HomeMy WebLinkAbout94- USF&G Companies Mutual Settlement Agreement and Release
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MUTUAL SETTLEMENT AGREEMENT AND RELEASE
INTRODUCTION
This Mutual Settlement Agreement and Release ("Agreement") is entered into by
and between USF&G Companies including USF&G Fidelity and Guaranty Co., Fidelity
and Guaranty Insurance Underwriters, Inc. and Fidelity and Guaranty Insurance
Company, and their respective officers, directors, agents, employees, attorneys, and their
parent, subsidiary or affiliated companies (hereinafter collectively referred to as USF&G)
and the City of Bozeman, a Montana Municipal Corporation, and its officers,
commissioners, agents, employees, attorneys, successors, and assigns (hereinafter
collectively referred to as the City of Bozeman).
DEFINITIONS
BUTTREY SHOPPING CENTER hereinafter referred to as "ssc" is a tract of real
property within the exterior municipal boundaries of the City of Bozeman, County of
Gallatin, State of Montana. Upon this real property was constructed retail operations in
the early 1960's which operations continue to date.
BOZEMAN SOL VENT SITE hereinafter referred to as "BSS" is a parcel of real
property within Gallatin County inclusive of SSC and adjacent real estate extending
generally in a northerly direction towards United States Interstate 90. An exact
description is incapable of definition and is dependent upon further investigatory efforts
by the City of Bozeman and others.
MONTANA DEPARTMENT OF HEALTH AND ENVIRONMENTAL SCIENCES
hereinafter referred to as "MDHES" is that governmental entity of the State of Montana
charged with the enforcement of the "Comprehensive Environmental Cleanup and
Responsibility Act" (CECRA) Mont. Code Ann. ~ 75-10-701 et seq.
SITE LITIGATION, as of the date of the execution of this Agreement, is a specific
reference to the following:
a. Jewel Food Stores, Inc., v. the City of Bozeman et aI.,
No. CV-92-57-BU (U.S. D.C., MT);
b. Order to Provide Information and Documentation,
Docket No. WQ-90-002; Before the MDHES, dated August 23,
1990;
Mutual Settlement Agreement
and Release . Page 1
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c. Letter dated December 31, 1991 authored by MDHES,
Director's Office and addressed to Robert Hawks, Mayor of
City of Bozeman, identifying the City of Bozeman as a
potentially liable person pursuant to ~ 75-10-711 (3) Mont.
Code Ann. for the contamination allegedly found at BSC/BSS.
d. Interim Water Supply Order, Docket No. WQ-93-101;
Before the MDHES, dated June 14, 1993 and Amendments
thereto dated June 18, 1993 and December 3, 1993
respectively.
It is understood that other actions at law or administrative
actions arising from the BSC/BSS may arise following the
execution of this Agreement and that they shall, upon their
filing or issuance, be characterized and identified within the
definition of "Site Litigation."
PREAMBLE
WHEREAS:
1. The City of Bozeman has alleged that USF&G provided liability insurance
coverage to the City of Bozeman during a period of time in which it has been alleged by
Jewel and MDHES that the predicate facts underlying the "Site Litigation" may have
arisen.
2. The City of Bozeman, during that period of time, may have owned, leased,
and/or conducted operations, including the operation of a sewage collection system at or
near BSC.
3. As a result of the City's operations at BSC, MDHES has notified the City of
Bozeman that it is potentially liable for the cleanup of BSC and BSS and, in furtherance
thereof, has issued an Alternate Water Supply Order to the City of Bozeman dated
June 14, 1993. The City of Bozeman has also been named as a defendant in a private
cost recovery action by Jewel Food Stores, Inc. in which Jewel seeks contribution for
costs incurred in the investigation and remediation of BSC and BSS, and in which other
defendants have asserted cross-claims against the City of Bozeman predicated upon
statutory violations and common law theories of recovery.
4. USF&G maintains that there is no insurance coverage under any policy of
insurance issued by it to the City of Bozeman for the "Site Litigation" and the City of
Bozeman maintains that such coverage does exist.
Mutual Settlement Agreement
and Release - Page 2
5. USF&G and the City of Bozeman acknowledge the existence of disputed
questions of law and fact as to whether or not insurance coverage exists for the "Site
Litigation."
6. USF&G and the City of Bozeman wish to resolve fully, completely, and finally,
as between themselves, all disputes which now exist or in the future may exist with
respect to insurance coverage for "Site Litigation" for which the City of Bozeman has
sought, is presently seeking, or in the future may seek, by way of the payment of the
costs of defense and/or indemnification.
NOW, THEREFORE, in reliance upon the aforesaid recitals and in consideration
of the mutual agreements contained herein, it is agreed by and between USF&G and the
City of Bozeman as set forth herein;
1. Policies
For the purposes of this Agreement only, it shall be deemed that USF&G issued
the following insurance policies to the City of Bozeman either as an insured, named
insured and/or additional insured:
Policy No. Effective Limits
USF&G 1 CC-E-19437 07-17-81 to $1,000,000
F&G SMP 773147 07-17-82
USF&G 1 CC 140464 07-17-82 to 1,000,000
F&G SMP 020647099 07-17-83
USF&G 1CC 017143951 07-17-83 to 1,000,000
F&G SMP 034903594 07-17-84
USF&G 1 CC 034280048 07-17-84 to 1,000,000
F&G SMP 034905376 06-30-85
This list is not meant to be exhaustive of all policies which USF&G issued or may
have issued to the City of Bozeman. It is the intention of USF&G and the City of
Bozeman, however, that this Agreement shall apply to all insurance policies (hereinafter
collectively referred to as "the Policies") issued by USF&G to the City of Bozeman,
whether such policies are listed above and regardless of whether the City of Bozeman
is an insured, named insured, or an additional insured under such policies identified or
presently incapable of identification.
Mutual Settlement Agreement
and Release - Page 3
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2. Payment by USF&G
a. In consideration of the agreements herein given by the City of Bozeman and
in response to demands by the City of Bozeman for the payment of the costs of defense
and indemnification with regard to Site Litigation, USF&G agrees to fund, on behalf of the
City of Bozeman, the sums stated in paragraph 2b hereof. In entering into this
Agreement to make such payments, USF&G is not acting as a volunteer but rather is
settling a disputed claim for which it denies any and all liability.
b. Upon receipt by USF&G of a fully executed copy of this Agreement, USF&G
shall pay to the City of Bozeman as follows:
i. $135,441.81 representing defense and
indemnity costs incurred by the City of Bozeman
incidental to its involvement with Site Litigation
prior to September 16, 1994;
ii. The City of Bozeman acknowledges receipt of
$3,713.00 from USF&G which sum shall be
credited to that amount identified in paragraph
2b.i; and
iii. 19% of all costs be they identified as costs of
defense or indemnification incurred by the City
of Bozeman with regard to Site Litigation, to be
allocated 80% to indemnity and 20% to defense,
regardless of the type of cost incurred atter
September 16, 1994.
c. The City of Bozeman, upon receipt of the sum of $131,728.81, shall deem
that USF&G is in complete satisfaction of its obligations under the policies to pay defense
and indemnity costs associated with Site Litigation which costs were incurred prior to
September 16, 1994.
d. The City of Bozeman agrees that the costs referred to in this paragraph and
subparts hereof do not and will not include any costs associated with the installation,
repair or replacement of sewer lines on the premises of BSe but will include the cost of
the removal and/or remediation of contaminated and/or impacted soils, as identified by
MDHES, which soils may be found during the installation, repair or replacement of sewer
lines upon sse. These costs for the removal and/or remediation of impacted soils on
BSe are payable if such activity is required and/or permitted by MDHES, its agents,
employees, contractor, or representative.
Mutual Settlement Agreement
and Release - Page 4
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3. Indemnity and Hold Harmless
a. The City of Bozeman, jointly and severally, agrees to hold USF&G harmless
and indemnity USF&G against any and all claims and/or lawsuits made and/or brought
against USF&G by any expert, consultant or contractor retained by the City of Bozeman,
which indemnity shall include all of USF&G's attorney's fees, costs, disbursements and/or
expenses incurred by USF&G in defending against such claims and/or lawsuits.
b. The City of Bozeman, jointly and severally, hereby specifically agrees to
defend, indemnity and hold USF&G harmless in connection with any and all claims or
lawsuits, past, present or future, known and unknown, asserted or unasserted, anticipated
or unanticipated which have been or hereafter may be asserted against USF&G pursuant
to the Policies by any person, including, but not limited to any claimant, plaintiff, petitioner,
governmental agency, entity or body, or insurer or excess insurer in connection with the
Site Litigation.
c. USF&G represents that it will not seek contribution from any of the City of
Bozeman's other insurance carriers with regard to payments made under this Agreement.
4. Release of all Claims by the City of Bozeman
a. In consideration of the payments made and anticipated to be made pursuant
to paragraph 2 hereof, and of the agreements made by the City of Bozeman, the City of
Bozeman releases and forever discharges USF&G, its corporate parents, subsidiaries,
affiliate companies, predecessor and successor companies, if any, and all of their present,
past and future officers, directors, employees, stockholders, representatives, agents, and
attorneys from any and all liability whatsoever, for all claims, actions, demands, suits,
liabilities, obligations, rights or causes of action of every kind and nature including, but not
limited to, compensatory, consequential and/or punitive damages, loss of profit,
compensation, emotional distress, property damage, bodily injury, personal injuries, costs,
expenses, attorney's fees, recision, reformation, declaratory relief or any other relief,
which claims or causes of action arise out of or are connected with the Site Litigation;
further including, but not limited to, all claims or causes of action arising out of or
connected with any statute including any alleged violation of the provisions of the
Montana Insurance Code, including but not limited to the Unfair Claims Settlement
Practices Act, with any alleged breach of any implied covenant of good faith and fair
dealing, with any and all claims of alleged "bad faith"; or, with any and all claims arising
out of or connected with any monies owed by the City of Bozeman or any other persons
or entities which may involve the interests of the City of Bozeman or to become due to
any present or future claimant or arising out of or connected with the negotiation or
execution of this Agreement, asserted or not asserted, known and unknown, anticipated
and unanticipated, past, present or future, and further including, but not limited to any
Mutual Settlement Agreement
and Release - Page 5
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environmental claims. For purposes of this Agreement only, "claims" or "suits" shall mean
any and all obligations, liabilities, demands, claims, administrative proceedings or
lawsuits, past, present or future, presently asserted or unasserted, known or unknown,
anticipated or unanticipated, running in favor of or against USF&G and/or the City of
Bozeman.
b. It is the intent of USF&G and the City of Bozeman that if and when
USF&G's indemnity payment to the City of Bozeman totals $4,000,000.00 with regard to
Site Litigation or otherwise, all rights, title, and interest which the City of Bozeman may
have had, presently has, or may hereafter have in the Policies will be extinguished, and
that this Agreement likewise shall extinguish any and all obligations which USF&G may
have had, now has or in the future may have under the Policies to any person or entity,
including but not limited to the City of Bozeman. It further is the intent and understanding
of the City of Bozeman and USF&G that upon exhaustion of the $4,000,000.00 indemnity
limits, the City of Bozeman will not hereafter seek insurance coverage from USF&G under
the Policies for any and all claims or suits which have been or hereafter may be asserted
against the City of Bozeman. Nothing in this subparagraph shall be deemed to impair
such rights as may arise under the terms hereof.
5. Aareement bv the City of Bozeman
a. The release given in this Agreement shall apply not only to all currently
known and anticipated results of the matters released, but also to those currently
unknown and unanticipated claims at the BSC/BSS. The City of Bozeman represents and
warrants that it understands that the nature, amount, and extent of the actual or potential
claims, actions, causes of action, injuries and damages arising from the BSC/BSS may
not be known either to the City of Bozeman or USF&G as of the date hereof, and that
additional or different facts than those which it knows or believes to be true may be
discovered. Nevertheless, the City of Bozeman hereby acknowledges that it specifically
intends to forever and fully discharge and release USF&G from any and all such claims,
actions, causes of actions, injuries, and damages, even if not discovered or brought to
the attention of the City of Bozeman until after the effective date of this Agreement.
b. The City of Bozeman agrees that this Agreement supersedes any and all
prior agreements between the City of Bozeman and USF&G regarding insurance
coverage for the Site Litigation.
GENERAL CONDITIONS
6. The City of Bozeman represents and warrants that it has not and will not in any
manner assign, transfer, conveyor sell, or purport to assign, transfer, conveyor sell to
any entity or person any cause of action, any chose in action, or part thereof, arising out
Mutual Settlement Agreement
and Release . Page 6
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of or connected with the matters released herein, and that it is the only entity entitled to
recover for any damages under such claims, causes of action, actions, and rights. The
City of Bozeman represents and warrants that no subrogation of any cause of action,
chose in action, or part hereof, has taken place. The City of Bozeman further represents,
warrants, and agrees that it will not in any way voluntarily assist any other person or
entity in the establishment of any claim, cause of action, actions or right against USF&G
in any way relating to the investigation, handling, defense, or settlement of claims relating
to or arising from the claims governed by this Agreement. Except as otherwise provided,
the City of Bozeman agrees to hold harmless and indemnify USF&G for any breach by
the City of Bozeman of any of the foregoing representations and warranties, such
indemnity to include, but not be limited to, USF&G's attorneys' fees and costs.
7. This Agreement is the result of a compromise and accord and shall not be
considered an admission of liability or responsibility. This Agreement is a compromise
and settlement of disputed claims and is the product of arms length negotiations.
8. This Agreement prevails over prior communications regarding the matters
contained herein between USF&G and the City of Bozeman or its representatives. This
Agreement was drafted by counsel for USF&G and the City of Bozeman and there shall
not be a presumption or construction against USF&G or the City of Bozeman, each
expressly waiving the doctrine of contra proferentum.
9. This Agreement is an integrated agreement and contains the entire agreement
regarding the matters herein between USF&G and the City of Bozeman and no
representations, warranties, or promises have been made or relied on by USF&G or the
City of Bozeman other than as set forth herein.
10. This Agreement is intended to confer rights and benefits only on USF&G and the
City of Bozeman and is not intended to confer any right or benefit upon any other person
or entity. No person or entity other than USF&G and the City of Bozeman shall have any
legally enforceable right under this Agreement. All rights of action for any breach of this
Agreement are hereby reserved to USF&G and the City of Bozeman.
11. This Agreement is without prejudice or value as precedent and shall not be used
in any proceeding or hearing to create, prove, or interpret the obligations under, or terms
and conditions of, any other agreement or any insurance policy.
12. This Agreement is not a policy of insurance, and USF&G and the City of Bozeman
do not intend that it will be interpreted as such.
13. The parties represent and warrant to the extent applicable:
Mutual Settlement Agreement
and Release - Page 7
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a. that they have taken all necessary corporate and/or legal actions to
duly approve the making and performance of this Agreement and
that no further corporate or other approval is necessary;
b. that the making and performance of this Agreement will not
violate any provision of law or of their respective articles of
incorporation or by-laws;
c. that they have read this Agreement and know the contents
hereof, that the terms hereof are contractual and not by way
of recital, and that they have signed this Agreement of their
own free act; and
d. that in making this Agreement, they have obtained the advice
of legal counsel.
14. Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be valid under applicable law, but if any provision of this Agreement shall
be invalid or prohibited thereunder, such provision shall be ineffective to the extent of
such prohibition without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
15. Each of the terms of this Agreement is binding upon USF&G and the City of
Bozeman, and their respective heirs, predecessors, successors, transferees, assignees,
representatives, principals, agents, officers, directors, and employees.
16. USF&G and the City of Bozeman agree that this Mutual Settlement Agreement and
its terms and conditions are confidential and shall not be disclosed to anyone without the
written consent of all parties to this Mutual Settlement Agreement. Notwithstandi ng the
foregoing, written consent shall not be required for any disclosure (a) made pursuant to
court order or (b) made to an attorney, reinsurer, auditor, representative, director or
employee of USF&G or the City of Bozeman, provided that any such disclosure is made
in the furtherance of a financial or business interest of USF&G or the City of Bozeman
and is not part of a general publication or dissemination, or (c) made pursuant to the City
of Bozeman's obligations under the Public Disclosure Laws or (d) made pursuant to a
valid and proper subpoena or production request directed to the City of Bozeman. Any
person to whom a disclosure is made under (b) or (d) shall be advised of the
confidentiality requirement.
17. This Agreement is entered into, and shall be construed and interpreted in
accordance with the laws of the State of Montana.
Mutual Settlement Agreement
and Release - Page 8
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City of Bozeman
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City of Bozeman
USF&G Companies
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APPROVED BY:
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THOMAS A. GORDON
Attorney for USF&G Companies
Mutual Settlement Agreement
and Release - Page 9
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DUPLICATE RECEIPT DUPLICATE RECEIPT
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CITY Of BOZEl~AN
CITY HALL
411 EAST ~AIH STREET
REG/RCPT : 81-28883 C:81-25-1995
CASHIER ID : B 12:26:08 A:81-25-1995
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3691 REFUNDS & REIl'lBUR $i31, 728. 81
PRJft7B9 JE~EL FOOD STORES
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TOTAL DUE $131,728.81
RECEIVED FRO!'!: U.S. FIDELITY & GUARANTY INS.
CHECK $131,728.81
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TOTAL TENDERED $131,728.81
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CHANGE DUE $8.88
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