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8.6. HANDOUTS 04-04-20161 q OR 6111 "1 N � C IMUNIVOINO). Court File No. 71 -CV -13-1006 PAUL I KRAUSE AND PAMELA FL KRAUSE, husband and w M, "F CITY OF ELK RIVER-, a Municipal Corporation, I Defendant. I'v 17, 1; "W14 TNZMWIMI— T, , Plaintiffil Paul J. Krause and Pamela H. Krause, C%rauses") and Defendant City of Elk Fiver ("Civ) stipulate and agree as follow. WDEREAS, the Krauses have oommenced this action against the City as=ting claims relating to the Cit Y's purchase ofthe Pinewood Oolf Course legally descaibed as fellows:. Outlot A and Oudot B, Pinewood, according to the plat on file in the office of the Registrar of Titles in and for Shednane County, Nnnesota, ("Subject Property-); and WBEREAS, the parties desire to settle any and all dairns which were or could have been asserted herein, and generally all claims arWng out of the sale and purchase ofthe Subject Propeofty, except as specified herein. NOW, T�EREFOREthe parties agree as follows: 1. PlaMM shall convey to the City by Warranty Deed title to the Subject Property. Delivery of the deed and evidence of title shall be in accordimce with Paragraphs 2 and 3 ofthe Con traot for Deed between the parties dated April 6, 2008, provided that the City waives any 186446V4 objections to the rnarketabr'lityr oftide related in any way to encumbrances caused or pertniged by the City during its operation and occupancy of the (Property. The City firer acknowledges tat any exceptions to title set forth on the Schedule H -Section H to the Commits hent of Tide Insurance dated March 21, 2466 are not the responsibility of Plaintiffs, provided the PlabrM shah, at closet& satisfy any mortgage encumbering the Pwpmty granted by the Plaintiff& 7be City acknowledges that all objections sat forth in the ,April 3, 2013 letter from Bradley L Hintze: relating to the closing on the Propertyare the not responsibility ofPlaintiffs, provided that the City may seek any and all endorsements relating to the tide, but obtaining such endorsements are not a condition to closing. Tire City is not waiving its right to object to any new encamahrasice oftitle not identffied in the Commitment of Title Ise dated April 15, 2013. 2. Delivery of W=anty Deed shall occur at closing which shall occur on May 15, 2016, or at such Tither date as agreed to by the parties in voiting. 3. At closing the City shall pay to Plainfiffi the sura of $1,550,000.00 in full i sari ac ion of an its obligations Tinder the Purchase Agreement and Contract for 17e4 and as further consideration, for the parties` promises and undertakim herein C Paysmenf}. The Payment shall not be offset by any prior camas paid to the Phdntiffi by the City - 4. The Subject Property will be conveyed AS IS, WBM IS AND WffH ALL FAULTS. The City acknowledges that it has occupied and operated the Subject Property s et 2006. 5. Upon compliance by both parties with the terms and conditions of this Stipulation, the parties mutually release flit other and their respective agents, employees, insurers and sureties, and each of there, from any and all claims, dernands, actions, causes of action, obligations, liabilities, expenses, costs, attttomeys' fees, procesdfiW and judgra ts, of whatsoever kind or nature, which either party novo has against the other, their agents, empIoyees, insurers and saeties, 2 18"4s4 past; present or futim known or-unknovm, arising in any way from the QVsparcbese oftbo Butted Property, Including all claims tbav=- or could Mvo becatssertad intbme proceeding. This release does not apply to any breach by Plairift, of any wamantios of tfflt made by delivery Of ft WetranV Deed at closing to the extent swh warrandes have not been. -waived by the City. 6. The City sW pay all special assessmeigs and taxes, if aay, relating to the propeq. Plafirft shag pay the state deed tax. awarded to eftherparty. 8. A pa that is in full compliance WM its obligations hereunder, may ea6bree this agreement against the ofl=, by specific peTformanoe. 'Lite CiVmconditionally waives any deftse W, a C - I lot 0m , Dated- ---2$� / 2016 � 20145 2016 186446A CITY OF ELK RIVER By: Jobn J. Dietz, Mayor By:.. Tina Allard, City Cler STATUTORY SHORT FORM POWER OF ATTORNEY MINNESOTA STATUTES SECTION 523.23 Before completing and signing this form, the principal must read and initial the IMPORTANT NOTICE TO PRINCIPAL that appears after the signature lines in this form. Before acting on behalf of the principal, the attorneys) -in -fact must sign this form acknowledging having read and understood the IMPORTANT NOTICE TO ATTORNEYS) -IN -FACT that appears after the notice to the principal. PRINCIPAL (Name and Address of Person Granting the Power) B. Pamela Krause, also known as Pamela H. Krause 6735 Suffield Avenue Warrenton, VA 20187 Amanda K. Hazel 6594 Mcraes Road Warrenton, VA 20187 SUCCESSOR ATTORNEY(S)-IN-FACT To act if any named attorney-in-fact dies, resigns, or is otherwise unable to serve. First Successor Blair P. Krause 2310 B rookwater Drive Alpharetta, GA 30005 Second Successor Zendalyn D. Malecha 27266 Galaxie Avenue Farmington, MN 55024 Notice: If more than one attorney-in-fact is designated to act at the same time, make a check or "x" on the line in front of one of the following statements: X Each attorney-in-fact may independently exercise the powers granted. All attorneys -in -fact mustjointly exercise the powers granted. EXPIRATION DATE (Optional) N/A (Use Specific Month, Day, Year Only) 1, Pamela H. Krause, (the above named Principal), do hereby appoint the above named Attorney(s)-in- Fact to act as my attorney(s) in fact: FIRST. To act for me in any way that I could act with respect to the following matters, as each of them is defined in Minnesota Statutes section 523.24: (To grant to the attorney-in-fact any of the following powers, make a check or "x" on the line in front of each power being granted. You may, but need not, cross out each power not granted. Failure to make a check or "x" on the line in front of the power will have the effect of deleting the power unless the line in front of the power of (N) is checked or x ed.) Check or "x" (A) real property transactions; I choose to limit this power to real property in County Minnesota, described as follows: (if more space is needed, continue on the back or on an attachment.) (B) tangible personal property transactions; (C) bond, share, and commodity transactions; (D) banking transactions; (E) business operating transactions; (F) insurance transactions; (Cr) beneficiary transactions; (M gift transactions; (1) fiduciary transactions; (J) claims and litigation; (K) family maintenance; (L) benefits from military service; (M) records, reports, and statements; X (N) all of the powers listed in (A) through (M) above and all other matters, other than health care decisions under a health care directive that complies with Minnesota Statutes chapter 1450. SECOND: (You must indicate below whether or not this power of attorney will be effective if you become incapacitated or incompetent. Make a check or "x" on the line in front of the statement that expresses your intent.) X This power of attorney shall continue to be effective if I become incapacitated or incompetent, — This power of attorney shall not be effective if I become incapacitated or incompetent. OA THIRD: My attorneys) -in -fact MAY NOT make gifts to the attorney(s)-in-fact, or anyone the attorneys) -in -fast are legally obligated to support, UNLESS I have made a check or an "x" on the line in front of the second statement below and I have written in the name(s) of the attorney(s)-in-fact. The second option allows you to limit the gifting power to only the attorney(s)-in-fact you name in the statement. Minnesota Statutes section 523,24, subdivision 8, clause (2), limits the annual gift(s) made to my attorneys) -in -fact, or to anyone the attorneys) -in -fact -fact are legally obligated to support, to an amount, in the aggregate, that does not exceed the federal annual gift tax exclusion amount in the year of the gift. X I do not authorize any of my attorneys) -in -fact to make gifts to themselves or to anyone the attorney(s)-in-fact have a legal obligation to Support. I authorize (write in name(s)) as my attorneys) -in -fact, to make gifts to themselves or to anyone the attorneys) -in -fact have a legal obligation to Support. FOURTH: (You may indicate below whether or not the attorney-in-fact is required to make an accounting. Make a check or "x" on the line in front of the statement that expresses your intent.) — My attorney-in-fact need not render an accounting unless I request it or the accounting is otherwise required by Minnesota Statutes section 523.21. X My attorney-in-fact must render [Monthly, Quarterly, Annual) accountings to me or to my then - surviving children if I am incapacitated during my lifetime, and a final accounting to the trustee or the personal representative of my estate, if any is appointed after my death In Witness Wsigned my name hereof I have hereunto sigthis day of�t�, 20 �15. Z3 Z__ B. Pamela Krause, Principal COMMONWEALTH OF VIRGINIA ss. COUNTY OF FAUQUIER ,; O&rn 6,64-" The foregoing instrument was acknowledged before me this day of A4kguft, 2015, by B. Pamela Krause, also known as Pamela H. Krause. Notary Stamp or Seal 0 . V1 A /('0P REGISTRAYION NO. 7379087 :MY COMM. EXPIRES: 0 V, IP r C_%• '07" \C' Ry pko%oo 1111111111110 Signature of Notary -Public Specimen Signature of Attorney(s) in Fact (Notarization not required) Acknowledgement of notice to attorney(s)-in-fact and specimen signature of attorneys) -in -fact. By signing below, I acknowledge I have read and understand the IMPORTANT NOTICE TO THE ATTORNEY(S)-IN-FACT required by Minnesota Statutes, section 523.23 (and attached hereto), and understand and accept the scope of any limitations to the powers and duties delegated to me by this instrument. FINI Whi �Tx mvrm7ml Mad 110m .• Blair P. Krause Zendalyn D. Malecha This Instrument Drafted by: Jeanne E. Morris, Esq. Morris Law Firm, P.A. 8101 — 34`h Avenue South, Suite 310 Bloomington, MN 55425 952-767-3070 READ THIS NOTICE CAREFULLY. The power of attorney form that you will be signing is a legal document. It is governed by Minnesota Statutes chapter 523. If there is anything about this farm that you do not understand, you should seek legal advice. PURPOSE: The purpose of the power of attorney is for you, the principal, to give broad and sweeping powers to your attorneys) -in -fact, who is the person you designate to handle your affairs. Any action taken by your attorneys) -in -fact pursuant to the powers you designate in this power of attorney form binds you, your heirs and assigns, and the representative of your estate in the same manner as though you took the action yourself. POWERS GIVEN: You will be granting the attorneys) -in -fact power to enter into transactions relating to any of your real or personal property, even without your consent or any advance notice to you. The powers granted to the attorneys) -in -fact are broad and not supervised. THIS POWER OF ATTORNEY DOES NOT GRANT ANY POWERS TO MAKE HEALTH CARE DECISIONS FOR YOU. TO GIVE SOMEONE THOSE POWERS, YOU MUST USE A HEALTH CARE DIRECTIVE THAT COMPLIES WITH MINNESOTA STATUTES CHAPTER 1450. DUTIES OF YOUR ATTORNEY(S)-IN-FACT: Your attorneys) -in -fact must keep complete records of all transactions entered into on your behalf You may request that your attorney(s)-in-fact provide you or someone else that you designate a periodic accounting, which is a written statement that gives reasonable notice of all transactions entered into on your behalf. Your attomey(s)-in-fact must also render an accounting if the attorney- in-fact reimburses himself or herself for any expenditure they made on behalf of you. An attorney-in-fact is personally liable to any person, including you, who is injured by an action taken by an attorney-in-fact in bad l faith under the power of attorney or by an attorney -in -fact's failure to account when the attorney-in-fact has a duty to account under this section. The attorney(s)-in-fact must act with your interests utmost in mind. TERMINATION: If you choose, your attorneys) -in -fact may exercise these powers throughout your lifetime, both before and after you become incapacitated. However, a court can take away the powers of your attorney(s)- in-fact because of improper acts. You may also revoke this power of attorney if you wish. This prover of attorney is autornatically terminated if the power is granted to your spouse and proceedings are commenced for dissolution, legal separation, or annulment of your marriage. This power of attorney authorizes, but does not require, the attorney(s)-in-fact to act for you. You are not required to sign this power of attorney, but it will not take effect without your signature. You should not sign this power of attorney if you do not understand everything in it, and what your attorneys) -in -fact will be able to do if you do sign it. Please P" Is e r initials on the following line indicating you have read this IMPORTANT NOTICE TO THE PRINCIP L: (InitialsofPrincipal) You have been nominated by the principal to act as an attorney-in-fact. You are under no duty to exercise the authority granted by the power of attorney. However, when you do exercise any power conferred by the power of attorney, you must. (1) act with the interests of the principal utmost in mind; (2) exercise the power in the same manner as an ordinarily prudent person of discretion and intelligence would exercise in the management of the person's own affairs; (3) render accountings as directed by the principal or whenever you reimburse yourself for expenditures made on behalf of the principal; (4) act in good faith for the best interest of the principal, using due care, competence, and diligence; (5) cease acting on behalf of the principal if you learn of any event that terminates this power of attorney or terminates your authority under this power of attorney, such as revocation by the principal of the power of attorney, the death of the principal, or the commencement of proceedings for dissolution, separation, or annulment of your marriage to the principal; (6) disclose your identity as an attorney-in-fact whenever you act for the principal by signing in substantially the following manner: Signature by a person as "attorney-in-fact for (name of the principal)" or "(name of the principal) by (name of the attorney-in-fact) the principal's attorney-in-fact"; (7) acknowledge you have read and understood this IMPORTANT NOTICE TO THE ATTORNEY(S)-IN- FACT by signing the power of attorney form. You are personally liable to any person, including the principal, who is injured by an action taken by you in bad faith under the power of attorney or by your failure to account when the duty to account has arisen. - The meaning of the powers granted to you is contained in Minnesota Statutes chapter 523, If there is anything about this document or your duties that you do not understand, you should seek legal advice. CAMPBELL FU�TUTSON April 4, 2016 Mr. Calvin Partner, City Administrator City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Re. Pinewood Golf Course/ Krause Stipulation of Settlement Dear Mr. Partner: Attached is the Stipulation of Settlement signed by Mr. Krause for consideration by the Council, This matter is scheduled for trial commencing tomorrow, April 5. The settlement provides for payment of $1,550,000.00 to the Krauses in exchange for the conveyance of fee title of the property to the City and the dismissal of the p . lawsuit seeking a judgment for damages against the City. By way of background, the City purchased the golf course property in 2006 for $1.8 Million. The purchase was on a contract for deed, with the principal balloon payment and last annual interest payment totaling approximately $1,5 Million due in April of 2013. In light of the dramatic decrease in property values that had occurred since 2006, the City attempted to negotiate a reduced payoff amount at that time, Mr. Krause refused and commenced this lawsuit in June of 2013 seeking a court order requiring the City to perform, damages, interest and attorney's fees. The matter has been in litigation since that time. Our law firm was assigned by the City's insurer, the League of Minnesota Insurance Trust, to defend the City. After a series of pretrial orders by the judge and an appeal by the City to the Court of Appeals as mentioned above, the matter is scheduled for trial commencing tomorrow. As a result of the judge's pretrial orders, most of the issues have already been decided. If the City proceeds to trial tomorrow, the City will be facing a situation where a judgment will be entered against the City in an amount between $1.2 Million and $1.5 Million, with the Krauses having the right to cancel the 186462v] Mr. Calvin Portner April 4, 2016 Page Two contract for deed and take back the property. Under this scenario, the City would have a substantial darnage judgment against it and have also lost the property. The City would then appeal to the Minnesota Court of Appeals in hopes of having the judgment thrown out, with the Krauses limited to taking back the property. We have extensively discussed this litigation in two recent closed sessions with the council. As a result of those discussions, settlement discussions were initiated with the Krauses attorney, resulting in the proposed settlement. in exchange for the $1,550,000 payment to the Krauses, the lawsuit will be dismissed, with the City retaining ownership of the golf course and all amounts due the Krauses considered paid in fall. An appraiser retained by the City valued the property at $565,000 as of July 1, 2014. If the City goes to trial, a judgment potentially as high as $1.5 Million could be entered against the City and the Krauses would have gotten the golf course back. In exchange for giving up its right to appeal this judgment, the City will own the property outright, free and clear of any claims by the Krauses, and the litigation will come to an end, without the continued uncertainty of another year or more of appeals. We recommend approval of the Stipulation of Settlement. Best regards, CAMPBELL KIS UTSON Professional Association By: '�'Tbomas M. Scott TMS/qJh Enclosure 1864620