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4.14. SR 05-16-2016City of Elk — River Request for Action To Item Number Mayor and City Council 4.14 Agenda Section Meeting Date Prepared by Consent May 16, 2016 Cal Portner, City Administrator Item Description Reviewed by Settlement Agreement with Gray Plant Reviewed by Action Requested Approve, by motion, a settlement agreement with Gray Plant. Background/Discussion During litigation for Pinewood Golf Course, our legal counsel identified a potential legal claim against the firm hired to prepare the purchase agreement and contract for deed. With City Council consent, counsel filed a claim in district court to protect the city's interests following the outcome of the Pinewood litigation. Following the settlement agreement to complete the transaction to acquire Pinewood, counsel initiated contact with the legal representation for Gray Plant to negotiate a settlement in lieu of a trial. Gray Plant indicated a desire to mediate the claim. Both parties successfully mediated on April 27, 2016, and the city council expressed consensus to accept the agreement on May 2, 2016. Financial Impact Gray Plant will remit $410,000 to the City of Elk River to resolve the claim. Attachments ■ Settlement Agreement P a w E A E U s r NaA f RE] 2010-14 MEDIATED SETTLEMENT AGREEMENT THIS AGREEMENT is fully effective as of April 27, 2016, and is entered into by the City of Elk River (City) and Gray, Plant, Mooty, Mooty & Bennett. P.A. (Gray Plant), Charlie Wilson and Peter Beek. Gray Plant, Mr. Wilson and Mr. Beck shall sometimes be collectively referred to herein as "Defending Parties." The City and Defending Parties shall be collectively referred to as "Parties." RECITALS Whereas, Defending Parties represented the City in connection with the 2006 purchase of the golf course property identified as "Gutlot A and Gutlot B, Pinewood, according to the plat on file in the office of the Regisrar of Titles in and for Sherburne County, Minnesota, FID NO 75- 504-0010 and 75-504-0020" (the "Property"). Whereas, as part of its representation of the City, Defending Parties were involved in the preparation of a purchase agreement, lease and contract for deed and related documents (the "Documents") to allow for sale of the Property from Paul and Pamela Krause ("Krause") to the City. Whereas, the City contends that Defending Parties failed to provide legal services for preparation of the Documents in accord with the required standard of care and alleged that Defending Parties failed to prepare the Documents to comply with the statutory requirement limiting the Krauses' remedies against the City upon default to recovery of the Property. Whereas, the City contends it experienced damages as a result of the alleged errors on the part of Defending Parties and was forced to pay damages to the Krauses related to the sale of the Property. Whereas, the Defending Parties denied liability and asserted that they provided all legal services and prepared the Documents in accordance with the required standard of care. Whereas, on February 24, 2014, the City commenced a lawsuit against the Defending Parties alleging professional negligence and damages arising from the Documents prepared for the Property. Whereas, Defending Parties submitted an answer denying liability and raising affinnative defenses. Whereas all claims between the parties are currently pending in Sherburne County District Court in the matter of The City of Elk River v. Gray, Plant, Mooty, Mooty & Bennett, Sherburne County District Court, Civ. No. 71 -CV -14-330 (the "Action"). Whereas, the Parties now desire to resolve, settle and dismiss all claims that were made or could have been made in the Action on the following terms: 1. In consideration of.the payment of $410,000 from Defending Parties, the receipt and sufficiency of which are hereby acknowledged, the City and Defending Parties hereby unconditionally mutually release and forever discharge each other, and their respective insurers, successors, parents, affiliates, assigns, agents, employees, dealers and distributors, and the officers, directors and assigns of each, from any and all claims that were made, or could have been made, past present or future, known or unknown, arising from, relating to or in any way connected with the sale or transfer of the Property, the preparation of the Documents, the alleged professional negligence or damages or any claims that were made or could have been made in the Action (the "Released Claims"). 2. The Released Claims include the release of all claims, counterclaims, cross claims or claims of any sort between the Parties, and includes specifically the release of any subrogated interests on the part of the City or its insurers related to insurance coverage, defense costs, contribution, subrogation, or indemnification. 2 3. Payment shall be made within 21 days from the date of approval by the City Council for the City of Elk River, via wire transfer or via check payable to the City of Elk River and delivered to counsel for the City at the address set out below. 4. The parties recognize and agree that this settlement is the compromise of disputed claims and that the consideration accepted and paid hereunder is not intended nor shall it be construed by anyone to be an admission of liability by or on behalf of any of the parties, by whom all such liability is expressly denied, said parties intending by this settlement merely to avoid litigation and buy their peace. 5. Subject to the provisions of paragraph 6 below, this settlement is binding and was reached during a mediated negotiation. Before the mediation session, the parties were each informed in writing that (a) the mediator has no duty to protect them with information about their legal rights, (b) signing a mediated settlement agreement may adversely affect their legal rights, and (c) they should consult an attorney before signing a mediated settlement agreement if they are uncertain of their rights. 6. This Agreement is conditioned only upon its approval by the City Council for the City of Elk River. The undersigned, as representatives of the City agree to recommend approval of the settlement to the City Council. The Parties to this Agreement each agree that if this Agreement is not approved by the City Council for the City of Elk River within 30 days from the date of this Agreement, then the Defending Parties shall not be bound by this Agreement. 7. Upon approval by the City, the terms of this Agreement shall be binding upon and be enforceable against and shall inure to the benefit of the Parties hereto jointly and severally and the heirs, successors, personal representatives, and assigns of each. 8. The Parties will cooperate fully and execute all supplementary documents and will take all additional actions as may be reasonably required or appropriate to effectuate the purpose and intent of this Settlement Agreement and Release, including preparation and execution of a stipulation to dismiss the pending lawsuit with prejudice and on the merits. 9. The parties may execute this Settlement Agreement and Release separately, and each separate signed document, whether hard copy, facsimile or email, shall be deemed an original regardless of the date of its execution and delivery, and these counterparts together shall be one and the same Settlement Agreement and Release. 10. The Parties will each bear their own attorneys' fees and other legal costs associated with the Action and Mediation. 11. The Parties each represent that they have not assigned or transferred any claims that are the subject of the Action, and are not aware of any other person or entity that claims to have a right to pursue the Released Claims. 12. By their signatures below the Parties each represent that they have read this document, relied on the advice of their respective attorneys regarding the legal consequences of this Agreement, know and understand the terms and effect hereof, have fully discussed the terms and effect of this document with their attorneys or clients, have authority to enter into this Agreement, that the terms of this Agreement are fully understood and voluntarily accepted by the Parties, and that each Party has signed this Agreement as its free and considered act. [Balance of page intentionally lett blank] E City of Elk River v. Gray, Plant, Mooty, Mooty & Bennett Mediated Settlement Agreement CITY OF ELK RIVER Dated: April 27, 2016 Dated: April 27, 2016 y y Its Mayor Its By. Its Citv Clerk Dated: April 27, 2016 By Its Attorneys Tbbmas M. Scott Campbell Knutson, P.A. Grand Oak Office Center I 860 Blue Gentian Road, Suite 290 Eagan, MN 55121 City of Elk River v. Gray, Plant, Mooty, Mooty & Bennett Mediated Settlement Agreement GRAY, PLANT, MOOTY, MOOTY & BENNETT, CHARLIE WILSON AND PETER BECK Dated: April 27, 2016 Gr , Plan oty, Mooty & nett, P.A. Dated: April 27, 2016 Peter Beek 1 Dated: April 27, 2016 G'7 Dated: April 27, 2016 Charlie Wilson By their Attorney **A--1 a04-4-� Ja n R. Asmus Briggs & Morgan 2200 IDS Center 80 South. Eighth Street Minneapolis, MN 55402