and the contractor would release any claim with respect to all retainage on the project in the amount of $871,719. PREVIOUS COUNCIL ACTION: None. BACKGROUND: The City entered into a construction contract with Insituform Technologies LLC (“Insituform”) dated August 7, 2017 for the 2017 Selenium Reduction J-1 Lining Project. Insituform is a worldwide provider of trenchless technologies for gravity and pressure pipelines. Insituform is a subsidiary of Aegion Corporation which corporation has consolidated earnings in excess of 1.3 billion dollars and approximately 6,000 employees. The Project consisted of the construction and placement of 18,161 lineal feet of cured-in-placed pipe (CIPP) to rehabilitate 8", 12", 15", 18" & 21" sanitary sewer mains and 77 manholes which were to be epoxy coated, replaced, or abandoned. The contract amount for the Project was $1,323,179. On October 25, 2018, the City gave Insituform notice of its intent to terminate the contract due generally to the significant delay in completion, rejected work with respect to epoxy coating of 69 of the manholes and rejected work with respect to the CIPP primarily including improperly cut service connections, wrinkles below the flow line and improper connections at the manholes. On November 14, 2018, the City gave Insituform notice of contract termination due to Insituform’s failure to give satisfactory arrangements for correction of the rejected work and a detailed and expedient timeline for completion of the Project. With respect to the CIPP, Insituform’s position was that, other than punchlist items in the approximate amount of $30,000, Insituform had substantially completed the CIPP, and the City had breached the contract based on its nonpayment. Insituform specifically maintains that (1) wrinkles do not affect structural integrity and are within acceptable industry standards and (2) CIPP is not intended to create a water tight seal at service connections. City disagrees with Insituform’s position as being inconsistent with the contract specifications and the facts of the case. With respect to the epoxy coating of the manholes, Insituform was willing to perform corrective work but for a price that the City maintained was inadequate to assure proper completion. In lieu of litigation, the proposed settlement agreement is presented for approval by City Council. The general terms of the settlement agreement are as follows: City would release any claims against Insituform and Insituform would waive any claims against the City, including any right to retainage in the amount of $871,719. In addition, Insituform would agree not to bid on any City construction project for a period of five (5) years and would further agree that it will be responsible for and hold the City harmless and indemnify City for any claims by subcontractors for work performed on the project and other damages. FINANCIAL IMPLICATIONS: The City would apply the retainage in the amount of $871,719 to perform work to the specifications and desires of City. The City has competitively bid such work and received a low bid of $949,451.20. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: Not approve the Ordinance in which case the matter would remain unresolved and subject to litigation. If litigation is filed, total projected litigation costs of City are between $90,000 and $150,000. RECOMMENDATION: Pass and approve the proposed Ordinance Attachments: Settlement Agreement. MUTUAL RELEASE AND SETTLEMENT AGREEMENT This Mutual Release and Settlement Agreement ("Agreement") is by and between INSITUFORM TECHNOLOGIES, LLC, a subsidiary of Aegion Corporation ("Insituform"), and any and all of its parent corporations or organizations, subsidiaries, officers, directors, shareholders, administrators, principals, agents, insurers, sureties, representatives, servants, employees, successors, assigns, affiliates, partners, predecessors and attorneys, and PUEBLO municipal corporation ("City"), and any and all of its officers, agents, insurers, sureties, employees, attorneys, representatives, assigns and successors (sometimes hereinafter collectively referred to as the"Parties"), and is expressly made subject to the following recitals: RECITALS WHEREAS, the City entered into a construction contract with Insituform dated August 7, 2017, for the 2017 Selenium Reduction J-1 Lining Project ("Contract"). The project generally consisted of placement of 18,161 lineal feet of cured-in-place pipe ("CIPP") to rehabilitate 8- inch, 12-inch, 15-inch, 18-inch and 21-inch sanitary sewer mains and 77 manholes which were to be epoxy-coated, replaced, or abandoned. The Contract price for the project was $1,323,179.00; and WHEREAS, Travelers Casualty and Surety Company of America ("Travelers") provided as called for under the Contract a performance bond, bond # 106776224, on behalf of Insituform as Principal and in favor of the City in the amount of$1,323,179; and WHEREAS, on October 25, 2018, the City gave Insituform notice of its intent to terminate the Contract due generally to alleged delays in completion, rejected work with respect to epoxy-coating of 69 of the manholes and rejected work with respect to CIPP. On November 14, 2018, the City gave Insituform notice of contract termination due to its position that Insituform failed to give satisfactory arrangements for correction of the rejected work and a timeline for completion of the project; and WHEREAS, Insituform contests the City's allegations of rejected work and the City's allegations as set out in the Notice of Intent to Terminate and Notice of Contract Termination; and WHEREAS, the Parties, in lieu of litigation, have agreed to resolve all aspects of the dispute regarding the Contract and its termination as well as any and all other claims or actions that they may have against the other arising out of the 2017 Selenium Reduction J-1 Lining Project; and WHEREAS, the City has approved this settlement in open session pursuant to passage and approval of Ordinance No. , (copy attached as Exhibit A to this Agreement). THEREFORE, in consideration of the foregoing recitals, and of the mutual promises, conditions, covenants, and agreements set forth below, the parties agree as follows: PUEBLO v. INSITUFORM SETTLEMENT AGREEMENT Page 1 of 7 3. Release of City by Insituform. Insituform fully and forever releases and discharges the City from any and all obligations, duties and/or warranties arising under the Contract or any other causes of action, claims, demands, costs, expenses, attorneys fees of any kind and nature whatsoever, in law or in equity, in tort or in contract, whether now known or unknown and relating to the Contract or the project that Insituform may have against the City as of the date of the execution of this Agreement. 4. Release of Insituform by City. The City fully and forever releases and discharges Insituform, its insurers, and sureties from any and all obligations, duties and/or warranties arising under the Contract including the Travelers performance bond or any other causes of action, claims, demands, costs, expenses, attorneys fees of any kind and nature whatsoever, in law or in equity, in tort or in contract, whether now known or unknown and relating to the Contract or the project including any claims for back charges, delays, or liquidated damages that the City may have against Insituform as of the date of the execution of this Agreement. 5. Contract Dissolved. By execution hereof, the City dissolves, rescinds in full, and converts the disputed termination of the Contract nunc pro tunc to a final close out of the Contract as though the termination never occurred. 6. Denial of Liability. It is understood and agreed by the Parties to this Agreement that this Agreement is not to be construed as an admission of liability on the part of any party, all liability being expressly denied. 7. Attorneys' Fees. It is understood and agreed by the Parties that each of them shall be responsible for any attorneys' fees and costs incurred by them in relation to the Contract. 8. Non-Reliance. The Parties to this Agreement expressly assume all risk that the facts, law and/or damages may be, or become, different than the facts, law or damages presently believed by the Parties. The Parties further expressly disclaim all reliance upon, and prospectively waive any fraud, misrepresentation, negligence or other claim based upon information supplied by an adverse party, or by counsel for any of the Parties. 9. Miscellaneous. The Parties, and each of them, represent and warrant as follows: a. Binding Agreement. This Agreement is a legal, valid, and binding obligation of the Parties, and each of them, and is enforceable by or against each party in accordance with its terms. b. No Other Promises. No party hereto has made any promise, commitment or other representation to the other party hereto other than those expressly set forth in this Agreement. PUEBLO v. INSITUFORM SETTLEMENT AGREEMENT Page 3 of 7 deemed a continuing waiver unless specifically stated therein, and the written waiver shall operate only as to the specific term or condition waived, and not for the future or as to any other act than that specifically waived. j. Venue. Venue and jurisdiction for any action arising out of or relating to this Agreement shall lie exclusively in the District Court, Pueblo County, Colorado. 10. Authorship. The Parties acknowledge that this Agreement is the result of negotiations and joint authorship and agree that this Agreement shall not be construed or interpreted against any single party on the grounds of sole or primary authorship. The Parties further acknowledge that each has had the full opportunity to consult with legal counsel and any other advisors of their choice. 11. Signatures. This Agreement may be executed in any number of counterparts with the same effect as if the signatures on each counterpart were upon a single instrument, and each such counterpart shall be mutually deemed to be a "duplicate original" for purposes of authentication, identification and admissibility. All counterparts, taken together, shall constitute the Agreement. 12. Approval. The Parties expressly warrant that they have authority to enter into this Agreement and that execution of this Agreement has been authorized by a vote or other appropriate approval of their respective governing bodies and recorded in the minutes of the organization. IN WITNESS WHEREOF, this Agreement has been executed on the dates below written to be effective on the last such date. [THIS SPACE INTENTIONALLY LEFT BLANK] PUEBLO v. INSITUFORM SETTLEMENT AGREEMENT Page 5 of 7 PUEBLO, CO A MUNICIPAL CORPORATION By: /1E/6'`� drearoatigiy Nicholas A. Gradisar Mayor ATTESTED B OL"^X tA414AJ.b ITY CLERK APPROVES AS TO FORM: G•' 7. Vaughan, Esq. VA.( AN &DeMURO Attorneys for the City PUEBLO v. INSITUFORM SETTLEMENT AGREEMENT Page 7 of 7