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
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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