HomeMy WebLinkAbout06-25-18 City Commission Packet Materials - C10. Settlement Agreement with McAlvain Civil Constructors, Inc.
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Tim Cooper, Assistant City Attorney
SUBJECT: Settlement of City of Bozeman v. McAlvain Civil Contractors, et al., and McAlvain v. Wymont Construction, Inc. et al., Gallatin County District Court Cause No. DV-16-552A.
MEETING DATE: June 25, 2018
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Ratify the Assistant City Attorney’s Signature on Settlement of City of Bozeman v. McAlvain Civil Contractors, et al., and McAlvain v. Wymont Construction, Inc. et al. Gallatin County District Court Cause No. DV-16-552A.
SUGGESTED MOTION: I move to ratify the Assistant City Attorney’s approval and signature
of the settlement agreement in City of Bozeman v. McAlvain Civil Contractors, et al., and McAlvain v. Wymont Construction, Inc. et al. and to direct the City Manager to place settlement funds in the City’s wastewater utility fund.
BACKGROUND: In 2016 the City filed a complaint in district court against McAlvain Civil
Constructors of Boise, ID. In 2010, McAlvain bid on and was awarded a contract with the City to perform work in connection with the re-construction of the Water Reclamation treatment facility. McAlvain had significant problems completing this contract. The delays in the project
were substantial. McAlvain and the City agreed to a liquidated damages provision that would be
triggered if substantial completion had not occurred within 400 days of the commencement of
the contract time. The contract required McAlvain to pay the City for each day that work on the project continued beyond this 400 day deadline without achieving substantial completion, and for each day beyond the 460 day deadline for completion and final payment.
In addition to the damages related to delay, the City asserted McAlvain breached its contract
with the City by failing to construct the project in a good and workmanlike manner in accordance with industry standards, and by failing to construct the project in accordance with the plans and
95
specifications. As a result of these breaches, McAlvain did not deliver the system that the City
contracted for, and the problems with the digester may shorten its useful life and could require
costly repairs in the future.
McAlvain had filed a separate action against its own subcontractors, effectively admitting that
damage had resulted to the City from this project. McAlvain also filed counter claims against
our consulting engineers alleging design defects caused the problems in completing the project.
The City made a demand for settlement for $1.5 million dollars. A mediation was scheduled for Wednesday, November 15, 2017. Prior to the mediation the Commission met in executive
session, directed me to attend and authorized me to settle the case for no less than $1 million.
The Commission further authorized me to represent during the mediation, if I was able to resolve
the case for no less than $1 million, that the Commission would ratify the settlement at a duly
noticed public meeting.
The parties participated in the mediation over the course of seven to eight hours but the case did
not settle on that date. Negotiations continued through communications with the mediator. The
parties ultimately agreed that McAlvain and the parties that McAlvain had added as Defendants
in the matter will pay, collectively, to the City, the total sum of $1 million dollars.
The terms of the settlement include:
• Payment to the City of $1M; as set forth in the Agreement
• Full releases of the parties;
• No admission of liability; and
• Dismissal of the defined claims.
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 payment to the City of
$1,000,000.00 to be placed in the City’s wastewater utility fund.
Attachments: Settlement Agreement. Report compiled on: June 15, 2018
96
97
98
99
100
101
102
103
104
105
106
107
108