Loading...
HomeMy WebLinkAbout12/12/2007 - STAFF REPORTS - 2.K. O�pALM Spy � Fc u e Y, *C'441FORakV, CITY COUNCIL STAFF REPORT DATE: December 12, 2007 Consent SUBJECT: PROPOSED AMENDMENT TO AGREEMENT FOR TOURISM SERVICES BETWEEN THE CITY OF PALM SPRINGS AND SMG FROM: David H. Ready, City Manager BY: City Attorney SUMMARY The City Council will consider adoption of an amendment to the Agreement for Tourism Services between the City of Palm Springs and SMG to clarify and reaffirm the intent of the City and SMG as the sole contracting parties now and at the time the parties entered into the Agreement. Specifically, the amendment revises sections 3.4 and 14.11 of the Agreement to make clear that the parties never intended to confer any rights or benefits to any third parties that are not signatories to the Agreement. Attached as Exhibit A is the proposed Amendment No. 2 to the Agreement. RECOMMENDATION: Adopt Amendment No-2 to the Agreement for Tourism Services By and Between the City of Palm Springs and SMG. BACKGROUND: On or about November 3, 2004, the City of Palm Springs and SMG, a Pennsylvania general partnership, entered into the Agreement for Tourism Services ("Agreement"). Pursuant to the Agreement, SMG would manage and operate the City's Bureau of Tourism. On or about October 22, 2007, a Palm Springs business initiated litigation against SMG, claiming that as a business proprietor in Palm Springs it is an intended third party beneficiary under the Agreement with the rights to compel SMG to perform services that directly benefit the specific business. This business claims that as third party 5573561 ITEM No. y' City Council Staff Report December 12, 2007— Page 2 Adoption of Amendment to Agreement for Tourism Services beneficiary to the Agreement it is entitled to enforce the Agreement between the City and SMG and seek damages, including lost profits, for SMG's alleged Failure to carry out the Agreement by not including this business in marketing materials and advertising promotions and campaigns. STAFF ANALYSIS: Both the City and SMG concur that the Agreement was never intended to confer any rights or benefits to any third parties. The Agreement was intended to define a relationship between the City and SMG and to essentially require SMG to provide the general duties that had previously been performed by the City's Bureau of Tourism. The primary goal of the Bureau and the Agreement was to provide opportunities for promotion of the City of Palm Springs and the general recreational and tourism opportunities available in the City. It was never the intent of the Agreement that SMG would be hired by the City to provide private marketing opportunities to each business in the City. The City acknowledges that the Agreement certainly provides incidental benefits to local businesses; however, the Agreement never contemplated that each business would be entitled to demand fulfillment of the Agreement and initiate litigation to enforce such demand. We are recommending that an Amendment to the Agreement be approved to eliminate any ambiguity in the Agreement regarding the obligations of SMG to City and to ensure that SMG's obligations are owed solely to the City and that the City did not and does not intend that any third party incidentally benefited by the Agreement would have any right to separately enforce the terms of the Agreement. If the Agreement is not amended, other businesses may seek to file lawsuits based upon similar allegations, including the recovery of lost profits for any perceived lack of effort by SMG to promote their particular business. The City Attorney's Office does not believe that these cases have merit since the Agreement at best provides that local businesses are only incidentally or remotely benefited and that such interest does not confer any right to enforce any term or provision of the Agreement. An amendment to the Agreement is necessary to expressly state that the Agreement is not now, nor was it ever, intended to confer any rights or benefits to third party businesses in the community including those that may be incidentally or remotely affected by the Agreement. FISCAL IMPACTS In the event the Amendment is not approved, it is anticipated that additional lawsuits will be filed against the SMG and that the City's obligation to cooperate in the defense of the litigation could cost t e City $25,000 to $50,000 in additional attorneys fees elated court costs. gl David H. Ready, City Do#A Holland, City Attorney Attachments: Proposed Amendment No. 2 to Agreement for Tourism Services 000002 557,1561 AMENDMENT NO. 2 TO AGREEMENT FOR TOURISM SERVICES This AMENDMENT No. 2 TO AGREEMENT FOR TOURISM SERVICES ("Second Amendment") is made and entered into as of December 12, 2007, by and between the CITY OF PALM SPRINGS, a municipal corporation, ("City") and SMG, a Pennsylvania general partnership ("SMG"). The City and SMG are individually referred to as "Party" and collectively as "Parties." RECITALS A. The Parties entered into that certain Agreement for Tourism Services ("Agreerrrent") dated and effective November 3, 2004. B. The Parties desire to amend the Agreement to make clear the intent of the Parties now and at the time of entering into the Agreement. C. By this Second Amendment, the Parties clarity and reaffirm the scope of the duties and liabilities of the Parties under the Agreement by specifically proclaiming that the Agreement does not, and at the time the Agreement was entered into, was never intended to confer any rights or benefits to any third party or any other person or entity not a signatory to the Agreement- The Parties further clarify and reaffirm that SMG's obligation under the Agreement is owed solely to the City. AGREEMENT NOW, THEREFORE, in consideration of the recitals and the mutual covenants and conditions contained herein, the Parties agree as follows: 1. Amendment of Section 3.4 of Azrccmeni: Section 3.4 of the Agreement is amended in its entirety to read: 3.4 Duty. SMG shall owe to City, and to no other person or entity, a duty to perform its obligations under this Agreement and to conduct the management and operation of the Visitor Center at all times consistent with tourism industry best business practices and in accordance with the business plan required pursuant to Section 3.5. 2. Amendment of Section 14.11 of Agreement: Section 14.11 of the Agreement is amended in its entirety to read: 14.11 Limitation of Liability. City agrees that no partner, co- venturer, employer, agent, director, officer, shareholder, or employee of SMG shall be personally liable to City or anyone claiming by, through or under City, by reason of any default by SMG under this Agreement or for any amount that may become 000003 5574311 due to City by SMG under the terms of this Agreement or otherwise. SMG agrees that no officers, agents, or employees of City shall be personally liable to SMG or anyone claiming by, through, or under SMG by reason of any default by City under this Agrecment, or for any amount that may become due to SMG by City under the terms of this Agreement or otherwise. Nothing contained in this Agreement, nor in any program or plan adopted pursuant to this Agreement including, but not limited to, the One Year Plan, is intended to confer, nor shall be construed as conferring, any rights, including, without limitation, any rights as third-party beneficiary or otherwise, upon any entity or person not a party hereto. 3. No other Modification. Except as provided in this Second Amendment, the provisions of the Agreement, as amended by the First Agreement, shall remain unmodified and in full force and effect. 4. Counters. This Second Amendment may be executed by the Parties in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the salrle instrument. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the date and year first above written. CITY OF PALM SPRINGS, a municipal corporation By: _ City Manager Date: ATTEST: City Clerk APPROVED AS TO FORM: Douglas Holland City Attorney [SIGNATURES CONTINUE ON THE NEXT PAGE] 000004 557431 1 SMG, a Permsylvania -cneral partnership By: Naine: Title: 000005 $$7a71 1