Settlement Agreement - Ainley Kennels & Fabrication, Inc., et al. vs. City of Dubuque Copyrighted
July 5, 2017
City of Dubuque Consent Items # 31.
ITEM TITLE: Settlement Agreement-Ainley Kennels & Fabrication, Inc.,
et al. v. City of Dubuque
SUMMARY: City Attorney recommending approval of a Settlement
Agreement and Mutual Release of All Claims and that the
Finance Director be authorized to issue rebates.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
Staff Memo Staff Memo
Settlement Agreement Staff Memo
HE CITY OF
DUB
E MEMORANDUM
Masterpiece on the Mississippi
BARRY LINDAHL
SENIOR COUNSEL
To: Mayor Roy D. Buol and
Members of the City Council
DATE: July 3, 2017
RE: Ainley Kennels & Fabrication, Inc., et al. v. City of Dubuque
This lawsuit was brought by 18 manufacturing plaintiffs' seeking rebates of natural gas
franchise fees dating back to 2009.
The gas franchise fee adopted in 2003 provided for a rebate of franchise fees paid by
entities exempt under state law for sales tax on natural gas used in manufacturing
"processing." None of these plaintiffs requested a rebate until 2013. Many other
manufacturers requested and received rebates during the ten-year period between
2003, when the franchise fee was enacted, and 2013, because they filed timely, usually
annually, rebate requests with the City.
In February 2014, the City Council amended the natural gas franchise fee ordinance to
require that requests for rebates be filed by June 30 in the fiscal year in which the
franchise fee was paid, in large part to cut off long-delayed rebate claims. The amended
ordinance also provided that any rebate for any franchise fees paid prior to July 1, 2013
was declared void again to cut off delayed rebate claims.
Because there were no material facts in dispute in the litigation, both sides filed motions
for summary judgment claiming that, based on those undisputed facts, each side was
entitled to a judgment as a matter of law, the City asking for dismissal of the case, and
the plaintiffs asking for a judgment for the amount of the claimed rebates.
The City argued that (1) there is no inherent right to a rebate, the City Council
authorized the rebate in the fee ordinance and the City Council can and did take away
1 Ainley Kennels & Fabrication, Inc., Automotive Enterprises Company d/b/a Automotive Industrial,
Dubuque Stamping & Mfg., Inc., Eagle Window & Door Mfg., Inc., Edwards Cast Stone Co., Rite-Hite
Corp. d/b/a Frommelt Safety Products, Grove Tools, Inc., Klauer Mfg. Co., Morrison Bros. Co., Rauen,
Inc., Rousselot Dubuque Inc., Smart Retract, Inc., F.H. Uelner Precision Tools & Dies, Inc., Union-
Hoermann Press, Inc., Welu, Inc. d/b/a Welu Printing Co., Giese Mfg. Company, Inc., Tri-State Industries,
Inc., Woodward Communications, Inc. d/b/a Telegraph Herald
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TELEPHONE (563)583-4113/FAX (563)583-1040/EMAIL balesq@cityofdubuque.org
the unfiled rebate claims with the amended ordinance; (2) the franchise fees paid by the
plaintiffs were used for city services which benefited the plaintiffs and it would be
inequitable to require city taxpayers to refund those fees now; and (3) the plaintiffs
waited too long and without any legitimate excuse for such late requests for the rebates.
The plaintiffs argued that the ordinance amendment taking away their claims for rebates
was not legal because it denied them rebates in violation of their Due Process and
Equal Protection rights by treating them differently from manufacturers who received
rebates—the manufacturers who made timely rebate requests.
The District Court granted the City's motion for summary judgment, dismissing the case.
The effect of the District Court's ruling was to uphold the amended ordinance which
provided that any rebate of any franchise fees which was not paid prior to July 1 , 2013
was declared void.
The plaintiffs appealed the District Court ruling. The Iowa Court of Appeals reversed the
decision of the District Court which had dismissed the plaintiffs' claims. The Court of
Appeals held that the ordinance amendments did not extinguish the plaintiffs' late-filed
rebate claims.
We recommended that the City petition the Iowa Supreme Court to review the Court of
Appeals opinion. The petition for review was filed but the Supreme Court denied the
request for further review.
Attached is a Settlement Agreement and Mutual Release of All Claims signed by the
plaintiffs.
I recommend that the Settlement Agreement and Mutual Release of All Claims be
approved and the Finance Director be authorized to issue a check in the amount of
$283,217.22 made payable to Brown, Winick, Graves, Gross, Baskerville and
Schoenebaum, P.L.C. Trust Account. Funds were set aside for possible rebates at the
time the lawsuit was filed.
Upon receipt of the check, the plaintiffs will also file a dismissal of the lawsuit.
BAL:tIs
Attachment
cc: Michael C. Van Milligen, City Manager
Crenna M. Brumwell, City Attorney
Maureen A. Quann, Assistant City Attorney
Jean Nachtman, Finance Director
Jenny Larson, Budget Director
Alexis Steger, Senior Budget Analyst
Jim Wainwright, Esq.
Ivan Webber, Esq.
F IUSERSRsteckleALindahlTranchise Fee Rebate Requests From Tax Exempt EntltitesVA nley Kennels et at vs.City\MayorCounal_SettlementAgreement_07031 Zdocx
2
SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF ALL CLAIMS
BE IT REMEMBERED that for the mutual promises and consideration herein
contained, the City of Dubuque, Iowa ("the City") and AINLEY KENNELS &
FABRICATION, INC., AUTOMOTIVE ENTERPRISES COMPANY d/b/a
AUTOMOTIVE INDUSTRIAL, DUBUQUE STAMPING & MFG., INC., EAGLE
WINDOW & DOOR MFG., INC.„ RITE-HITE CORP. d/b/a FROMMELT SAFETY
PRODUCTS, GROVE TOOLS, INC., KLAUER MFG. CO., MORRISON BROS. CO.,
ROUSSELOT DUBUQUE INC., SMART RETRACT INC., F.H. UELNER PRECISION
TOOLS & DIES, INC., UNION-HOERMANN PRESS, INC., WELU, INC. d/b/a WELU
PRINTING CO., GIESE MFG. COMPANY, INC., TRI-STATE INDUSTRIES, INC.,
WOODWARD COMMUNICATIONS, INC. d/b/a TELEGRAPH HERALD (the
"Plaintiffs") have made and entered into the following Settlement Agreement and Mutual
Release of All Claims:
WHEREAS, on or about January 31, 2014, Plaintiffs filed an action in the Iowa
District Court for Dubuque County, Case No. EQCV101386, against the City seeking
reimbursement of allegedly exempt franchise fees; and
WHEREAS, the City and the Plaintiffs filed motions for summary judgment; and
WHEREAS, on July 1, 2015, the Court granted the City's motion for summary
judgment; and
WHEREAS, Plaintiffs appealed and the Iowa Court of Appeals reversed the District
Court; and
WHEREAS, all disputes between the City and the Plaintiffs have been settled and
resolved and these parties desire to conciliate, compromise, and settle fully and finally all
differences and disputes between themselves for the claims made by the Plaintiffs in Case
No. EQCV101386 or which could have been made in said litigation;
NOW, THEREFORE, the parties, in consideration of the foregoing, the payment,
and mutual promises set forth in this Settlement Agreement andiMutual Release of All
Claims, agree as follows:
1. DISMISSAL WITH PREJUDICE - As a part of the parties' agreement, the
Plaintiffs will execute and file a Dismissal with Prejudice with the Iowa District Court
for Dubuque County, Iowa within five (5) days of the City Council's formal approval
of this Settlement Agreement and Mutual Release of All Claims.
The parties further acknowledge that each shall bear their own respective costs,
including but not limited to Court costs and/or attorney fees.
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2. CITY's PAYMENT TO PLAINTIFFS - The City will issue a $283,217.22 check
made payable to Brown, Winick, Graves, Gross, Baskerville and Schoenebaum,
P.L.C. Trust Account, within one day of the City Council's formal approval of this
Settlement Agreement and Mutual Release of All Claims.
3. COVENANT NOT TO SUE —Subject to paragraph 4, the Plaintiffs covenant not to
sue or to institute or cause to be instituted any kind of claim or action (except to
enforce this Agreement, if necessary) in any federal, state, or local agency or court
against the City arising out of or attributable to the conduct of any current or former
officers, employees, or agents of the City. The City covenants not to sue or to
institute or cause to be instituted any kind of claim or action (except to enforce this
Agreement, if necessary) in any federal, state, or local agency or court against the
Plaintiffs arising out of or attributable to the conduct of any current or former
employees or agents of the Plaintiffs.
4. EXCEPTION TO COVENANT NOT TO SITE. Both the Plaintiffs and the City
agree that this Covenant not to sue shall not apply to: (1) the unrelated case captioned
Welu, Inc. v. City of Dubuque, Dubuque County District Court Case No.
CVCV104919, which was filed on or about July 28, 2016, and (2) any and all claims
held by GIESE MFG. COMPANY that are unrelated to claims for franchise fee
refunds.
5. RELEASE - In consideration of the Plaintiffs' Dismissal with Prejudice of their
claims, the parties mutually release and forever discharge each other from any and all
causes of action and claims which either holds against the other for or by reason of
any damage, loss, or injury, known or unknown, now existing or hereinafter identified
but relating back to a date prior to the execution of this release, including but not
limited to all claims arising from any and all franchise fees for which claims for
refunds were not filed prior to July 1, 2016 and any and all claims which could have
been made by the Plaintiffs and the City against each other in Dubuque County Case
No. EQCV101386. Notwithstanding the foregoing, the parties acknowledge and
agree that this release shall not apply to: (1) any and all claims raised by either party
in the unrelated case captioned Welu, Inc. v. City of Dubuque, Dubuque County
District Court Case No. CVCV104919, which was filed on or about July 28, 2016,
and (2) any and all claims held by GIESE MFG. COMPANY that are unrelated to
claims for franchise fee refunds. The Plaintiffs and the City understand this
settlement is the compromise of disputed claims, liability for which is expressly
denied by the released parties, and that the other consideration herein is not to be
construed as an admission of liability on the part of any person, firm or corporation
hereby released.
6. ACCEPTANCE OF TERMS - The terms of this Settlement Agreement and Mutual
Release of All Claims have been completely read and are fully understood and are
voluntarily accepted for the purpose of making a full and final
Page -2 -of 19
compromise, adjustment, and settlement of any and alt claims, disputed or
otherwise, on account of the damage mentioned above.
6. BINDING AGREEMENT - This Agreement is binding on the Parties and their
respective successors, heirs, legal representatives, and assigns. The persons
executing this Agreement on behalf of the Plaintiffs, and the person executing this
Agreement on behalf of the City, each represent and warrant that he or she is duly
authorized to execute and deliver this Agreement on behalf of said party, and that
.this Agreement is binding on said party.
7. GOVERNLNG LAW - This Agreement, including all matters of construction,
validity and performance shall be governed by, and construed in accordance with
the laws of Iowa without giving effect to the choice of law or conflicts of law
provisions thereof.
8. COUNTERPARTS - This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute one
and the same instrument.
9. CONSTRUCTION - The Parties acknowledge, represent and warrant that each
has been fully advised by its attorney(s) concerning the execution of this
Agreement, that each has fully read and understands the terms of this Agreement,
and that each has freely and voluntarily executed this Agreement. Each Party has
participated in the creation of this Agreement. No legal principle interpreting the
Agreement against the drafter will apply.
10.INTEGRATION - This Agreement reflects the entire agreement and
understanding between the Parties with respect to the settlement contemplated
here, and supersedes all prior agreements, arrangements, understandings,
communications, representations or warranties, both oral and written, related to
the City's taking of the above described property interests. This Agreement may
be modified only by a written document signed by both Parties.
DT WITNESS WHEREOF, the Parties have fully executed this Agreement as of
the date of the last signature below.
By:
A
Date:
CAUTION! READ BEFORE SIGNING.
& FAB CATION, INC.
7
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CAUTION! READ BEFORE SIGNING.
AUTOMOTI ' NT'RPRISES COMPANY
d/b/a AUT • OTIVE INDUSTRIAL
Date:
&- (
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CAU HON READ BEFORE S1GNLNG.
By: , '>`
DUBUQUE -STA! I "G. G., INC.
Date:
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CA MON! READ BEFORE SIGNING.
Date:
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By:
RITE-HITE CORP. dibfa FROMMELT SAFETY PRODUCTS
CAUTION! READ BEFORE SIGNLNG.
Date:
01 -7
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By:
GRO
Date:
CAU 0 READ BEFORE SIGNING.
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By: .-1/1,1
KLAUERMPU. CO,
Date;
;
CAUTION! READ BEFORE SIGNING.
Page - 9 - of 19
CAUTION! READ BEFORE SIGNING.
By-
MORR[SON B1ROS. CO.
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CAU ON! READ BEFORE SIGNING.
Date:
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1
CAUTION! READ BEFORE SIGNING,
By: 41
SMART ACT; INC.
/ 7
Page- 12 - of 19
By<
UELNER PRECISION TOOLS & DIES, INC.
CAUTION! READ BEFORE SIGNING.
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By:
UNICMMtRi1A!'.\
CAUTION: READ BEFORE SIGNING.
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AD BEFORE SIGNING.
Date:
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CAUTION! RIEAB BEFORE SIGNING.
B AJk
G�SEMFG. CO
Date:
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I;
By:
TRISTA
Date:
CAW: ON! READ BEFORE SIGNING.
jT
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CAUTION! READ BEFORE SIGNING.
By: GUiJ //e4 -
WO i WARD COMMUNICATIONS, INC.
d/b/a TELEGRAPH HERALD
Date:
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City of D que�
By
Rov n . Rue1
- a
City of Dubuque
CAUTION! READ BEFORE SIGNING.
01341874-1\10422-150
Attest:
Kevin , Clerk Firnstahl
, Mayor Date: July 5 , 2017
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