Terminal Street Lift Station Insurance Claim Settlement Copyrighted
April 2, 2018
City of Dubuque Consent Items # 6.
ITEM TITLE: Terminal Street Lift Station Insurance Claim Settlement
SUMMARY: CityAttorney recommending approval of a Settlement
Agreement and Release for an insurance claim filed by
the City of Dubuque for the 2016 Terminal Street Lift
Station failure and repair.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
Staff Memo Staff Memo
SettlementAgreement& Release Supporting Documentation
THE CITY OF Dubuque
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BARRY A. LINDAHL, E Q.
SENIOR COUNSEL
MEMO
To: Mayor Roy D. Buol and
Members of the City Council
DATE: March 27, 2018
RE: Insurance Claim, Terminal Street Lift Station Failure and Repair
In 2016, the City incurred costs for the repair of the pumps in the Terminal Street Lift
Station. The March 9, 2017 memorandum of Water & Resource Recovery Center
(W&RRC) Manager William O'Brien describing the repairs and costs is attached
(Attachment I). The total costs were $303,423.09.
The City filed a claim for the cost of the repairs with the City's insurer, The Cincinnati
Insurance Companies (Cincinnati).
Much of the repair work is not a covered loss under the terms of our insurance policy with
Cincinnati. However, working with our property insurance agent, Scott DeSousa, of The
Friedman Group, and Anne MacFarland, an attorney and an employee of Scott's
company and a client advocate who works with The Friedman Group, we have reached
an agreement with Cincinnati. Cincinnati will pay the City $62,500 for the covered cost of
repairs.
I believe this is a successful resolution of this claim and I recommend City Council
approval of the Settlement Agreement and Release in substantially the attached form.
BAL:tIs
Attachments
cc: Michael C. Van Milligen, City Manager
Crenna M. Brumwell, City Attorney
Willie O'Brien, W&RRC Manager
Steve Brown, Project Manager
Tony Breitbach, Purchasing Coordinator
F:\Users\tsteckle\Lindah112016-17 Insurance Claims By CitylTerminal Street Lift Station#2819728 DOL062716\MayorCouncil_AgendaSettlementOfferUpdate_032718.docx
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OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TE�EPHONE (563) 583-4113/F,4x (563)583-1040/EMAi� balesq@cityofdubuque.org
Attachment I
THE CITY OF ���
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TO: Michael C. Van Milligen, City Manager
FROM: William O'Brien, W&RRC Manager
SUBJECT: Terminal Street Lift Station Failure and Repair Timeline
DATE: March 9, 2017
INTRODUCTION: This purpose of this memo is to provide a timeline, for your
information, of failures and work performed at Terminal Street Lift Station since June of
2016.
BACKGROUND: Terminal Street Lift Station houses two 13,900 gallon/minute
Fairbanks Morse model 5712 pumps for redundancy. One pump operates at a time. A
spare, third pump is stored at the W&RRC. The pumps are identified by the following
serial numbers:
Pump #1: 797112
Pump #2: 326977
Pump #3: 1476136
DISCUSSION: Pumps #1 and #2 were in service in May 2016. In June, pump#2 was
pulled for routine maintenance after operating for 11 years. The impeller and shaft were
badly worn. Pump#3 was installed in place of pump#2. Pump#3 was operated for 24
hours, then the (original to 1957) shaft failed. This left only pump #1 operable. An
emergency response plan was developed. Wulfekuhle Injection & Pumping Inc. was
hired to provide pumping equipment on standby for 3 weeks (Wulfekuhle Invoice#03-
1009 for$25,000.00). The temporary pumps were placed in and above the sewer
collection box prior to the station. A spare flange for the pump#2 check valve was
modified to accept a discharge from an 8-inch temporary line (Anderson Welding
Invoice #30428 for$180.00); the flange was stored near the check valve.
Sum of all invoices related to emerqency preparation at Terminal St Lift Station
totals $25,180.00
On June 27'h, pump#1 failed around 10:00 pm. The emergency response plan was
activated. Waste haulers were called to pump wastewater from the collection box prior
to the lift station, then transport and discharge to Cedar Street Lift Station, or a manhole
at Inland Lane (Kruser Invoice #27845 for$2,440.00, All Seasons Invoice#050876
for$4,150,00, Triple J Invoice #7816 for$1,650.00)Temporary reroute pumping was
initiated by Wulfekuhle around 11:30 pm on June 27°i, and lasted until around 10:30 pm
on June 29t''(Wulfekuhle Invoice # 03-1012 for$33,865.53), when pump #2 was
placed back in service. A sanitary sewer overflow did not occur.
W&P.RC staff hours associated with the June 27�h pump failure are as follows:
Adam Leeser: 19 hours @ $26.66 = $506.54
24.5 hours @ $39.99 = $979.76
Larry Hoppman: 11 hours @ $26.66 = $293.26
24 hours @ $39.99 = $959.76
Mike Reinert: �6 hours @ $39.99 = $639.84
Wayne Polsean: 36 hours $35.64 = $1,283.04
Totai of $4,662.20 (Payroll edit attached)
Sum of ali invoices related to emerqencv reroute pumpinq at Terminal St Lift
Station totais $46,767.73
Routine repair work was performed on Pump#2 by Power Process Equipment (Powe�
Process Equipment Invoice #7075896 for$18,294.00).
Sum of repair work to Pump#2$18,294.00
Top Grade Excavating was hired to excavate around the (ift station and create a
permanent re-route pumping setup by connecting to an abandoned pressurized
averflow pipe. This allows staff to route flow around the lift station pumps in case of a
failure. The permanent reroute satup allaws the use af 2 mobile pumps which are
necessary to convey higher wet weather flows (a single pump would not convey
sufficient wastewater to avoid a sanitary sewer overflow). The foflowing expenses are
associated with installing permanent reroute piping:
Top Grade Invoice #2969 for$56,834.21 (labor, materials, equipment rental)
J�R Invoice #1607142-IN for$23,607.13 (piping materials�
J&R Invoice #16Q7170-tN far $6,028.00
J&R Invoice #16Q7183-IN for $6,827.60
J8�R Invoice #1607208-IN for $127.30
J�R Invoice #1607216-IN for $1,768.15
J&R lnvoice #1607230-IN for . $40Q.00
Hawkeye Electric Invoice#244 for$785.53 (repair of ground rods and wire)
Sum of all invoices related to the permanent reroute setup tQtals $96,377.92
Kruser Septic was hired to jet a vacuum wet well to remove debris resulting from pump
failure (Kruser Invoice #27908 for $910.00).
Wulfekuhle was retained on standby through July 13th due to wet weather concerns
(Wuifehuhle Invoice # 03-1014 for $14,504.00).
Sum of debris removal and standbv $15,410.00
R�pair work was performed on failed Pump #3 (failed after 24 hours) by Power Process
Equipment (Power Process Equipment Invoice #7077344 for$16,891.Q0). This
inciuded machining of a new shaft, machining impeller, installing wear rings, coating
impeller, and balancing impeller.
Sum of repair work to Pump #3 $'16,891.00
On August 11�', A-1 Crane was hired to remove Pump #1 and repiace with Pump #3 (A-
1 Crane Invoice #10590 for$78Q.00j. Rebuilding of the failed Pump #1 included
machining of a new shaft, impeller wear ring, and impeller nut(Power Process
Equipment Invoice #1081604 for$14,Q67.OQ), purchase of a new impeller and wear
ring (Zimmer� Francescon Invoice #0155959-IN for$38,068.00), filler metal for
pump bawl repair(E.J. Voggenthaler lnvoice #S9875 far$58.Q6j, welding repair of
pump bowl (Anderson Welding Invaices #30566 for$510.00, an�! #3Q581 for
$85.OQ), and pump parts and labor for work performed by W&RRC maintenance staff
(Work Orderllnvaice #1798 for$6,316.26}.
Sum af all invoices related to the repair of Pump #1 totals $59,884.32
In early August, the wet well at Terminal Street was cleaned over 3 nights at low flow
(Tschiggfrie Invoice #1009 for$24,109.50}. Barricades were rented from SELCO for
the road closure during clean-out (SELCQ Invoice #67940 for$126.00).
W&RRC staff hours associated with cleaning are as foltows:
Adam Leeser: 7 hours a�? $27.33 = $191.3�
Larry Hoppman: 7 hours @ $27.33 = $191.31
Sum of all invoices related to cleaning of Terminal St Lift Station totals $24,618.12
Sum of all work performed on Terminal Street l.ift Station since June of 2Q16 =
$303,423.09
The City has filed a claim with our insurance carrier and I am currently working with the
Gity Attorney's Office, Finance Department, and the City's property agent to evaluate
what expenses are covered under our property andlor equipment policies. I will inform
you as I learn more.
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("AgreemenY') is made and entered into
this _ day of , 2018 by and among the City of Dubuque, lowa
("Dubuque") and Cincinnati Insurance Company ("Cincinnati"). From time to time,
Dubuque and Cincinnati are collectively referred to as the "Parties."
RECITALS
WHEREAS, Cincinnati issued a policy of insurance with policy number COP 231
45 94 to the City of Dubuque, effective from July 1 , 2015 to July 1 , 2016 (the "Policy").
The Policy contains a Commercial Output Program Property (COP) coverage part.
WHEREAS, the COP coverage part provides coverage to certain properties
located in the City of Dubuque, lowa. One of those properties is the Terminal Street Lift
Station (the "Lift Station").
WHEREAS, the Lift Station houses two wastewater pumps. A third, spare pump is
stored offsite.
WHEREAS, in June 2016, one of the pumps at the Lift Station was removed for
routine maintenance.
WHEREAS, after that pump was removed, the other pumps were put into service
at the Lift Station and failed. This left the Lift Station with no operational pumps.
WHEREAS, Dubuque performed certain work at the Lift Station as a result of the
failed pumps. Among other things, that work included: installing temporary reroute
pumping; pumping wastewater from a collection box located near the Lift Station; and
repairing the broken pumps. No wastewater overflows occurred while the Lift Station was
not operational.
032818ba1
WHEREAS, in August 2016, the wet well of the Lift Station was inspected. During
that inspection, a large amount of debris was observed. Additionally, the wet well inlet
gates were in poor condition. These issues potentially caused the pumps to wear down
and fail.
WHEREAS, on January 11 , 2017, Dubuque submitted a claim to Cincinnati
seeking coverage for the cost to repair the Lift Station pumps. Dubuque also sought
coverage for extra expenses it incurred while the Lift Station was not operational
(collectively referring to the failed pumps and extra expenses as the "Lift Station Loss").
WHEREAS, Cincinnati investigated the Lift Station Loss. After completing its
investigation, Cincinnati advised Dubuque that the Policy provided no coverage for that
loss.
WHEREAS, a disagreement arose between Cincinnati and Dubuque regarding
coverage for the Lift Station Loss.
WHEREAS, Dubuque supplied Cincinnati with additional documents and
information to support its claim for coverage for the Lift Station Loss.
WHEREAS, the Parties now wish to resolve the expense and disruption potentially
arising out of their disagreement, and to avoid any possible litigation by amicably entering
into the full and final settlement and release contained in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the covenants below,
and for other good and valuable consideration, the receipt, adequacy and sufficiency of
which is acknowledged by the Parties, the Parties agree as follows:
1 . Cincinnati will issue payment of $62,500.00 (SIXTY TWO THOUSAND
FIVE HUNDRED AND 00/100 DOLLARS) payable to the "City of Dubuque" (the,
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"Settlement AmounY'). Payment of the Settlement Amount will be made within 21 days
after execution of this Agreement by delivery of it to: Barry A. Lindahl, Esq., 300 Main
Street, Suite 300, City of Dubuque, lowa 52001 .
2. As part of the consideration to Cincinnati for the Settlement Amount
Dubuque, for itself and each of its officials, officers, directors, partners, members,
employees, principals, attorneys, controlling persons, insurers, reinsurers, agents, and
assigns, (collectively hereinafter the "Dubuque Releasors") agree to forever release and
discharge Cincinnati and its respective officers, directors, owners, partners, members,
stockholders, employees, principals, agents, attorneys, controlling persons, insurers,
reinsurers, parent companies, subsidiaries and affiliates, heirs, successors and assigns
(collectively hereinafter the "Cincinnati Releasees"), from any and all claims, demands,
liabilities, obligations, losses, damages, and causes of action that the Dubuque
Releasors, or anyone claiming on their behalf, ever had, now have, or in the future may
have, whether fixed or contingent, liquidated or not, known or unknown, suspected or
unsuspected, based on, arising out of, or directly or indirectly relating to: the Lift Station
Loss; and/or any claims for insurance coverage that Dubuque has asserted or could have
asserted with respect to the Lift Station Loss. The types of claims released herein include,
but are not limited to, claims for: insurance coverage; injunctive relief; damages or relief
under lowa Statutes and lowa common law; common law and statutory bad faith;
attorneys' fees; equitable contribution; equitable subrogation; insurance benefits; unfair
trade practices and any form or theory of recovery or cause of action whatsoever based
in tort, contract, or otherwise.
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3. This Agreement is for the compromise of a disputed claim. This Agreement
shall not be construed as an admission by any of the Parties regarding any duties, rights
or obligations, whether arising or allegedly arising under the Policy issued by Cincinnati
to Dubuque, under statute, contract, tort, or otherwise, in connection with the matters
released in Paragraph 2.
4. This Agreement incorporates and supersedes all of the Parties' prior
negotiations, representations, understandings, and discussions with respect to the
resolution of the matters resolved by this Agreement and represents the Parties' full
compromise and only Agreement in that regard.
5. The Parties represent and warrant to each other that there has not been
and will be no assignment or transfer of any interest in any claim which they may have
had, or now have against each other which is within the scope of the release stated in
Paragraph 2.
6. Should any provision of this Agreement be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of the remaining
parts, terms, or provisions shall not be affected thereby, and said illegal or invalid
provision or term shall be deemed severable and not part of this Agreement.
7. This Agreement is made in the spirit of compromise, and it shall not be
deemed, offered, or described as an admission of liability or any wrongdoing by any of
the Parties.
8. This Agreement shall be governed by the laws of lowa.
9. Any dispute arising out of this Agreement shall be resolved in a United
States District Court located in lowa, assuming that one has jurisdiction.
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10. By signature below, the Parties acknowledge that they have each read this
Agreement, that they understand all of the terms of this Agreement, that each have
executed this Agreement voluntarily and with full knowledge of its meaning and
consequences, that they each have had sufficient opportunity to consult with counsel as
to the significance and meaning of this Agreement, and that, unless expressly provided
herein, this Agreement is executed without reliance upon any statement or representation
of the Parties not contained in the Agreement.
11 . Each of the Parties will bear its own attorneys' fees and costs.
12. This Agreement may be signed in counterparts, which when put together,
will create an entire document. Signatures sent by electronic mail will be considered
"originals."
IN WITNESS WHEREOF, this Agreement has been read and signed in duplicate
originals by the duly authorized representatives of the Parties.
THE CITY OF DUBUQUE
Date: By:
Barry A. Lindahl, Senior Counsel
CWCINNATI INSURANCE COMPANY
Date: By:
Its:
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