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HomeMy WebLinkAbout2005.10.13_City Council Agenda_SpecialPUBLIC NOTICE OF THE MEETING OF THE OWASSO CITY COUNCIL TYPE OF MEETING: Special DATE: October 13, 2005 TIME: 7:30 a.m. PLACE: City Hall, Lower Level Conference Room 111 N. Main On Monday, October 10, 2005 at 3:00pm, Mayor Thoendel called a special meeting of the Owasso City Council. Notice and agenda filed in the office of the City Clerk and posted at City Hall at 5:00 p.m. on Monday, October 10, 2005. h f Juliann . Stevens. Administrative Assistant AGENDA 1. Call to Order Mayor Craig Thoendel 2. Consideration and appropriate action relating to the City of Owasso vs. William Lewis civil action. Mr. Ray Attachment #2 Staff will recommend Council action relating to the City of Owasso vs. Williams Lewis civil action. 3. Adjournment. 0 S \Agendas\Counci1\2005\1013. doc MEMORANDUM TO: THE HONORABLE MAYOR AND COUNCIL CITY OF OWASSO FROM: RODNEY J. RAY CITY MANAGER SUBJECT: CIVIL ACTION - CITY OF OWASSO VS. WILLIAM LEWIS DATE: October 12, 2005 BACKGROUND: As you know, the City of Owasso filed a legal action against Bill Lewis, PE in an effort to recover the cost of repair and remediation to the drainage system in the Fairways subdivision. The action claimed negligence on the part of Mr. Lewis as the engineer for the storm water facilities design. This lawsuit has been active for more than one year. Prior to today the case had not progressed beyond the "discovery" stage. However, late last week our attorney (Danny Williams) received a request for a settlement conference. The basis of the settlement request was that Mr. Lewis had directed his insurance company to tender an offer of settlement and have that offer accepted by October 17th or he would file personal and business bankruptcy. The threat has credibility because Mr. Lewis' insurance policy has a limit of only $100,000 (including legal defense) and any potential exposure above that limit would be his personal liability. Filing bankruptcy would, according to both Julie Lombardi and Danny Williams provide protection for him in the event of an adverse verdict . On October 5th, Mr. Williams, Ms Lombardi and I met with Mr. Lewis and his attorney, Mr. Harry Crowe, for the purpose of discussing the position of each side. It was clearly communicated that the goal of this litigation was two-fold and that those goals had not changed. First, to clearly signal to all developers and engineers that development design work that was deemed "negligent" would not be tolerated by the City and that action to rectify such would be taken. Secondly, the City desired to recover taxpayer funds spent to remedy such negligent design. Based on the situation described above, and considering the goals of the legal action it has become apparent that we can achieve the "message sending" we desired. However, the insurance company has already spent approximately $17,000 of the $100,000 policy to defend the suite, leaving only $83,000 remaining available from the insurance policy. Thus, absent assets held by Mr. Lewis being "attached" by virtue of a judgment, we would not be able to recover the $350,000 spent on correcting the problems caused due to C his negligence. City of Owasso vs. William Lewis October 11, 2005 Page 2 of 2 And, if he were to make good on his bankruptcy threat it appears that no other assets would be available for attachment. Additionally, if we take this matter through the full litigation it is expected that his attorney fees would total about $30,000 to $40,000 leaving the insurance policy with only $50,000 to $60,000 to pay the City. After review and advice from both Julie and Danny, I authorized Mr. Williams to agree (contingent upon City Council approval) to a settlement that contained the following components: 1) Cash payment to the City in the amount of $100,000; 2) No agreement to any "confidentiality" clause, we want to be sure that others know the city's position on these issues. Subsequently, Mr. Lewis agreed to a personal payment of $17,000 and the insurance company agreed to an $83,000 payment to bring the total to $100,000. Additionally, there was agreement to the condition of "no confidentiality". It should be noted that both Ms Lombardi and Mr. Williams did a very good job of moving this to a settlement. While my report is to give you an advance notice and is short and to the point, it took some time to reach the agreement through the negotiations. It should also be noted that the Bankruptcy Laws will undergo significant change on October 17th and Mr. Lewis is absolutely insistent on approval of the settlement or he will be forced to file prior to that date. or While I am not happy that we couldn't recover the entire amount, I do believe this settlement to be the best deal available and I do believe Mr. Lewis is ready to protect his position by filing for bankruptcy. If you have questions please call Julie Lombardi or me. RECOMMENDATION: Staff recommends Council acceptance of the Agreement of Settlement and Release between the City of Owasso and William E. Lewis and Lewis Engineering, P.C., and authorization of the Mayor to execute the agreement. ATTACHMENT: 1. Copy of the proposed settlement agreement 0 A 014 AGREEMENT OF SETTLEMENT THIS agreement is made and entered into by and between the of Owasso, Oklahoma (Owasso); and William E. Lewis and Lewis Engineering, P.C. (collectively Lewis) with respect to the following facts: In 1995 Lewis was employed by Kourtis Properties, L.L.C. for the design of a real estate development in the City of Owasso known as the Fairways at Bailey Ranch (the development). The development consisted of residential subdivisions known as the Fairways at Bailey Ranch, numbers I through VI. Lewis' duties included the design of the stormwater drainage systems for the development and parts of the adjacent golf course. On January 28, 2004, Owasso brought an action against Lewis in the District Court for Tulsa County, Oklahoma, Case No. CJ-2004-601 (the lawsuit) by which Owasso asserted claims that Lewis had improperly designed the stormwater drainage system for the development and claimed damages for breach of contract and negligence. Owasso and Lewis have agreed to compromise and settle Owasso's claims against Lewis by the payment of the sum of One Hundred Thousand and No/1-00 Dollars ($100,000.00), by and on behalf of Lewis to Owasso within 30 days after the date this agreement is approved by the City of Owasso governing body and signed by its duly authorized officials. NOW THEREFORE the parties agree: U Within 30 days after this agreement is approved by the governing body of Owasso and signed by its duly authorized officials, Lewis will cause the sum of $100,00.00 to be paid to Owasso. Said sum will be paid by Lewis and his insurer, Continental Casualty Company, in such proportions as the payers shall determine. 2. In consideration of such payment Owasso does hereby release, remise and forever discharge Lewis and Lewis' insurer of and from all claims made or that could have been made in the lawsuit and any and all claims, whether known or unknown, or that may hereafter arise, that relate in anyway to Lewis' work on the development including, but not limited to, stormwater drainage design of the Fairways residential subdivisions and golf course. It is agreed that this is a settlement of a disputed claim and is not an admission of fault or liability on the part of Lewis. 4. Owasso and Lewis will each bear their own costs and attorneys fees. 5. Forthwith, upon receipt of payment Owasso will dismiss the lawsuit with prejudice. IN WITNESS WHEREOF a duly authorized representative of each of the parties, each of whom warrants his authority to so do, has placed his or her signature hereon in the space provided below on the date set forth opposite the signature. 1401 2 Dated: %6 G LEWIS ENGINEERING, P.C. ~01 Dated: 7 l Dated: VED: F WILLIAM E. LEWIS, Individually B Y ~ William E. Lewis, President The City of Owasso, Oklahoma (nl~ By Craig Tho or ATTEST: ;1-1:2~ Sherry Bishop, City Clerk BY. APPROVED: Marry M. rowe, Jr. Rodney Ray, City Manager Attorney r Lewis Julie Lombardi, City Attorney Danny C. Williams, Attorney for Owasso 3