HomeMy WebLinkAbout14-171 Resolution No. 14-171
RESOLUTION
RATIFYING THE EXECUTION OF A SETTLEMENT AGREEMENT
WITH FIDELITY AND DEPOSIT COMPANY OF MARYLAND REGARDING
WATERFORD SUBDIVISION PERFORMANCE BONDS
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS,
that it hereby ratifies and approves the execution of a settlement agreement with Fidelity and
Deposit Company of Maryland by Sean R. Stegall, City Manager, and Kimberly A. Dewis, City
Clerk, regarding Waterford Subdivision performance bonds, a copy of which is attached hereto
and made a part hereof by reference.
s/David J. Kaptain
David J. Kaptain, Mayor
Presented: December 3, 2014
Adopted: December 3, 2014
Omnibus Vote: Yeas: 9 Nays: 0
Attest:
s/Kimberly Dewis
Kimberly Dewis, City Clerk
SETTLEMENT AGREEMENT
This Settlement Agreement is made and entered into as of the 21St day of November,2014,
by and between the City of Elgin, an Illinois municipal corporation ("Elgin"), and Fidelity and
Deposit Company of Maryland,a Maryland corporation, ("F&D").
RECITALS
WHEREAS. Kimball Hill Homes. Inc. ("Kimball Hill")undertook to develop certain real
property in Elgin. Illinois. commonly known as the Waterford Subdivision, which subdivision is
divided into neighborhoods for the purpose of development;and
WHEREAS, to secure the construction of certain improvements in the Waterford
Subdivision,Kimball Hill procured and delivered to Elgin the following performance bonds issued
by F&D,as surety:
A. Bond No. 08664420 dated July 20, 2004, in the amount of$171,352.50
pertaining to certain grading improvements in Neighborhood I of the
Waterford Subdivision(the"N1 Grading Bond");
B. Bond No. 08664421 dated July 20, 2004, in the amount of$446,631.35,
pertaining to certain grading improvements in Neighborhood 2 of the
Waterford Subdivision (the"N2 Grading Bond");
C. Bond No. 08664422 dated July 20, 2004. in the amount of $251,666.25
pertaining to certain grading improvements in Neighborhood 3 of the
Waterford Subdivision(the"N3 Grading Bond");
D. Bond No. 08664423 dated July 20, 2004, in the amount of $156,200
pertaining to certain mass grading improvements in Neighborhood 4 of the
Waterford Subdivision(the"N4 Grading Bond");
E. Bond No.08825123 dated December 8,2005,in the amount of$277,564.32
pertaining to certain box culvert improvements in Neighborhood 4 of the
Waterford Subdivision(the"N4 Box Culvert Bond");
F. Bond No. 08664415 dated July 16, 2004, in the original amount of
$2,582,829.70.which amount was subsequently reduced to$732,117.40 on
January 12,2007,pertaining to certain improvements in Neighborhood 5 of
the Waterford Subdivision(the"N5 Bond");
WHEREAS. on or about April 23, 2008, Kimball Hill filed a voluntary petition for relief
under Chapter 1 I of the United States Bankruptcy Code in the United States Bankruptcy Court for
the Northern District of Illinois,Eastern Division,as Case No.08-10095;and
WHEREAS, Elgin has notified F&D that Kimball Hilt was in default of its bonded
obligations and made a demand upon the NI Grading Bond,the N2 Grading Bond,the N3 Grading
Bond,the N4 Grading Bond,the N4 Box Culvert Bond and the N5 Bond(collectively,the "F&D
Bonds");and
WHEREAS, F&D undertook an investigation of the claims asserted by Elgin under the
F&D Bonds,which investigation was conducted under a full reservation of rights;and
WHEREAS, Elgin and F&D were not able to settle or resolve any claims under the F&D
Bonds;and
WHEREAS, Elgin subsequently filed a Iawsuit against Arch Insurance Company.Fidelity
& Deposit Company of Maryland, a Maryland corporation, and TRG Venture Two, LLC a
Delaware limited liability company, in the Circuit Court of Kane County under Case No. 12 MR
53 (the"Subject Lawsuit')wherein with respect to F&D Elgin sought a declaratory judgment and
a judgment for damages against F&D under the F&D Bonds;and
WHEREAS, F&D has denied liability under the F&D Bonds;and
WHEREAS, Elgin and F&D have now agreed to settle all issues between Elgin and F&D
regarding the F&D Bonds in accordance with the terms and conditions set forth in this Settlement
Agreement.
AGREEMENT
NOW,THEREFORE,for and in consideration of the mutual undertakings set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Elgin and F&D agree as follows:
-2-
1. The foregoing Recitals are incorporated into this Agreement.
2. F&D shall pay to Elgin within seven (7) days of the complete execution of this
Settlement Agreement the aggregate sum of Nine Hundred Fifty Thousand Dollars
(5950,000.00) ("Settlement Payment") in full and complete satisfaction of all obligations under
the F&D Bonds allocated as follows:
A. The sum of$171.352.00 in full and complete satisfaction of F&D's obligations
under the NI Grading Bond;
B. The sum of$446,631.00 in full and complete satisfaction of F&D's obligations
under the N2 Grading Bond;
C. The sum of$56,415.00 in full and complete satisfaction of F&D's obligations under
the N3 Grading Bond;
D. The sum of$156,200.00 in full and complete satisfaction of F&D's obligations
under the N4 Grading Bond;
E. The sum of$51,385.00 in full and complete satisfaction of F&D's obligations under
the N4 Box Culvert Bond;and
F. The sum of$68,017.00 in full and complete satisfaction of F&D's obligations under
the N5 Bond.
The foregoing allocation of the Settlement Payment amongst the various F&D Bonds has been
determined by F&D and is not intended and shall not be construed as a limitation as to the manner
or purposes for which Elgin expends the Settlement Payment. Notwithstanding the foregoing
allocation of the Settlement Payment amongst the various F&D Bonds, it is agreed and understood
that Elgin may use the Settlement Payment in any manner it deems appropriate, and in its sole
discretion as described in Paragraph 8 hereof. The Settlement Payment shall be delivered to
-3 �
counsel for Elgin, William A. Cogley, Corporation Counsel, City of Elgin, 150 Dexter Court,
Elgin, Illinois 60120.
3. In consideration of and effective upon receipt by counsel for Elgin of the Settlement
Payment, Elgin for itself and any other persons or entities claiming through Elgin (collectively,
"Elgin Releasors") hereby completely, fully and finally releases, remises, acquits and forever
discharges F&D, its affiliates, subsidiaries, successors, assigns, reinsurers, employees, agents,
representatives, attorneys, consultants, contractors, officers, directors, and shareholders
(collectively, "F&D Released Parties"),jointly and severally, from all manner of liability, loss,
damages, expenses, including, without limitation, attorneys' fees,claims, liens,rights of action,
causes of action, assessments, fines, levies, and/or demands, of any nature, whether in law or
equity,known or unknown,which any of the Elgin Releasors has had,now has or may have against
the F&D released Parties arising out of or related to the F&D Bonds.
4. In consideration of the mutual promises contained herein and effective upon receipt
of the Settlement Payment by counsel for Elgin,F&D for itself,its parent,subsidiaries,affiliates,
and successors and assigns,and any other persons or entities claiming through F&D(collectively,
"F&D Releasors"),jointly and severally, hereby fully and irrevocably releases and discharges
Elgin. its attorneys,consultants, successors,assigns,officials,officers, council members,agents,
representatives and employees(collectively,"Elgin Released Parties"),jointly and severally,from
all manner of liability, loss, damages, expenses, including, without limitation, attorneys' fees,
claims, liens,rights of action,causes of action,assessments,fines, levies,and/or demands,of any
nature,whether in law or in equity,known or unknown,which any of the F&D Releasors has had,
now has or may have against the Elgin Released Parties arising out of or related to the F&D Bonds
and/or the Waterford Subdivision.
-4 -
5. It is expressly agreed and understood that the foregoing releases are strictly limited
to the release of the F&D Released Parties and the Elgin Released Parties. The parties hereto do
not intend to release any other person, firm or corporation. including, without limitation, any of
the TRG Entities(as that phrase is hereinafter defined).
6. F&D for itself,its parent.subsidiary and affiliated corporations,and successors and
assigns,and any other persons or entities claiming through F&D,jointly and severally,covenants
not to sue and agrees not to assert any claims, including lien claims, against any real property,
owner or party holding an interest in real property within the Waterford Subdivision with respect
to and as a result of any payments made by F&D with respect to the F&D Bonds. Provided,
however,said covenant not to sue and agreement not to assert claims shall not include claims,liens
and suits against TRG Venture Two, LLC and any of its successors, successors in title, assigns,
affiliates and subsidiaries (collectively, "TRG Entities") and any real property within the
Waterford Subdivision in which any of the TRG Entities has or may have any interest. F&D
reserves the right to assert claims for setoff or contribution against any such owner or real property
or party holding an interest in real property within the Waterford Subdivision [except for any of
the TRG Entities] in the event that, and only in the event that, a claim or suit is brought by any
such party against F&D arising out of or related to the F&D Bonds and that such a claim for setoff
or contribution shall be for defensive purposes only and the amount thereof shall not exceed the
amount claimed by any such parties.
7. Elgin agrees to deliver to counsel for F&D the original N4 Box Culvert Bond and
the original N5 Bond within thirty(30)days after the receipt by counsel for Elgin of the Settlement
Payment
8. Elgin may use the Settlement Payment in any manner it deems appropriate, and in
its sole discretion. with respect to improvements, costs and expenses in connection with the
-5 -
Waterford Subdivision,including but not limited to South Street,and also including but not limited
to litigation expenses including attorneys' fees,expert witness fees and other costs associated with
litigation in connection with the Waterford Subdivision, which improvements, costs or expenses
are not necessarily limited to Neighborhoods 1.2,3,4 and 5,or for any other lawful purposes that
Elgin deems appropriate, in its sole discretion.
9. Except with respect to F&D, Elgin reserves all rights,remedies and defenses with
respect to all claims in connection with the Waterford Subdivision, including but not limited to,
all claims against the TRG Entities,or any other property owner within the Waterford Subdivision
and/or their respective successors and assigns.
10. F&D reserves all rights, remedies and defenses with respect to all claims against
the TRG Entities. Notwithstanding the foregoing, it is agreed and understood that Elgin is not
assigning to F&D any rights or claims it may have against TRG Venture Two, LLC, and Elgin
does not represent or warrant to F&D that F&D has any rights or claims against TRG Venture
Two,LLC.
11. Within three (3) business days after the receipt by counsel for Elgin of the
Settlement Payment, Elgin and F&D shall execute a joint stipulation of dismissal of Defendant
Fidelity and Deposit Company of Maryland in the form attached hereto as Exhibit A to provide
for F&D to be dismissed as a Defendant in the Subject Lawsuit with prejudice and without costs
and shall request that the Court enter the Agreed Dismissal Order of Defendant Fidelity and
Deposit Company of Maryland in the form of the draft order included in Exhibit A. Elgin and
F&D agree that Elgin and F&D shall each bear its own costs,attorneys' fees,and other expenses
incurred in connection with the Subject Lawsuit and that the Court shall retain jurisdiction of Elgin
and F&D to enforce this Settlement Agreement.
- f-
12. This Settlement Agreement contains the entire understandings and agreements of
the parties hereto with respect to the subject matter hereof. All oral or written agreements between
the parties prior to the effective date of this Settlement Agreement and which relate to this
Settlement Agreement and the matters set forth herein are declared null and void. Any
modification of this Settlement Agreement must be made in writing and executed by the parties
hereto
13. Any notice related to this Settlement Agreement shall be deemed made if either
party emails such notice or mails such notice by first class mail,postage prepaid,as follows:
As to the City of Elgin:
William A.Cogley
Corporation Counsel
150 Dexter Court
Elgin,IL 60120-5555
Tel.: (847)931-5659
Fax: (847)931-5665
e-mail:cogley w @cityofelgin.org
With a copy to:
Lawrence R.Moeimann
Hinshaw&Culbertson,LLP
222 North LaSalle Street
Suite 300
Chicago,IL 60601
Tel.: (312)704-3229
Fax: (312)704-3001
e-mail: Imoelmann@hinshawlaw.com
As to Fidelity and Deposit Company of Maryland:
Gregory W. Kilburn
Claim Counsel
P.0. Box 968037
Schaumburg,IL 60196
Tel: (800)670-7177 Ext. 5
e-mail:Gregory.kilburnt :zurichna.con
- 7 -
With a copy to:
Cornelius F. Riordan
Riordan,McKee&Piper, LLC
20 N.Wacker Drive
Suite 910
Chicago,IL 60606
Direct: (312) 589-6010
Fax: (312)663-1028
e-mail:criordan@rmp-11c.com
14. It is understood and agreed by Elgin and F&D that this Settlement Agreement shall
be construed without regard to any presumption or other rule requiring construction against the
drafting party.
15. This Settlement Agreement may be executed in counterparts. Signatures
transmitted by facsimile or e-mail shall have the same legal effect as an original signature.
16. The parties agree that no third party shall have any rights under this agreement.
17. This agreement shall be governed by the law of the State of Illinois.
18. This Agreement may not be assigned by either Party without the written consent of
the other Party. Any assignment in violation of this provision will be void.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement this
2- x r day of November,2014.
CITY OF ELGIN FIDELITY AND DEPOSIT COMPANY
OF MARYLAND
/r.
By: d By:
City Manager ,/ Its
Date:November , 2014
Att-st
Cit Jerk
F,\L.egal Dept\Agreement\Settkment Agreement-Fidelity&Deposit Co of Maryland(F&D)-clean-I I-18-I4 w Eahibit.doot
-8-
With a copy to:
Cornelius F.Riordan
Riordan,McKee&Piper,LLC
20 N.Wacker Drive
Suite 910
Chicago,IL 60606
Direct: (312)589-6010
Fax: (312)663-1028
e-mail:criordan(a?,nnp-1lc.com
14. It is understood and agreed by Elgin and F&D that this Settlement Agreement shall
be construed without regard to any presumption or other rule requiring construction against the
drafting party.
15. This Settlement Agreement may be executed in counterparts. Signatures
transmitted by facsimile or email shall have the same legal effect as an original signature.
16. The parties agree that no third party shall have any rights under this agreement.
17. This agreement shall be governed by the law of the State of Illinois.
18. This Agreement may not be assigned by either Party without the written consent of
the other Party. Any assignment in violation of this provision will be void.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement this
day of November,2014.
CITY OF ELGIN FIDELITY AND DEPOSIT COMPANY
OF MARYLAND
By: By: :
City Manager ts_ _..kirN.;.",o4 I
D:t-• 'ovember / ,2014
Attest:
City Clerk
F\I.egaI lkpt'Agreemenl\Setdetnent Agreernent•Fdelity&Deposit Co of Maryland(F&D)-clean-I 1-18-14 w exhibit doex
- 8 -
EXHIBIT A
STIPULATION OF DISMISSAL
AND
AGREED DISMISSAL ORDER OF DEFENDANT
FIDELITY AND DEPOSIT COMPANY OF MARYLAND
- 9-
IN THE CIRCUIT COURT OF THE SIXTEENTH JUDICIAL CIRCUIT
KANE COUNTY. ILLINOIS
CITY OF ELGIN.ILLINOIS.an Illinois )
Municipal Corporation, )
Plaintiff, )
)
v. ) Case No. 12 MR 53
)
ARCH INSURANCE COMPANY,a Missouri ) Judge David R. Akemann
Corporation.and FIDELITY AND DEPOSIT )
COMPANY OF MARYLAND,a Maryland )
Corporation and TRG VENTURE TWO,LLC, a )
Delaware Limited Liability Company )
)
Defendants. )
STIPULATION OF DISMISSAL OF DEFENDANT
FIDELITY AND DEPOSIT COMPANY OF MARYLAND
The Plaintiff,City of Elgin,an Illinois municipal corporation.and Defendant, Fidelity and
Deposit Company of Maryland,a Maryland corporation,by their respective counsel,stipulate and
agree that Defendant,Fidelity and Deposit Company of Maryland,be dismissed as a Defendant in
this case with prejudice,and that the City of Elgin and Fidelity and Deposit Company of Maryland
shall each bear its own costs, attorneys' fees and other expenses incurred in connection with this
case;all claims between the City of Elgin and Fidelity and Deposit Company of Maryland having
been resolved pursuant to a settlement agreement between the City of Elgin and Fidelity and
Deposit Company of Maryland dated November 21,2014("Settlement Agreement"). This Court
shall retain jurisdiction over the City of Elgin and Fidelity and Deposit Company of Maryland to
enforce the Settlement Agreement. All of the claims asserted by Fidelity and Deposit Company
of Maryland. as counterplaintiff against Defendant-Counterdefendant, TRG Venture Two, LLC,
are fully reserved by Fidelity and Deposit Company of Maryland. The City of Elgin fully reserves
all of its rights,remedies and defenses against TRG Venture Two,LLC.
- 1Q-
CITY OF ELGIN, Plaintiff FIDELITY AND DEPOSIT COMPANY
OF MARYLAND
By: By.
William A.Cogley,Corporation Counsel Cornelius F.Riordan
City of Elgin Riordan,McKee&Piper,LLC
150 Dexter Court 20 N. Wacker Dr., Suite 910
Elgin, Illinois 60120 Chicago, Illinois 60606
cocley wracityofelgin.ore criordan t?rmp-Ilc.com
One of its attorneys
- II -
IN THE CIRCUIT COURT OF THE SIXTEENTH JUDICIAL CIRCUIT
KANE COUNTY, ILLINOIS
CITY OF ELGIN, ILLINOIS,an Illinois )
Municipal Corporation, )
Plaintiff, )
v )
) Case No. 12 MR 53
ARCH INSURANCE COMPANY,a Missouri )
Corporation:and FIDELITY AND DEPOSIT ) Judge David Akemann
COMPANY OF MARYLAND,a Maryland )
Corporation and TRG VENTURE TWO, LLC.a )
Delaware Limited Liability Company, )
Defendants. )
AGREED DISMISSAL ORDER OF DEFENDANT
FIDELITY AND DEPOSIT COMPANY OF MARYLAND
THIS CAUSE COMING BEFORE THE COURT on the City of Elgin's Motion for Entry
of a Dismissal Order and on the jointly executed Stipulation of Dismissal of the City of Elgin
("Elgin")and of the Fidelity and Deposit Company of Maryland("F&D"),due notice given to all
parties, including notice to TRG Venture Two,LLC("TRG"),and the Court having been advised
in the premises:
IT IS HEREBY ORDERED:
The Court enters this Order based upon the following findings:
A. On December 4, 2013, this Court entered an order dismissing without prejudice
Elgin's Complaint against TRG for failure to join necessary parties, which ruling was not on the
merits of any matter asserted by Elgin against TRG in its Complaint.
B. Elgin voluntarily chose not to file an Amended Complaint joining additional parties
with respect to the issues involving TRG. Rather,Elgin is taking a voluntary nonsuit with respect
to any issues that were asserted,or that could have been asserted,by Elgin against TRG.
- 12 -
C. Elgin and TRG fully reserve all of their rights, remedies and defenses which they
may have against each other with respect to the Waterford Subdivision and with respect to any
matter that could have been asserted by and between Elgin and TRG in this litigation.
D. F&D and Arch filed counterclaims against TRG for reimbursement/repayment and
other relief. TRG moved to dismiss those counterclaims. By order entered on May 29,2014,the
court dismissed F&D's and Arch's counterclaims against TRG with prejudice. On or about
July 28,2014. F&D and Arch filed a motion for a finding pursuant to SCR 304(a)that the May 29,
2014, order dismissing F&D's and Arch's counterclaims against TRG was immediately
appealable. By order entered on August 19,2014,the court denied F&D's and Arch's SCR 304(a)
motion with respect to the May 29,2014,order.
E. Trial commenced on September 30,2014 with respect to the claims asserted herein
by Elgin against Arch and F&D.
F. On October 27, 2014, the Court entered an Order dismissing with prejudice all
claims asserted herein by Elgin against Arch, which claims were the subject of a settlement
between Elgin and Arch. The trial on Elgin's claims against F&D continued.
G. On November 4, 2014, Elgin and F&D advised the Court that they had reached a
settlement, An order was entered setting the matter for status on November 18, 2014, for the
dismissal of the claims asserted by Elgin against F&D. The status date was continued to November
26,2014.
H. That Elgin and F&D have filed herein a Stipulation to dismiss with prejudice all
claims asserted herein by Elgin against F&D pursuant to settlement.
IT IS HEREBY ORDERED AS FOLLOWS:
1. That all claims filed herein by Elgin against F&D are dismissed with prejudice pursuant to
Stipulation.
- 13 -
2. That this Court shall retain jurisdiction to enforce the Settlement Agreement between Elgin
and F&D.
3. That Elgin voluntarily nonsuits all claims that it could have asserted against TRG. Elgin
and TRG retain all claims,rights, remedies and defenses which they may have against each other
with respect to the Waterford Subdivision,which claims may be the subject of a subsequently filed
lawsuit.
4. That all parties should bear their own costs, attorney's fees and expenses incurred in
connection with this case.
5. This Order disposes of all matters pending in their proceedings. This Order is final and
appealable.
ENTER:
JUDGE DAVID R.AKEMANN
DATE:
, 2014
Order prepared by:
William A.Cogley
Corporation Counsel
City of Elgin
150 Dexter Court
Elgin, IL 60120
(847)931-5655
(847) 931-5665 (Fax)
cogley wrikitvofelgin.org
Lawrence R. Moelmann
James M. Hofert
HINSHAW&CULBERTSON LLP
222 North LaSalle Street, Suite 300
Chicago, IL 60601
(312)704-3000
(312)704-3001 (Fax)
lmoelmanne,hinshawlaw.com
ihofert@hinshawlaw.com
- 14 -