ITEM 3.10 Settlement Agreement regarding ROW for 85th STF
Otsego
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Legal
City Attorney David Kendall
February 24, 2020
PRESENTER(S)
REVIEWED BY:
ITEM #:
Consent
City Administrator/Finance Director Flaherty
3.10
STRATEGIC VISION
MEETS:
I THE CITY OF OTSEGO:
Is a strong organization that is committed to leading the community through innovative
communication.
X
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff recommends the City Council approve a Settlement Agreement regarding the acquisition of Right
of Way for the 85th Street Public Improvement Project.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No
BACKGROUND/JUSTIFICATION:
Following a verdict at trial the Council directed the City Attorney to engage in negotiation and determine
whether it was possible to resolve the litigation regarding the eminent domain taking from the Pouliot
parcels ("Property") on the 85th Street public improvement project ("Project"). The Project involved the
extension of 85th Street between Nashua Avenue and Maciver Avenue. The City acquired the property
necessary for the project through the use of eminent domain.
The City obtained an appraisal of the Property and offered to acquire the necessary property for the
Project from the property owner for $197,500. The City deposited this amount into the District Court as
the City's "quick take" deposit. This allowed the City to take possession of the new right of way in 2018
and to construct the project in 2018-2019, with final compensation to the property owner to be
determined later. At trial, the property owner rejected the City's offer and made a claim for approximately
$432,700 in damages. The case went to trial in October of 2019 and the Condemnation Commissioners
reached a verdict of $284,423 in compensation to the property owner.
Minnesota law regarding eminent domain requires is favorable to property owners and requires that if the
total damages are more than 40% above the City's offer, the City is required to pay all of the property
owner's attorney fees, litigation expenses, expert appraisal fees, expert witness fees, and other costs and
expenses incurred in litigation. Minn. Stat. § 117.031.
This verdict was more than 40% above the City's offer, specifically 44% above. Thus the City is legally
obligated to pay all these expenses. This verdict included an award of damages for construction
interference, which was not claimed by the property owner at trial. This provided a potential basis for the
City to appeal the award of the Condemnation Commissioners to District Court.
Following the verdict from the Commissioners, the Property owner produced affidavits specifying all of
their litigation costs and made a demand for the City to pay a total of $391,926.47 including the award of
damages, interest, attorney fees, appraisal fees, expert witness fees, and other costs and expenses. The
City had the option to appeal this award and the related expenses, however the Council directed the City
Attorney to explore whether the matter could be resolved short of the City having to file an appeal. During
negotiations, the Property owner acknowledged that the City had a basis upon which to appeal the verdict
to the district court and that warranted some discount off the amount to which they were legally entitled.
After extensive negotiations the parties arrived at a proposed agreement for the City to pay a total of
$347,000, which includes the $197,500 previously deposited by the City. The City will deposit an additional
$149,500 with the District Court, to be added to the $197,500 previously deposited by the City, to reach
the total settlement amount of $347,000. This will satisfy all claims and obligations for the City to pay
damages for the taking, interest, attorney fees, appraisal fees, expert witness fees, costs, and expenses.
The property owner will be permitted to bring a motion to have these funds paid out by the court after
service of process upon all interested parties including any lenders with liens on the property.
SUPPORTING DOCUMENTS ATTACHED:
• Settlement Agreement
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES:
Motion to approve the Settlement Agreement between the City of Otsego and the Pouliots.
BUDGET INFORMATION
FUNDING: BUDGETED:
Fund 403 — Municipal State Aid for Construction No. The settlement amount is more than
originally estimated/budgeted. The additional
funding will be sourced through additional
construction funding through the City's MSA
account.
SETTLEMENT AGREEMENT
This Settlement Agreement ("Settlement Agreement"), dated as of
February _, 2020, is entered into by and between the City of Otsego, Minnesota
("City"), and Randal T. Pouliot as Trustee of the Randal T. Pouliot Revocable
Trust, and Karen K. Pouliot as Trustee of the Karent K. Pouliot Revocable Trust
(the "Pouliots") (collectively, the "Parties").
RECITALS
WHEREAS, the Pouliots own real property located in Wright County,
State of Minnesota.
WHEREAS, The City sought to acquire by eminent domain certain
temporary and permanent easements upon the Pouliot Property (the "Easements"),
which easements were necessary for extension of public right of way and the
location and construction of a public roadway and related public improvements;
WHEREAS, on or about February 23, 2018, the City filed its Petition
in Condemnation and Notice of Intent to Seek Transfer of Title and Possession
under Minnesota Statute § 117.042 to obtain the Easements over and across
property owned by the Pouliots in a legal action entitled City of Otsego v. Berning
Family Dairy, Inc., et al., Civil Court File No. 86-CV-18-1079 in Wright County
District Court, State of Minnesota (the "Action") and the Pouliot parcels were
identified as Parcels 4, 5 and 6 in this Action;
WHEREAS, Parcel 4 in the Action is also identified as PID No. 118-
500-1923 00, Parcel 5 in the Action is also identified as PID No. 118-5 00-193100,
Parcel 6 in the Action is also identified as PID No. 118-500-192400.
WHEREAS, on or about May 17, 2018, the Wright County District
Court granted the City's Petition, ordering the City to pay to deposit with the
District Court the amount of the City's approved appraisals of value with respect to
each of the Parcels in the Action (the "Quick Take Payments"), and this court order
further transferred the Easements to the City, and appointed three condemnation
commissioners to hear the matter pursuant to Minnesota law;
W MREAS, on or about May 22, 2018, the City deposited the Quick-
Take Payments with the District Court and regarding the Pouliot property those
payments were $84,500 with respect to Parcel 4 (PID No. 118-500-192300), and
$1,700 with respect to Parcel 5 (PID No. 118-500-193100), and $111,300 with
respect to Parcel 6 (PID No. 118-500-192400) for a total deposit of One Hundred
Ninety -Seven Thousand Five Hundred Dollars ($197,500) on the Pouliot property;
WHEREAS, on or about October 30 and 31, 2019, the Parties had a
hearing before the three court -appointed condemnation commissioners;
WIMREAS, on or about December 6, 2019, the three commissioners
issued their report determining the total award to be $284,423, less the Quick -Take
Payment of $197,500 tendered by the City in May of 2018, for an additional award
of damages of $86,923 to the Pouliots.
WHEREAS, following the commissioners' award there remained
unresolved claims and disputes between the parties including but not limited to
claims for appeal of the award to the District Court, appraisal fees, attorney fees,
expert witness fees, costs, and expenses, and the Parties undertook to negotiate a
settlement in an attempt to reach a settlement of all outstanding differences and
disputes between them;
WHEREAS, as a result of arms -length and good faith negotiations,
the Parties have mutually reached a settlement of all outstanding differences and
disputes between them as set forth below.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the mutual
promises, covenants, and agreements herein described, and for other good and
valuable consideration, acknowledged by each of them to be satisfactory and
adequate, and intending to be legally bound, the Parties do hereby mutually agree
as follows:
1. COMPENSATION AND REQUIREMENTS.
1.1 PAYMENT: In addition to the Quick -Take Payment of One
Hundred Ninety Seven Thousand Five Hundred and No/100 Dollars ($197,500)
previously deposited into the District Court by the City on behalf of the Pouliots in
May of 2018, the City agrees to deposit into the District Court the additional sum
of One Hundred Forty Nine Thousand Five Hundred and No/100 Dollars
($149,500.00) for a total settlement amount of Three Hundred Forty Seven
Thousand and No/100 Dollars ($347,000) (the "Settlement Amount") and the City
shall deposit this amount within thirty (30) days after final approval of this
Settlement Agreement by the City Council for the City of Otsego. It is hereby
expressly understood and agreed to by the Parties that payment of the Settlement
Amount into the District Court shall be a full and complete settlement of all
monetary claims that the Pouliots have related to the Action, including the
condemnation award, interest, attorneys' fees, expert fees and any other costs or
claims related to the Action. Upon proper service and filing of a Motion for
release of these funds by the Pouliots, the City will not oppose and will agree to
release of the funds as directed by the District Court to the Pouliots and to any
other party named in the Petition as having an interest in Parcels 4, 5, and 6 who
appears in response to the Motion, if any such party appears and if the District
Court orders disbursal to any such party.
2. APPEAL OF COMMISSIONERS' AWARD. In consideration of the terms
of this Settlement Agreement, neither party will appeal the Commissioners'
EE=
3. CITY' S EASEMENTS.
3.1 FINAL CERTIFICATE: The City may file a Final Certificate
as required by Minnesota Statutes Chapter 117 with respect to the Parcels 4, 5 and
6 after depositing the Settlement Amount with the District Court.
3.2 THE TEMPORARY EASEMENT: The City currently has two-year
temporary easements over Parcels 4, 5 and 6 as described in the City's Petition in
Condemnation. Construction on the roadway is substantially complete. The City
maintains rights to the Temporary Easements from May 22, 2018 until May 22,
2020. Nothing in this Settlement Agreement releases, relinquishes, or surrenders
the City's rights to the Temporary Easements. The City, at its sole discretion, may
choose to release the Temporary Easement sooner than May 22, 2020 but is under
no obligation to do so.
4. RELEASES. In consideration of the terms of this Settlement
Agreement, the Parties agree as follows:
4.1 The Pouliots, and each of them, on behalf of themselves and
their heirs, assigns, representatives, relatives and anyone authorized to act on their
behalf, do hereby fully and forever release and discharge the City and its
employees, elected officials, agents, assigns, affiliates, representatives, and anyone
authorized to act on the City's behalf, from any and all claims, causes of action,
suits, proceedings, debts, judgments, damages, levies, executions and demands of
any nature, in law or equity, whether accrued or not, whether already acquired or
acquired in the future, whether known, unknown, suspected or unsuspected,
liquidated or unliquidated, fixed, contingent, direct or indirect, as well as any claim
or right obtained by assignment, brought by way of demand, complaint, cross -
claim, counterclaim, third party claim or otherwise, arising out of or in any way
related to the Action.
4.2 The Pouliots have carefully read the terms of this Settlement
Agreement and all attachments and understand the terms and effects, including the
fact that they have agreed to RELEASE, RELINQUISH AND FOREVER
DISCHARGE, City from any legal action or other liability of any type related in
any way to the matters released.
4.3 Notwithstanding the foregoing, the provisions of Sections 4.1
through 4.2 above shall not release actions, claims, demands, suits or liabilities
related to or arising out of the failure by any of the parties to fulfill an obligation
under this Settlement Agreement, or any of the documents to be executed and
delivered pursuant to this Settlement Agreement.
5. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this Settlement Agreement embodies the complete agreement and understanding
between the Parties with respect to the subject matter hereof and thereof and
specifically supersedes any prior proposals, promises, understandings, agreements, or
representations by or between the Parties, written or oral, which may have been
related to the subject matter hereof in any way.
6. AUTHORITY TO EXECUTE AGREEMENT. Each Party hereto represents,
warrants, and agrees that the person who executed this Settlement Agreement on
his, her, or its behalf has the full and complete right and authority to enter this
Settlement Agreement on behalf of that Party and has the full right and authority to
execute this Settlement Agreement and to fully bind that Party to the terms and
obligations of this Settlement Agreement. Moreover, each Party represents,
warrants, and agrees that neither the execution of this Settlement Agreement, nor
the performance of this Settlement Agreement will result in any violation of any
contract, agreement, loan agreement or understanding to which any party hereto is
a party.
7. OPPORTUNITY TO CONSULT WITH COUNSEL. All of the parties to this
Agreement hereby represent that they have carefully read and have been advised
of the effect of this Settlement Agreement by their own attorneys, or that they have
had the opportunity to consult with counsel of their choosing (whether or not they
have used such opportunity), have investigated the facts and are not relying upon
any representation or acknowledgement, whether oral or in writing, except as
contained herein.
9. ADEQUATE CONSIDERATION. The Pouliots have signed this
Settlement Agreement voluntarily and knowingly in exchange for the consideration
described herein, which they acknowledge is adequate and satisfactory to them and
which they acknowledge is in addition to any other benefits to which they are
otherwise entitled.
10. NEUTRAL INTERPRETATION. The Parties have each participated in
the negotiation and drafting of this Settlement Agreement, and therefore, the terms
and conditions of this Settlement Agreement shall be construed as if drafted jointly
by the Parties and shall not be interpreted or applied in favor or against any Party
on the basis of who may have drafted this Settlement Agreement or any particular
provisions.
11. SEVERABILITY. Whenever possible, each provision of this Settlement
Agreement shall be interpreted in such a manner as to be effective and enforceable
under applicable law. Should it be determined by any court of competent
jurisdiction, however, that any provision of this Settlement Agreement is invalid,
illegal, or unenforceable in any respect under any applicable law, such invalidity,
illegality, or unenforceability shall in no way affect the validity, legality, or
enforceability of any other provision of this Settlement Agreement. Instead, this
Settlement Agreement shall be reformed, construed, and enforced by such court of
competent jurisdiction as if such invalid, illegal, or unenforceable provision had
never been contained herein.
12. FURTHER DOCUMENTS. Each of the Parties hereto and their respective
counsel shall promptly take such actions and execute, acknowledge, deliver and
cause to be fully filed and recorded all such additional agreements, documents,
conveyances, pleadings, instruments, and/or other papers as may be reasonably
necessary or appropriate to consummate or implement the settlement contemplated
by this Agreement.
13. COVENANT PROHIBITING OTHER ACTIONS. No Party to this
Settlement Agreement shall institute, promote, participate in, assist with, submit,
file or permit to be filed on its behalf any lawsuit, charge, claim, complaint,
grievance (e.g. media, criminal, Better Business Bureau, licensing and certification
authorities, commissions, etc.) or other proceeding whether judicial,
administrative, arbitration or otherwise arising out of or in any way relating to the
Action (collectively a "Complaint"). To the extent any party to this Settlement
Agreement has already made, submitted, participated in or is aware of any
Complaint, such party shall immediately withdraw and/or dismiss any such
Complaint.
14. WAIVER OF TRIAL BY JURY. To the fullest extent permitted by law,
each of the Parties hereto waives any right it may have to a trial by jury in relation
to any litigation arising out of or in any way related to this Settlement Agreement.
15. EXECUTION IN COUNTERPARTS. This Settlement Agreement, and any
amendments thereto and waivers of conditions, may be executed by exchange of
faxed or electronic (PDF) executed signature pages, and any signature transmitted
by facsimile or electronic means (PDF) for the purpose of executing this
Settlement Agreement shall be deemed an original signature. This Settlement
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute one and
the same instrument.
16. AMENDMENT. This Settlement Agreement may be modified or
amended only by written agreement signed by the parties.
17. WAIVER. The provisions of this Settlement Agreement may be
waived only by an instrument in writing executed by the waiving party. The waiver
by any party of any breach of this Settlement Agreement shall not be deemed to be
or construed as a waiver of any other breach, whether prior, subsequent, or
contemporaneous, of this Settlement Agreement.
18. CHOICE OF LAW. This Settlement Agreement shall be governed by
and interpreted in accordance with the laws of the State of Minnesota, without
giving effect to the conflict of laws or choice of law provisions thereof, except to
the extent that the law of the United States governs any matter set forth herein, in
which case such federal law shall govern.
19. .JURISDICTION AND VENUE. Any litigation arising under or pertaining
to this Settlement Agreement shall be brought in state court sitting in Wright
County, State of Minnesota. In the event of such litigation, the Parties hereby
consent to the jurisdiction and venue of such court, and waive any objection to the
jurisdiction or venue of such court including the objection that venue is
inconvenient or otherwise improper.
20. NON -ADMISSION OF LIABILITY. The Parties agree that this
Settlement Agreement compromises and settles a dispute, that each Party chose to
enter into this Settlement Agreement instead of continuing to pursue their
respective claims and defenses in the Action, that neither Party admits the validity
of positions taken by the other Party in the Action, and that both Parties are bound
by the terms of this Settlement Agreement.
21. NOTICE. Any notice required or permitted by this Settlement
Agreement shall be sent by U.S. Mail to the following addresses:
If to the
Pouliots: Randal and Karen Pouliot
8457 Mason Avenue Northeast
Elk River, MN 55330
With a copy to: Christopher Harmoning
Lathrop GPM LLP
1010 West St. Germain
Suite 500
St. Cloud, MN 56301
Email: christopher.harmoning@lathropgpm.com
If to City: City of Otsego
City Hall
13400 901h Street NE
Otsego, MN 55330
Attn: Adam Flaherty, City Administrator
Email: aflaherty@ci.otsego.mn.us
With a copy to: Campbell Knutson, PA
Grand Oak Office Center I
860 Blue Gentian Road
Suite 290
Eagan, MN 55121
Attn: David S. Kendall
Facsimile No.: 651-243-6237
Email: dkendall@ck-law.com
Such notice shall be effective upon receipt.
22. BINDING EFFECT. This Settlement Agreement binds and inures to the
benefit of the parties hereto, their assigns, heirs, administrators, executors and
successors.
IN WITNESS WI-IEREOF, the parties have executed this Settlement
Agreement as of the date first set forth above.
[Signature page(s) to follow —the remainder of this page intentionally left
blank]
Petitioner:
CITY OF OTSEGO) A MUNICIPAL CORPORATION
Mayor Jessica Stockamp
CITY OF OTSEGO, A MUNICIPAL CORPORATION
Lo
Tami Loff, City Clerk
STATE OF MINNESOTA
)ss.
COUNTY OF WRIGHT)
The foregoing instrument was acknowledged before me this day of
512020 by Jessica Stockamp and by Tami Loff, respectively the
Mayor and City Clerk of the City of Otsego, a Minnesota municipal corporation,
on behalf of the corporation and pursuant to the authority granted by its City
Council.
Notary Public
Respondents:
RANDAL T. POULIOT AS TRUSTEE OF RANDAL T.
POULIOT REVOCABLE TRUST DATED APRIL 185,
2003,
0
Print Name:
Print Title:
Subscribed and sworn to before me
this day of 52020.
Notary Public
Respondents:
KAREN K. POULIOT AS TRUSTEE OF KAREN K.
POULIOT REVOCABLE TRUST DATED APRIL 18,
2003,
I' 0
Print Name:
Print Title:
Subscribed and sworn to before me
this day of , 2020.
Notary Public