SETTLEMENT AGREEMENT
This Settlement Agreement (Agreement”) is entered into between COMMONWEALTH & HARBOR LLC (“Commonwealth”) and the CITY OF FULLERTON (“City”). Commonwealth and City are collectively referred to as the “Parties” or individually as a “Party” with reference to the following:
WHEREAS, Commonwealth is a limited liability company registered in the State of California and is the owner of the real property located at 100 N. Harbor Blvd., Fullerton, California 92832 (“the Premises”). Intimate Inns of California, Inc. DBA Florentine’s Tuscany Club (“Florentine’s”) entered into a “Site Lease Agreement and Encroachment Agreement” (the “Original Agreement”) with the City to allow Florentine’s to use certain portions of the City’s sidewalk area on Commonwealth Avenue adjacent to the Property (the “Encroachment Area”) for its business purposes, in November 2004. On July 18, 2017, the City and Florentine’s entered into the “First Amendment to Encroachment License Agreement” (the “First Amendment”). The Original Agreement and the First Amendment will collectively be referred to as the “Agreement.” The Encroachment Area is approximately 384 square feet.
WHEREAS, Florentine’s closed in October of 2020. While some of the required rent was suspended for the period of May 2020 to April 2022, some of the rent for the leased area (approximately $485 per month) has not been paid to the City.
WHEREAS, Commonwealth obtained building permits and substantially remodeled the Premises, including the Encroachment Area. A dispute has arisen between the Parties as to Commonwealth’s right to use the Encroachment Area and the timing and costs to remove encroachments in the Encroachment Area and restore it to the public’s use.
WHEREAS, the City desires to have restored the full public right of way adjacent to the Premises, requiring removal of the Encroachment Area and maintains that Commonwealth as the owner of the Premises is obligated to do so. Commonwealth contends that it is not obligated to remove the encroachment or to bear the costs of doing so.
WHEREAS, the Parties desire to resolve the dispute by allowing Commonwealth to use the Encroachment Area after full sign off on all applicable building permits for the Premises and issuance of a Certificate of Occupancy, subject to Commonwealth’s obligation to remove the Encroachment at its own expense as provided herein.
NOW THEREFORE, and in consideration for the promises contained herein, and other good and valuable consideration, receipt of which is acknowledged by the execution of this Agreement, and to avoid litigation, it is agreed by and between the Parties as follows:
Commonwealth shall, by September 16, 2022, enter into a contract with an architectural firm/structural engineer/fire consultant or any appropriate project team to prepare the plans for removal of the encroachment and restoration of the public right of way of the entire Encroachment Area. Complete plans for the removal and restoration shall be submitted for review no later than November 8, 2022. City Staff shall review and provide corrections/ comments no later than December 21, 2022. The first review shall include review and approval/corrections as needed to allow Commonwealth to place orders for any specialized materials such as replacement windows. Orders for such specialized materials shall be placed no later than December 27, 2022. Any required resubmittal shall be due no later than January 12, 2023. Staff shall review and provide corrections/comments, if needed, no later than February 17, 2023. Any third submittal if required would add additional time to the review process. Demolition/Construction shall commence no later than March 27, 2023 and be completed no later than July 2023.
Time to perform any deadline set forth herein may be extended due to unforeseen and uncontrollable delays, upon any reasonable request by Commonwealth to City. Any failure by City to meet the deadlines required of it in Paragraph 1 above shall automatically extend subsequent deadlines for the period of the City’s delay.
Commonwealth shall bear the entire cost of design, materials, demolition and construction necessary to remove the encroachment and restore the Encroachment Area to its pre-encroachment condition. The City agrees to waive building fees and plan check and inspection fees, unless an unreasonable delay on the part of Commonwealth requires payment of outside plan checkers or inspectors to meet deadlines provided for herein.
Mario Marovic, as an individual, will provide a personal guarantee to ensure that the full costs would be met if there is any default in performance by Commonwealth and the City is required to complete the work.
Commonwealth will reapply for/reinstate its request for the updated CUP, excluding the Encroachment Area (“New CUP”), by September 14, 2022, without payment of a new CUP application fee. This Agreement is contingent upon the approval of the New CUP application on or before September 21, 2022, which will be the same application previously submitted and withdrawn by Commonwealth, with minor modifications made by applicant. If the City amends the New CUP in a manner not agreed to by Commonwealth, or if the New CUP is ultimately denied by the City Council, then either party shall have ten days following the amendment, or denial to terminate this Agreement.
The City shall cause an agenda item to be placed on the City Council agenda recommending termination of the Agreement with all appropriate parties, including Florentine’s, to be notified in writing. Nothing in this agreement is intended to affect any rights that Commonwealth may have against Florentine’s. Commonwealth understands and agrees that no further notice or legal action is or shall be required to terminate Commonwealth’s right to use the Encroachment Area as expressly contemplated by this Agreement.
Each Party hereto shall bear and pay its own attorneys’ fees and costs in connection with the dispute giving rise to this settlement agreement and the negotiation and execution of this settlement agreement.
The City waives any right to past due rent from Commonwealth for the Encroachment Area. Commonwealth shall pay rent in the amount of Four Hundred Seventy Two and 27/100s Dollars ($472.27) per month from September 1, 2022, and on the first of each month thereafter, until the Encroachment Area is completely restored to its pre-encroachment condition. Should rent not be received on time, City will provide notice to Commonwealth and an opportunity to cure any default.
Insurance
Commonwealth shall procure and maintain throughout the duration of its use of the Encroachment Area until the public right of way is fully restored to its prior condition insurance against claims for injuries to persons or damages to property which may arise from or in connection with the operation, occupancy of and use of the Encroachment Area in an amount to be determined by the City’s Risk Manager. Commonwealth shall provide current evidence of the required insurance in a form acceptable to the City and shall provide replacement evidence for any required insurance which expires prior to the termination of such use. Nothing in this section shall be construed as limiting in any way the Indemnification and Hold Harmless clause contained herein or the extent to which Commonwealth may be held responsible for payments of damages to persons or property.
Commonwealth shall maintain commercial general liability insurance coverage in a form at least as broad as ISO Form CG001 ED 1188 with a limit of not less than one million dollars ($1,000,000) each occurrence. If such insurance contains a general aggregate limit it shall apply separately to the obligation of this Agreement or shall be twice the required occurrence limit. Any deductible or self-insured retention must be declared to and approved by the City.
The required insurance policies shall contain or be endorsed to contain the following provisions:
The City, its elected or appointed officials, officers, employees, and volunteers are to be covered as insureds with respect to liability arising out of Commonwealth’s operation or the ownership, occupancy, maintenance, or use of the Encroachment Area or with respect to liability arising out of automobiles owned, leased, hired, or borrowed by or on behalf of Commonwealth. The coverage shall contain no special limitations on the scope of its protection afforded to City or its officials, officers, employees, and volunteers; ii This insurance shall be the primary insurance with respect to the City, its officers, employees, and volunteers and shall apply separately to each insured against whom a suit is brought or a claim is made. Any insurance or self-insurance maintained by the City, its officers, employees, and volunteers shall be in excess of this insurance and shall not contribute with it; iii The policy required by this clause shall be endorsed to state that coverage shall not be canceled except after thirty 30 days prior written notice by certified mail return receipt requested has been given to the City; iv All required insurance shall be placed with insurers acceptable to the City with current BEST’S ratings of no less than B+, Class X. All insurers shall be licensed by or hold admitted status in the State of California. At the sole discretion of the City insurance provided by non-admitted or surplus carriers with a minimum BEST’S rating of no less than A-, Class X may be accepted if Commonwealth evidences the requisite need to the sole satisfaction of the City; v Commonwealth shall furnish the City with certificates of insurance which bear original signatures of authorized agents and which reflect insurers names and addresses policy numbers, coverage limits, deductibles, and self-insured retentions. Additionally, Commonwealth shall furnish certified copies of all policy endorsements required herein. All certificates and endorsements must be received and approved by City.
10. Hold Harmless. As a material inducement and in consideration of this Agreement Commonwealth agrees to defend indemnify and hold harmless City, its elected, officials, officers, agents, volunteers, and employees from any claims of liability for personal injury or damage to property to the extent that such claims arise out of the activities and operations of Commonwealth or its officers, agents, or employees on City’s property whether such activities or operations are authorized by this Agreement or not. Further Commonwealth shall pay for any and all damage loss or theft to the Premises or adjacent property to the extent such damage loss or theft arises out of the activities and operations of Commonwealth or its officers, agents, and employees on the Premises. City shall not be responsible for any loss or damage to any fixtures or personal property owned or controlled by Commonwealth that is situated on the Property. The provisions of this paragraph do not apply to any claims of liability for personal injury or damage to personal property to the extent such claims are attributable to the sole negligence or willful misconduct of City or any of its elected officials, officers, agents, volunteers, or employees.
12. It is understood by the Parties that the facts with respect to the issues settled between the Parties hereto may turn out to be other than, or different from, the facts now believed by the Parties to be true, and each of the Parties, therefore, expressly assumes the risk of the facts turning out to be different than they believe them to be, and each of the Parties agree that the foregoing terms shall in all respects be effective and not subject to termination or rescission because of any such mistaken belief.
13. In making this Agreement, no Party to this Agreement is admitting the sufficiency of any claims, allegations, assertions, contentions or positions of any other party, or the sufficiency of any defenses to any such claims, allegations, assertions, contentions or positions.
14. The Parties in consideration of the above-described settlement and as an inducement therefore, represent, covenant and agree as follows:
a. that the signatory for each of the Parties is competent to sign on behalf of and is fully authorized by the Party on whose behalf the signatory has executed this instrument; b. that the consideration herein above recited is contractual and not mere recital; c. that no inducements other than those stated in this agreement have been made to the Parties on behalf of any of the other Parties and that the Parties have relied solely and only upon their own judgment and the advice given to them by their attorney, whom the Parties have each selected for themselves; d. that this instrument contains the entire, complete and final agreement between the Parties, and no other agreements, written or oral, express or implied, exist between the Parties concerning the subject matter of this instrument which are not incorporated herein; e. that this instrument is not intended to be an admission of liability, which is expressly denied, on the part of each of the Parties, but is made solely for the purpose of compromise and settlement; f. that the compromise and settlement which forms the basis of this agreement has been reached after thorough negotiation and bargaining and represents a final, mutually agreeable compromise; g. this agreement may be signed in counterparts and shall be considered as if signed in one document. h. this agreement shall be construed in accordance with, and shall be governed by, the procedural and substantive law of the State of California. i. the terms of this Agreement have been drawn by mutual cooperation of the Parties and shall not be construed for or against any party by reason of its participation or lack of participation in drafting this Agreement.
Executed this ___ day of September, 2022, at Fullerton, California.
Dated:__________________ COMMONWEALTH AND HARBOR LLC _______________________________________
By: MARIO MAROVIC
Its:
Dated:__________________ _______________________________________
CITY OF FULLERTON
By: ___________________
Its: ___________________
Approved as to form and content:
Dated:__________________ JONES & MAYER _________________________________________
Kimberly Hall Barlow
Attorneys for CITY OF FULLERTON
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