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HomeMy WebLinkAbout135-89 RESOLUTION• RESOLUTION•NO. 135-89 • 4. A • 4 j. e A RESOLUTION AUTHORIZING THE, MAYOR AND CITY CLERK TO EXECUTE A TOLLING AGREEMENT BETWEEN THE CITY OF FAYETTEVILLE, ARKANSAS, NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY AND JAMES N. MCCORD IN CONNECTION WITH THE INCINERATOR LAWSUIT. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the Mayor and City Clerk are hereby authorized and directed to execute a tolling agreement between the City of Fayetteville, Northwest Arkansas Resource Recovery Authority and James N. McCord in connection with the incinerator lawsuit. A copy of the Tolling Agreement authorized for execution hereby is attached hereto marked Exhibit "A" and made a part hereof. PASSED AND APPROVED this 19th day of December APPROVED Mayor , 1989. o f o f Fayettevil e, Arkansas Resource HTS T LLING TOLLING AGREEMENT r6I1s'h5 Gt— OkioG sw,1- 1 AGREEMENT is made this_ _ _ day , 1989, by and between the City Arkansas (the "City") and the Northwest Recovery Authority (the "Authority"), on t he one hand, and James N. McCord (the "Toller"), on the o ther hand. The City and the Authority are hereinafter collectively referred to as the "Public Entities." and the City, the Authority, and the Toller are hereinafter collectively referred to as the "Parties." WHEREAS, the Authority is the issuer of a certain bond issue identified as Northwest Arkansas Resource Recovery Authority Revenue Bonds Fixed/Adjustable Rate Series 1985 (the "bond issue"); and WHEREAS. the Supply Agreement pay the Authority t o approximately payments owed by "City payments"); and Public Entities entered into a Waste in which the City agreed, inter alia. to a tipping fee that includes a sum equal 95% of the principal and interest the Authority under the bond issue (the WHEREAS. a lawsuit hasbeen filed in the Chancery Court of Washington County, Arkansas, styled and numbered Joe Robson, For Himself and All Others Similarly Situated vs. City of Fayetteville, Arkansas; Northwest Arkansas Resource Recovery Authority; and Union National Bank of L ittle Rock, Arkansas, No. E 89-1170 (the "Robson suit"); and WHEREAS, the plaintiff in the Robson that the City's putative obligations in the Agreement to make the City payments are unenforceable under Arkansas law; and suit alleges Waste Supply invalid and WHEREAS, if the plaintiff should prevail in the Robson suit, the City may be prevented from making some or all of the City payments; and WHEREAS, if the City is prevented from making some or all of the City payments, the Public Entities will be exposed to the possibility that they will be sued by the THE NIBLOCK LAW FIRM 20 EAST MOUNTAIN ST. • DRAWER 818 FAYETTEVILLE, ARK. 72702-0818 1-50!-521-5510 bondholders, the trustee for the bondholders. and the bond insurer for the bond issue: and WHEREAS, if such claims should be asserted against them. the Public Entities might seek damages, including contribution and indemnity, from the Toiler for losses suffered as a result of the City's failure to make the City payments; and WHEREAS, the statutes of limitations applicable to some or all of the Public Entities' claims against the Toller resulting from the City's failure to make the City payments may expire before a final judgment in the Robson suit, including the exhaustion of all appeals, has been obtained; and WHEREAS, the Toller wishes to preserve his ability to file suit against the Public Entities if either or both of them file suit against the Toller; and WHEREAS, the Public Entities, on the one hand, and the Toller, on the other hand. desire to defer and potentially avoid litigation by tolling the statutes of limitations pertaining to any claims between them, NOW, THEREFORE, in consideration of the mutual covenants and promises herein made, it is agreed by the Parties as follows: 1) The statutes of limitations applicable to any and all claims between the City and/or the Authority, on the one hand, and the Toller, on the other hand, shall be tolled until the later of: (a) one hundred eighty (180) days following the obtaining of a final ,judgment in the Robson suit, including the exhaustion of all appellate review (whether discretionary or as of right), or; (b) one hundred eighty (180) days following service of process on a suit that was timely filed under subparagraph (a) above; and 21 So lone as a claim against it is filed within the time permitted by the applicable statute of limitations, as extended by the tolling period contained in paragraph 1, above, a Party shall not assert as a defense to a claim the statute of limitations, laches, or any contention based in whole or in part on the failure of the claim to have been filed at an earlier time; provided however, THE NIBLOCK LAW FIRM 20 EAST MOUNTAIN ST. • DRAWER 818 FAYEIIEVILLE, ARK. 72702-0818 1-501-521-5510 that nothing in this paragraph shall preclude a Party from asserting any such defense based on the failure of a claim to have been filed before the date of this Tolling Agreement; and 3) Subject only to the requirements that anv claims be asserted within the period of time authorized by this Tolling Agreement, the Public Entities and the Toller shall retain their full and unbridled discretion to decide when, if ever, to assert any or all of their respective claims against each other; and 4) Nothing in this Tolling Agreement, or in the Public Entities' and the Toller's decision to defer asserting their claims against each other, shall be deemed to constitute an admission by any of the Parties regarding either their liability on any claims that may be asserted against them by any persons, or the weakness of any claims that they may assert against any persons; and 5) The signators warrant and represent execute this agreement they are acting; and to that on this Tolling Agreement each they are fully authorized to behalf of the Party for whom 6) This Tolling Agreement is an integrated contract that embodies the entire agreement of the Parties and supersedes any and all prior oral or written agreements, discussions, or understandings; and 7) This Tolling Agreement may not be modified except by a writing signed by all of the Parties; and 81, This Tolling Agreement shall be laws of the State of Arkansas. City of jayettevij4 e, Arkansas By: je :eAtt G'w"L/ Mayor J. Attest: City Cler governed by the lgt THE NIBLOCK LAW FIRM 20 EAST MOUNTAIN ST. • DRAWER 818 FAYETTEVILLE, ARK. 72702-0818 1-501-521-5510 Date Date Northwest Arkansas Resource Recovery Chairperson By: Witness James N. McCord egal Signature Witness: Authority l2`2G/Yf - THE NIBLOCK LAW FIRM 20 EAST MOUNTAIN ST. • DRAWER 818 FAVtI ItVILLE, ARK. 72702-0818 1-501-521-5510 Date 6/CFF Date 71A7jet, Date TOLLING AGREEMENT This Tolling Agreement is entered into on this 28th day o f December, 1989 by and among the City of Fayetteville, Arkansas ("City"), the Northwest Arkansas Resource Recovery Authority ("Authority") and Kutak Rock Et Campbell ("Kutak"). 1. City and Authority agree they will not directly or indirectly initiate, prosecute or assist in any action, suit o r proceeding against Kutak at any time prior to the Termination Date, as hereinafter defined, of this Tolling Agreement. 2. Kutak agrees that if City and Authority file and serve the attached Third -Party Complaint ("Complaint") on or before 20 days after the Termination Date of this Tolling Agreement, then Kutak shall not assert as a defense that any statute of limitations expired between December 29, 1989 and the date of the filing of the Complaint. City, Authority and Kutak intend and agree that filing of the Complaint on or before 20 days after the Termination date of this Tolling Agreement will have.the same legal effect as filing of the Complaint on December 28, 1989. 3. The Termination Date of this Tolling Agreement shall be the earlier of: (a) the day any of City, Authority or Kutak deliver written notice, citing this paragraph 3(a), to the other two stating that the party giving notice thereby is terminating this Tolling Agreement; or (b) June 29, 1990. 4. City, Authority and Kutak agree their execution and performance of this Tolling Agreement is not intended to and does not (a) revive, extend or in any way affect any statute o f limitations which expired on or before December 28, 1989; (b) apply to any claim, right or cause of action other than those alleged in theComplaint; (c) constitute an admission o f any fact or legal principle; or (d) benefit any person or entity other than City, Authority and Kutak. 5. City, Authority and Kutak each represent and agree that the person(s) signing this Tolling Agreement on their respective behalfs are fully authorized and empowered to do so. 6. This Tolling Agreement is an integrated contract that embodies the entire agreement of City, Authority and Kutak, and supercedes all prior oral and written communications, discussions, understandings and agreements. 7. This Tolling Agreement may not be modified except by a writing signed by City, Authority and Kutak citing this paragraph 7. 8. Agreement Any otherwise proper notice regarding this Tolling will be sufficient if delivered as follows: (a) Notices to City: Mayor City of Fayetteville Post Office Drawer F Fayetteville, AR 72702 (b) Notices to Authority: Chairman Northwest Arkansas Resource Recovery Authority c/o Mayor City of Fayetteville Post Office Drawer F Fayetteville, AR 72702 (c) Notices to Kutak: Presiding Partner Kutak Rock & Campbell 1650 Farnam Street Omaha, NE 68102 9, This Tolling Agreement shall laws of the State of Arkansas. • be governed CITY OF FAYETTEVILLE By lii NORTHWEST ARKANSAS RECOVERY AUTHORITY by the ARKANSAS age.:L/4,,Ve(/ erL SOURCE By i2- 27- 8f KUTAK ROCK CAMPBELL By -2- moral precedent set, and the City may get requests in the future based on the fact that "you did it for them, now do it for us." Vorsanger, made a motion for the City to undertake the drainage repairs and the funding come from the CIP budget. This motion was seconded by Kelley. Lancaster stated that the issue before the Board tonight was drainage for the PUD. What type of problems will be brought before the Board in the future when the developer has defaulted. Linebaugh stated that the regulations for drainage and streets in the PUD were not different than any other development. The streets do have problems, but their repair was already budgeted into the CIP budget. Kelley asked that thenecessary changes to City ordinances and policies that would eliminate these types of deficiencies be brought back to the Board as early as possible in the first quarter of 1990. 410 410.1 410.2 410.3 Upon roll call, the motion passed by a vote of 7-0. Eric Malstrom addressed the Board and thanked the Board for their 410.4 support and willingness to address the problem. He wondered if the Staff was prepared to address specific solutions to the drainage problems. Linebaugh stated that the City has received no plans from the engineer at this point. The engineer has looked at the location and stated there was a considerable amount'of work that needed to be done. Malstrom •stated that several members of the neighborhood had 410.5 suggestions on how to solve the drainage problems that they would like to share with City Staff. Mayor Martin stated Staff.would welcome the suggestions and cooperation with the subdivision members. RESOLUTION 134-89 APPEARS ON PAGE OF ORDINANCE AND RESOLUTION BOOK OTHER BUSINESS NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY Linebaugh announced that the Northwest Arkansas Resource Recovery Authority would hold a meeting at 8:00 a.m. on Thursday, December 21 at City Hall to discuss filing lawsuits against the third parties that have not signed the tolling agreements. Linebaugh has also asked Walter Niblock to present the Board with 410.7 a report tonight. Niblock is requesting two actions from the Board: (1) approval of the signatures on the tolling agreements and (2) approval to enter into.a lawsuit against the third parties who refuse to sign the tolling agreements. 410.6 411 411.1 • • • Steve Pflaum addressed the Board on the progress of the litigation. The case is still pending regarding the freedom of information act. A suit has been filed requesting declaratory relief. There are two defendants who have moved to have the case dismissed from chancery court, and an opposition has been filed against these and are currently waiting on a decisiof to the motions. 411.2 With respect to the main lawsuit, their basic strategy is still the same --to bring all interested parties into one lawsuit. A motion has been filed to force the p.aintiff to bring into the suit the additional parties they excluded from the case. A hearing is expected on this motion in Jamuary. Union Bank, the trustee for the bondholders, has filed a motion for summary judgment wanting a determination that the waste supply agreement is enforceable and that the City has a legal obligation to pay the short fall. Pflaum intends to file a similar motion but will wait until all interested parties are in the case. 411.3 Most of the activity over the past several weeks has involved the third party claims that both the City and Authority have against other parties that were involved with this transaction. Both the City and Authority have two types of claims that can be asserted against the third parties: (1) the theory that the remarketing was premature because the site had not firmly been decided upon as of December 30, 1986 when the remarketing took place. Various approvals from state, federal, and local governments had not been approved, and these were necessary before the remarketing took place. (2) Some of the third party defendants also bear responsibility, that if in the main action the waste supply agreement is determined to be unenforceable, then there are other parties that bear responsibility for that document and should be held responsible for the damages suffered. Basically, these parties had an obligation to put together a deal that worked, and the waste supply agreement) was an integral part of this transaction. If that document is ultimately determined not to be enforceable, then those other parties did not put together a deal that worked and should be held responsible for any losses the City would obtain. 411.4 Only the former city attorney has agreed to sign the tolling agreement at this point. Pflaum is requesting that the Board ratify the tolling agreement signed by Mr. McCord. Also, the Board is being requested to authorise lawsuits to be filed against the third party defendants who do not sign the tolling agreements. If these claims are successful, they offer a possible means to recover the $7 million short fall of the bonds so the City would not be left footing the bill. Countersuits are possible from the third party defendants, but he doe, not believe there are any valid claims that could be brought against the City. Currently, some of the third party defendants are upset that they have been accused of possible wrongdoing, and Say they are being slandered and/or libeled. He wants the Board to understand that the City could be sued, and some of the third party defendants have threatened to seek sanctions from the City if they are sued. This is common is high stakes litigation such as this. The law firm is continuing their legal research into the case. If something were to come.yup that would :raise questions about the validity of a claim against a particular defendant, this would be discussed with the City Attorney, and a decision would be made about pursuing the particular claim. There are also complex issues about where the case should be filed. 412.2 Their preference is to'bring the suits in the same lawsuit that is already pending. It is more convenient for the attorneys and less expensive for the City. However, there is a risk that if the pending case fails, there is some chance that the case could be dismissed and some chance that we could not sue elsewhere because the statute would have run. Pflaum thinks this is very unlikely, and the risk is outweighed by the economy, convenience, and strategic advantages of having all claims decided in one case. Pflaum stated the Authority has basically the same claims that the 412.3 City does against the third party defendants. It is in the best interest of the City that the Authority pursue the claims. In certain legal respects, the Authority's claims may be even stronger than the City's claims. The Authority was the issuer of the bonds, so there is a clear and direct relationship between the Authority and the different third party defendants. The relationship to the City is less direct. The problem is that the Authority has very little money. It was concluded that at this time, there would be potential conflicts of interest if the City's attorneys represented the Authority inthis case, so the Authority needs their own attorney. The City will need to help finance the Authority's attorney, but those fees will be much less than the City's. Kelley, seconded by Lancaster, made a motion to ratify the existing tolling agreement executed by Jim McCord and any others that may be executed by any of the other third parties (A. G. Edwards, Rose Law Firm, Wright, Lindsey & Jennings, and Kutak, Rock & Campbell). Vorsanger asked if the tolling agreements mentioned what would 412.5 happen if Mr. Robson drops his lawsuit. Pflaum stated that this is not specifically addressed. Vorsanger stated that the City has no choice but to ratify these agreements in order to protect the right to file suit against the third parties. These could always be withdrawn if not needed. 419 412.1 412.4 Robert Brandon, one of the defendants in the FOI case, addressed the Board asking about who should be held as third parties in the suit. He stated that he has been unable to obtain the papers from the attorneys that would let him determine who all are potential third party defendants. He wanted to know if there was any assurance from the attorneys that there are not any potential third party defendants deliberately or inadvertently being omitted from the tolling agreements. Mayor Martin stated that the City did not have anything in its files that has not been turned over for public review. 412.6 412.7 • 413.1 Pflaum stated there were no peojle involved in the transaction that are not known at this time. T ere should be no concern then that all third parties have been included in the tolling agreements. Also, the claims being discussed would recover the entire damages involved, and you cannot recover more than once. 413.2 Mayor Martin stated one of the duties of the attorneys is to be sure all potential third parties have been included in the tolling agreements, and the attorneys are being held responsible for letting the City know whom they should be seeking tolling agreements from. 413.3 Upon roll call, the motion to approve the tolling agreements passed by a vote of 7-0. RESOLUTION 135-89 APPEARS ON PAGE OF ORDINANCE AND RESOLUTION BOOK Mayor Martin stated that Mr. Pflaum had also asked the Board for authority to file suit against the any of the remaining third parties who do not execute tolling agreements before Thursday. 413.4 Vorsanger, seconded by Lancaster, made a motion to authorize the attorneys for the City to file suit against those who do not execute tolling agreements. Upon roll call, the motion passed unanimously. RESOLUTION 136-89 APPEARS ON PAGE OF ORDINANCE AND RESOLUTION BOOK 1* 413.5 Mr. Niblock stated that Judge Adams has set all motions for hearing on January 18, 1990. The hearings will be in Bentonville. PHYLLIS RICE 413.6 Mayor Martin stated that the City enjoys excellent and thorough coverage if its affairs. He stated that Phyllis Rice will be changing her duties with the aper and he thanked her for the job she has done in the past cover ng the City affairs. He wished her well in her new assignment. ADJOURNMENT The meeting adjourned at 9:02 p.m. r • AMENDMENT TO TOLLING AGREEMENT This Amendment to Tolling Agreement is entered into as of the 28th day of June, 1990 by and among the City of Fayetteville, Arkansas ("City"), the Northwest Arkansas Resources Recovery Authority ("Authority') and Kutak Rock & Campbell ("Kutak"). 1. Pursuant to paragraph 7 of their December 28, 1989 Tolling Agreement ("Tolling Agreement"), City, Authority and Kutak hereby amend the Tolling Agreement by deleting from paragraph 3(b) thereof the date 'June 29, 1990," and insert- ing in its place the date "September 29, 1990." 2. City, Authority end Kutak agree the Tolling Agree- ment remains in full force and effect in all respects and exactly as entered into on December 28, 1989 with the sole exception of the amendment to paragraph 3(b) stated in this Amendment to Tolling Agreement. CITY OF FAAYETTEVIILLLE ARKANSAS By ire NOR $ =BAS tmRCE RECOVERY AUTHORITY By KUTAK R By & CAMPBEIfL Miff / 3 s, 65 AMENDMENT NO. 2 TO TOLLING AGREEMENT This Amendment No. 2 to Tolling Agreement is entered into as of the 28th day of September, 1990 by and among the City of Fayetteville, Arkansas ("City"), the Northwest Arkansas Resources Recovery Authority ("Authority") and Kutak Rock & Campbell ("Kutak"). 1. Pursuant to paragraph 7 of their December 28 Tolling Agreement, as previously amended by their June 1990 Amendment to Tolling Agreement (collectively, "To Agreement"), City, Authority and Kutak hereby further the Tolling Agreement by deleting from paragraph 3(b) the date "September 29, 1990," and inserting in its pl date "January 29, 1991." 1 1989 28, lling amend thereof ace the 2. City, Authority and Kutak agree the Tolling Agree- ment remains in full force and effect in all respects and exactly as entered into on December 28, 1989 with the sole exception of the amendment to paragraph 3(b) stated in this Amendment No. 2 to Tolling Agreement. CITY OF FAYETTEVILLE, ARKANSAS By NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY By *7/ KUTAK ROCK & CAMPBELL By /tat Ayer' FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: Fayetteville Board of Directors FROM: Scott C. Linebaugh, City Manager, / DATE: September 27, 1990 SUBJECT: AMENDMENT NO. 2 TO TOLLING AGREEMENT Please find attached a copy of Amendment No. 2 to the original tolling agreement and Amendment No. 1 between the City, and the Northwest Arkansas Resource Recovery Authority entered on December 19, 1989. Amendment No. 2 will extend the tolling agreement from September 29,1990 for a period of four (4) months to allow the City to file suit in the Incinerator Lawsuit between Kutak, Rock &. Campbell. If you should have any questions, please contact me. Thank you. SCL/jwc • VIA FACSIMILE 0 KUTAK ROCK & CAMPBELL A PARTNRRSHIP INCLUDING PROFESSIONAL CORPORATIONS THE OMAHA BUILDING 1650 FARNAM STREET OMAHA. NEBRASKA 68102-2186 (402) 346-6000 FACSIMILE (402) 346-1148 September 24, 1990 Thomas M. Ingoldsby, Esq. McDermott, Will & Emery 1850 K Street, N.W. Washington, D.C. 20006-2296 Re: City of Fayetteville, Arkansas, Incinerator Bonds ;, SEP 2 5 1990 \\\) V ATLANTA DENVER NEW YORK WASHINGTON Dear Mr. Ingoldsby: Pursuant to our telephone conference today, our firm is willing to extend the September 29, 1989 Amendment to Tolling Agreement for an additional four months. A copy of an executed Amendment No. 2 to Tolling Agreement embodying that change is attached. I will forward directly to Mr. Rose tomorrow three (3) originals of the attached Amendment No. 2 to Tolling Agree- ment signed on behalf of Kutak Rock & Campbell. By a copy of this letter, I ask Mr. Rose return one of those originals to me after execution on behalf of the City and the Authority. caa-m Enclosure cc: Jerry E. Rose, Esq. (with enclosure) 75 STATE STREET BOSTON. MASSACHUSETTS 02109 611/3455000 III WEST MONROE STREET CHICAGO. ILLINOIS 60603 312/ 372-2000 2029 CENTURY PARK EAST LOS ANGELES. CALIFORNIA 90067 213/277.4110 MCDERMOTT, WILL & EMERY A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS 1550 K STREET. N.W. WASHINGTON. O.C. 20006-2296 202/661.6000 BY FEDERAL EXPRESS FACSIMILE 202/776-8037 TELEX 904261MILANWASH June 26, 1990 Jerry E. Rose, Esq. City Attorney City Administrative Building 113 West Mountain Fayetteville, Arkansas 72701 Re: 201 SOUTH BISCAYNE BOULEVARD MIAMI. FLORIDA 33131 305/3583500 1301 DOVE STREET NEWPORT BEACH. CALIFORNIA 92660 714/651-0633 445 PARK AVENUE NEW YORK. NEW YORK 10022 2121371 7000 Northwest Arkansas Resource Recovery Authority Revenue Bonds Fixed/Adjustable Rate Series 1985 ("Bonds") Dear Jerry: Kutak, Rock & Campbell ("Kutak"), the tax counsel in the above -referenced transaction, has executed a Tolling Agreement related to its participation in the above -referenced matter. The Tolling Agreement runs on June 29, 1990. A copy of the Tolling Agreement is enclosed. Kutak has agreed to extend the Tolling Agreement to September 29, 1990. I recommend the City of Fayetteville agree to the extension. If you concur with my recommendation, I ask that you request the Mayor to execute the Amendment to the Tolling Agreement and that you present the Amendment to the Tolling Agreement to the Northwest Arkansas Resource Recovery Authority for its consideration. The Amendment to the Tolling Agreement needs to be executed by all parties by June 28, 1990. Sincerely yours, Thomas M. Ingoldsby Enclosure cc: Katherine C. Gay (w/enclosure) Steven F. Pflaum (w/enclosure) 3512n