Developers Surety and Indemnity Company - 2015 Settlement Agrmt - TR 32891 SIASETTLENTENT AGREEMENT
This Settlement Agreement ("Settlement Agreement") is made as of this 3rd day of
September, 2015, by and between City of La Quinta ("City") and Developers Surety and
Indemnity Company ("DSI") effective upon the last date it is executedby both City and DST
(collectively the "Parties").
RECITALS
I, On or about February 28,';2008, Tradition Club Associates, LLC ("Subdivider")
entered into a Subdivision Improvement Agreement with City pertaining to Tract 32891 located
in the City of La Quinta, California ("A eemene). Under the Agreement, Subdivider agreed to
construct, install and complete certain offsite improvements witin twelve (12) months of the
date on which the Agreement was approved.
2. On or about January 18, 2008, pursuant to the requirements of theAgreement and
California Government Code §§66499, et seq., Subdivider, as principal, and DST as surety,
executed a subdivision improvement faithful performance bond and a subdivision labor and
material bond naming City as obligee, each designated by the number 727493S. (Said bonds
shall hereafter be collectively referred to as the "Bonds,")
3. - In or about March 2008, City notified DST that the Labor and Material Bond No.
727493E was no longer required under the City's regulations.
. Subdivider did not complete the improvements by the`original deadline of
February 18,-2009. In August 2009, Subdivider submitted the first of several requests for an
extension of time to complete the improvements,
5, On March 2, 2015,' City issued a Notice of Default of Sub ivision Improvement
Agreement (S ) to Subdivider and DST premised upon the expiration of deadline to complete the
improvements which had last been extended to November 1, 2012. City made demand for
Subdivider to complete the improvements within sixty (60) days,
. On Jane 1, 2015, City issued a Termination o Subdivision Improvement
Agreementfor'Tract No. 32891 With the City o La; uinta. City made demand for DS1 to
arrange for completion of the improvements. - --
7. DI disputes that it has any obligation to City under the Bonds.
8. A dispute arose between City and DSI regardingDST's obligations, under the
Bonds as well as under the Agreement, whose terms the Bonds secured:
9. Though City and DST have a disagreement over whether DST has any obligations
under the Agreement d the Bonds, and the obligations DST claims City owes to DST, it is the
desire of City and DS1 to resolve their respective disputes relating to the claimed obligations
under the said contracts and to resolve all issues relative to the Agreement and the Bonds:
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NOW, THEREFORE, in consideration of the above RECITALS, and in consideration of
e mutual promises, covenants, and obligations set forth in this Settlement Agreement and for
good and valuable consideration as stated herein the Parties agree as follows:
AGREEMENTS
A. REMALS. Each of the recitals contained in paragraphs 1-9 above, is true and
correct and is expressly incorporated herein by reference,
B. DS1'Disbursement. Within ten (1 ) business days of the execution of this
Settlement Agreement by City and DSI, DSI agrees to pay to City the total sum of Fifty
Thousand Dollars and 01100 ($50 00. 0). I's agreement to make the foregoing payment i
conditioned upon: the provisions of this Settlement Agreement and City's agreement to accept
is payment as full and final satisfaction of any and all obligations owed or alleged to be;owe
to City under the Agreement and the Bonds. SI's obligation to release payment shall be
triggered by City's tender of the Settlement Agreement containing the necessary signatures to
bind City to its terms.
C. Release, Discharge and Exonerationof Bonds. Upon receipt of and success l
negotiation of I's Fifty Thousand Dollars and 00f 100 ($5 ,000. ) payment required by
Paragraph B, above, SI's obligations under the Agreement and the .bonds, are released,
discharged and extinguished. Receipt of the payment shall constitute a full exoneration of the
Bonds as well as a full and complete release, by all Parties, of any and all known or unknown
claims, demands,causes of action, losses, or damages in any way related 'to' e Agreements d
the Bonds CReleased Claims), excepting only DSI's contractual and legal rights as against
Tradition Club Associates, LLC and its personal guarantors.
D. Waiver of Unknown Claims and i is and Protections Afforded By
California Civil Cade 154 . In connection with the Released Claims, the Parties waive all
rights and benefits and`protections under Section 1542 of the California Civil Code, as well as
under any other statutes, legal decisions or common law principles of similar effect to a extent
that such rights, benefits or protections may contravene the provisions of this Settlement
Agreement. Section 1542`of the California Civil Code states:
general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
;executing the release, which if known by him or her must"have
materially affected his settlement with the debtor.
e Parties acknowledge (a) that they are aware that they may subsequently discover facts in
addition to or different from those they now know or believe to exist with respect to the matters
covered by this Settlement;Agreement; and (b) that such different or additional facts, if they
exist, may have given or may subsequently give rise to causes of action, claims, demands,
controversies, damages, losses, costs, and expenses that are presently unknown, unanticipated,
and/or suspected. a Parties hereby affirm that the releases contained in this Settlement
Agreement shall remain in effect and shall be binding notwithstanding the discovery or`existence
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51063527.!
of any additional or different facts:
E. Representation Re Assignment of Claims. City represents that it has M
authority to enter into this Settlement Agreement and further represents that City has not
her tofor assigned, pledged, or hypothecated, or purported to assign, trsferpledge or
hypothecate, to any person entity, or individual, any right, title or interest it may have under the
Agreement or the Bonds.
F. Non -Admission. This Settlement Agreement represents a compromise of claims
and shall not be construed as an admission by the Parties of any liability or of any contention or
allegation made by the other party.
G. Costs and Expensesof i ute and Action. The Parties shall each bear their
own costs, expenses and attorneys' fees incurred in connection with the dispute relative to the
rights and obligations under Agreement, the Bonds as well as the negotiations, drafting
consummation of this Settlement Agreement.
H. Successors and Assigns. This Settlement Agreement, d the releases contained
or referred to herein, shall bind and inure to the benefit oft the principals, agents, representatives;
successors, heirs and assigns of the parties hereto.
I. Entire Integrated ee a t.. This Settlement Agreement constiutes the
whole, integrated understanding, discussions and agreements by and between City and DSL The
terms and provisions oft is Settlement Agreement are contractual and not mere recitals. City
d DS1 acknowledge that there have been no oral, written or other aeemnts of any kind as a
condition precedent to or to induce the execution and delivery of this: Settlement Agreement.
Any written or oral discussions conducted prior to the effective date of this Settlement
Agreement shall not in any way vary or alter the terms of this Settlement Agreement. This
Settlement Agreement shall not be changed, amended or altered in any way except in writing
executed by berth City and DSL-
. Voluntary r e e t with Adviceof Counsel. City and DSI have entered into
this Settlement Agreement freely and voluntarily and after having consulted with counsel and
having had all of the terms hereof explained to them by their respective counsel and with the
understanding that`this is a full and final compromise, release, and settlement of the matters set
forth herein. The parties appreciate and'understand the terms hereof and are'fully satisfied with
the settlement set forth herein:
K. - o Third a Beneficiary. This Settlement =Agreement is for the sole benefit
of City and DS1 and confers no rights, benefits or cause of action in favor of any third parties or
entities.
L. Construction. It is understood and agreed by City and DSI that this Settlement
Agreement shall be construed without regard to any presumption or other rule requiring
construction against the party causing this Settlement Agreement to be drafted. City and DSI
agree that this Settlement Agreement was jointly drafted by the Parties and their respective
counsel.
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M. Enforcement of Settlement; Attorneys' Fees and Costs. In the event it is
necessary for either City Or SiDto initiate a proceeding to enforce any term or condition of this
Settlement Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees
and costs incurred.
N. Execution and Counterparts. This Settlement Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same ins merit. In making proof of this Settlement Agreement, it shall
not be necessary to produce or account for more than a single counterpart containing the
respective signatures of each of the Parties. The Parties are entitled to rely upon a facsimile or
electronic signature of the other Parties to this Agreement upon receipt by facsimile transmission
via telecopier or electronic mail.
U. Governing Law. This Settlement Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California.
P. Authorization to Enter Into Settlement. City and DSI expressly represent that
by affixing their respective signatures hereto; each is authorized to execute this Settlement
Agreement.
Q. Captions. Any captions to the paragraphs or subparagraphs, of this Settlement
Agreement are solely for the convenience of the Parties, are not apart of this Settlement
Agreement, and shall not be used for interpretation or determination of the validity of this
Settlement Agreement or`any provision thereof.
R. Further Assurances. Each party to this Settlement Agreement shall execute all
instruments and documents and take all action as may be reasonably required to effectuate this
Settlement Agreement.
S. Venue and Jurisdiction. For purposes of venue and jurisdiction, this Settlement
Agreement shall be deemed made and to be performed in the County of Riverside, California.
T. Time of Essence. Time is of the essence with respect to each provision of this
Settlement Agreement.
U. Modification. This Settlement Agreement may be modified only by a contract in
writing executed by both Parties to this Settlement Agreement.
V. Interpretation. Whenever the context so requires in this Settlement Agreement,
all words used in the singular shall be construed to have been used in the plural_( d vice versa),
each gender shall be construed to include any other genders, and the word "person" shall be
construed to include a natural person, a corporation, a- firm, a joint venture, a trust, an estate, or
any other entity.
W. Partial Invalidity. Each provision of this Settlement Agreement shall be valid
and enforceable to the hest extent permitted by law. If any provision of this Settlement
Agreement or the application of such provision to any person or circumstance is, to any extent,
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deerned to be invalid Or Unenforceable. the remainder of this Setifenlent Agreement. or the
application Of SLICII provision to persons or circumstances other than those to which it is held
invalid or UnCllrorccablc, shall riot be aNected by SLICII invalidity Or LI7C111orceabilitV, L1111CSS SLICII
provision or, such application OfSLICh PrDViSiOn is essential to this Settlement Acreement.
X. Confidentiality. The provisions of this Settlement Agreement shall be kept
strictly confiticntial by the Parties to the 111RXiML1111 CXMIt permitted by law. Notwithstanding tht:
foregoing, the 11arLieS are firee to disclose the terms OfthiS Settlement Agreement to their
management personnel. auorney(s), accountants) or DSI's regulators. This prohibition shall not
apply, however, to a Part), if (a) diSCIOS1,11-e by that tarty is ucessary to enforce any portion of
this Settlement Agreement. or, is required by lzm, regulation. or order of COL11-1 01'C01-npCtCJlt
Jurisdiction, provided that written notice ofdisclOSLIN is (jVCn to the offier I)arty at least fifteen
(15) days prior to disclosure or at the disclosino Party's earliest opportunity. whichever is less, or
(b) disclosure, and the scope of that disclosure. is inUtUally agreed upon by the Parties in Writing.
In witness whereof the parties have executed this Settlement Agreement oil the dates
indicated below.. to be effcctivc as provided hercinabove.
CITY OF LA QUINTA
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Dated: D.1201 5.1022 09 20 34 -07 00'
By: Frank Spevacek, City Manager
DEVELOPERS SURETY AND INDEMNITY COMPANY
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Dated- SigmitUrC:
............ z:1
By: Susan M. Moore, Senior- Vice President
Approved as to form:
Rutan & Tucker. 1-1-1'
William H. 11-irke. Esq.
Attorneys for City of La QLlitlta
Robins Kaplan LIJI
Laura P, Nash, Esq.
Attorneys for, Developers Surety and
y Indemnity Compan,
61083s27 I
a
oft . . . . . . . . . . . . . . . . . . . . . . Sep
Frank J. Spevacek, City Manager
FROM: �%- y R. Jonasson, Public Works Director/CityEngineer
DATE: October 15, 2015
Settlement re t between City_ of Laih velo r Surety
and Indemnity y Related to Subdivision v t
Agreementr Tradition ClubSubdivision
Attached_ for your review i r is a settlement_e nt between the City
and Developers r nit Company related e subdivision referenced
above, whereby the City will be granted, n l i improvements.
Reviews__ and signatures are_ _ being conducted l cr nic lvia
the TRAKiT system.
Please provide your electronic signature visCity Clerk once you have
so. The City Clerk will continue full execution and final distribution of the agreement.
Requesting department shall check and attach the items below as appropriate,
$50,000 paymenttoCity
N/A Contract payments will be charged to account number; 4 �_
A Conflict of Interest Form 700 Statement of Economic Interests from Consultants! is attached with
no reportable interests in LO or —: reportable interests
N/A A Conflict of Interest Form 700 Statement of Economic Interests is not required because this Consultant does not meet
the definition in FPPC regulation 18701 (2).
Authority to execute this agreement is based upon.
X Approved by the City Council on October 6, 2015 (date)
City Manager's signature authority provided under Resolution No. 2005 095
Public Works projects for $30,000 or less.
City Manager's signature authority provided under Resolution No; 2005 096
Service agreements for $30,000 or less.
City Manager's signatureauthority provided under Contract Change Order Policy
Contracts under $100,000 = 10% max, contracts over $100,000= $25,000 mast
The following_ required documents are attached to the agreement:
N/A Insurance certificates as required by the agreement (approved by Risk Manager can �
N/A Performance bonds as required by the agreement (originals)
ILIA City of La Quints Business License (coley or note number & expiration date here No:
FAW
Developers Surety and Indemnity Company
An AmTrust Financial Company
October 23, 2015
Travis Van Ligten, Attorney at Law
Rutan & Tucker LLP
611 Anton Blvd. 141h Floor
Costa Mesa CA 92626
Re Surety: Developers Surety and Indemnity Company
Bond No.; 727493S
Principal: Tradition Club Associates LLC
Claimant: City of La Quinta
Project: Tract 32891
Dear Atty. Van Ligten,
Consistent with the terms of the settlement agreement with the City of La Quinta, please
find enclosed Developers Surety and Indemnity Company's check number 021667 in
the amount of $50,000 payable to the City of La Quinta.
We appreciate your cooperation and assistance in this matter.
Very Truly Yours,
*m"'ell F el. a
Senior Claims Examiner II
DEVELOPERS SURETY AND INDEMNITY COMPANY
INDEMNITY COMPANY OF CALIFORNIA
AMTRUST SURETY
(949) 263-3410 Direct Line
(949) 553-8143 Fax
mitch.petras@amtrustgroup.com
Encl.
cc. Laura Nash, Esq (w/ attach.)
MTP:mp
17771 Cowan • Suite 100 • Irvine, CA 92614
(p) 800.782.1546 or 949.263.3300 • (t) 949.883.8143• www.amtrustsurety.com
CA Insurance License No. OF60644
DEVELOPERS SURETY AND INDEMNITY COMPANY
CLAIMS ACCOUNT COMMUNITY BANK
17771 Cowan, Suite 1 OO 1750 S. STATE COLLEGE BLVD.
ANAHEIM, CA 92806
Irvine, CA 92614 (714)834.2265
CHECK. DAME
10123/2015 Pay the Sum of 60,000 dollars and 00 cents
To the CITY OF LA QUINTA DEVELOPERS 5
order c/o Travis Van Listen. Esa. CLAMS Accat+
Of 611 Anton Blvd. 14th Floor z
Costa Mesa CA 92626
727493S
11102L667I'm 1:L2220347L1: 07111220639,11
The Insco / Dico Group Detach and Retain this Statement
17771 Cowan. INne. CA 92614 The attached check is in omr ojit of items described below. If not correctnlease nnlifv us nromntly
AND
16-34711222
021667
— � Amount
50,000.00
Date
DESCRIPTION Check No: 021667
Amount
10/23/2015
727493S - 1506 - Tradition Club Associates LLC
Full and Final Payment settlement Tradition Club Associates Bond 727493S
50,000.00
ClickFereto,,fALT,Rffl atMRJO.
City of La Quinta
CITY COUNCIL MEETING: October 6, 2015
STAFF REPORT
AGENDA TITLE: APPROVE SETTLEMENT AGREEMENT BETWEEN CITY OF LA QUINTA AND
DEVELOPERS SURETY AND INDEMNITY COMPANY RELATED TO SUBDIVISION
IMPROVEMENT AGREEMENT FOR TRADITION CLUB SUBDIVISION
RECOMMENDATION
Approve a Settlement Agreement between the City of La Quinta and Developers Surety
and Indemnity Company, and authorize the City Manager to execute the agreement on
behalf of the City.
EXECUTIVE SUMMARY
• In February 2008, Tradition Club Associates, LLC, the developer of a custom lot in
The Tradition, entered into a Subdivision Improvement Agreement (SIA) to
construct on -site and off -site improvements in connection with Parcel Map No.
32891 (Attachment 1).
• The City granted the developer numerous extensions to the SIA to complete
unfinished improvements, which remain incomplete.
• On March 2, 2015, the City placed the developer in default of the SIA and on June
1, 2015, terminated the SIA and demanded construction of the improvements.
• After initially contesting the City's action, the developer's bonding company,
Developers Surety and Indemnity Company (DSI), agreed to settle the matter by
granting the City $50,000 to fund the unfinished improvements.
FISCAL IMPACT
The City will receive $50,000 that must be used for on -site grading and drainage
improvements as well as off -site water and sewer connections. Virtually all of these
improvements have been completed and $50,000 will fund any remaining costs.
BACKGROUND/ANALYSTS
DSI guaranteed, by payment and performance bonds, the installation of certain
improvements subject to a SIA between Tradition Club Associates, LLC ("Tradition") and
the City, dated February 18, 2008, regarding Parcel Map No. 32891.
After granting numerous extensions, on June 1, 2015, the City Attorney's Office notified
Tradition and DSI that the SIA had been terminated, thereby commencing the process for
calling the bonds.
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Click here to returq to Ag da
DSI contested the City's claim that it owed the City for Tradition's failure to comptete die
improvements, but DSI nonetheless proposed to settle the matter by paying $50,000 to
the City in exchange for full exoneration of the bonds. No lawsuit has been filed, and the
parties' acceptance of the settlement releases claims and litigation related to the
improvements specified in the SIA (but does not release claims related to a violation of
the settlement agreement).
The City Attorney's Office and DSI counsel have agreed upon the form of the Settlement
Agreement (Attachment 2). DSI has executed it. If the City Council approves the
Settlement Agreement, DSI is required to pay the City $50,000, and the City is required to
declare the contested bonds fully exonerated. The Agreement will fully and final settle
this matter.
ALTERNATIVES
Since the surety has agreed to the City's terms for settling this matter, no alternatives are
recommended.
Report prepared by: William Ihrke, Rutan & Tucker, LLP, City Attorney
Report approved by: Timothy R. Jonasson, P.E., Public Works Director/City Engineer
Attachments 1. Vicinity Map
2. Settlement Agreement
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PM 32891 TRADITION
r__� C I l t l l l I I I I Jy/ I I I I
VICINITY MAP
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