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Dept/ Agency: Law
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Purpose: Accepting Funds - Settlement of Civil Litigation
Docket No.: ESX-L-007632-21
Claimant: City of Newark
Claimant's Attorney: Schenck, Price, Smith & King, LLP, 220 Park Avenue, PO Box 991, Florham Park, New Jersey 07932
Settlement Amount: $1,250,000.00
Funding Source: City of Newark, Department of Engineering
Additional Information:
Contract #07-2014 Hayes Park East Improvements, 608-630 Ferry Street, Newark, New Jersey 07105, Resolution 7R4-C adopted April 1, 2015, Amended Resolution adopted on March 1, 2017 and October 4, 2017 authorizing extensions of Contract Resolution 7R3-A (A.S.). There is no additional cost to the City of Newark.
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WHEREAS, on September 10, 2014, the City received bids for improvements to and the erection of an indoor/outdoor sports facility at Hayes Park East (the "Hayes Park Project"); and
WHEREAS, Z-Tech was determined to be the lowest responsive, responsible bidder; and
WHEREAS, the parties executed a contract on May 20, 2015 (the "Contract"), which contract amount was adjusted to $4,552,149.60, inclusive of change orders. The original Contract completion date was May 20, 2016 (the "Completion Deadline"); and
WHEREAS, the City granted Z-Tech two extensions of the Completion Deadline, the first to May 19, 2017 and then to May 18, 2018; and
WHEREAS, despite these extensions, the Project was not completed; and
WHEREAS, the City formally terminated the Contract on September 25, 2019, pursuant to Article 10.8 of the Contract, by certified letter to Z-Tech; and
WHEREAS, the City paid Z-Tech approximately $2,921,293.18 against the Contract. Per Payment Application No. 14 (the final payment application submitted, dated April 13, 2018), the remaining contract balance is approximately $1,688,838.65; and
WHEREAS, the Parties entered into a series of mediation conferences with the goal of securing a settlement with the parties; and
WHEREAS, the Parties acknowledge that the enforceability of the Settlement Agreement is conditioned on approval of its terms by the Municipal Council of the City of Newark, followed by Seneca's successful enforcement of the Indemnity Agreement and the Settlement Agreement against Z-Tech, through and including all appeals of an enforcement order entered by the Court, resulting in a final and non-appealable dismissal with prejudice of the Z-Tech Counterclaims and all other claims between the parties; and
WHEREAS, the Parties entered this Agreement without admission of any fact, fault, or liability, including the facts and procedural history set forth herein; and
NOW, THEREFORE, BE IT RESOLVED BYT THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
As a result of the agreements reached between them, and for and in consideration of the mutual promises, covenants, and agreements set forth below, the adequacy and receipt of which is acknowledged, the Parties agree as follows:
1. Recitals Incorporated. The recitals and "WHEREAS" clauses set forth above are hereby incorporated in full, and made a part of, this Agreement. The Parties admit that the Recitals are accurate.
2. Municipal Council Approval Required. The enforceability of the terms of this Agreement, including but not limited to the Release, are conditioned upon the passage of an approving Resolution by the Municipal Council of the City of Newark.
In the event that Municipal Council does not approve this Agreement within sixty (60) days of execution by Seneca on behalf of itself and Z-Tech, the Parties shall return to their same position as they stood immediately prior to the execution of this Agreement without prejudice to their respective claims or defenses and shall reasonably cooperate with one another to agree upon an acceptable schedule for the Action to present to the Court for its approval (the "Enforcement Order").
3. Motion to Enforce Indemnity Agreement and this Agreement. Seneca shall file with the Court a motion to enforce the Indemnity Agreement and this Agreement (the "Enforcement Motion") within thirty (30) days of the Municipal Council's approval of this Agreement. The Enforcement Motion shall seek the issuance of a Court Order: (i) enforcing the provisions in the Indemnity Agreement that permit Seneca to settle the Action in full on Z-Tech's behalf; (ii) enforcing the terms of this Agreement as against Z-Tech; (iii) dismissing all Claims as to all parties with prejudice and without costs; and (iv) authorizing Seneca to take all necessary actions on Z-Tech's behalf to consummate and effectuate the terms of this Agreement.
4. Settlement Payment to the City. In full and final settlement of any all Claims and disputes between the Parties relating to the Contract, the Hayes Park Project and the Bond, Seneca agrees to pay to the City the sum of $1,250,000.00 (One Million Two Hundred and Fifty Thousand Dollars), on the following terms: On the forty-sixth (46th) day after the Court's entry of the Enforcement Order, and/or the completion of any appeal of the Enforcement Order in a manner that upholds the enforceability of the Enforcement Order against Z-Tech, Seneca will issue a check payable to the City in the amount of $1,250,000.00 (the "Settlement Funds").
a. The Corporation Counsel shall file a fully executed copy of the Settlement Agreement and Release in the Office of the City Clerk.
b. This Resolution shall be effective upon adoption in accordance with applicable State Law.
c. The Settlement Agreement and Release and Resolution does not admit, nor should it be construed as an admission of liability or violation of any law, statute or regulation or a breach of any duty by the City of Newark, its agents, officers and/or employees whatsoever and is entered into based upon recommendations of the Corporation Counsel and to eliminate all risks and future litigation costs.
STATEMENT
This Resolution authorizes the Corporation Counsel on behalf of the City of Newark to enter into a Settlement Agreement and Release to receive payment from SENECA INSURANCE COMPANY and Z-TECH CONTRACTING LLC, in the amount of 1,250,000.00 (One Million Two Hundred and Fifty Thousand Dollars), in exchange for dismissal of any and all claims against Seneca, Z-Tech and its employees, and a complete release.