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Home My WebLink About2012-04-23 12-138 ORDERCOUNCIL ACTION Item No. 1.2 138 Date: .April 23, 2012 Item/ Subject: ORDER, Authorizing the Execution of a Settlement Agreement with Frontier Communications Company, formerly known as Citizens Communications Corporation Responsible Department: Legal Commentary: In November 2002, the City of Bangor filed suit against Citizens Communications Company, now known as Frontier Communications Company (Frontier) in the United States District Court for the District of Maine alleging that Citizens contributed to pollution of the Penobscot River. In February 2007, the City Council approved a settlement agreement with Citizens. The settlement agreement provided Frontier would pay the City $7.625 million to be deposited in an escrow account and that the City assign any rights it has against third party defendants in the lawsuit to Citizens and that Citizens could continue to pursue its claims against them. The settlement agreement also provided that any recovery from third party defendants will be divided one-third to the City and two-thirds to Citizens after reimbursement to Citizens of its expenses to reach such settlement and these funds would also be deposited in the escrow account. To date Frontier has paid the City $600,000 from settlements with third party defendants. This Order will authorize the execution of a settlement agreement and Release with Frontier for $390,000 representing a final accounting for money due from third party claims and will be a final settlement with Frontier for any and all issues and will close the escrow account. Manager's Comments: Recommend approval. Associated Information: Budget Approval: Legal Approval: Introduced for X Passage First Reading Referral Department Head W'.,,_s ► uCity Manager .Go Finance Director City Solicitor Page 1 of _ 12 138 Assigned to Councilor Sprague April 23, 2012 1 CITY OF BANGOR `9go- ' titi i 4I�ED. F� r .a�Q 4 u► (TITLE.) ORDER, Authorizing the Execution of a Settlement Agreement and Release with Frontier Communications Company, Formerly Known as Citizens Communications Corporation WHEREAS, in November 2002, the City of Bangor filed suit against Citizens Communications Company in the United States District Court for the District of Maine alleging that Citizens contributed to pollution of the Penobscot River; and WHEREAS, in February 2007, the City Council of the City of Bangor approved a settlement agreement with Citizens Communications Company, now known as Frontier Communications Company (Frontier); and WHEREAS, the settlement agreement provided that the City of Bangor assign any rights it has against Third Party Defendants in the lawsuit to Frontier and that Frontier could continue to pursue its claims against them; and WHEREAS, the settlement agreement provided that any recovery from third party defendants shall, after reimbursement of Frontier's expenses to reach a settlement, be divided two-thirds to Frontier and one-third to the City of Bangor; and WHEREAS, the settlement agreement provided that settlement proceeds would be placed into an escrow account; and WHEREAS, Frontier has reached settlement with third parties, has previously paid the City $600,000 from settlements, and will pay the City the balance due from all settlements. NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR THAT the City Manager is hereby authorized to execute a settlement agreement and release with Frontier Communications Corporation in the matter of City of Bangor v. Citizens Communications Company, said settlement agreement and release to be substantially the same as attached hereto and in a final form as approved by the City Solicitor or Assistant City Solicitor. IN CITY COUNCIL April 23, 2012 Passed CITY C OULEI) Assigned to Councilor 12 138 DRAFT 4/17/2012 SETTLEMENT AGREEMENT AND RELEASE THIS SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is entered into by the City of Bangor, Maine (the "City") and Frontier Communications Company ("Frontier") (collectively the "Settling Parties"), to become effective on the date when this Agreement has become fully executed by the Settling Parties (the "Effective Date"). WHEREAS, pursuant to the Settlement Agreement and General Release entered into by the City and Frontier as of February 14, 2007 ("Settlement Agreement and General Release"), the City was entitled to receive a portion of Frontier's recoveries from various third parties; WHEREAS, a dispute arose between the Settling Parties over the City's share of such third party recoveries, resulting in the City's filing of an action against Frontier on October 27, 2011 (Case 1:11-cv-00406-GZS) (the "Case"); WHEREAS, pursuant to the Escrow Agreement entered into by the Settling Parties as of July 30, 2007 (the "Escrow Agreement"), Frontier objected to various disbursements from the Escrow account and on November 13, 2011 demanded that the City repay certain disbursed funds to the Escrow account; and WHEREAS, the Settling Parties wish to compromise, finally settle, fully release and discharge all claims between them concerning both the City's share of any recoveries from third parties and Frontier's objections to any disbursements from the Escrow account established pursuant to the Escrow Agreement; 12 138 NOW, THEREFORE, in consideration of all mutual covenants contained herein and in consideration of the payment by Frontier of the total sum of $390,000, the Settling Parties hereby agree as follows: 1. Release and Dismissal of Claims (a) As of the date the City receives the payment contemplated by Paragraph 2, below (the "Payment Date"), the City hereby releases and forever discharges Frontier from any and all claims, demands, actions, rights, obligations, damages and liabilities, whether known or unknown, claimed or unclaimed, that it has had in the past, has now, or may have in the future against Frontier pursuant to the Settlement Agreement and General Release concerning Frontier's recoveries from any and all third parties as contemplated therein. (b) As of the Payment Date, Frontier hereby releases and forever discharges the City from any and all claims, demands, actions, rights, obligations, damages and liabilities, whether known or unknown, claimed or unclaimed, that it has had in the past, has now, or may have in the future against the City pursuant to the Escrow Agreement and concerning any and all disbursements from the Escrow account. (c) Within 30 days of the Payment Date, the Settling Parties will move jointly for an order providing for dismissal with prejudice of the Case. 2. Payment to the City. Within 30 days of the Effective Date, Frontier will pay $390,000 to the City via wire transfer pursuant to the following wiring instructions: Camden National Bank ABA 011201458 City of Bangor Account #9225000 2 12 1 138 Promptly following its receipt of acknowledgement that the funds have been received, the City will provide confirmation via email to Frontier's counsel of record in the Case. 3. Effect on Agreements. Except as specifically provided herein, the Settlement Agreement and General Release and the Escrow Agreement remain unchanged and are of full force and effect, provided however the Settling Parties will wind up various administrative matters governed by the Escrow Agreement, including closing the escrow account and releasing the escrow agent, provided any additional payments to the escrow agent will be made by the City and not by Frontier, and any residual amount remaining in the escrow account will be paid 100% to the City. 4. Costs and Attorneys Fees. Each party shall bear and be fully responsible for their own costs, expenses and attorneys' fees. 5. No Admission of Liability. The Settling Parties acknowledge and agree that payment of the consideration referred to herein does not constitute any admission or concession of liability whatsoever by Frontier or the City. 6. No Third Party Rights. Nothing in this Agreement shall constitute a release of any claims against any third party, nor shall anything in this Agreement create any right or benefit accruing to any person or entity not a Settling Party. 7. Binding Effect. This Agreement shall be conclusively binding on and for the benefit of the Settling Parties and their respective successors, assigns, bankruptcy trustees or estates, executors and administrators. 3 12 138 8. Recitals. The recitals contained in the preamble to this Agreement are not a part of the terms, provisions and conditions of this Agreement, and are not binding on the Settling Parties in any way, except that terms defined in the recitals will be given the meaning set forth therein when used elsewhere in this Agreement. 9. Entire Agreement and Modification. This Agreement constitutes the entire agreement between the Settling Parties with respect to the referenced claims being settled, and supersedes any and all other agreements and negotiations, whether oral or in writing, with respect to those claims. 10. Duplicate Originals. This Agreement may be executed in duplicate originals, each of which is equally admissible into evidence. 11. Maine Law. This Agreement shall be construed and enforced pursuant to the laws of the State of Maine. 12. Jurisdiction. The Settling Parties hereby admit and consent to exclusive jurisdiction in the United States District Court for the District of Maine for any actions that may arise over the performance, interpretation or enforcement of any provision of this Agreement. The Settling Parties further agree that they will be subject to personal jurisdiction in the District of Maine for purposes of any action arising out of any provision of this Agreement. 12 !�,b 13. Joint Preparation of Agreement. This Agreement shall be interpreted as if it were prepared collectively by the Settling Parties, such that any uncertainty or ambiguity shall not be construed against either Settling Party. IN WITNESS HEREOF, the Settling Parties have placed their authorized signatures on the dates set forth below: City of Bangor, Maine Frontier Communications Company By: By: Title: Title: Dated: Dated: 5