HomeMy WebLinkAboutSettlement Agreement for March 5, 2009 Incident Related Costs.pdf
Commission Memorandum
REPORT TO: Honorable Mayor and Commission Members
FROM: Anna Rosenberry, Finance Director
Greg Sullivan, City Attorney
Chris Kukulski, City Manager
SUBJECT: Settlement Agreement with NorthWestern Energy for March 5, 2009
Incident Related Costs
MEETING DATE: April 19, 2010
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Authorize City Manager to Sign Settlement Agreement for
March 5, 2009 Incident Related Costs.
BACKGROUND: During the March 5, 2009 incident, the City tracked expenses related to our
efforts to reduce the property damage and the public health and safety risks brought on by the
explosion on Main Street.
Due to the unprecedented and substantial nature of the response that was required, in May 2009
we requested that NorthWestern Energy reimburse all of the staff time, equipment usage and
supply purchases that the City incurred to handle the incident.
Requested Reimbursement for Incident Response Quantity Charge
Staff Hours - including regular hours and overtime efforts
221 Individuals with incident hours (65% of City Staff)
5,079 hours $209,577
Supply Costs
4.7 million gallons of water to suppress fire
Materials for boarding windows
Investigation expenses, etc.
various 26,853
Equipment Usage
Over 200 pieces of equipment
-Police cars, public works trucks, fire engines, generators, street
sweepers, etc.
2,000+ hours 73,713
TOTAL Requested Reimbursement $310,143
19
Although they were used heavily during the incident, we did not request reimbursement for:
Building Usage (City Hall, Old City Hall, Fire Station #1, City Shops, Library,) Technology
System Usage (cable television system, website, phone, wireless, etc.)
We have been in discussions with NorthWestern Energy officials and their insurance
representatives to resolve this issue. We have developed the attached settlement agreement,
which Northwestern Energy is agreeable to. It reimburses the City a total of $163,624 for
incident related costs.
Settlement Agreement Quantity Amount
Staff Hours - no regular hours; only overtime to non-exempt employees,
including direct benefit costs
1,834 hours $58,058
Supply Costs
4.7 million gallons of water to suppress fire
Materials for boarding windows
Investigation expenses, etc.
Deductible for Property Damage
various 31,853
Equipment Usage
Over 200 pieces of equipment
-Police cars, public works trucks, fire engines, generators, street
sweepers, etc.
2,000+
hours
73,713
TOTAL Settlement Agreement $163,624
The agreement alsocontains a number of clauses, including:
Section 2: The City forever releases NorthWestern Energy "from every claim, demand, liability,
action and cause of action whatsoever, of every kind and nature, ...whether presently
known or unknown,... arising out of or related to the March 5, 2009 explosion and fire that
occurred in the 200 block of East Main Street in Bozeman, Montana"
Section 4: The agreement is no admission of liability by NorthWestern Energy.
UNRESOLVED ISSUES: None. NorthWestern Energy has agreed to sign the attached
settlement.
FISCAL EFFECTS: When accounting for incident related costs, we accumulated paid
overtime hours and supply costs out of a separate special revenue fund. Regular hours and
equipment fuel were charged to FY09 department budgets. When we billed Northwestern
Energy for these costs, a receivable was recorded in this fund.
The settlement amount will make this special revenue fund whole. It will also compensate a few
funds for the utilization of their equipment and fuel (charged in FY09.) The following amounts
will be returned to the fund and department that provided the equipment. We recommend
adding these amounts to the reserve of each fund, to help support equipment replacement in the
future.
20
DEPARTMENT EQUIPMENT TOTAL AMOUNT Budgeted Fund
PARKS $ 1,976.00 General Fund
POLICE $ 28,389.00 General Fund
FIRE $ 31,049.00 General Fund
STREETS $ 8,607.00 Street Maintenance Fund
WATER $ 3,122.00 Water Fund
$ 73,143.00 TOTAL
ALTERNATIVES: We could reject signing the Settlement Agreement; Our options would
be to continue to pursue collection through the courts, or drop our request for reimbursement
altogether.
Attachments: Settlement Agreement
Report compiled on: April 13, 2010
21
DB04/837149.0002/2436544.3 CD04 1
SETTLEMENT AGREEMENT AND RELEASE FROM LIABILITY
RELEASOR: City of Bozeman, Montana
RELEASEES: NorthWestern Corporation d/b/a NorthWestern Energy and its
affiliated companies, successors, assigns, agents, partners, officers,
directors, employees, insurers and attorneys
INCLUDING
RELEASED Chartis (f/k/a AIG), Energy Insurance Mutual and ACE-Bermuda
INSURERS:
DESCRIPTION March 5, 2009 Explosion and Fire in 200 Block of East Main
OF INCIDENT: Street, Bozeman, Montana
SETTLEMENT
AMOUNT: $163,624
This Settlement Agreement and Release from Liability ("Agreement") is made
and entered into by and between NorthWestern Corporation d/b/a NorthWestern
Energy (NorthWestern) and the City of Bozeman, Montana ("City" or
"Releasor") (together referred to as “Parties”).
For good and valuable consideration mutually had and received, the sufficiency of
which is hereby acknowledged, the Parties agree as follows:
1. Settlement Payment to the City of Bozeman
Within thirty (30) days after acceptance and execution of this Agreement by the
City, NorthWestern or its insurers acting on its behalf shall pay the City the sum of One
Hundred Sixty Three Thousand, Six Hundred Twenty Four and no/100ths Dollars
($163,624).
2. Release of NorthWestern Corporation d/b/a NorthWestern Energy and its Insurers
In partial consideration of the payment referred to in Paragraph 1 hereof, the City
agrees to settle with and fully and forever release and discharge NorthWestern
Corporation d/b/a NorthWestern Energy, including its affiliated companies, successors,
assigns, agents, partners, officers, directors, employees, attorneys, insurers and adjusters
and their affiliated companies (including but not limited to Chartis insurance company
[formerly known as AIG insurance company], Energy Insurance Mutual, ACE-Bermuda
and GAB Robins NA Inc.) (hereinafter collectively referred to as the "Releasees") from
every claim, demand, liability, action and cause of action whatsoever, of every kind and
nature, whether arising out of contract, tort, statute, common law or otherwise, in law or
in equity, including all claims for compensatory, special, liquidated and punitive
damages, penalties, costs, expenses and attorneys' fees, and other types of loss or losses,
22
DB04/837149.0002/2436544.3 CD04 2
whether presently known or unknown, fixed or contingent, matured or unmatured,
suspected or unsuspected, arising out of or related to the March 5, 2009 explosion and
fire that occurred in the 200 block of East Main Street in Bozeman, Montana, including
but not limited to all property damages, emergency response costs, personnel costs,
equipment costs, and supply costs incurred by or on behalf of the City.
As additional consideration for the payment of the aforementioned sum, Releasor
further agrees to release and discharge the insurance carriers and adjusters for
NorthWestern Corporation and their affiliated companies (including but not limited to
Chartis insurance company (formerly known as AIG insurance company), Energy
Insurance Mutual, and ACE-Bermuda) and GAB Robins NA Inc. from all obligations
related to Releasor's claims under any of NorthWestern Corporation's insurance policies
and to release and discharge all of the Releasees from any and all claims Releasor might
have against any of them arising out of their investigation, handling, adjusting, defense or
settlement of any claims by Releasor arising out of or related to the March 5, 2009
explosion and fire that occurred in the 200 block of East Main Street in Bozeman,
Montana including, without limitation, any common law claims and any claims under the
Montana Unfair Trade Practices Act, § 33-18-242, MCA.
3. Release of Future Damages
Releasor acknowledges that its losses, damages and injuries resulting from the
March 5, 2009 explosion and fire that occurred on Main Street in Bozeman, Montana
may not currently be fully known and may be more extensive or more serious than it is
now understood or expected and Releasor agrees, as a further consideration for the
settlement paid hereunder, that this Release also applies to any and all future losses,
damages and injuries resulting from the March 5, 2009 explosion and fire that occurred
on Main Street in Bozeman, Montana, even if some of those losses, damages and injuries
are now unanticipated, unexpected or unknown, as well as any and all other losses,
damages and injuries that are currently known or anticipated.
4. No Admission of Liability
Releasor understands and acknowledges that the above-mentioned settlement sum
is being paid as the sole consideration for a full satisfaction and accord to compromise a
disputed claim, that the Releasees and their insurers deny that Releasees and/or their
insurers are liable for any of the losses, damages or injuries arising from the March 5,
2009 explosion and fire on Main Street in Bozeman, Montana and that they have agreed
to pay the consideration stated herein solely to avoid the costs and uncertainties of
litigation. Neither payment of that sum by or on behalf of the Releasees nor the
negotiations for settlement are an admission of liability by the Releasees or their insurers,
which liability is expressly denied.
23
DB04/837149.0002/2436544.3 CD04 3
5. No Additional Claims
Releasor represents that Releasor does not contemplate pursuing any additional
claims against any other party potentially liable for the losses, damages, and injuries for
which this Release is given.
7. Binding Agreement
This Settlement Agreement and Release shall be binding upon and inure to the
benefit of the successors and assigns of the parties.
8. Entire Agreement
This written Agreement contains the entire understanding between the Parties
hereto in connection with the subject matter and it supersedes and replaces any and all
prior negotiations, agreements and representations, whether oral or written. City
acknowledges that neither the Releasees, nor any agent or attorney of any of the
Releasees, has made any promises, representations or warranties whatsoever, express
or implied, not contained herein, concerning the subject matter hereto, to induce City to
execute this Agreement, and acknowledges that it has not executed this Agreement in
reliance upon any promises, representations, or warranties not contained herein. City
further acknowledges that it has had a full and complete opportunity to independently
investigate all facts material hereto, and has done so.
9. Governing Law
The interpretation and enforcement of this Agreement shall be governed by the
laws of the State of Montana.
10. Interpretation and Construction
This Agreement has been jointly drafted and/or reviewed by the Parties hereto
following negotiations between them. It shall be construed according to the fair intent of
the language as a whole, and not for or against either of the Parties.
24
DB04/837149.0002/2436544.3 CD04 4
11. Representations
The City represents that it is duly organized and has all requisite power and
authority to execute and deliver this Settlement Agreement and Release From Liability
and to perform its obligations thereunder; has taken all necessary action to authorize the
execution and delivery of this Agreement and the performance of the obligations
thereunder; the Agreement has been duly executed and delivered by the City; neither the
execution nor the delivery of the Agreement nor the consummation of any of obligations
contemplated, nor compliance with the terms and provisions thereof, will contravene the
ordinances, rules and, regulations of the City or the laws of the State of Montana; and all
consents, authorizations and orders required to be obtained, and all notices and filings
required to be made, with any court, government authority, regulatory body or third party
for the execution, delivery and performance by the City of the Agreement and the
consummation of the obligations thereby, have been duly obtained or made.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the ____ day of ____________, 2010.
NORTHWESTERN CORPORATION d/b/a
NORTHWESTERN ENERGY
By: ___________________________________
Robert C. Rowe
President and CEO
CITY OF BOZEMAN, MONTANA
By: ___________________________________
Chris Kukulski
City Manager
By: ________________________________
Attorney for City of Bozeman
Approved as to form and content
25