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HomeMy WebLinkAbout05836 - CLUB TRINIDAD OWNERS' ASSOC SETTLEMENT AGR Town c1a�e � 3 �, • te Memorandum To: James Thompson, City Clerk Geoffrey Kiehl, Director of Finance From: Douglas Holland, City Att ey( -,�-,— Date: April 23, 2009 Re: Settlement Agreement Club Trinidad Property Owners' Assn. v. City of palm Springs At the City Council's closed session on January 10, 2008, the City Council provided the City Attorney with authorization to settle Club Trinidad's lawsuit against the City, authorized the City Attorney's office to negotiate For a settlement of the lawsuit consistent with certain parameters, and authorized the City Manager to execute this agreement and any related documents on behalf of the City. I have reviewed the Settlement Agreement that is attached to this Memorandum, and executed by the City Manager on May 12, 2008, and I have determined that this document is consistent with the direction of the City Council and the authority the City Council provided this Office and the City Manager. I believe that an original of the Settlement Agreement has been submitted to your Office. This original of the agreement and this memorandum should be filed and retained in the Office of the City Clerk; a copy of this memorandum and the agreement should be retained in the Finance Department as evidence of the payment requirements provided in the agreement. If you have any questions, please do not hesitate to give me a call. ``.RX 2 4 "iI.I �' a: (SETTLEMENT AGREEMENT AND RELEASE Cif Thi"gii[ettlement Agreement and Release ("Agreement") is made as of this day of April 2008 (the "Effective Date") by and between Club Trinidad Owners' Association, a non profit mutual benefit corporation (the "Association") and the City of Palm Springs, a California Municipal Corporation (the "City") (the Association and the City are sometimes collectively referred to as the "Parties," and sometimes individually referred to herein as a "Party"), with reference to the following: A. In approximately 1961, the property located at 1900 E. Palm Canyon Drive in the City of Palm Springs was improved with an approximately 51-room hotel, restaurant and lounge. In 1978, the owners of the hotel development paid a sewer connection fee and obtained a permit to connect the hotel property to the City's public sewer system. It is assumed that the owners of the hotel project thereafter paid a monthly sewer service fee to the City for the entire hotel property. B. In or about November 1984, the hotel was converted to timeshare estates. Since the conversion, the timeshare project has been referred to as "Club Trinidad Resort." The Association was created in mid-November 1984 in connection with the conversion to timeshare estates. It is assumed that since 1984, the Association has paid monthly sewer service fees to the City for all of the timeshare units, as well as the restaurant and lounge, on behalf of the owners of the timeshare estates. C. In July 1995, the Association acquired an ownership interest in a portion of the Club Trinidad Resort pursuant to a Sheriffs Deed. Thereafter, it is 1 SG320 I RMLITKKLATCHKCA293604 4 assumed that the Association continued to make monthly sewer service fee payments to the City both on its own behalf and on behalf of the owners of timeshare estates, D. In June 2005, the Association discovered that 27 of the 51 timeshare units were never connected to the City's public sewer system, but instead were connected to underground septic tanks. That same month, the Association filed a claim with the City seeking a refund of all sewer service fees paid in connection with the 27 units from 1978 through the date of the claim. The claim was denied by operation of law in August 2005. E. In September 2005, the Association filed a lawsuit against the City seeking a refund of sewer service fees paid between 1978 and 2005 for the 27 units which were known not to be connected to the City's public sewer system. That action bears Riverside County Superior Court Case No. INCO53493 (the "Action"). In the Action, the Association alleged that it was entitled to a refund of all sewer service fees paid to the City for the 27 units for the entire time period between 1978 and 2005. The City denied those allegations, and asserted that the Association lacked standing to seek a refund on behalf of the owners of the timeshare estates or the prior owners of the hotel project. The City also contended that much of the claim was barred by the statute of limitations. F. The Association and the City desire to resolve the disputes that are raised, or which could have been raised, in the Action without the time and cost of additional litigation. 2 563270 1 RMLMMATOHKOl293504A NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. The City agrees to pay the Association $105,000.00 within 15 days of executing this Agreement. Funds shall be made payable to the Best Best & Krieger LLC Client Trust Account, fbo Club Trinidad Owners' Association, and transmitted to counsel for Club Trinidad, who shall hold funds in trust until filing a dismissal of the Action with prejudice; Club Trinidad agrees to execute and file a dismissal of the Action with prejudice, within 10 days after funds are verified. 2. The $105,000,00 paid by the City to the Association is expressly intended to settle and resolve any and all claims related to any and all refunds of sewer service fees for the Club Trinidad property. 3. The Association will use its best efforts to connect all structures and/or units on the Club Trinidad property to the City's public sewer system within six months of the Effective Date of this Agreement. The Association will be required to obtain any and all required permits for the connection. However, because a connection fee has already been paid, the Association will not be required to pay the currently applicable connection fee. If the Association determines that, through no fault of its own, it will be unable to connect any portion of the property to the City's sewer system within the six months provided by this Agreement, the Association must provide to the City a written memorandum to that effect prior to expiration of the six-month period. 4. Until the 27 units at issue in this case are connected to the City's public sewer system, neither the Association nor any owner of a timeshare interest shall be required to pay a sewer service fee for the unconnected units. The City agrees to waive 3 563270 1 RMLITIKKLATCHK0%293604.4 in full any and all past due amounts owing for the disputed 27 units (the approximate value of which being $9,598.38, plus interest thereon, as reflected on the most recent invoice relative to this Agreement). And until such time as the Club Trinidad Property is fully connected to the City sewer, Club Trinidad will pay only $297.60 per month for the timeshare portion of the Property, exclusive and unrelated to any payments it may make on the restaurant and lounge portions of the Property. Once the 27 disputed units are connected to the public sewer system, sewer service fees for all units and other structures on the Club Trinidad Property shall be paid at the rate prescribed by City regulation, currently $632.40 for all 51 units. 5. The Association, on behalf of itself, its officers, agents, employees, successors, assigns and all those it is legally authorized to act for, or on behalf of ("Association Releasing Parties") hereby releases, acquits, and forever discharges the City, and its officers, agents, employees, and successors and assigns ("City Released Parties") from any and all claims, demands, causes of action, obligations, and/or claims for damages, losses, costs, attorney's fees and/or expenses of every kind and nature whatsoever, known or unknown, anticipated or unanticipated, fixed or contingent, arising out of any alleged damage to all or any portion of the Club Trinidad Resort property relating in any way to the use, operation and/or failures of any septic tanks or related facilities on the Club Trinidad Resort property_ The Association Releasing Parties also hereby release, acquit and forever discharge the City Released Parties from any and all claims, demands, causes of action, obligations, and/or claims for damages, losses, costs, attorney's fees and/or expenses of every kind and nature whatsoever, known or unknown, anticipated or unanticipated, fixed or contingent, which 4 5632701 RMLITIKKLATCHM293504.4 any of the Association Releasing Parties may now have or may hereafter claim to have against one or more of the City Released Parties relating to any claim for a refund of sewer service fees for all or any portion of the Club Trinidad Resort property. In this regard, the Association Releasing Parties hereby waive the protections of California Civil Code section 1542, which provides as follows: "A 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 or her settlement with the debtor." The Association, on behalf of the Association Releasing Parties, represents that it understands and acknowledges the significance and consequences of a waiver of Civil Code section 1542, and hereby assumes full responsibility for any injuries, damages, or losses which either the Association or any of the Association Releasing Parties may incur by such waiver. 6. The City, on behalf of itself, its officers, agents, employees, successors, assigns and all those it is legally authorized to act for or on behalf (the "City Releasing Parties') hereby releases, acquits, and forever discharges the Association, and its officers, agents, employees, and successors and assigns (the "Association Released Parties") from any and all claims, demands, causes of action, obligations, and/or claims for damages, losses, costs, attorney's fees and/or expenses of every kind and nature whatsoever, known or unknown, anticipated or unanticipated, fixed or contingent, arising out of any alleged damage to all or any portion of City property adjacent to the Club Trinidad Resort Property relating in any way to the use, operation and/or failures of 5 56320 1 RMLITWKLO,TC H KO\293604.4 any septic tanks or related facilities on the Club Trinidad Resort property In this regard, the City Releasing Parties hereby waive the protections of California Civil Code section 1542, which provides as follows: "A 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 or her settlement with the debtor." The City, on behalf of the City Releasing Parties, represents that it understands and acknowledges the significance and consequences of a waiver of Civil Code section 1542, and hereby assumes full responsibility for any injuries, damages, or losses which either the City or any of the City Releasing Parties may incur by such waiver. 7. The Association shall defend and indemnify the City, and its officers, agents, employees, successors or assigns, from and against any future claims by any person, entity, or other organization, for a refund of sewer service fees paid on or before the Effective Date of this Agreement in connection with the Club Trinidad Resort property. 7. This Agreement shall bind and inure to the benefit of the Parties hereto and their successors, assigns, officers, directors, principals, employees, subsidiaries, affiliated agents and corporations, attorneys, and representatives. S. This Agreement shall not be altered, amended or modified, except by a written amendment executed by the Parties to this Agreement. 9, Each Party shall bear its own costs and attorney's fees in connection with the Action. 6 563270.1 RMLIT%KLATCHKO1293604 4 10. This Agreement shall be construed and governed in accordance with the laws of the State of California. If it becomes necessary to interpret this Agreement, it shall be assumed that the Agreement was the subject of arms-length negotiations and that each Party played an equal role in the drafting of the Agreement. 11. This Agreement states the entire Agreement between the Parties and supersedes any prior agreements, negotiations or understandings by or between the Parties. Each of the Parties to this Agreement acknowledges and agrees that no other Party to the Agreement, nor any agent or attorney thereof, has made any promise, representation or warranty, express or implied, not set forth in this Agreement. Each Party to this Agreement acknowledges that such Party has not executed this Agreement in reliance on any promise, representation, conduct or warranty of any other Party to this Agreement not set forth in this Agreement. 12. Each person executing this Agreement represents and acknowledges that it has the authority to legally bind the Party for whom it signs. 13. The Parties have read and understand the terms of this Agreement. Each Party represents and warrants to the other that this Agreement is executed voluntarily and without duress or undue influence on the part of or on behalf of any Party. Each Party acknowledges and agrees that it has been represented by the counsel of its choice in negotiations for and in the preparation of this Agreement, that said Party has had this Agreement explained to it by counsel, and that each Party is fully aware of the contents of this Agreement and of its legal effect- 7 5G3VO I RMLmKKLATCHK0\2$3604.4 0 14. As this Agreement is intended to he a compromise of disputed claims by all Parties, nothing in this Agreement shall be construed to be an admission of fault or liability by any Party with respect to any of the issues raised in the Action. 15. This Agreement may be executed in counterparts. Facsimile or electronically conveyed signatures shall be deemed to be as effective as originals for the purposes of this Agreement. Dated; CLU13 TR ID OW E ASSOCIATION By: Tdle: APPROVED AS TO FORM: BEST BEST& KRIEGER BY: 5?1� &�i KIRA KLATCHKO Dated: CITY OF PALM SPRINGS 4 �-r By: David Ready Title; City Manager / a' APPROVED AS TO FORM: (' WOODRUFF, SPRADLIN & SMART By: M OIS BOBAK 8 sn+x+n.i RMLMKKLATrHK0T936n4.A