Item 3.13 Settlement Agreement regarding ROW/85th Street Public Improvement Project0
OtseF o
MINNESOTA C
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Legal
City Attorney David Kendall
March 8, 2021
PRESENTER(S)
REVIEWED BY:
ITEM #:
Consent
City Administrator/Finance Director Flaherty
3.13 Specht Parcel
STRATEGIC VISION
MEETS:
THE CITY OF OTSEGO:
of Way for the 85th Street Public Improvement Project.
Is a strong organization that is committed to leading the community through innovative
communication.
X
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Following a verdict at trial, the Council directed the City Attorney to engage in negotiation and determine
Is a social community with diverse housing, service options, and employment opportunities.
Specht parcel ("Property') on the 85th Street public improvement project ("Project"). The Project involved
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 outstanding claims regarding the eminent domain taking from the
Specht parcel ("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 $70,200. The City paid this amount directly to the property owners in
May of 2018 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 last written offer of $70,200. The case
went to trial in September of 2020 and the Condemnation Commissioners reached a verdict of $235,000 in
compensation to the property owner.
Minnesota law regarding eminent domain 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. Thus
the City is legally obligated to pay all these expenses.
Following the verdict from the Commissioners, the Property owner produced records specifying all of their
litigation costs and made a demand for the City to pay a total of $405,500.07 including the Commissioner's
award, interest, attorney fees, appraisal fees, expert witness fees, and other costs and expenses. After
extensive negotiations the parties arrived at a proposed agreement for the City to pay a total of
$358,399.88, which includes the $70,200 previously paid by the City. The City will pay $288,199.88 to the
property owners, satisfying all claims and obligations for the City to pay damages for the taking, interest,
attorney fees, appraisal fees, expert witness fees, costs, and expenses.
SUPPORTING DOCUMENTS ATTACHED:
• Settlement Agreement
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THEM I NUTES:
Motion to approve the Settlement Agreement between the City of Otsego and the Spechts.
6UDGET 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
, 2021, is entered into by and between the City of Otsego,
Minnesota ("City"), and Edwin J. Specht and Elizabeth A. Specht (the "Spechts")
(collectively, the "Parties").
RECITALS
WHEREAS, the Spechts own real property located in Wright County,
State of Minnesota;
WHEREAS, The City has acquired by eminent domain certain
temporary and permanent easements upon the Specht 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, in furtherance of the City -
approved project for a new public roadway, 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 Spechts 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 Specht parcel was identified as
Parcel 7 in this Action;
WHEREAS, Parcel 7 in the Action is also identified as PID No. 118-
500-194200;
WHEREAS, on or about May 18, 2018, the Wright County District
Court granted the City's Petition, ordered the Easements transferred to the City, and
appointed three condemnation commissioners to hear the matter pursuant to
Minnesota law;
WHEREAS, on or about May 22, 2018 the City made the Quick Take
Payment of $70,200.00 directly to the Spechts;
WHEREAS, on or about September 21, 22, and 23, 2020, the Parties
held a hearing before the three court-appointed condemnation commissioners;
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WHEREAS, on or about September 29, 2020, the three commissioners
issued their report determining the total award to be $235,000.00.
WHEREAS, following the commissioners' award there remained
unresolved claims and disputes between the parties including but not limited to
claims for 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 previously paid Quick -Take
Payment of Seventy Thousand Two Hundred and No/100 Dollars ($70,200.00)
made to the Spechts by the City in May of 2018, the City agrees to issue an
additional and final payment to the Spechts for the additional sum of Two Hundred
Eighty Eight Thousand One Hundred and Ninety Nine and 88/100 Dollars
($288,199.88) ("Partial Settlement Amount") to reach total payments of Three
Hundred Fifty Eight Thousand Three Hundred Ninety Nine Dollars and 88/100
Dollars ($358,399.88) ("Total Settlement Amount").
1.2 The City shall issue payment for the Partial Settlement Amount
by March 30, 2021. It is hereby expressly understood and agreed to by the Parties
that payment of the Partial Settlement Amount shall be a full and complete
settlement of all monetary claims that the Spechts have related to the Action,
including the condemnation award, interest, attorneys' fees, expert fees and any
other costs or claims related to the Action.
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1.3 The Partial Settlement Amount will be paid to Edwin J. Specht
and Elizabeth A. Specht c/o Larkin Hoffman and mailed to Timothy A. Rye,
Larkin Hoffman, 8300 Norman Center Drive, Suite 1000, Minneapolis, MN 5 543 7.
2. APPEAL OF COMMISSIONERS' AWARD. In consideration of the terms
of this Settlement Agreement, neither party has appealed the Commissioners'
Award.
3. FINAL CERTIFICATE: The City may file a Final Certificate as
required by Minnesota Statutes Chapter 117 with respect to the Parcel 7 after
delivering the Partial Settlement Amount to the Spechts.
4. RELEASES. In consideration of the terms of this Settlement
Agreement, the Parties agree as follows:
4.1 The Spechts, 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. Excluded from this Release are any claims that may arise
concerning the design and construction of the public improvements that
necessitated this Action.
4.2 The Spechts 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
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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 Spechts 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.
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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. Except as stated above
in paragraph 4. 1, 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.
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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:
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If to the
Spechts: Edwin J. and Elizabeth A. Specht
8740 Mason Avenue Northeast
Elk River, MN 55330
With a copy to: Timothy A. Rye
Larkin Hoffman
8300 Norman Center Drive
Suite 1000
Minneapolis, MN 55437-1060
Email: trye@larkinhoffman.com
If to City: City of Otsego
City Hall
13400 90th Street NE
Otsego, MN 55330
Attn: Adam Flaherty, City Administrator
Email: aflaherty@city.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 WHEREOF, 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]
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Petitioner:
CITY OF OTSEGO, A MUNICIPAL CORPORATION
M.
Mayor Jessica Stockamp
CITY OF OTSEGO, A MUNICIPAL CORPORATION
0
Audra Etzel, City Clerk
STATE OF MINNESOTA
)ss.
COUNTY OF WRIGHT)
The foregoing instrument was acknowledged before me this day of
, 2021 by Jessica Stockamp and by Audra Etzel, 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
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Respondents:
s:
EL1Z9 man A- SPECHT,
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SubsFrib+ed and sw om to before me
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Respondent:
EDWIN J. SPECHT
By:
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Subscribed and swom to before me
this duty of F Ml .
BEV PERSONS
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213711v3
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