HomeMy WebLinkAbout _ 4.11(a)--Authorize Terminations of Contract with Jason Abel Construction, Inc. � � �' � � �
� � � ' � �' � � ' � ` CITY OF REDDING
REPORT TO THE CITY COUNCIL
MEETING DATE: April l,2024 FROM:
ITEIVI NO. 4.11(a)
***APPROVED BY***
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btippin@cityofredding.org
SUBJECT: 4.11(a)--Consider Termination of Contract with Jason Abel Construction, Inc.
and Potential Findings of Fact to consider terminating the Public Works Agreement
("Agreement") dated March 15, 2022, between the City of Redding and Jason Abel
Construction, Inc. ("Contractor") with respect to the Magnolia Area Sewer Improvements
Pro'ect, Phase l, Bid Schedule 5263, Job No. 2629 ("Project" for the Contractor's default.
Recommendation
Approve and authorize the following:
(1) Find that the Contractor has failed to commence satisfaetory corrective actions and/or
diligently continued satisfactory and timely correction of the default under the Agreement
as the City requested via Notice to Cure sent to the Contractor on February 23, 2024;
(2) Find that the Contractor is in default of the Agreement; and
(3) Authorize the City Manager to take all appropriate action to terminate the agreemen�,
including, as appropriate, written notice of termination for default to the Contractor and
its Surety.
Fiscal Impact
The Magnolia Area Sewer Improvements Project Phase One Project is funded by the Wastewater
Utility. However, there are supplemental funds utilized from the Water Utility and Storm Drain and
Streets Divisions related to improvements to each of its facilities. Sufficient funds are budgeted for
this project from Wastewater, Water, Storm Drains and Streets budgets.
Alte�^native Action
The City Council could choose not to terminate the contract for default or provide alternative
direction to staff.
Report to Redding City Council Apri12,20Z4
Re: 4.12(a)--Authorize Terminations of Contract with Jason Abel Construction, Inc. Page 2
Background/flnalysis
On February 15, 2022, City Council at its regular meeting awarded construction for the Magnolia
Area Sewer Improvements Phase One Project to the low bidder Jason Abe1 Construction, Inc., of
Corning, California in tbe amount of$6,330,696.50. To date, the Contractor has been compensated
for work performed in the amount of $5,170,810.56 incl�uding $573,323.21 in authorized Contract
Change Orders.
A Notice to Cure (attached) was sent to the Contractor via certified mail on February 23, 2024
notifying the Contractor that they are in default of the contract as they materially violated
provisions of the contract documents by not completing the work in accordance with the contract
documents, they disregarded written instructions from the Engineer, and failed to prosecute the
work according to the schedule approved by the Engineer. Within the Notice to Cure the
Contractor was directed to commence satisfactory corrective actions, as outlined in the
attachment to the Notice to Cure, within five(5)working days after receipt of the Notice to Cure.
The Contractor has since refused to inake the corrective actions as indicated in the Notice to
Cure and its attachments.
As a result, Staff is recommending Termination of the Contract for Default in accardance with
Section 6-4 of Standard Specifications for Public Works Construction (the "Greenbook"), 2015
Edition.
Environmental Review
This action is not a project as defined under the California Environmental Quality Act.
Council Pr�ioNity/City Manage� Goals
Attachments
^Supplemental Attachment with Settlement Agreement
Notiee to Cure BS5263 02232024
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C A L I F C7 R h!,"�--' -'' citycsfredding.org
SLTY'P�..,E EIYTAL, STAF'F P T T
SPECIAL CIT� C UNCIL EET G F AP IL l, 2024
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l�tecommencltttivn from C'ity Attvrney
It is recommended that the City Cauncil adopt the proposed Contract Amendment, Settlement
Agreement, and Release with Jasan Abel Construction, Inc., for a mutual waiver and re�ease vf
Ziability, canclusic�n of this contractor's work on the prc�ject, and other included terms.
Alternative Action
Alternatively, the City Council could chc�ose to approve and authorize the fallc�wing.
{l) Find that the Contractor has failed to commence satisfactory corrective actions andlQr
dilsgently continued satisfactary and timely carrection of the tiefault under the Agreetnent
as the C�tp requested via Nat�ce to Cure sent ta the Contractor on February 23,2024;
(2) Find t�at the Contractar is in default of the Agreement; and
(3) Authorize the City Manager tc� take all appropriate action ta terminate the agreement,
inci�ding,as appropriate,�vritten notice of t�rmination for default to the Contractar and its
Surety.
B�ckgrouncUAnaCysis
Subsequent to pubiicatian of the agenda, representatives of the City of Redding and Jasan Abel
Construction,Inc., were able to negotiate a prop�sed settlement agreernent in lieu af termination
ft�r default. The proposed agreement v�ould release each party crf all disputed and undisputed
monetary claims and end this contractor's participation an the project.
The structure c�f this agreement would amend the scope t�f work to a11ow immediate acceptan�ce af
contractor's work to date and allow the City to finish any needed wark wlth a new vendor. The
agreement further provides that b�th parties waive all monetary claims against each �ther,
including any claims the cantractar has for work already performed and p�:yments wathheid to date:
Attachments
Praposed Contract Agreement, Settlement Agreement;and Release
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DocuSign Envelope ID: 14A8E4A7-FEOD-4DA1-880A-4873797461E3
Contract Amendment, Settlement Agreement, and Release
This Contract Amendment, Settlement Agreement, and Release("Amendment")is hereby entered
into this 2nd day of April, 2024. between the City of Redding ("City") and Jason Abel
Construction,Inc. ("Contractor"). City and Contractor are referred to collectively as"Parties"and
individually as "Party."
WHEREAS, Jason Abel Construction, Inc. and the City of Redding executed a contract dated
March 15, 2022 ("Contract"), for the performance of all work required to construct and complete
certain improvements entitled"Magnolia Area Sewer Improvements Phase 1 Project;" and
WHEREAS, in the course of performing the Contract, certain disagreements have arisen among
the parties as to the scope of their respective rights and obligations. Mare specifically, City
contends that certain work performed by Contractor on the Project is defective and deficient,
including without limitation, as described in the Notice to Cure dated February 23, 2024. City
intends to perform the portions of the corrective work deseribed in the Notice to Cure that City
deems are necessary subject to the resources available to perform such corrective work. Contractor
contends that City owes Contractor additional sums,including without limitation,for both contract
funds and for extra work. Each Party denies the contentions of the other Party; and
WI�EREAS, recognizing time and expense of furthering the dispute between the Parties and the
expense to both Parties in the event of dispute reso]ution processes, the Parties desire to end their
disputes under the Contract; and
WHEREAS, the Parties desire a global resolution of their disputes, along with an end to the
Contract.
NOW THEREFORE, the parties agree as follows:
l. Scope of Work
The scope of work of the Contract between the City and Contractor for the Project is hereby
amended to conform to the eurrent status of the Proj ect including all work performed by Contractor
in the Project as of the date of execution of this Amendment.
This new scope of work sha11 supersede and replace a11 prior definitions, plans, speci�cations, or
other conflicting requirements in the original Contract or amendments thereto, inc]uding but not
limited to any and a11 change orders. Parties agree that the Project is complete as modified by this
Amendment, and that City, having conducted such inspections and review of the work performed
by Contractor to date as City determined to be warranted, accepts the work performed by
Contractor on the Project.
The Parties agree that the purpose and intent of this Amendment is to fully, finally, and forever
resolve any and all claims that either has raised or may raise against the other with regard to the
Project and the Contract regardless of whether those claims have been asserted to date. Further,
the Parties agree that the purpose and intent of this Amendment is to remove Contractor's
obligation to provide any additional work(whether original work under the Contract or corrections
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DocuSign Envelope ID: 14A8E4A7-FEOD-4DA1-880A-4873797461E3
to work previously performed) under the Contract and to allow City to accept the Project as
complete in its current, "as-is" condition.
2. Payment
No further sums shall be due either from or to either Party under the Contract or this Amendment
to the Contract.
3. Mutual Settlement and Release of Ciaims
Except as Specified in section 6, below, and in exchange for the consideration provided under this
Amendment,each Party to this Amendment on behalf of itself and its elected or appointed of�cials,
agents, employees, parent companies and subsidiaries, affiliates, predecessors, successors, joint
employers, managers, shareholders, and assigns ("Releasors"), irrevocably and unconditionally
fully and forever waives,releases,and discharges the other Party and that Party's respective elected
or appointed officials, agents, parent companies and subsidiaries, affiliates, predecessors,
successors,joint employers, and assigns, and all of their officers, directors, managers, employees,
agents, and shareholders, in their corporate and individual capacities (col]ectively, the "Released
Parties"), from any and all claims, demands, obligations, liabilities, or causes of action of any type
whatsoever, known or unknown ("Claims") that Releasors may have or has ever had against the
Released Parties by reason of any actual or alleged act, omission, transaction, practice, conduct,
occurrence, or other matter from the beginning of time up to and including this Amendment
becomes fully executed, including, but not limited to all claims based on tort, contract, quasi-
contract, equity, statute (including without limitation False Claims Act or Prompt Payment
Penalties) or other theories of recovery or obligation. The releases by the Parties in this paragraph
apply both to claims that have been asserted to date, as well as claims that may arise in the future,
whether known or unknown. Neither Party sha11 have any further obligation to the other Party in
connection with the Contract or the Project except as expressly set forth in this Amendment.
Except as speci�ed in Section 6, below, both City and Contractor agree to a mutual release of
claims related to the performance of the Contract or arising from or relating to the Project,
including but not limited to any express or implied warranties,repair requirements,patent or latent
deficiencies, liquidated damages,payment for extra work,payment of retained or withheld funds,
or any other claim, whether based in contract or tort. This release shall extend to the Parties, as
well as their current or former officers,directors,elected or appointed officials, employees,agents,
successors, and assigns.
4. General Release
The Parties understand, acknowledge, and agree that these releases by and between them also
app]y to a11 unknown and unanticipated injuries, debts,losses or damages which are in any way
related to the subject matter of this Agreement as we11 as those claims now known or disclosed,
and the Parties hereby waive all rights and a11 benefits that they may have once had, now have,
or in the future may have under the terms of Section 1542 of the California Civil Code, which
provides as follows:
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DocuSign Envelope ID: 14A8E4A7-FEOD-4DA1-880A-4873797461E3
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 and agree that they have read and understand the terms of this provision.
The Parties waive all rights under any other statutes and/or common law principles of similar effect
arising in any jurisdiction. The Parties acknowledge that the Parties consciously intend these
consequences even as to claims for damages that may exist as of the date of this Agreement which
they do not know exist, and which, if known,would materially affect their decision to execute this
release and this Agreement,regardless of whether that lack of knowledge is the result of ignorance,
oversight, error, negligence, or any other cause.
5. Release of Performance Bond
In exchange for the covenants and conditions contained herein, City of Redding hereby releases
Contractor's surety, Great American Insurance Company, from any and all obligations under its
Public Works Performance Bond(Bond No.4187727)in connection with this agreement. Release
under this section shall apply only to the performance bond—Contractor's payment bond shall be
governed by Section 6,below.
6. Obli�afions of Contractor and Release of Pavment Bond
The releases contained herein shall not extend to Contractor's obligations to any employees,
subcontractors, or suppliers, or Contractor's obligation to indemnify and defend City from claims
arising from failure to a subcontractor, or supplier for work performed or materials or equipment
supplied for the Project or failure to pay an employee wages or compensation.
Additionally, this agreement shall not release Contractor from any requirement with respect to
record keeping, compliance with state audits, provision of certified payroll records,
nondiscrimination, or any other requirements imposed by state or federal law.
In order to facilitate the speedy release of Contractor's payment bond before such statutory
timelines as needed for release by operation of law, the City of Redding hereby authorizes its City
Manager to execute a release of the Payment(Labor and Materials)Bond(Bond No. 4187727)by
Great American Insurance Company if he determines that Abel Construction, Inc. has provided
satisfactory releases of liability by all contractors and suppliers on this project. Such determination
shall be in the sale discretion of the City Manager.
7. A�reement Not to Bid
Contractor hereby covenants and agrees not to bid or propose on any future construction projects
by the City of Redding, its agencies, or the Redding Area Busing Authority. Contractor agrees
that this obligation shall extend to both Jason Abel Construction,Inc. and its affiliates, as that term
is used in the Redding Municipal Code.
8. Owner of Claims and Authoritv
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DocuSign Envelope ID: 14A8E4A7-FEOD-4DA1-880A-4873797461E3
The Parties, and each of them, warrant and represent that:
A. Each Party hereto represents that they are the sole and lawful owners of all right, title
and interest in and to a11 of the interests released under this Agreement and that each of
them, have not heretofore voluntarily or involuntarily, by operation of law or otherwise,
assigned or transferred or purported to assign or transfer to any person any such claim or
any portion thereof; and,
B. Each Party is the authorized agent of the individuals or entities that are or may be a
party to this Agreement and that each Party is vested with the actual authority to settle and
compromise known and unknown claims by on behalf of said individuals or entities
identified in this Agreement and on whose behalf this Agreement is executed.
9. Attorneys' Fees and Costs
The Parties shall bear their own attorney's fees and costs incurred in the negotiation of this
Amendment. Should any action be instituted to enforce any provision of this Amendment, the
prevailing party shall be entitled to recover its costs and reasonable attorney's fees.
10. Severabilitv
If any provision of this Amendment is found by a court or arbitral authority of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect, or enforceable only if modified,
such finding shall not affect the validity of the remainder of this Amendment, which shall remain
in full farce and effect and continue to be binding on the Parties.
11. Mutual Draftin�
This Amendment shall not be construed against either Party as the author or drafter of the
Amendment.
12. Entire A�reement
This Amendment contains the entire agreement between the Parties, and supersedes all prior or
contemporaneous agreements and understandings relating to the subject matter hereo£ This
Amendment sha11 not be modified except in writing signed by the party to be bound.
13. Successors and Assi�ns
This Amendment shall be binding upon and inure to the benefit of each Party's successors,assigns,
and heirs.
14.Acknowled�ement of Full Understanding
The Parties specifically agree and acknowledge that they have read this Amendment in its entirety
and understand all its terms. The Parties knowingly, freely, and voluntarily assent to a11 the
Amendment's terms and conditions including, witho�ut limitation, the waiver, release, and
covenants contained in it. Parties execute this Amendment, including the waiver and release, in
exchange for good and valuable consideration in addition to anything of value to which the Parties
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DocuSign Envelope ID: 14A8E4A7-FEOD-4DA1-880A-4873797461E3
are otherwise entitled. The Parties acknowledge and agree that they have had an opportunity to ask
questions and consult tivith an attorney of their choice before signing.
15.No Admission of Liabilitv
Nothing contained herein sha11 be construed as an admission by any Party of any liability of any
kind. In fact, the Parties agree a11 factual contentions, events and related issues and circumstances
are hereby disputed and will remain disputed as between the Parties. However, the Parties agree
as set forth herein to settle the claims between them as described herein to protect the economic
interests of the Parties and to bring an end to their disputes.
16. Effective Date
This Amendment is effective as of the day it becomes fully executed, subject to approval by City's
city council. If the City's city council does not approve this Amendment, it shall not become
effective.
17. Counterpart Ori�inals and Electronic of Copies of Si�natures
This Agreement may be executed in any number of counterparts, all of which taken together sti11
constitute one agreement and a copy of which shall be deemed an original for a11 purposes. An
electronic or facsimile copy of any signature hereto shall have the same force and effect as an
original.
Date: 4/2/zo24 1ASON ABEL CO�NSTRUCTION, INC.
DocuSigned by�
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JASON ABEL
Date: CITY OF REDDING, a Municipal Corporation
TENESSA AUDETTE, Mayor
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PUBLIC WORKS
ENGINEER(NG DMSION
530.225.4170
530.245.7024 February 23, 2024
Bid Sch. #5263 JO#2629
Jason Abel Construction, Inc.
Attn: Jason Abe1
23333 Neva Avenue
Corning, CA 96021.
Great American Insurance Company
Attn: Stephen Beraha
301 E 4th Street
Cincinnati, OH 45202
VIA: CERTIFIED MAIL POSTAGE PREPAID,RETURN RECEIPT REQUESTED AND �
REGULAR MAIL
Re: Ma�nolia Area Sewer Improvements Project, Phase 1, Bid Schedule 5263, Job No. 2629
NOTICE TO CURE
Reference is made to the Public Works Agreement (the "Agreement") dated March 15, 2022, �� � �
between the City of Redding (the "City", "we" or "our") and Jason Abel Construction, Inc. (the �"� �
"Contractor", "you" or "your") with respect to the Magnolia Area Sewer Im�provements Project, ���� �
Phase 1, Bid Schedule 5263, Job No. 2629 (the "Project"). Capitalized terms used but not�defined x��
herein have the meaning ascribed to them under the Agreement.
In accordance with Section 6-4.2 of Standard Specifications for Public Works Construction (the
"Greenbook"), 2015 Edition,we hereby notify you that you are in default of the Agreement as you
materially violated provisions of the Contract Documents by not completing the Work in '
accordance with the Contract Documents, andlor you disregarded written instructions frorri the � �
Engineer, and/or you failed to prosecute the Work according to the schedule� approved b� the ����
Engineer. We hereby demand that you commence satisfactory corrective actions�as ou�lined i�the �;�
Corrective Action Repair List, attached hereto and incorporated herein as Exhib�t"A";within five ,
(5)Working Days after receipt of this Notice to Cure.It should be noted,that additional inspection
is ongoing, and this Corrective Action Repair List may not be a complete list of required repairs �
to cure your default under the Agreement. The City reserves the right to amend this��Corrective ��
t
February 23, 2024
Page 2 of 3
Action Repair List, as may be reasonably required. A11 corrective actions outlined in Exhibit A are
to be completed, to our reasonable satisfaction, no later than May 31, 2024.
We will accept your commencement of the corrective actions to be satisfactory, if within five (5)
Working Days of receipt of this Notice to Cure, you provide an adequate and reasonable schedule
of work for the corrective actions outlined in Exhibit A with completion dates no later than May
31, 2024. This schedule must be supported by your written statement outlining the availability of
the following items:
• Adequate and appropriate equipment(either owned or available via rent or lease),
• Materials,
• Services, as required, and
• Staff(ar the reasonable prospective of hiring necessary personnel).
Further, we hereby notify you that if you fail to commence satisfactory corrective actions within
five (5) Working Days after receipt of this Notice to Cure, or to diligently continue satisfactory
and timely correction of the default thereafter, then we will move forward with terminating the
Agreement due to default pursuant to Section 6-4 of the Greenbook from 2015.
This notice is without prejudiee to any of our rights, power, privileges, remedies, and defenses,
now existing or hereafter arising, a11 of which are hereby expressly reserved.
Please direct any questions to M�ichael R. Webb, Director of Public Works / City Engineer at
530-225-7156.
Sincerely, �� �� �
����,.����.��� �(��c� .
Michael R. Webb,P.E. ��
Director of Public Works /City Engineer
cc:
1. Revnolds Tilbury Woodward LLP via email
Attorney for Jason Abel Construction, Inc. �� ��� � � � �
11601 Blocker Drive, Suite 105
Auburn, CA 95603
e-mail: ttilbury@rtwlawllp.com _
Attn: Treven L Tilbury
2. Consultant to Great American Insurance Com�any via email �� � �� � �
Michael Jankowski
Mediator& Arbitrator � � � � � � �
80 Blake Blvd. #4736
Pinehurst, NC 28375 - �
February 23, 2024
Page 3 of 3
3. S�ecialist- Great American Insurance Company via email
Stephanie Vreeland
Great American Insurance Company
Financial Products Claim Specialist
P.O. Box 2119
Cincinnati, OH 45201
4. The City of Reddin�;via email
Christian Curtis, City Attorney
Natalia Ebersole, Assistant City Attorney
Josh Anthony, Assistant Director of Public Works
Nick Visconti, Construction Manager