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HomeMy WebLinkAboutResolution - 2010-R0516 - St Paul Fire_ Marine Insurance Co. And Travelers Lloyds Insurance Settlement - 10_14_2010Resolution No. 2010-RO516 October 14, 2010 Item No. 5.34 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Settlement, Compromise, Release and Indemnity Agreement with St. Paul Fire and Marine Insurance Company ("St. Paul Travelers") and Travelers Lloyds of Texas Insurance Company ("Travelers Lloyds"). Said Agreement is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of this Council. Passed by the City Council on October 14, 2010 ATTEST: Rebecca Garza, City APPROVED AS TO CONTENT: L Ann Dumbauld, City Manager APPROVED AS TO FORM: Sam Medina, City vw/ccdocs/Res.Agreement-St. Paul Fire & Marine September 22, 2010 sk� TOM MAYOR ONLY ONE ORIGINAL XECUTED PI EGAL (Sylvi CE COMP ED ORIGINAL ontacted John Simpson 11.16.10 SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT This Settlement, Compromise, Release and Indemnity Agreement (the "Agreement") is made by and between the City of Lubbock (the "City"), David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson and St. Paul Fire and Marine Insurance Company ("St. Paul Travelers") and Travelers Lloyds of Texas Insurance Company ("Travelers Lloyds") (collectively "Travelers") WHEREAS, St. Paul Travelers issued a Public Sector policy, policy number GP06301452, to the City, effective from October 1, 2006 to October 1, 2007, which was a renewal of policies issued by Travelers effective October 1, 2003 to October 1, 2004, October 1, 2004 to October 1, 2005, October 1, 2005 to October 1, 2006, and which was renewed by a policy issued by Travelers effective October 1, 2007 to October 1, 2008 (collectively the "Policy"); WHEREAS, the City had a contract with ICON Benefits Administrators 11, L.P. ("ICON") effective December 2004 to provide TPA services for its integrated health care plans, and American Administrative Group, Inc. ("AAG") a related entity owned by Ted Parker sought renewal of that contract; WHEREAS, on March 5, 2007, shortly after the expiration of the ICON contract, the City filed suit in Lubbock County, Cause No. 2007-538,383 against ICON and AAG alleging that ICON and AAG had misappropriated funds. In that suit, the City further requested an audit and certain discovery because ICON and AAG had allegedly failed to provide information required under their contract; WHEREAS, on July 19, 2007, ICON, AAG, HealthSmart Preferred Care, 11, LP and The Parker Group, Inc. (collectively "ICON/AAG") filed a Rule 202 Petition against the City, Cause SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 1 No. 2007-540024, in the District Court, Lubbock County, Texas seeking pre -suit discovery to identify the proper employee parties for various claims (the "Rule 202 Lawsuit"); WHEREAS, on February 12, 2008, ICON/AAG made a demand for arbitration, and on March 12, 2008, both Cause No 2007-583,383 and the Rule 202 Lawsuit were ordered to a combined arbitration, Case No. 71-193-00084-8 before the American Arbitration Association. (the "Arbitration"). On March 24, 2008, ICON/AAG filed their Supplement to Demand to Arbitration; WHEREAS, on February 8, 2008, ICON/AAG filed suit in Dallas County Court at Law No. 2, Cause No. 08-01067-13, against various Wachovia employees and three City employees, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson (the "Dallas Lawsuit"); WHEREAS, on October 24, 2008, ICON/AAG amended their pleading in the Dallas Lawsuit to join former City mayor, David Miller as a defendant; WHEREAS on May 25, 2010, all claims asserted by ICON/AAG against David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson in the Dallas Lawsuit were dismissed without prejudice; WHEREAS, the City provided a defense to David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson in the Dallas Lawsuit; WHEREAS, the City requested that Travelers reimburse it for defense costs, including legal fees and other expenses, it incurred in the Rule 202 Lawsuit, the Arbitration and the Dallas Lawsuit and sought indemnification for any judgment that may be entered in the Arbitration or the Dallas Lawsuit (the "Claim"); WHEREAS, Travelers contested coverage for the Claim, and on July 29, 2009 filed suit in the United States District Court for the Northern District of Texas, Dallas Division, Civil SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 2 Action No. 3-09CV 1400-P styled St. Paul Fire & Marine Ins. Co. v. City of Lubbock, Leisa Hutcheson, Lee Ann Dumbauld, Scott Snider, David Miller, Icon Benefit Adrnininrators, 11 LP, American Administrative Group, Inc. and Healthsmart Preferred Care 11, LP seeking a declaratory judgment that Travelers provided no coverage for the Claim (the "Coverage Lawsuit"); WHEREAS, the City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson asserted counterclaims against Travelers in the Coverage Lawsuit for breach of contract and violations of the Texas Insurance Code; WHEREAS, Travelers, the City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson now wish to compromise all claims and causes of action which they may have against one another arising from the Arbitration, the Dallas Lawsuit, the Claim or the Coverage Lawsuit; NOW THEREFORE, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Within 30 business days after Travelers' receipt of this agreement executed by the City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson and receipt of a fully executed W-9 for the City, Travelers agrees to pay the City the sum of FIVE HUNDRED THOUSAND DOLLARS and NO/100 ($500,000.00). 2. Travelers, the City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson, agree to cooperate with each other to submit all pleadings necessary to secure the dismissal of the Coverage Lawsuit with prejudice. SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 3 3. The City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson hereby compromise, settle, fully release, and forever discharge Travelers, as well as its affiliated corporations and entities and their respective directors, officers, shareholders, employees, agents, receivers, insurers, attorneys (including but not limited to Quilling Selander Cummiskey & Lownds P.C. and Greg K. Winslett and Marcie L. Schout), and their predecessors, successors, and assigns, whether specifically named herein or not, of and from any and all claims or causes of action which the City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson has held or may now or in the future own or hold for any and every kind of loss, injury, or damage, whether known or unknown, arising from or in any way growing out of or related to the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit, the Claim, the Coverage Lawsuit, the claims giving rise to the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit, or the Claim, including but not limited to any claims for breach of contract, breach of the common law duty of good faith and fair dealing, violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, similar "bad faith' causes of action or any other cause of action or claim arising out of or related to the handling or adjustment of the claims arising from or related to the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit, the Claim, the Coverage Lawsuit or the insurance coverage provided for the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit, or the Claim under the Policy, including, but not limited to any claim for reimbursement of defense costs incurred in connection with the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit, or indemnification for any judgment or award entered in the Rule 202 Lawsuit, the Arbitration, or the Dallas Lawsuit. 4. The City agrees that in the unlikely event an arbitration award is entered against the City in the Arbitration, or a judgment associated with such award is entered, the City will be SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 4 responsible to satisfy such award and will not seek reimbursement from Travelers for any amounts the City may incur to satisfy the award or judgment related to the Arbitration, if any. The City, David Miller, Lee Ann Dumbauld, Scott Snider and Leisa Hutcheson agree that in the unlikely event any new lawsuit or arbitration proceeding is instituted against David Miller, Lee Ann Dumbauld, Scott Snider and/or Leisa Hutcheson or any other City employee by ICON/AAG related to the factual allegations that served as the basis of the Arbitration or the Dallas Lawsuit, Travelers will have no obligation to defend such new lawsuit or arbitration and shall have no duty to indemnify against any judgment or award entered in connection with such new lawsuit or arbitration; however, this shall in no way alter any obligation of the City of Lubbock to defend the above named individuals against any such suit by AAG/ICON or any other related entity or individual and where appropriate indemnify the above named individuals against any judgment or award that might result, pursuant to the City's Self Insurance Risk Program and related Resolution(s). 6. Though the parties are not currently aware of any such claims, any insurance claims other than those related to the Rule 202 Lawsuit, the Arbitration, the Dallas Lawsuit or the Claim are not released hereby and such claims shall be subject to the terms and provision of the Policy as written. 7. Travelers releases any subrogation claims or rights it may have to any affirmative claims for relief that have been or could be asserted against ICON/AAG by The City, David Miller, Lee Ann Dumbauld, Scott Snider and/or Leisa Hutcheson in the Arbitration or the Dallas Lawsuit. 8. INDEMNITY: TO THE EXTENT PERMITTED BY LAW, THE CITY AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS TRAVELERS OR SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 5 THOSE IN PRIVITY WITH IT, INCLUDING ANY EMPLOYEE OR ATTORNEY OF TRAVELERS, AGAINST ANY CLAIM, INCLUDING COSTS AND ATTORNEY'S FEES INCURRED DEFENDING SUCH CLAIM, THAT IS ASSERTED BY ICON/AAG, RELATING IN ANY WAY TO THE ARBITRATION OR THE DALLAS LAWSUIT. THE CITY EXPRESSLY AGREES TO INDEMNIFY AND DEFEND TRAVELERS AGAINST ANY CLAIM THAT IS ASSERTED AGAINST TRAVELERS BY ICON/AAG AS JUDGMENT CREDITORS RELATED TO THE ARBITRATION, THE DALLAS LAWSUIT OR THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE ARBITRATION OR THE DALLAS LAWSUIT, WHICH CLAIMS, IF ANY, FLOW THROUGH CITY, DAVID MILLER, LEE ANN DUMBAULD, SCOTT SNIDER, OR LEISA HUTCHESON, DIRECT OR DERIVATIVE. 9. Each party shall bear their own attorney's fees and costs incurred in connection with the Coverage Lawsuit and the consummation of this Agreement. 10. All parties hereto understand that this settlement is a compromise of a doubtful and disputed claim and is not to be construed as an admission of liability on the part of the persons hereby released, by each of whom liability is expressly denied. 11. This release contains the entire agreement between the parties hereto, and the terms of this agreement are contractual and not mere recitals. 12. All of the terms and provisions of this release shall be binding upon and shall inure to the benefit of the parties hereto and their respective representatives, successors, and assigns. 13. In making this agreement of compromise and settlement, no party has relied upon any statement or representation pertaining to this matter made by the persons who are hereby SETTLEMENT. COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 6 released or by any persons speaking for or representing any of them. Each party hereto has carefully read the foregoing release and knows the contents hereof and represents to the other parties that such party is signing it knowledgeably and as his or her own free act. 14. Each releasing party to this agreement represents and warrants on behalf of such party that he, she, or it, in the capacities recited herein, has the power and authority to execute, deliver, and perform this agreement, and that each of the persons signing this agreement has been duly authorized to do so in their behalf. Each releasing party to this agreement further represents and warrants on behalf of such party that he, she, or it is the sole legal and beneficial owner of the claims released herein, that he, she, or it has the exclusive right and power to pursue them, and that he, she, or it has not conveyed, encumbered, or assigned any of them in whole or in part. 15. THIS AGREEMENT AND RELEASE SHALL BE INTERPRETED UNDER THE LAWS OF THE STATE OF TEXAS. Exclusive venue and jurisdiction of any suit arising hereunder shall lie within the courts of the State of Texas, or within the courts of the United States of America located within the State of Texas. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.] SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 7 'I'I IF CITY OF LUBBOCK By: � "M� Printed Name: TOM MARTIN l-itic: Mayor STATH OFTEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned authority, on this day Personally appeared 1 om M0.r� , known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act ol'said City of' Lubbock and that he/she executed the same as the act of -the City of Lubbock for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of' Q Irj We .2010. ELISA ,y�'1SA[yNr�CnHENWq of V aS My Canrtwssan DOM 11-07-2011 Commission Expires: Notary Public In and For Sai ounty and State SE' TLEMEN 1', CONIPRON11SE, RELEASE AND INDEMNITY AGREENIENT Page 8 David Miller STATE OF TEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned, a Notary Public in and 1m said County and State, on this day personally appeared David Miller, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same liar the purposes and consideration therein expressed. � UGtt�J�T GIVEN under my hand and seal of office this e—',ay of 8ef,4embcr, 2010. U"-�- L -�Xpwx i 7- MyAWN MAMAWAL Notary Public —In and For Said County and State fep� 2011 commission expires: SETTLEMENT, COMPROMISE, RELEASE AND INDEMNI'I N AGREEMENT Page 9 , ov - L Scott Snider STATE OF TEXAS COUNTY OFLUBBOCK BEF0RP ME. the undersigned, a Notary Public in and for said County and Stale, on this day personally appeared Scott Snider, known to me to be the Person whose name is subscribed to the foregoing instrument. and acknowledged to me that he executed the same for the purposes and consideration therein expressed. D D+� GIVEN under my hand and seal of office this rJ— day of SoHemhe . 2010. CU WEBS NV"W$a dTow Notary Public ---In and For Said County and Stale My Cattmietdon F 301,2014 (S ] — My commission expires; 03-01-;LOIY SEVULENIENT, COMPROMISE, RELEASE AND INDEMNI'l Y AGREEMENT 1'alle 11) isa I Iutcheson STATE OF TEXAS COUNTY OF LU13BOCK 13EFORE ME. the undersigned, a Notary Public in and for said County and State, on this day personally appeared Leisa Hutcheson. known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same for the purposes and consideration therein expressed. �I �bt � GIVEN under my hand and seal of office thisL day of&�. 2010. CYNTHIA ANN BENEDICT Notary S Public, State of Texas My Commission Explres March 3, 2Q My commission expires: I _ , t ((m/1 No ary Public —In and For Said County and State CYNTHIA ANN BENEDICT Notary PubUc, State of To" my C° �im EXOM March 3, TO La SM-11 LENIE` 1. CONI PRONI ISE, RELEASE AND INDENINI U%' %(;RIKEN1ENT Puke I I at f4., 4t4�� Lee AeKliumbauld STATE: OF TEXAS § ti COUNTY OF LUBBOCK BEFORE' ME, the undersigned. a Notary Public in and lirr said County and State, on this day personally appeared Lee Ann Dumbauld, known to me to be the Person %vhose name is subscribed to the foregoing instniment. and acknowledged to me that she executed the same Ibr the purposes and consideration therein expressed. GIVEN under my hand and seal ol'office this 5 day of fir. 2010. r 1JLLI WEBB(iA�jl"A' No" P&C,&*oiTws Notary Pu is —In and For Said County and State My Cmtrs m Egkm 3-01.2D14 (Seal My commission expires: 03-01. "t-� SE 11 LENIENT, COMPROMISE, RELEASE AND INDENINITI AGREEMENT Page 12 ST. PAUL FIRE AND MARINE INSURANCE COMPANY By Pri Tit STATE OF i typfS COUNTY OF Ie l iAt— BEFORE ME, the undersigned authority, on ibis day personalty appeared Dbuc 40R 4! S known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of said St. Paul Fire and Marine Insurance Company and that he/she executed the same as the act of such corporation for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this d D d` day of 2010. Notary Publid In and For Said County and State Commission Expires: L—.1ANG•; L1NA USELTONNoterY Public STATE OF TEXAS +> .y Cpmm Er.O WY SET L MENT. COMPROMISE. RF.LF,ASE 6ND INDEMNM AGREEMENT Page 13 TO 39Cd dIDINI bSLZLZS ZO:bT 0TOZ/OZ/OT — TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY M Prir Till STATE OF 71�-- XX.S COUNTY OF 3E x a e BEFORE ME. the undersigned authority, on this day personalty appeared 3001 MA eR l S , known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of said Travelers Lloyds of Texas Insurance Company and that he/she executed the same as the act of such corporation for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this �>-? n d day of c o . 2010. Notary Publ a In and For Said County and State ANGEu",- t.JSE� roN Commission Expirej Notary PuhiK `ATE OF rEJCA3 Z© 39bd VIDI211 OSLZLZS PRge 14 ZO:vT 0I0Z/0Z/0T THE CITY OF LUBBOCK By: Printed Name: TOM MARTIN Title: Mayor STATE OF TEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned authority, on this day personally appeared l(3m MO('+ r` , known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of said City of Lubbock and that he/she executed the same as the act of the City of Lubbock for the purposes and consideration therein expressed and in the capacity therein stated. , r GIVEN UNDER MY HAND AND SEAL OF OFFICE, this `i' day of K ey- , 2010. v PUy� ELISA SANCHEZ Notary Public, State of Texas My comrtNss on Expires 1107.2011 Commission Expires: Notary Public In and For SaidQ13unty and State SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 8 i David Miller STATE OF TEXAS § COUNTY OF LUBBOCK § BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared David Miller, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN under my hand and seal of office this 9 day of fir, 2010. Lbh.,.j DAWN MgMAWA Notary Public —In and For Said County and State ii My CWdsebruWY �E 11 cr My commission expires: SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 9 Scott Snider STATE OF TEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared Scott Snider, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed. +� ober GIVEN under my hand and seal of office this rJ— day of , 2010. ►�r `� CELIA WGDD � Exp N"Pu*,&AdTOM Notary Public —In and For Said County and State My Corm4ssion w 3-01.2014 (S My commission expires: 03-01-aAlA/ SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 10 Hutcheson STATE OF TEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared Leisa Hutcheson, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same for the purposes and consideration therein expressed. GIVEN under my hand and seal of office this SN day of September., 2010. CY=State DICT xasMy C3, 200 My commission expires: 6h No ary Public —In and For Said County and State CYNTHIA ANN BENEDICT Notary Public, State of Taw o. •�' fdp Commission Expw WC11 3.20 Ia SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 11 - 'Xv ae", Lee Arg6umbauld STATE OF TEXAS COUNTY OF LUBBOCK BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared Lee Ann Dumbauld, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that she executed the same for the purposes and consideration therein expressed. GIVEN under my hand and seal of office this 5 - day of Sew, 2010. CELIAWEBB Na"PubBc,80dTams Notary Pu is—ln and For Said County and State W ConjWm Bow 301.2014 (Seal My commission expires: 03-01- XOIAF SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 12 ST. PAUL FIRE AND MARINE INSURANCE COMPANY By: Printed Name: Title: STATE OF COUNTY OF BEFORE ME, the undersigned authority, on this day personally appeared , known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of said St. Paul Fire and Marine Insurance Company and that he/she executed the same as the act of such corporation for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of 2010. Notary Public In and For Said County and State Commission Expires: SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 13 TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY Printed Name: Title: STATE OF COUNTY OF BEFORE ME, the undersigned authority, on this day personally appeared , known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of said Travelers Lloyds of Texas Insurance Company and that he/she executed the same as the act of such corporation for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of .2010. Notary Public In and For Said County and State Commission Expires: SETTLEMENT, COMPROMISE, RELEASE AND INDEMNITY AGREEMENT Page 14