HomeMy WebLinkAboutAgreement A-25-409 Settlement and Mutual Release Agreement.pdf Agreement No. 25-409
SETTLEMENT AND MUTUAL RELEASE AGREEMENT
THIS SETTLEMENT AND MUTUAL RELEASE AGREEMENT ("Agreement") is entered
into between the COUNTY OF FRESNO ("COUNTY") and KLASSEN CORPORATION
("KLASSEN" and/or"Contractor") (COUNTY and KLASSEN are collectively referred to herein as
the "Parties").
RECITALS
A. KLASSEN was the successful bidder on a COUNTY Project for construction of a
Sheriff Substation, Vehicle and Evidence Storage building, parking lot and associated site
improvements, located at 1129 North Armstrong Avenue, Fresno, California 93727 (the "Project").
On June 25, 2020, COUNTY opened bids for construction of the Project, and on July 7, 2020, the
Project was awarded to low bidder KLASSEN, including the base bid and two additive bids, and
Contract No. 19-5-04 (the "Contract") for the performance of the same, in the amount of
$11,364,500.00, was signed by COUNTY and KLASSEN on August 10, 2020. The Contract
incorporated by reference therein a set of Project Plans, General Conditions and other Contract
Documents,all of which also governed the Project. The Contract required KLASSEN to complete the
work within 322 calendar days,with liquidated damages being imposed at a rate of$1,500.00 per day
for every day beyond such time until the Project was completed, subject to permissible delays
described in the Contract Documents. Notice to Proceed was issued by COUNTY on November 9,
2020, making the initial completion date September 27, 2021 (322 days).
B. During construction of the Project, various issues, allegations and disputes arose
between the Parties. KLASSEN asserted claims against the COUNTY for additional time and
compensation on the Project related to various alleged delays which KLASSEN alleged were beyond
its control, as well as extra work claims which KLASSEN alleged entitled it to additional time and
monetary compensation on the Project. COUNTY asserted that the Project should have been
completed no later than January 1, 2022, and that substantial completion was not reached until
February 12, 2024, when COUNTY alleged final occupancy and beneficial use occurred.
Accordingly, under the Contract, COUNTY asserted it was entitled to liquidated damages on the
Project in the amount of $1,158,000.00 (772 days at $1,500.00/day), and that after crediting the
withheld contract balance sum and back charging KLASSEN additional sums for alleged contract
completion work and assessment of other damages allegedly caused by failure of total completion
during such period when the Contract allegedly remained incomplete beyond the occupancy date,
COUNTY alleged it suffered damages in the sum of at least$1,841,288.80.
C. On December 10,2024,KLASSEN filed a Complaint for Damages (the"Complaint")
against the COUNTY in Fresno County Superior Court Case No. 24CECG05369 (the"Action"). The
allegations set forth in the Complaint filed in the Action are incorporated herein by reference as
though set forth in full.
D. COUNTY denies the allegations in the Complaint filed in the Action, and maintains
that it is entitled to a complete offset and monetary damages from Klassen based on the claimed
liquidated damages and actual damages sought, as noted in subsection `B," above. On February 24,
2025, COUNTY filed its Answer to the Complaint and a Cross-Complaint ("Cross-Complaint") for
damages against KLASSEN in the Action.
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E. The Parties wish to avoid continued litigation between each other relative to their claims
and defenses which were or could have been asserted arising out of the Project and/or in the Action,
and in that regard agree to the following settlement and compromise:
AGREEMENT
In consideration of the foregoing Recitals, the mutual understandings contained in this
Agreement, and other good, valuable, and sufficient consideration, the Parties hereto agree as follows:
1. Payment to KLASSEN. COUNTY agrees to pay KLASSEN, and KLASSEN agrees to
accept,the total sum of Seven Hundred Thirty-Seven Thousand Four Hundred Five Dollars and Sixty-
One Cents ($737,405.61) as full and final settlement of all KLASSEN's claims against the COUNTY
arising out of or relating to the Project("Settlement Payment").
a. The Settlement Payment is for all sums that may be due and owing on the
Contract, for any and all proposed change orders, claims of extended performance costs, time
extensions, claims for defective plans, claims of interference of contractor's means and
methods, field overhead, home and field office overhead or otherwise alleged to have been
experienced by the contractor.
b. Additionally, the Settlement Payment by the COUNTY includes and takes into
account all credits/claims for overpayment and/or reimbursement that may exist to those
payments (i.e., offsets, liquidated damages, back charges).
C. The Settlement Payment of the above amount shall be subject to all rules and
laws concerning public works stop payment notices, as well as the rules associated with the
Division of Labor Standards Enforcement ("DLSE") and the California Labor Code.
d. The Settlement Payment is due to KLASSEN within ten(10)calendar days after
mutual execution of this Agreement.
e. The Settlement Payment is to be made by check made payable to KLASSEN
delivered to KLASSEN's counsel, Zimmer & Melton LLP at: Zimmer & Melton, LLP, Attn:
Nick Street, Esq., 11601 Bolthouse Drive, Suite 100, Bakersfield, California 93311.
2. Releases.
a. Release by KLASSEN. Except for the rights and obligations expressly retained
or created by and described in this Agreement and in consideration of the covenants described herein,
including but not limited to the payment described above, KLASSEN, on its own behalf and on behalf
of its past, present and future officers and directors, assignees, stockholders, agents, representatives,
successors-in-interest, and attorneys hereby forever releases and discharges COUNTY and all elected
and administrative officers,employees and attorneys thereof from any and all claims,demands,actions,
causes of action and rights of whatsoever character related to the Project whether known or unknown.
Nothing herein is intended as a release of the obligations or reservations of rights set forth in this
Agreement.
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b. Release by COUNTY. Except for the rights and obligations expressly retained
or created by and described in this Agreement, including Paragraph 5 of this Agreement, and in
consideration of the covenants described herein, COUNTY hereby forever releases and discharges
KLASSEN, and all of their past, present and future officers and directors, employees, assignees,
stockholders, agents, representatives, successors-in-interest, sureties, and attorneys from any and all
claims, demands, actions, causes of action and rights of whatsoever character related to the Project
whether known or unknown. Nothing herein is intended as a release of the obligations or reservations
of rights set forth in this Agreement.
3. Dismissal with Prejudice. Within ten (10) calendar days of the Settlement Payment
clearing deposit, KLASSEN, through its counsel, must submit to the Court a Request for Dismissal of
the Complaint, with prejudice, and within the same time period, COUNTY must submit to the Court a
Request for Dismissal of the Cross-Complaint,with prejudice.Each Request for Dismissal shall include
the statement "Each party to bear its own costs and attorney's fees. The Court shall retain jurisdiction
to enforce the Parties' settlement per CCP § 664.6."
4. Waiver of Civil Code Section 1542. With respect to the releases described in
Paragraph 2 of this Agreement, and with the exception of the reserved claims set forth in Paragraphs
5 and 6 which remain reserved, the Parties expressly waive all rights under California Civil Code
section 1542 which provides that a general release does not extend to unknown or unsuspected
claims which,if known,would have materially affected the settlement. California Civil Code section
1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR
HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR OR RELEASED PARTY.
The Parties acknowledge that they may hereafter discover facts different from, or in addition
to,those which they now believe to be true with respect to the release of claims related to the Project
and agree that this Agreement shall remain effective in all respects, notwithstanding such different
or additional facts, or the discovery thereof.
5. Mutual Rights Reserved. It is understood and agreed that both the KLASSEN's
release of the COUNTY, as well as the COUNTY's release of KLASSEN, exclude the following:
a. Third Party Personal Injtu.L/LProperty Damage Claims. Notwithstanding the
mutual releases set forth above, the Parties agree to expressly except from this agreement releases
of any and all rights they have against each other relative to claims from third party individuals or
entities for personal injury and/or property damage relating to the Project. The Parties each
acknowledge they are currently unaware of any such personal injury or property damage claims.
b. Matters Not Released. Any claim or potential claim that cannot be waived or
released under applicable California or federal law or that relate to another project.
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6. COUNTY's Rights Reserved, Indemnifications. It is understood and agreed that
COUNTY's release of KLASSEN excludes, and indemnification rights exist, as follows:
a. Warranty, Latent and Patent Construction Defect Claims. Notwithstanding the
COUNTY's releases set forth above, COUNTY specifically reserves all claims for warranty, latent
and patent defects in construction it has in connection with the Contract and the Project. COUNTY
acknowledges it is currently unaware of any such warranty or latent or patent defect claims.
b. Claims of Defense and Indemnity. Notwithstanding the COUNTY's releases
set forth above, COUNTY specifically reserves all claims for any and all continuing contractual
obligations of KLASSEN relating to the Project(other than the liquidated damages and time-related
claims which were the subject of the Cross-Complaint which are released), including all rights to
seek defense and indemnity from KLASSEN. Further, COUNTY is not obligated to defend,
indemnify, or hold harmless KLASSEN with respect to, or make any payment relating to any claims
by, KLASSEN subcontractors, vendors, or any of their employees, including but not limited to any
alleged pass-through claims, as the sole payment to be made to KLASSEN by COUNTY is the
Settlement Payment provided for in this Agreement.
C. Employee Claims. Notwithstanding the COUNTY's releases set forth above,
COUNTY specifically reserves all claims against KLASSEN based upon claims assserted by
workers, trust funds, apprenticeship programs or other governmental agencies seeking penalties,
wages, benefits or apprenticeship payments, trust fund contributions, damages, forfeitures,
injunctive or other relief relating to the Project. With regard to any such matter listed in this
paragraph, KLASSEN agrees to defend, indemnify, and hold harmless COUNTY from and against
any actions, proceedings, causes of action, suits, debts, liens, contracts, agreements, promises,
liabilities, claims, demands, assessments,judgments, damages, deficiencies,penalties, fines, losses,
costs or expenses, including attorney's fees, resulting from, based upon, arising out of, related to or
incurred as a result of the same.
d. Claims by Subcontractors / Vendors. Notwithstanding the COUNTY's
releases set forth above, COUNTY specifically reserves all claims against KLASSEN based upon
claims by any subcontractor, vendor or taxing authorities seeking to recover for amounts that
KLASSEN,its subcontractors or venders allegedly did not pay.With regard to any such matter listed
in this paragraph, or any claim by any subcontractor, vendor, or employee of any of the above
relating to the Project, KLASSEN agrees to defend, indemnify, and hold harmless COUNTY from
and against actions, proceedings, causes of action, suits, debts, liens, contracts, agreements,
promises, liabilities, claims, demands, assessments, judgments, damages, deficiencies, penalties,
fines, losses, costs or expenses, including attorney's fees,resulting from,based upon, arising out of,
related to or incurred as a result of the same.
e. Matters Not Released. Any claim or potential claim that cannot be waived or
released under applicable California or federal law or that relate to another project.
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7. Final Application for Payment and Final Change Order(Time). Within five (5) days
of the full execution of this Agreement, KLASSEN shall issue a final Application For Payment and
a Conditional Waiver and Release Upon Final Payment, each in the sum of$737,405.61. Within
seven (7) days of the full execution of this Agreement, COUNTY shall issue and the Parties shall
execute a final Change Order relating to the Project, granting an extension of time of 772 days with
no additional compensation, setting forth a new completion date of February 12, 2024.
8. Delivery of Warranties, Operation&Maintenance Manuals, and As-Built Drawings.
Within thirty(30)days of the full execution of this Agreement,KLASSEN shall deliver to COUNTY
all warranties, operation and maintenance manuals, and as-built drawings required by the Contract
and Contract Documents relating to the Project,which includes KLASSEN ensuring that each of its
subcontractors and vendors have done the same.
9. No Admission of Liability. Liability for the matters included in this Mutual Release
and Settlement Agreement is disputed and this Agreement shall not be construed as an admission
thereof as against either of the Parties.
10. Representations and Warranties. The Parties and signatories hereto each represent,
covenant and warrant that they are authorized(individually or by their respective principals)to enter
into and execute this Agreement and that they have not previously assigned any claims released or
assigned in this Agreement, in whole or in part, or taken any other steps which would adversely
affect the rights which are the subject of this Agreement. In the event that any of the above
representations/warranties are breached or any of the representations and/or warranties contained in
this subparagraph prove false, the breaching/misrepresenting party hereby agrees to defend,
indemnify and hold the other party harmless from all damages, loss, liability, costs and attorneys'
fees resulting from said breach/misrepresentation.
11. Consultation with Legal Counsel. The Parties represent that they have consulted
legal counsel prior to the execution of this Agreement and have executed this Agreement with full
knowledge of its meaning and effect.
12. Execution of Terms of Agreement/Continuing Jurisdiction Under CCP §664.6. The
Parties agree to perform any acts and execute any documents consistent with the terms and
conditions of this Agreement which may be needed, desired or required to effectuate the terms,
conditions and provisions hereof. Further, before the Dismissals set forth above are filed with the
Court, the Parties shall cooperate in filing an executed stipulation and proposed order noting this
Agreement and requesting that the Court retain jurisdiction under Code of Civil Procedure §664.6.
13. Drafting of Agreement. The Parties agree that this Agreement shall not be construed
in favor of, or against,any party by reason of the extent to which any party or its counsel participated
in the drafting of this Agreement.
14. Amendment of Agreement. This Agreement can be amended only by a writing
signed by each of the Parties hereto.
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15. Agreement Binding on Successors. It is agreed that this Agreement, together with
the releases, shall be binding upon and inure to the benefit of the heirs, executors, administrators,
personal representatives, successors in interest and assigns of the respective Parties hereto.
16. No Prior Assignment; Indemnity. KLASSEN represents and warrants that it has not
assigned or transferred, or purported to assign or transfer, to any person or entity any claim or other
matter released in this Agreement. In the event that KLASSEN has assigned or transferred, or
purported to assign or transfer, any claim or other matter herein released, KLASSEN shall defend
and indemnify COUNTY and hold COUNTY and its past,present and future officers and directors,
assignees, stockholders, agents, representatives, affiliates, servants, insurers, successors-in-interest,
assigns, and attorneys, and all of them, harmless from any and all manner of actions, proceedings,
causes of action, suits, debts, liens, contracts, agreements, promises, liabilities, claims, demands,
assessments,judgments, damages, deficiencies,penalties, fines, losses, costs or expenses, including
attorney's fees, resulting from, based upon, arising out of, related to or incurred as a result of any
such assignment or transfer or purported assignment or transfer.
17. Agreement Not to Bid/Propose. As further good, valuable, and sufficient
consideration for this Agreement, KLASSEN agrees to refrain from bidding on or submitting
proposals for COUNTY projects for a period of ten (10) years from and after the date of execution
of this Agreement, and that if KLASSEN does so bid or propose, COUNTY may reject the same as
a result of this Agreement.
18. No Other Actions. Except as provided herein, KLASSEN has not commenced or
prosecuted and will not commence or prosecute any other action or proceeding for recovery of
damages or for any form of equitable relief, declaratory relief or any other form of action or
proceeding or arbitration against the COUNTY or any other person or entity based upon the claims
released in this Agreement including,but not limited to,the Action. This Agreement shall constitute
a judicial bar to the institution of any such action or proceeding or any assignment thereof.
19. Entire Agreement. This Agreement embodies the entire understanding between the
Parties pertaining to the matters described herein. Each party acknowledges that no parry, agent or
representative of the other party has made any promise, representation or warranty, express or
implied, not expressly contained in this Agreement, that induced the other parry to sign this
document. No modification of this Agreement shall be valid unless agreed to in writing by the
Parties.
20. Attorney's Fees for Enforcement of This Agreement. Each party to this Agreement
shall bear such party's own respective costs and attorneys' fees as incurred to date concerning the
prosecution or defense of the above-referenced Action and the Project and in the preparation of this
Agreement, with the exception of any reservation of such claims in this Agreement. Should suit or
action be instituted to enforce any provision of this Agreement,the prevailing parry shall be entitled
to recover its costs and reasonable attorney's fees.
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21. Severability. If any provision of this Agreement or the application thereof to any
person, place or circumstance shall be held by a court of competent jurisdiction to be invalid,
unenforceable, or void, the remainder of this Agreement and such provision as applied to other
persons,places, and circumstances shall remain in full force and effect.
22. Authori . Each party that is not a natural person represents and warrants that the
undersigned have the authority to act on behalf of and to bind it and all who may claim through it to
the terms and conditions of this Agreement.
23. Convenience of Reference. The headings and numbers used in this Agreement are
included•for the purpose of convenience of reference only; they shall not be used to explain, limit,
or extend the meaning of any part of the Agreement.
24. Counterparts. This Agreement may be executed in separate counterparts, the whole
of which shall constitute a binding agreement. Electronic, PDF or facsimile signatures, when
received,shall have the same force and effect as original signatures.
25. Governing Law. This Agreement shall be construed in accordance with and be
governed by the laws of the State of California. If any action is brought to interpret or enforce any
term of this Agreement,the action shall be brought in a state or federal court situated in the County
of Fresno, State of California.
IN WITNESS WHEREOF,the Parties hereby execute the Agreement.
Dated: August �/ ,2025 KLAS EN CONSTRUCTION
By:
Name:
Title: �-
Dated: August�, 2025 COUNTY OF FRESNO
By
Name: Ernest Buddy Mendes
Chairman of the Board of Supervisors
Title: of the County of Fresno
Si matures Continue Next Pare ATTEST:
� � � BERNICE E.SEIDEL
Clerk of the Board of Supervisors
Page 7 of 8 County of Fresno,state of California
By &,L6,r t Va..,_ Deputy
(Signatures Continued from Last Page)
REVIEWED AND RECOMMENDED
FOR APPROVAL
Dated: August , 2025 Akz��)40Z�1
Peter Wall, Interim Fresno County Counsel
[END OF SIGNATURES]
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