HomeMy WebLinkAboutContract 39585-T1CITY SECRETARY
CONTRACT NO.
Takeover Agreement
This Takeover Agreement ("Agreement") is entered into by and between North American
Specialty Insurance Company ("Surety") and the City of Fort Worth, Texas ("Owner"), and is
made effective as of then` Vk day of April, 2011.
Recitals:
WHEREAS, W. R. Hodgson Co., LP ("Contractor") and Owner entered into a written
contract dated September 29, 2009, in the original amount of $2,139,683.20 (M&C C-23818)
("Original Contract"), whereby Contractor agreed to construct that certain construction project
known as the South Shore Sanitary Sewer Replacement Main 253, Part 1 on Randol Mill Road
and Parallel to the Banks of the Trinity River, Fort Worth, Texas (the "Project"), in accordance
with the terms and provisions of the Original Contract;
WHEREAS, as required by law and under the terms of the Original Contract, Contractor
and Surety executed and delivered to Owner a Performance Bond No. 2105600 ("Performance
Bond") and a Payment Bond No. 2105600 ("Payment Bond"), each in the penal sum of
$2,139,683.20, along with a Maintenance Bond No. 2105601 ("Maintenance Bond") in the penal
sum of $2,139,683.20;
WHEREAS the Original Contract was modified by and includes Change Order 1; and
WHEREAS, Contractor voluntarily defaulted and terminated the Original Contract, and
Owner has called upon Surety to fulfill its obligations as surety under the terms of the
Performance Bond; and
WHEREAS, Surety is willing to undertake the completion of the Original Contract in
accordance with the terms of the Performance Bond and this Agreement provided that in doing
so it will receive the entire Contract Balance as hereinafter defined below.
NOW, THEREFORE, in consideration of the agreements and undertakings hereinafter
set forth, and for other good and valuable consideration, the receipt and sufficiency of which
being hereby acknowledged, Owner and Surety agree as follows:
Agreement:
Surety hereby undertakes to cause the performance of the terms, covenants and
conditions of the Original Contract, including all modifications thereto, and agrees to be
bound by the Original Contract as modified herein. Owner acknowledges that Surety, by
its execution of this Agreement, is acting in its capacity as the surety for Contractor in
making arrangements for the performance and completion of the Original Contract, and
not as a completing contractor, and that Surety is not assuming any obligations or
liabilities beyond those set forth in the Performance Bond. As to the completion of the
Original Contract, except as otherwise provided in this Agreement, Surety is entitled to
all rights, title and interest of Contractor in and to the Original Contract in all respects as
OFFICIAL RECORD
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FT. WORTH TX
if Surety were the original party to the Original Contract. The term "contractor" as used
in the Original Contract shall be deemed, after the effective date of this Agreement, to
refer to Surety rather than to Contractor.
2. Owner acknowledges that Surety will subcontract the performance of the work under the
Original Contract to Dowager Utility Construction, Ltd., as completion contractor
("Completion Contractor"), and Owner hereby consents to Surety's designation of this
entity as Completion Contractor to complete the work under the Original Contract.
Surety may satisfy the required insurance obligations under the Original Contract by
providing evidence of the required insurance coverage carried by Completion Contractor,
with Surety and Owner being named as an additional insureds under the policy or
policies. Surety shall have no obligation to furnish any insurance under the Original
Contract or this Agreement as long as Completion Contractor provides such insurance
coverages.
Owner represents and warrants to Surety that as of the date of this Agreement:
a. The adjusted amount of the Original Contract, including Change
Order 1 ($13,550.00), is the sum of $2,153,233.20;
b. (i) Contractor has been paid the sum of $1,504,236.18 by Owner
through Pay Estimate No. 13;
(ii) Due to Contractor's failing performance, Owner withheld
payment for Pay Estimate No. 14 in the sum of $87,519.60, as
shown in Exhibit "1"; and
(iii) The sum of Pay Estimate No. 14 shall be remitted to Surety
within fifteen days of execution of this Agreement or from the date
that Surety is recognized as a vendor by Owner, whichever is later,
and is deducted from the Contract Balance, below;
(i) Due to Contractor's failing performance, a proposed Change
Order No. 2 and Change Order Justification Record ("PCO#2")
(Exhibit "2") attached hereto and incorporated herein for all
purposes, was never fully executed by Owner. PCO42 proposed to
delete the installation of 1,060 LF of 42-inch pipe and one
manhole, add additional compensation for pavement repair and
contemplated the Owner paying Contractor for 1,060 LF of 42"
Hobas sewer pipe and one 42" Hobas tee -base procured by
Contractor but made surplus when the Project scope was reduced.
(ii) Surety agrees to and accepts the deletions in the Project's
scope made by PCO#2.
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OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
(iii) Surety and Completion Contractor intend to use a portion of
the 42" Hobas Pipe material made surplus by PCO#2 and which is
stockpiled at the jobsite. Surety agrees, however, that Owner has
no obligation to purchase from Surety any of said material as
contemplated by Item 33 in PCO#2 except as further described in
Paragraph 6, below.
(iv) As per Item 31 of PCO#2, Owner agrees to pay Surety for the
additional cost of $46,309.86 for 2" HMAC overlay, which sum
shall be remitted to Surety in the time frame set forth in item
b.(iii).
(v) As per Item 32 of PCO#2, Owner agrees to pay Surety for the
additional cost of $6,156.00 for 2" of 2/27 concrete base, which
sum shall be remitted to Surety in the time frame set forth in item
b.(iii).
(vi) Based on review of Owner's records, Contractor was paid for
the 42" Hobas tee -base ($8,088.30), via Pay Estimate 9. As a
result, Item 34 of PCO#2 is erroneous and Owner withdraws this
Item 34 from PCO#2. See also, Paragraph 6, below regarding this
item.
d. The "Contract Balance" (including unpaid retainage) shall be
defined as the sum of $561,477.42 [subsection (a) minus
subsections (b)(i) minus (b)(ii)]. The Contract Balance shall be
increased or decreased, as appropriate, as a result of any change
orders for extra work or reductions from the scope of work as
requested or required by Owner after the date of the execution of
this Agreement per the terms of the Original Contract.
4. Owner agrees that the entire Contract Balance is dedicated to and will be applied to the
completion of the Original Contract pursuant to this Agreement. Owner shall pay
directly to Surety (as indicated below) the Contract Balance, plus or minus any additional
amounts of money on account of any modifications or changes requested by Owner and
agreed to in writing signed by Owner and Surety, as the work progresses. The payment
of the Contract Balance to Surety shall be made in accordance with the terms of the
Original Contract as to the time, amount and method of payment, and no payment shall
be delayed by reason of any slow down or cessation of work in connection with the
takeover of the Original Contract by Surety. Surety agrees to spend its own funds
(subject to the penal sum cap described below) as may be necessary from time to time to
pay for the performance of the Original Contract by Completion Contractor in the event
that the Contract Balance is insufficient, with any such payments being credited against
the penal sum of the Performance Bond. Owner agrees that it will not assess any
liquidated or other damages against progress and/or retainage payments from the
Contract Balance payable to Surety under this Agreement alleged to have occurred on or
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OFFICIAL RECORD
CITY SECRETARY
FT. WORTHY TX
before the effective date of this Agreement, and Owner agrees to pay said Contract
Balances to Surety, without offset, back charge, reduction or diminution whatsoever for
any action or inaction of Contractor and/or Surety alleged to have occurred on or before
the effective date of this Agreement, except as may be made in accordance with the terms
of this Agreement. All payments under this Agreement shall be made payable to Surety
and shall be sent to Surety at the following address, unless and until Owner is notified in
writing of any different address:
North American Specialty Insurance Company
c/o Jeffrey Goldberg
Vice President
475 N. Martingale Road, Suite 850
Schaumburg, IL 60173.
5. Surety shall complete the work required under the Original Contract pursuant to this
Agreement within 160 calendar days after receipt of a written notice to proceed from
Owner (the "Completion Date"). Surety understands and acknowledges that Contractor's
original work from approximately Station 59+75 to Station 72+'19 must be replaced at no
additional cost to the Owner in addition to any work remaining to be completed. Surety
is hereby granted a non -compensatory time extension from the original completion date
in the Original Contract until the Completion Date. As consideration for the
non -compensatory time extension, Surety hereby waives any right to any claim for any
additional time extensions and/or damages as a result of any delays which may have been
caused by Owner up to and including the date of this Agreement. The assessment of any
liquidated damages under the Original Contract and this Agreement may begin on the day
after the Completion Date; provided, however, that any such assessment of liquidated
damages shall not include any alleged delays of Contractor which occurred at any time
during Contractor's performance of the work under the Original Contract, and that the
calculation and assessment of any such liquidated damages shall include the recognition
of any excusable delays during Surety's performance of this Agreement in accordance
with the terms of the Original Contract.
6. a. Insofar as the Owner has any right, title or interest therein, Owner agrees that
Surety and Completion Contractor shall have the right to use, without charge, any of the
equipment, materials and appurtenances furnished or supplied by Contractor which may
be stored on or about the premises of the Project site or materials which may have been
fabricated for use in connection with the Original Contract, whether or not presently upon
the Project site. As per paragraph 3.c.(iii), above, Owner and Surety agree that there are
51 pieces of new 42" Hobas sewer pipe remaining at the jobsite. Surety, through
Completion Contractor, intends to use a portion of these materials in its prosecution of
the Work. Surety intends to use 42" Hobas sewer pipe recovered from the removal of
and in the reconstruction of Contractor's original work (see Paragraph 5) if such material
is certified by a certified Hobas Pipe repair technician ("Technician") as fit for use.
Surety agrees to provide Owner an inventory of the recovered Hobas Pipe, by serial
number, which is declared to be fit for use by Technician prior to installation of said pipe.
Such inventory shall also show pipe which is unfit for use on this Project. Should any of
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OFFICIAL RECORD
CITY SECRETARY
FT. WORTHS TX
the 51 pieces of new materials remain after Surety and Completion Contractor complete
the Work, an inventory shall be made and the materials secured on site for Owner's
future use. Owner will purchase said surplus new materials at $81.91 per linear foot.
b. As per Item 3. c(vi), above, the 42" Hobas tee -base shall remain on the jobsite
until such time as Owner removes it. Surety agrees that Owner may make an agreement
with Completion Contractor, independent of this Agreement, for transportation of this
item to Owner's desired location.
7. Surety will not have any employees or other representatives on the Project site on a daily
basis other than Completion Contractor. Prior to the issuance of the written notice to
proceed, Surety shall specifically authorize in writing an individual with Completion
Contractor to be its designated representative (the "Authorized Individual") solely for the
purposes set forth in this paragraph. The Authorized Individual will represent Surety in
dealing with Owner on day-to-day construction issues with respect to the Project. The
Authorized Individual shall also have the authority to negotiate and sign change orders
for extra work requested or required by Owner without Surety's prior written approval,
provided the change order does not exceed $1,000.00 and Completion Contractor is given
additional time to perform the change order, if requested. If the change order exceeds
$1,000.00, or no additional time is given to Completion Contractor to perform the change
order, then Surety's prior written approval is required to negotiate the change order and
the final change order must be signed by Surety and not the Authorized Individual. If the
total of all of the approved change orders exceeds the sum of $5,000,00, then Surety, not
the Authorized Individual, must approve in writing all additional or subsequent change
orders regardless of the amount of each such change order. The Authorized Individual
has no authority to negotiate deductive change orders, credits, back charges or net
deductions from the Original Contract or the Contract Balance of any nature whatsoever
without Surety's prior written approval. Save and except for that corrective work
identified in Paragraph 5, above, any agreements with respect to any other warranty work
of Contractor or corrective work as a result of any latent defects in the work performed
by Contractor shall require the written approval of Surety.
8. The authority of the Authorized Individual to deal directly with Owner may be revoked
by Surety on three (3) days' written notice to Completion Contractor and Owner. In the
event any dispute arises between Owner and Completion Contractor, or Completion
Contractor is alleged to be or is in actual default under the terms of the Original Contract
or this Agreement, Owner shall give Surety written notice thereof within forty-eight (48)
hours of Owner's knowledge of same.
9. The total liability of Surety under this Agreement and the Performance Bond for the
performance of the work, after the expenditure of the Contract Balance if paid by Owner
to Surety hereunder, is limited to and shall not exceed the penal sum of the Performance
Bond in the amount of $2,139,683.20. All payments properly made by Surety for the
performance of the Original Contract shall be credited against the penal sum of the
Performance Bond. Nothing in this Agreement constitutes a waiver of such penal sum as
the maximum limitation of Surety's liability under the Performance Bond. In the event
OFFICIAL RECORD
Takeover Agreement - Page S CITY SECRETARY
FT. WORTH, TX
that Surety expends the penal sum of the Performance Bond, after the expenditure of the
Contract Balance if paid by Owner to Surety hereunder, in performance of the Original
Contract and this Agreement, Owner agrees that Surety shall have no further liability or
obligation to Owner under the Performance Bond, this Agreement, the Original Contract
or otherwise, and Surety may immediately cease performance without further obligation
to Owner.
10. Completion Contractor has provided to Surety and Owner, as dual obligees, Maintenance
Bond No. S399944, issued March 22, 2011 by Employers Mutual Casualty Company of
the State of Iowa, in the penal sum of $2,139,683.20 (the Original Contract amount) and
encompassing the entire original project scope, which is attached hereto and incorporated
herein for all purposes. Additionally, Contractor's original Maintenance Bond, No.
2105601, as referenced above, remains valid from and after the date of final acceptance
by Owner of the Project. Should a latent defect be discovered during the effective time
period of the Maintenance Bonds, Owner agrees to first notify and seek remediation from
Completion Contractor. Should Completion Contractor fail to perform said remediation,
Owner agrees to seek relief from Employers Mutual Casualty Company under
Completion Contractor's Maintenance Bond No. S399944 prior to seeking relief from
Surety under Contractor's Maintenance Bond No. 2105601.
11. In no event shall Owner withhold any of the Contract Balance from Surety because of or
on account of any claims, liens, suits or demands by any persons or entities furnishing or
alleging to have furnished labor and/or materials to the Project. The Payment Bond shall
remain in full force and effect in accordance with its terms and provisions. The total
liability of Surety under the Payment Bond is limited to and shall not exceed the penal
sum of the Payment Bond in the amount of $2,139,683,20. All payments properly made
by Surety under the Payment Bond shall be credited against the penal sum of the
Payment Bond. Nothing in this Agreement constitutes a waiver of such penal sum or an
increase in the liability of Surety under the Payment Bond.
12. Owner agrees that it will not acknowledge or honor any claim or charges against the
Contract Balance by Contractor or any alleged assignees, successors, creditors or
transferees of Contractor, or any other party making claim to any such proceeds or
balances, without the prior written consent of Surety, or except by order of a court of
competent jurisdiction after due notice to Surety.
13. This Agreement constitutes the entire agreement between the parties and supersedes any
and all prior discussions, agreements, arrangements and/or understandings by and
between them, all of which are merged into this Agreement. This Agreement shall not be
changed, amended or altered in any way except in writing and signed by both Owner and
Surety. Owner and Surety acknowledge that there have been no oral, written or other
agreements of any kind as a condition precedent to or to induce the execution and
delivery of this Agreement. Any written or oral discussions conducted prior to the
effective date of this Agreement shall not in any way vary or alter the terms of this
Agreement. Except as herein modified, all terms and conditions of the Original Contract
shall remain unchanged and in full force and effect. The Recitals to this Agreement shall
Takeover Agreement -Page 6 OFFICIAL RECORDCITY SECRETARY
FT. WORTHTX
be considered substantive terms and conditions and not mere recitals in the interpretation
of this Agreement.
14. This Agreement is solely for the benefit of Owner and Surety. Owner and Surety do not
intend by any provision of this Agreement to create any rights in any third -party
beneficiaries, nor to confer any benefit upon or enforceable rights under this Agreement
or otherwise upon anyone other than Owner and Surety. Specifically, Owner and Surety
acknowledge that nothing in this Agreement shall extend or increase the rights of any
third -party claimants or the liabilities or obligations of Surety under the Bonds.
15. This Agreement shall be governed by and controlled by the laws of the State of Texas
and is performable in Tarrant County, Texas.
16. Any notices which are required to be given by the terms of this Agreement shall be sent
via certified mail, return receipt requested, to the following persons and addresses:
Owner:
City of Fort Worth, Texas
c/o Andy Cronberg
Re: South Shore Sanitary Sewer Replacement Main 253, Part I on Randol Mill Road
and Parallel to the Banks of the Trinity River
1000 Throckmorton St.
Fort Worth, Texas 76102
And
City Attorney's Office
Attn: Douglas W. Black, Assistant City Attorney
1000 Throckmorton Street
Fort Worth, Texas 76102
Surety:
North American Insurance Company
c/o Jeffrey Goldberg
Vice President
475 N. Martingale Road, Suite 850
Schaumburg, IL 60173
And
Robert M. Fitzgerald
Law Offices of Robert M. Fitzgerald
1219 FM 314
Van, TX 75790.
OFFICIAL RECORD
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CITY SECRETARY
FT. WORTH, TX
17. This Agreement shall be binding upon the parties and their respective successors and
assigns.
18. In the event that one or more provisions of this Agreement shall be declared to be invalid,
illegal or unenforceable in any respect, unless such invalidity, illegality or
unenforceability shall be tantamount to a complete failure of consideration, the validity,
legality and enforceability of the remaining provisions contained in this Agreement shall
not in any way be affected or impaired thereby.
19. It is understood and agreed by Owner and Surety that this Agreement shall be construed
without regard to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted.
20. This Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original.
IN WITNESS WHEREOF, the parties have executed this Agreement and made effective
as of the date indicated above, and each of the undersigned personally represent and warrant that
they have the full right, power and authority to execute this Agreement on behalf of the
respective parties.
Recommended:
VAZU'V)l
1
Frank Crumb
Director, Water Department
Approved a o Form and Legality:
low
Douglas W. Black
Assistant City Attorney
Takeover Agreement - Page 8
OWNER:
CITY
OF .FORT WORTH, TEXAS
By: ; � l
Fernando Costa
Assistant City Manager
OFMICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
ATTEST:
Marty Hendrix
City Secretary
r, ` Date: aO, 2011
No M&C Required —
Authorized by contract executed per
M&C C-23818 approved 9-29-09
Takeover Agreement - Page 9
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SURETY:
NORTH AMERICAN SPECIALTY
INSURANCE COMPANY
By:
effrey Goldberg,
Vice President
OFFiZIAL RECORD
CITY SECRETARY
FT. WOIaTH, TX