9.B.
City Council Meeting - FINAL (2)
- Meeting Date:
- 03/21/2017
- Co-Submitter:
- Andy Bertelsen
- From:
- Anja Wendel, Senior Assistant City Attorney AW
TITLE:
Consideration and Approval of Settlement Agreement: Ford Motor Company (related to Ford 6.4 liter diesel fuel trucks)
RECOMMENDED ACTION:
Approve Settlement Agreement with Ford Motor Company.
Executive Summary:
The City purchased 17 Ford trucks in 2008-2009 for City utilities and parks and recreation operations. Within the next six years, the City experienced problems with the trucks. The City retained special counsel and made a claim against Ford Motor Company in August 2015. Ford inspected the City trucks and raised defenses to City's claim. Ford has offered to settle the City's claim and City staff recommends approval. The Settlement Agreement is included in the final Agenda Packet, except the settlement amount is confidential.
Financial Impact:
The City will receive a cash settlement from Ford in consideration for a release of all claims against Ford related to the trucks. The City will remit a 25% contingency fee from the recovery to special counsel, Cory Fein.
Policy Impact:
None.
Connection to Council Goal, Regional Plan and/or TeamFlatstaff Strategic Plan:
COUNCIL GOALS:
3) Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics
3) Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics
Has There Been Previous Council Decision on This:
The City Council received legal advice in Executive Sessions regarding this matter in February 2015 and January 2017.
Options and Alternatives:
1. Approve Settlement Agreement. (Recommended)
2. Do not approve Settlement Agreement, and authorize litigation against Ford and/or other possible defendants. Pros: Seek greater recovery. Cons: City will incur time and expense of litigation, and associated risks.
3. Do nothing.
2. Do not approve Settlement Agreement, and authorize litigation against Ford and/or other possible defendants. Pros: Seek greater recovery. Cons: City will incur time and expense of litigation, and associated risks.
3. Do nothing.
Background and History:
The City retained Cory Fein of Houston, Texas as special counsel in this matter due to his expertise in automotive related litigation.
Key Considerations:
The City will recover substantially the same amount as it spent in out-of-pocket repairs to the trucks. The City also recovered $122,000 in trade in value when the trucks were sold, reducing any losses associated with a shorter service life than expected. The City is not recovering the value of lost use of trucks during repair or servicing.
Community Involvement:
The Community benefits from the Settlement Agreement in that the City is avoiding the costs of litigation and mitigating its losses (fiscal responsibility).
Expanded Options and Alternatives:
The Community is being informed of the proposed settlement via this agenda item. The need for replacement of the trucks was discussed as part of the 2016 budget meetings and when Council approved purchase of the replacement trucks.