CR 01-125 Indemnity Agreement - Justus Lumber Company
August 31, 2001
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Council Report 2001-125
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Indemnity Agreement-Justus Lumber Company
Proposed Action
Staff recommends adoption of the following motion: Move to approve an indemnity aareementbetween
Justus Lumber Company and the City of Hopkins for the property at the corner of Excelsior Boulevard
and 11th Avenue. known as the Justus Lumber property.
Adoption of this motion will cause an agreement to be signed that will commit the City of Hopkins to indemnify
Justus Lumber Company for certain environmental issues and will provide for specific protections for the City
relative to the investigation of the site.
Overview
The Justus Lumber property was at one time owned by the City of Hopkins. The site was utilized for
manufactured gas plant and a burn and fill municipal solid waste refuse site. In the .1970's the property was
purchased by Justus Lumber and has been operated as a lumber yard since that acquisition.
Justus Lumber has sold the business to Scherer Brothers Lumber to operate in a similar capacity. The
owners of Justus Lumber have retained ownership of the land and are leasing the land to Scherer Brothers to
operate as a lumberyard. As with all contaminated or potentially contaminated sites, the property owner is
concerned about potential liability for actions that were taken on the site prior to their purchase of the property.
The indemnity agreement, as proposed, would provide very specific and time limited indemnity to Justus
Lumber Company, giving them protection against potential negative impacts of contamination related issues.
eikewise, the City of Hopkins will receive certain protections relative to investigatory issues on the site.
Staff is recommending the Council pass the indemnity agreement.
Primary Issues to Consider
. Is the City exposing itself to additional liability by passing this agreement?
Legal representatives for the City, both from Linquist and Vennum, and Miller Steiner have
indicated that the indemnity agreement clarifies relationships between the parties, but does not
alter liability issues.
What other actions will be necessary as a result of this transfer of property?
During previous environmental investigations, the City of Hopkins and Justus Lumber Company
jointly placed monitoring wells (three) on the Justus Lumber property. Along with this action, the
City will be agreeing to remove the previous wells on an equal cost-sharing basis.
Supportina Documentation
Indemnity agreement, Justus Lumber Company
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Steven C. Mielke
City Manager
Financial Impact: $ N/A
Related Documents (CIP, ERP, etc.):
Notes:
Budgeted: Y/N Source:
Indemnitv Aareement-Scherer Brothers Lumber
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INDEMNITY AGREEMENT
(Justus Lumber Company)
THIS INDEMNITY AGREEMENT made and entered into this _ day of
,2001, by and between THE CITY OF HOPKINS, a Minnesota municipal
corporation ("City"), and JUSTUS LUMBER COMPANY, a Minnesota corporation ("Justus"
or, the "Indemnitee").
WITNESSETH:
WHEREAS, the City has had ownership interests in portions of the real property legally
described on Exhibit "A" hereto ("Property") at various times since 1918, and during such
periods of ownership (and otherwise), there have been located on the Property, or portions
thereof: a manufactured gas plant (decommissioned approximately 1934), a sewage treatment
facility and a municipal waste disposal site; and
WHEREAS, such past usage, and other industrial or commercial uses, both on the
Property and adjacent to the Property, have caused the Property to become contaminated with
hazardous substances, pollutants or contaminants (as the terms are used and defined in
Minnesota Statutes, Section 115B.02), which pollutants, contaminants or hazardous substances
(collectively referred to hereinafter as the "Contamination") are more particularly described in
the environmental reports ("Environmental Reports") enumerated on Exhibit "B" attached
hereto and made a part hereof; and
WHEREAS, in order to facilitate a business transaction between the Indemnitee and
Scherer Bros., LLC, a Minnesota limited liability company, ("Scherer"), or affiliates of Scherer,
and without admitting liability whatsoever in connection with the deposit, placement, release,
threatened release or discharge of any Contamination, or any injury or damage resulting
therefrom, the City has agreed to execute and deliver the limited indemnity herein set forth;
NO~\', THEREFORE, in consideration of the premises, it is agreed as follows:
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1. Limited Indemnity by City. City hereby agrees to defend, indemnify and hold
harmless the Indemnitee from and against any claim, demand, proceeding, judgment or cause of
action, in law or in equity, whether now existing or hereafter arising (hereinafter "Claim")
brought by: (i) a governmental agency having jurisdiction; or (ii) a private owner or occupier of
adjacent or downgradient land claiming loss, injury or damage with respect to such land or
personal injury attributable to the Contamination. It is expressly agreed that the limited
indemnity herein set forth shall not be applicable to any claim with respect to natural resource
damages, except to the extent such claim for natural resource damages is brought by a
governmental agency or such adjoining owner or occupier. It is further understood that this
Indemnity shall cover only Claims which are also within the scope and coverage of an Indemnity
Agreement between Scherer and the City, of even date as the within Indemnity Agreement
("Scherer Indemnity"), and that all defenses which the City may have to claims under, or
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performance under the Scherer Indemnity, shall apply with equal force to claims under the
within Indemnity.
2. Limitation of Liability of City: Payment Under Scherer Indemnity a Pro Tanto
Discharge Hereunder. The extent of the liability of the City shall be as provided under
Minnesota Statutes, Chapter 466, the provisions of which are incorporated expressly into this
Agreement, and the City's obligations under this Agreement shall be limited to the maximum
amounts set forth in Minnesota Statutes, Section 464.04. It is expressly understood and agreed
that nothing herein contained shall be construed to expand or to limit the liability of the City for
the Contamination, and that the extent of any liability of the City hereunder (which liability is
not admitted by this Indemnity) shall not exceed the extent of the City's liability as set forth in
Minnesota Statutes, Chapter 466. Further, under no circumstances will the liability of the City
include loss of value of the Property or of any business conducted thereon.
To. the extent City shall have incurred costs or expended funds under the Scherer
Indemnity, any amount so incurred or expended shall be credited against and reduce the liability
of the City under its indemnity obligation hereunder. The facts set forth by any person making a
Claim covered by the Scherer Indemnity shall, insofar as any indemnity is requested hereunder,
be deemed to constitute one and the same "occurrence," within the meaning of Minnesota
Statutes, Section 466.04, Subd. lb. Any paYment by, or expense incurred by, the City under the
Scherer Indemnity shall discharge, pro tanto, the obligation of the City to Justus hereunder.
3. Term of Indemnity: Time Limit for Assertion of Claim. This Indemnity shall
have a term equal to the term of the Scherer Indemnity. In the event of any termination,
voluntary or involuntary, of the Scherer Indemnity, the within Indemnity shall terminate
simultaneously, and without notice, and the period offive (5) years from the date of such
termination, within which a Claim may be brought, shall commence as of the date of the
termination of the Scherer Indemnity.
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4. Claim Procedure: Right of City to Defend Proceeding: Cooperation of
Indemnitee. Promptly upon receipt of notice, oral or written, of a Claim, Indemnitee shall
promptly give written notice to City, in care of its City Manager, of the assertion of such Claim,
and shall furnish to City any and all information in the possession of Indemnitee with respect
thereto. City shall have the right and option to respond to such Claim in the name of the
Indemnitee, as necessary, and may carry out any action set forth in the Scherer Indemnity as
shall be available to it thereunder. The parties hereto agree that any agreement between Scherer
and the City with respect to any response by the City thereunder shall bind and apply to the
Indemnitee hereunder. The City's obligation to indemnify Indemnitee shall be conditioned upon
Indemnitee's cooperation with the City in responding to any Claim, including any remedial or
other activity in response thereto.
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5. Indemnity Personal to Indemnitee. This Indemnity is personal to the Indemnitee
herein and cannot be transferred, sold, pledged or assigned, in whole or in part, or relied upon by
any party other than Indemnitee, or any benefit thereunder sold, transferred, pledged or assigned,
either voluntarily or by operation of law. It shall not run with title to the Property. There are no
third party beneficiaries of this Indemnity.
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6. Applicable Law. Minnesota law governs the interpretation of this Indemnity.
7. Approval of City Council Required. This Indemnity shall be effective only upon
the adoption of a resolution by the Hopkins City Council specifically approving the same.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity the date
and year above-written.
CITY OF HOPKINS,
a Minnesota municipal corporation
By:
Its:
JUSTUS LUMBER COMPANY
a Minnesota corporation
By:
Its:
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