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HomeMy WebLinkAbout01-29-18 City Commission Packet Materials - C4. City v. Moore, O'Connell & Refling Settlement AgreementCommission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Greg Sullivan, City Attorney SUBJECT: Authorize Settlement of City v. Moore O’Connell & Refling, P.C, Lewis and Clark County District Court (Cause No. BDV-2010-988) MEETING DATE: January 29, 2018 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize City Attorney to sign settlement agreement in City v. Moore O’Connell & Refling, P.C. SUGGESTED MOTION: I move to authorize the City Attorney to sign the settlement agreement in City v. Moore O’Connell & Refling, P.C. and to direct the City Manager to place settlement funds in the City’s general fund reserve. BACKGROUND: In 2003, the City was sued by Delaney and Company for issues related to the acquisition of the Mandeville Farm. The City tendered the suit to the Montana Municipal Interlocal Authority (MMIA) to provide a defense. The MMIA retained the law firm of Moore O’Connell & Refling, P.C (MOR) to defend the City. After a district court judge ordered the City liable as a sanction for discovery issues in 2006, a jury awarded Delaney & Co. $3,000,000.00 in damages. That decision was affirmed on appeal. The MMIA subsequently paid the entire amount subject to an agreement with the City to seek a Court’s determination whether the MMIA was responsible for the entire judgment. In 2010, the City filed a complaint for declaratory judgment against the MMIA seeking a determination the entire $3M jury award was covered under the MMIA’s applicable insuring agreements. A district court judge determined the jury award was not covered under the MMIA’s insuring agreement. During the appeal of that decision, the City and MMIA settled wherein MMIA agreed to pay $1M of the award and the City was to reimburse MMIA for $2M of the award. The City made payments to the MMIA to cover its share of the settlement out of the City’s general fund in FY13, FY14, and FY15. Also in 2010, the City filed a suit against MOR seeking compensatory damages. This settlement resolves the case against MOR. The terms of the settlement include: • Payment to the City of $1M; • Full release of MOR and its insurer; • No admission of liability by MOR; and 42 • Stipulation for dismissal of the lawsuit. The result of this settlement is the three parties involved in defending the original Delaney & Co. lawsuit (MMIA, MOR, and the City) have all participated the equivalent of 1/3 of the damages paid to Delaney & Co. UNRESOLVED ISSUES: None. ALTERNATIVES: None identified. FISCAL EFFECTS: Settlement will result in the City no longer having to expend general fund money in pursuit of this litigation. In addition, settlement will result in a payment to the City of $1,000,000.00 to be placed in the City’s general fund reserve. Attachments: Settlement and General Release City v. Moore O’Connell & Refling, P.C. Report compiled on: January 22, 2018 43 GENERAL RELEASE AND SETTLEMENT AGREEMENT (COB v. MOR) Page 1 2418086 GENERAL RELEASE AND SETTLEMENT AGREEMENT RELEASOR: The City of Bozeman RELEASEE: Moore, O’Connell & Refling, P.C. DATE OF CASUALTY: July 17, 2003 to present DESCRIPTION OF CASUALTY: Alleged legal malpractice in Delaney & Company, Inc. v. City of Bozeman, DV-03-354, Eighteenth Judicial District Court, Gallatin County. SUM OF SETTLEMENT: $1,000,000.00 CIVIL CAUSE: The City of Bozeman v. Moore, O’Connell & Refling, P.C., Lewis and Clark County District Court, Cause No. BDV-2010-988 1. Release The undersigned Releasor acknowledges receipt of the above sum of money and in consideration for payment of such sum, fully and forever releases and discharges Releasee, Releasee’s heirs, personal representatives, successors, assigns, agents, partners, employees and attorneys from any and all actions, claims, causes of action, demands, or expenses for damages or injuries, whether asserted or unasserted, known or unknown, foreseen or unforeseen, arising out of the described casualty. 2. Future Damages Inasmuch as the injuries, damages, and losses resulting from the events described herein may not be fully known and may be more numerous or more serious than it is now understood or expected, the Releasor agrees, as a further consideration of this agreement, that this Release applies to any and all injuries, damages and losses resulting from the casualty described herein, even though now unanticipated, unexpected and unknown, as well as any and all injuries, damages and losses which have already developed and which are now known or anticipated. 3. Release of Insurer Releasor further releases ALPS Property and Casualty Insurance Company from all obligations under any part of the company’s insurance policies applicable to 44 GENERAL RELEASE AND SETTLEMENT AGREEMENT (COB v. MOR) Page 2 2418086 Releasor’s claims and from any and all claims arising out of the investigation, handling, adjusting, defense or settlement of the claim including, without limitation, any claims for breach of contract, in tort, violation of the covenant of good faith and fair dealing, violation of Montana Code Annotated §§ 33-18-201 et seq., and in common-law bad faith. 4. No Admission of Liability It is understood that the above-mentioned sum is accepted as the sole consideration for full satisfaction and accord to compromise a disputed claim, and that neither the payment of the sum by Releasee nor the negotiations for settlement shall be considered as an admission of liability. 5. No Additional Claims Releasor represents that no additional claims are contemplated by the City of Bozeman, its employees and agents against any other party potentially liable for the losses, damages, and injuries for which this Release is given. In the event any additional claim is made which directly or indirectly results in additional liability exposure to Releasee for the losses, injuries, and damages for which this Release is given, Releasor covenants and agrees to indemnify and save Releasee harmless from all such claims and demands, including reasonable attorneys’ fees and all other expenses necessarily incurred. 6. Stipulation for Dismissal with Prejudice Releasor stipulates and agrees that Releasor’s attorney of record shall dismiss with prejudice, as fully settled upon the merits, the above-described civil action. Each party shall pay their respective costs and attorneys’ fees. 7. Disclaimer Releasor has carefully read the foregoing, discussed its legal effect with Releasor’s attorney, understands the contents thereof, and signs the same of Releasor’s own free will and accord. This Release shall be binding upon Releasor’s heirs, successors, personal representatives and assigns. 8. Severability Should any provision of this Agreement be determined to be unenforceable, all remaining terms and clauses shall remain in force and shall be fully severable. 9. Choice of Law 45 GENERAL RELEASE AND SETTLEMENT AGREEMENT (COB v. MOR) Page 3 2418086 The laws of the State of Montana shall apply to the interpretation of this Agreement. 10. Final Agreement This written Agreement constitutes the final agreement between the parties and shall supersede any oral agreements to the contrary. DATED this ____ day of , 2018 CAUTION: READ BEFORE SIGNING! RELEASOR The City of Bozeman By Its STATE OF MONTANA ) :ss. County of ) This instrument was acknowledged before me on the day of , 2018 by , known to me to be the , of The City of Bozeman, Releasor. Typed or Printed Name: NOTARY PUBLIC for the State of Montana Residing at: My Commission Expires: APPROVED BY: Attorneys for Releasor MILODRAGOVICH, DALE & STEINBRENNER, P.C. P.O. Box 4947 Missoula, MT 59806-4947 46 GENERAL RELEASE AND SETTLEMENT AGREEMENT (COB v. MOR) Page 4 2418086 By G. Patrick HagEstad 47