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BCC Minutes 06/14/2011 Closed Session (#11A-APAC-SE) MINUTES APAC- SE June 14, 2011 IN THE CIRCUIT COURT FOR COLLIER COUNTY,FLORIDA CIVIL DIVISION ^' KER ENTERPRISES,INC.d/b/a tic ARMADILLO UNDERGROUND, cn Plaintiff ... v. Case No.08-3496 CA APAC-SOUTHBAST,INC.and LIBERTY MUTUAL INSURANCE COMPANY, Defendants. APAC-SOUTHEAST,INC., Third Party Plaint v. COLLIER COUNTY,FLORIDA, Third Patty Defendant. / ORDER OF iisMiss.AI, In consideration of the foregoing Stipulation attached as Exhibit A,it is hereby ORDERED AND ADJUDGED that the above action and all claims asserted herein by and between K.E.R. Enterprises, Inc. d/b/a Armadillo Underground, APAC-Southeast, Liberty Mutual Insurance Company and Collier County, Florida filed herein are hereby dismissed with prejudice,each party to bear its own costs and attorney's fees. DONE AND ORDERED in Chambers in Naples, Collier County, Florida on ,2011. The original of this document as signed AUG 2 5 2011 - The Honorable Cynthia A.Pivacek Circuit Judge by CYNTHIA A.PiVACEK Circuit Court Judge !• 2 Copies furnished to: Jason Kopelow,Esq. McRae&Metcalf P.A. 306 S.Plant Avenue Tampa,Florida 33606 Mike Piscitelli,Esq. Vezina,Lawrence&Piscitelli,P.A. 300 SW First Ave.,Suite 150 Fort Lauderdale,Florida 33301 Jacqueline W.Hubbard,Esq. , Office of the County Attorney 3301 East Tamiami Trail,8th Floor Naples,Florida 34112 Gregory N.Woods,Esq. Grant,Fridldn,Pearson Athan&Crown,P.A. 5551 Ridgewood Drive,Suite 501 Naples,Florida 34108 2 IN THE CIRCUIT COURT FOR.COLLIER COUNTY,FLORIDA CIVIL DIVISION KER ENTERPRISES,INC.d/b/a ARMADILLO UNDERGROUND, Plaintiff, v Case No.4 8-3496 CA APAC-SOUTHEAST,INC.and LIBERTY MUTUAL INSURANCE COMPANY, Defendants. APAC-SOUTHEAST,INC., Third Party Ply v. COLLIER COUNTY,FLORIDA, Third Party Defendant. I STIPULATION FOR ORDER OF DISMISSAL WiTA I C All claims asserted herein by and between K.E.R. Enterprises, Inc. d/bla Armadillo Underground, APAC-Southeast, Inc., Liberty Mutual Insurance Company and Collier County, Florida having been settled,it is: STIPULATED AND AGREED that 1. The above captioned action, including all claims, csnmterclalma and third-party claims,be dismissed with prejudice,each party to bear its own attorneys'fees and costs, 2. Per the Mediated Settlement Agreement, this Stipulation may be executed in marts. Exhibit A. 3. The parties consent to the form of the Order attached as Exhibit B. . , DATED this day of August,2011. IMMINFIMMINII VEZINA,LAWRENCE&PISOIXFAI,P.A. McRAE&MrfCALF,P.A. Cormsel for APAC-5or heass Inc. Counsel for KER. Enterprises. Inc. d/b/a 300 Southwest First Avenue Armadillo Underground Suite 150 306 S.Plant Avenue Fort Lauderdale,Florida 33301 Tampa,Florida 33606 Telephone: -1270 Telephone:(813)225-1025 - .., . -. 54)7 1271 Facsimile:(813)225-1077 I r me By: - BY i Michael A.Piscitslli. � 8sq. I Florida Bar No.:364967 Jason lorida Bar No.:992811 OmenotrTHE Cowry ATTORNEY W0009 WED &MI&MicasTri,P.L. Counsel for Collier County,F7orlda Co-Counsel for Collier County,Florida 3299 Tamiami Trail Past,Suite 800 5150 North Tamiami Trail,Suite 603 Naples,Florida 34112 Naples,Florida 34103 Telephone:(239)252-8400 Telephone:(239)325-4070 Facsimile:(239)774-0225 Facsimile:(239)325-4080 By: B y: . Jacqueline W.Hubbard,Beg. Gregory N,Woods,Esq. - Florida Bar No.:468126 Florida Bar No.: 175500 VEZINA,LAWRENCE&PIsc P.A. Counsel for liberty Mutual Insurance ComPanY 300 Southwest First Avenue Suite 150 Fort Lauderdale,Florida 33301 T- 728-1270 F;-;. •.(954) 1271 , 4,,a . • _ ,,,,,,,,, . By: i-.,., A.Piscitelli,Esq. • Florida Bar No.:364967 2 1 . . .�•�.�... .�.r s • DATED this 70day of August,2011. 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Y:. • • r + /•rr ' • '• d + .ra ••� • �� , 7-°::', •• `Lr ': r • /7,-4 4-. .,...3..4 % j � • {`. tolt. ' � • ' •.l= y _ ':• Qa'f 2' ,� j i ' °r • • ti }!•• jJFiJ. �'•r•• 'L�ly, , 1.,f ' '' 'n'' h � i ,- .v �' ••S.� ,fi F •+ I ti :r 1 (SS`rr,• r _ • Ny' am, •, _ S • , r•1 ' • . Lc ° A - • 1....x,• ♦ � VFW,-."2.2%, •r ,fir 1k -. •s* r•,• • 14: 4t-!'.a.:1:.**'f yr y; j"•• .: •'P''• In The Twentieth Judicial Circuit Corot in and for Collier County, Florida • Case No.08-3496-CA KER.F ses,Inc.d/b/a Armadillo Underground, Plaiatlft v. APAC-Southeast,Inc.and Liberty Mutual Insurance Company, Def�mdants. MAC-Southeast,Inc., Third Party • v. Collier County,Florida, Third Party Defendant. Mediated Settlement Agreement,dated May 20,2011 j In consideration of the promises, covenants and conditions contained herein, KER Enterprises, Inc. d/b/a Armadillo Underground ("Amradl7lo"), APAC-Southeast, Inc. ("APAC"),and Collier County,Florida("County"),agree as follows: 1. t�Se a l er.atjMgagatii o APAG County will pay to MAC the full and feral settlement amount of Four Million Five Btmdred Thousand Dollars ($4,500,000.00)within thirty(30)days of the approval of this Agreement by the Collier County Board of County Commissioners("Board"),as set forth below. 2. Settlenaezet Payment to APAC. The aforesaid payment to APAC will be made either by wire transfer to the Vezina,Lawrence&Piscitelli,P.A. Trust Account or by check payable to "Vezina, Lawrence & Piscitelli, P.A. Trust Account," . which,in either event,shall be delivered to APAC's counsel,Vezina,Lawrence& Piscitelli,P.A.,by or before the date indicate in paragraph 1 above.All payments shall be subject to clearing the recipient's account is the ordinary course. 'Vezina, Lawrence & Piscitelli, PA. will, within ten (10) days from the date hereof, BIT PLa • provide to counsel for the County that fern's federal tax Identification number and • the firm's trust account's wire trams losfucti ns. 3. §etftenynt Amount to Armadillo. Within no more Than seven (7)days of the aforesaid settlement funds clearing the Vezina,Lawrence&Piscitelif,P.A. Trust • Account, APAC shall pay to Armadillo the fill and final settlement amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00). Such payment will be made either by wire transfer r to the McRae&Metcalf,PA Trust Account, or by check payable to"McRae&Metcalf PA Trust Account,"which,in either event,shall be delivered to Armadillo's counsel,McRae&Metcalf;PA,by or before the date indicated in the first sentence of this paragraph.All payments shall be subject to clearing the recipient's account in the ordinary course. McRae & Metcalf;PA will,within ten(10)days from the date hared provide to counsel for the APAC that firm's federal tax identification number and the fine's trust account's wire transfer bona 4. Atinidalimigy,2 ,at Within ten (10) days•of the aforesaid settlement funds being paid to APAC and Armadillo, counsel for Armadillo shall prepare and,deliver to the attorneys for APAC and the County a Stipulation for Dismissal with Prejudice with a proposed Order on the Stipulation,which shall provide that such Stipulation may be executed in counterparts, and that this entire action, including all claims, counterclaims and third-party claims is dismissed with prejudice,with all parties to bear their own attorneys' fees and costs. Within 7 days of receiving the same,the attorneys for APAC and the County shall execute the Stipulation of Dismissal with Prejudice and return such executed Stipulations to counsel for Armadillo. Within 7 days of Araaadillo's counsel receiving such executed Stipulations,Armadillo's counsel shall execute the Stipulation and file the same with the Court, with the request that the Court enter the Order of Dismissal with Prejudice. 5. conjeagmealgtajoasi,Waidm This civil action and this Agreement pertain to the County's Vanderbilt Beach Road(CR862)Project No. 63051 (the "Project"). The County hereby represents that it has no knowledge of any existing warranty claims or claims for latent defects arising out of or relating to the Project. 6. Release from Calais to APAC and Armalllo. Except for the obligations of This Agreement, which are not hereby released and which shall survive the execution heaeat the County hereby releases AMC,its suety on the Project,and Armadillo,and its surety on the Project,from any and all claims arising out of or relating to the Project, except for any claims that may hereafter arise for latent defects. 7. m APAC to the County. Except for the obligations of this Agreement,which are not hereby released and which shall survive the execution heneot APAC hereby releases to County from any claims for compensation or • 2 67®' . damages whatsoever arising out of or relating to the Project or APAC's contract with the County pertaining to the Project. S. release from Armadillo to APAC and the Coamtr% Except for the obligations of this Agreement, which are not hereby released and which shall survive the execution hereof;Armadillo hereby releases APAC and its surety,Liberty Meal Insurance Company, and the County, from any claims for compensation or damages whatsoever arising out of or relating to the Project or Armadillo's subcontract with APAC pertaining to the Project and/or the Payment Bond ism by APAC and Liberty Mutual Insurance Company pertaining to the Project. 9. i sse them APAC to Armadil*o. Except for the obligations of this Agreement which are not hereby released and which shall survive the execution - hereof;APAC hereby releases Armadillo and its surety on the Project,from any and all claims arising out of or relating to the Project and/or the Performance Bond issued by Armadillo and its surety,except for any claims that may hereafter arise for latent defects. 10.Dne Dates Falllig on Weekends oy&lidava. In the event that the date of may act requited to be performed by this Agreement(including,but not limited to,the payment of any money) falls on a weekend or a federal holiday,then the same shall not be required to be performed until the next business day thereafter. 11.Eagnkzegnstst This Agreement sets forth the entire understanding of the parties and no verbal or written%semantics or'represectations have been made or have been relied upon which do not appear in wring within this Agreement. Any reliance on verbal or other representations which do not appear within this Agreement shall be deemed unjustifiable reliance. Each party hereto is represented by that party's own counsel(or has had the opportunity to confer with counsel of their own choosing)and has had the benefit of(or the opportunity to have the benefit of)such counsel's advice in reviewing, comment*upon, and g this Agreement 12,Modification of Agreement. This Agreement may not be amended or modified except by written instrument signed by all of the parties hereto, and the parties agree that this provision may not be waived except in writing, 13.Waiver The rights of the parties under this Agreement are to be considered otmaulative,and the failure on the part of any party to exercise or enforce properly or promptly any rights arising out of this Agreement shall not operate to forfeit or serve as a waiver of any of those or other rights. The waiver by one party of the performance of any covenant or condition herein shall not invalidate this Agreement,nor shall it be considered to be a waiver by such party of any other covenant or condition herein. The waiver by any party of the time for performing any act shall not constitute a waiver of the time for performing any other act or an identical act required to be performed at a later time. 3 • • • 14.Mediator As S rjveuaer: Interpretation. The mediator has provided the initial draft of this Agreement to the parties and their counsel as a draft for their consideration. The mediator has done so as an accommodation to assist the parties in memorializing their agreement and has not done so is order to render any legal advice. The parties sod their counsel have been Ike to add to,delete from,and to otherwise change the initial draft as they have seen fit. Any changes made to the initial draft of this Agreement have been at the request of one or more • of the parties to this Agreement (or their counsel) and represent the melon of their iatcnt.The parties hereto acknowledge and agree that the mediator has not provided them with any legal advice(either during the course of the mediation or in connection with the negotiation and preparation of this Agreement),and that they have obtained(or have bad the opportunity to obtain)their own independent legal advice prior to executing this Agreement The parties hereto agree that in the event of any dispute as to the precise meaning of any tear or provision contained herein, the principle of • construction and iuterpretattan that written documents are to be censored against the party preparing the same shall not be applicable. Wherever used herein,the singular shall include the plural, the plural shall include the singular, and pronouns shall be read as masculine, feminine or neuter, all as the context mgr 15.Coonerntion. The parties hereto agree to cooperate fully in the execution of any .documents or performance in any way which may be reasonably necessary to carry out the purposes of this Agreement and to effectuate the intent of the parties hereto. 16.No Admission of liabllitvv, By this no � Y settlement, party admits any liability,but rather the parties have agreed to this settlement as a compromise of disputed claims in the interests of avoiding the costs and uncertainty of continued litigation. 17.Time is of the Essence. Time is of the essence of this Agreement 18.Maks& The headings used in this Agreement are for convenience and reference only and in no way define,describe,extend,or limit the scope or intent of this Agreement or the intent of any provision in it 19.6everabilty. If any provision of this Agreement shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable for any reason, whether on its face or as applied, the remaining provisions shall remain in full force and effect. 20.ftseikatmlAWknagegt. This Agreement shall inure to the benefit of and be binding upen the parties,their heirs,successors and assigns.This Agreement may be executed in one or more counterparts, each of which shall be deemed an 4 ! � ' original,but all of which together shall constitute one and the same instrument - The individuals signing below on behalf of entities represent and warrant that they have the NI authority to bind their respective entitles to all of the provisions hereof. Signatures by facsimile transmission or other electronic traonsmissdon of this Agreement shall be acceptable and hang upon the Parties. A copy hereof shall be as binding as the executed original. 21.fingainglga. This Agreement shall be governed by the laws of the State of Florida,without regard to its principles of conflicts of law. 22,Attornevs Fees. In any litigation arising out of or relating to this Agreement,or to the interpretation or enforcement hereof, the prevailing party(les) shall be entitled to recover the prevailing palrty's(ies')reasonable attorneys'fees and costs from the non-prevailing party(ies)at the trial and at all appellate levels. 23.Conditiop Precedegt The foregoing provisions of this Agreement to the contrary notwithstanding,this Agreement shall not become effective unless and until it is approved by a majority vote of the Collies County Board of County Connmiasicners at a duly noticed meeting to occur not later than June 7,2011. If so approved, then this Agreement shall be in full force and effect If not so appnuved,then this Agreement shall be null and void and of no force or effect. • IN WITNESS WHEREOF,the parties have executed tbis Agreement on the date first stated above. KER Enterprises,Inc. d/b/a Armadillo Underground Br ' k A.1`.�.. -x-19 Cif' _ Kirk E.Richmond,President— Christopher T.McRae,Esq.,Counsel. for Armadillo APAC-Southeast,Inc. By: c.4*__' 1,1% - •,Vice • Pisaitelli,Esq.,Counsel for APAC 5 Collier Comity,Florida r ' / A 1420. .L. /•.E., • I :. Is , Gregory N. "1'5'.a Esq.,Counsel co .n&enecting .•(oui.7 Collier County Board of County Commissioners '41'1"P'41)-•W. Coraita. By: Its:Chairperson Date:Tune_ I4. a•Gl Ar �• ^R, ` • ,`. t is ,,.�^� !�• +. 4f:`. �. • 1141 ' : 1.._W.Hubbard,'T•',�`',sq�j{' unty Litigation Section Cbief 6 June 14, 2011 TRANSCRIPT OF THE CLOSED SESSION MEETING OF THE BOARD OF COUNTY COMMISSIONERS Naples, Florida, June 14, 2011 CLOSED SESSION Item #11A — APAC-SE, Inc. LET IT BE REMEMBERED, that the Board of County Commissioners, in and for the County of Collier, and also acting as the Board of Zoning Appeals and as the governing board(s) of such special districts as have been created according to law and having conducted business herein, met on this date at 12:00 p.m., in CLOSED SESSION in Building "F" of the Government Complex, East Naples, Florida, with the following members present: CHAIRMAN: Fred Coyle Jim Coletta Donna Fiala Georgia Hiller Tom Henning ALSO PRESENT: Leo Ochs, County Manager Jeffrey A. Klatzkow, County Attorney Jacqueline Hubbard, Assistant County Attorney Page 1 — Item #11A (APAC-SE Inc.) June 14, 2011 Item #1 l A THE BOARD IN EXECUTIVE SESSION WILL DISCUSS: STRATEGY SESSION RELATED TO SETTLEMENT NEGOTIATIONS IN THE PENDING CASE OF KER ENTERPRISES, INC., D/B/A ARMADILLO UNDERGROUND V. APAC-SOUTHEAST, INC., ET AL V. COLLIER COUNTY, CASE NO. 08-3496-CA, NOW PENDING IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY, FLORIDA. — CLOSED SESSION MS. HUBBARD: This is a closed session. Today's date is June 14, 2011. And present at the session are Commissioner Fred Coyle, Chair; Commissioner Jim Coletta, Vice-Chair; Commissioner Donna Fiala; Commissioner Georgia Hiller; Commissioner Tom Henning; County Manager Leo Ochs; and County Attorney Jeff Klatzkow; and myself, Jacqueline Hubbard, litigation section chief. The subject of this session is to inform the board about a pending lawsuit and the results of a mediation that we had. CHAIRMAN COYLE: Jackie, can you speak a little louder? I'm having difficulty hearing you. MS. HUBBARD: I know. That's why I moved down here. Okay. I'll try and speak louder. That was just the introductory part. The lawsuit involves three parties: The general contractor for the Vanderbilt Beach expansion, APAC; the subcontractor to APAC, Armadillo Underground; and the county. This was a $37-plus million project to expand Vanderbilt Beach Road to six lanes and to expand certain water and sewer lines under the road. During the construction of the project, numerous things occurred, from OSHA violations to the fact that we had 66 design changes. Page 2 — Item #11A (APAC-SE Inc.) June 14, 2011 The matter was sent out to bid in 2000 -- or 2001, and the design contract was completed in 2002. During this period of time, there was tremendous construction along Vanderbilt Beach Road, and the transportation department decided to do the 30-percent design plans way back in -- around 2000, 2002. And when the contract was given to the design company, which was CH2MHi11, they had the 30-percent plans already prepared for them. The problem was -- started when CH2MHi11 realized that they were having problems with the 30-percent plans, so they had to do additional work on those plans to bring them up to what they felt 30-percent plans should demonstrate. As the project went on and the construction continued, 40 percent of the 37-million-plus was for underground utility work, and the underground utility company was either improperly staffed and/or supervised or the project was not properly overseen. In any event, what happened is the county staff directed the general contractor pursuant to the contract provisions to terminate the subcontractor, and the contractor did so and notified the subcontractor's bonding company. A series of meetings occurred, and the bonding company decided to hire, you know, a first-class construction management firm called Perini out of Massachusetts to come in. They also decided -- it was their money -- that it would be cheaper to continue to use Armadillo's personnel as opposed to going out and getting a whole 'nother group of underground utility people. That was an interesting decision. They made that decision, and they brought their personnel on the job to manage it, and ultimately the contract was completed. It was past due over two years -- over two years late. After the project was completed, Armadillo Underground filed a lawsuit against the general contractor. The general contractor then Page 3 — Item #11A (APAC-SE Inc.) June 14, 2011 filed a lawsuit against us, third-party complaint. Basically, Florida law does allow what we call pass-through claims. So ordinarily a subcontractor who does not have a contract with the county cannot sue the county because the county is not in privity with the subcontractor nor are they involved in the same contract; however, the general contractor who contracted with the county is in privity with the county and has the ability to directly sue the county, and in the State of Florida they allow these pass-through claims. And so Armadillo took the position that it was damaged. Its reputation, its bonding capacity, its good name, and so forth and so on, by being terminated from the job unfairly, is their contention, and sued APAC. APAC took the position that they would not have terminated Armadillo but for the county telling them under the contract they had with the county to terminate Armadillo, and, therefore, if the jury comes back and finds damages against APAC, APAC should be able to pass those damages over to the county. All right. Now, that's the nature of the litigation. Now, in evaluating the county's position in terms of what is needed, what would be needed, what are our strong points, our weaker points, let me just tell you that our strong points were that our CEI kept daily reports on what was going on out there, and the Perini people also kept daily reports. And there appears to have been a shortage of manpower on the part of our underground utility company. Nonetheless, the underground utility company's position was, every time they started digging to put in the lines they would run into some unknown water line, sewer line, whatever, or some unknown utility, such as cable and Sprint and all of these other ones, and they would stop, and they would ask the design people to show them how to get around this because it wasn't in the plans. And so there are 66 occasions where the design team had to revise the plans to allow the underground utility company to have something in writing to show that somebody else told them how to do Page 4 — Item #11A (APAC-SE Inc.) June 14, 2011 the job. Now, ordinarily my understanding is that the turnaround time -- well, okay. Let me start from the beginning. Sixty-six design changes is more than normal for a construction job. So if there were that many underground conflicts that the design firm was unaware of, I mean, we don't really know why that was, except a lot of the new utilities that came online were in the process of being constructed when the design was first done. Also we found out that, at least in one case, the same group that you have out there at Island Walk apparently did not connect its utilities to county's utilities in the manner in which everybody thought they did, and that created a very large problem with the construction of Vanderbilt Beach Road. Okay. So as we are moving into it, trying to figure out what our defense is, our greatest defense was liquidated damages, obviously, because we were so late. Now, in liquidated damages you have to show that the delay -- because everybody knows there was a delay -- that the delay was not caused by the county. We've hired two consultants who looked at the delay claims, and their reading was that, yes, there was a lot of delay. Was all of that delay the fault of the other parties, and the answer was we don't -- we don't really know. We don't really -- we don't really think so, but we don't really know. In absolute numbers, we could -- if you just took the days of delay, you could say that we have $14 million in damages. If you took the amount of damages that we could prove that's hard damages delay it was closer to 3 to $4 million. Between APAC and Armadillo, their claims against the county totaled $14 million. They had six experts. And the basis of their -- they claim -- they had 144 claims, individual claims, in which they allege that the county was at fault in these 144 different matters. I have reviewed those 144 different claims. They've been Page 5 — Item #11A (APAC-SE Inc.) June 14, 2011 reviewed by our consultant. And we did have a response to them; however, this is a very risky case for the county because there were so many different items of contention. You had 144 claims from the general contractor, not from the subcontractor. You had 66 design changes which is basically an admission that there was something wrong. Now, who was at fault? You did have some problems with manpower. We know that Armadillo was understaffed, we also know that APAC really didn't have an underground utilities expert overseeing the work of Armadillo, and we also know that APAC was busy doing a job on 951 at the same time where they were -- if they finished early, they would get a bonus, which apparently they got the b onus. COMMISSIONER HENNING: That was Immokalee Road. MS. HUBBARD: Was it Immokalee Road? COMMISSIONER HENNING: Yeah. MS. HUBBARD: Okay. So my estimate of time -- of the time to try these cases would be, I would say, from three to four weeks, and that is because we would have to try almost all of those design changes and determine that they were not the fault of the designer or the county. There are problems because the county's records were not particularly clear, and there were problems with as-builts that we had on file, and then there were problems with things that we didn't have on file. We also made changes to the project that weren't necessary for the construction of Vanderbilt Beach Road, all of which could create problems at trial. And then there are other problems, which I don't need to go into, which could also be problematical for the county if we went to trial. And so we went to mediation, and at mediation we had a great mediator, Jim Nulman. He really is very good. COMMISSIONER HILLER: He's fantastic. I love him. MS. HUBBARD: I like him, too. Page 6 — Item #11A (APAC-SE Inc.) June 14, 2011 COMMISSIONER HILLER: He's a first-class guy; very competent. MS. HUBBARD: And we got along very well. COMMISSIONER HILLER: He's a good person. MS. HUBBARD: Yeah. He's a very good person. And when I was city attorney up in Fort Myers, I did a lot of things with Nulman. But Nulman came in at 10 o'clock in the morning on a Friday. And our side was very prepared, and we gave an excellent presentation. In fact, CH2MHil1, since they knew that everybody was pointing the finger at them, gave a really excellent presentation. They basically said, okay, we did 66 design changes, but we made ourselves available because we knew that there probably would be conflicts given all of the construction out there, and sometimes the turnaround time was very long for Armadillo. They would make the changes, make the design changes, give them to them, but they didn't immediately follow up. The project was a -- it was pretty disastrous all the way around. It's as if whatever could go wrong on a project went wrong. And so we started out at the mediation basically $28 million apart. The position that I assumed at the mediation was that I checked with Norm and I checked with Jay Ahmad, and I said, how much money are you holding back, you know, in retainage on this project? They usually hold 10 percent. So they had 4.2 because -- 4.2 million they were holding because they had the 10 percent retainage, which was about 37-, 38,000, and there were some unpaid pay requests by APAC that they hadn't paid. And my position was, we are not going to go over that line. 4.2 is it for us. So, you know, they're running back and forth and back and forth all -- you know, all day. We broke for lunch. We never did break for dinner.And around -- I'd say around 9:30 that night, Jim Nulman, the mediator, comes in and he says, I really think we can get there. Page 7 — Item #11A (APAC-SE Inc.) June 14, 2011 And I said -- I remember saying something like, well, if it's going to be more than 4.2, we aren't going to get there, and I'm getting real tired. So he said, well, do you think we can come up with just $300,000? I said, I don't know. You'll have to ask Jay. And Jay -- I think Jay said -- he made some phone calls, and he agreed that they could come up with $300,000. COMMISSIONER HENNING: Extra? MS. HUBBARD: Extra. COMMISSIONER HENNING: Okay. MS. HUBBARD: Norm said that the interest that had been earned -- they had earned on the retainage exceeded the $300,000, so it was a -- you know, it was a wash. And so he said, okay, we'll go up 300,000 to 4.5. And Nulman left and stayed gone for -- I don't know, he must have been gone for over an hour. He came back about 10:30 or so and said, okay, we've got -- we've got a deal, and the deal is $4 and a half million; Armadillo will receive 2.5 million, and APAC will receive 2, and everybody dismisses everybody and everybody releases everybody, and the case is over. And in my opinion, anyway, I think it was a very good settlement. The county doesn't come out of pocket really with any money. You don't have to budget any money. The money's all from their money. And if they had won anyway, my sense is that the jury would have come back and said some kind of split verdict, but I don't think we would have -- we would have overcome the other side. COMMISSIONER COLETTA: May I ask a question? MS. HUBBARD: Yeah, go ahead. COMMISSIONER COLETTA: Jackie, I'm trying to figure out what we're doing here. I mean, it doesn't sound like there's really any decision. It sounds like you handled this perfectly from beginning to end. Is there some sort of choice we've got between two different Page 8 — Item #11A (APAC-SE Inc.) June 14, 2011 objects? MS. HUBBARD: Yes, but you can't really make that choice in the closed session. Okay. So you can't vote here. COMMISSIONER COLETTA: No, I understand that. What's the choices that we've got to make? MS. HUBBARD: The choices is to approve the settlement agreement or not approve the settlement agreement. COMMISSIONER COLETTA: Okay. We -- help me with this. If we don't approve the settlement agreement, what do you do, go back and you start the whole process over again? MR. KLATZKOW: Trial. MS. HUBBARD: Correct, we go to trial. COMMISSIONER COLETTA: And if we go to trial, our cost is going to probably be more than three -- MS. HUBBARD: Oh, absolutely. I estimate a half million. COMMISSIONER COLETTA: It's a no-brainer. MR. KLATZKOW: I mean, at the close of the day, we'll owe them $300,000. Very expensive. MS. HUBBARD: No. I think it would cost about a half a million dollars. COMMISSIONER COLETTA: Yeah. I mean, there's no decisions to be made. I mean, it's already been made for us. You did a wonderful job -- MS. HUBBARD: Well, thank you. COMMISSIONER COLETTA: -- of bringing this back. That's my own feeling. CHAIRMAN COYLE: I agree, but I have a question for you. MS. HUBBARD: Sure. CHAIRMAN COYLE: It seems to me that any contractor has the right to depend upon the records of the county as being reasonably correct, particularly when it comes to locates. MS. HUBBARD: Correct. Page 9 — Item #11A (APAC-SE Inc.) June 14, 2011 CHAIRMAN COYLE: And we know that our older records -- we've done a better job in the recent years, but our older records for locations are still really pretty bad. MS. HUBBARD: Yes. CHAIRMAN COYLE: So my question is not for this settlement -- because I agree with Commissioner Coletta that we should take this settlement agreement -- but the question is, how can we protect ourselves in the future? Is there something we need to put into our RFPs that provides notice that, perhaps, some of these things are inaccurate and thereby protect ourselves from future circumstances such as this? MS. HUBBARD: Well, there are a number of things that Jeff and I have talked about. This year, this is the last -- I have two very complicated construction contracts. And one of the things that I think needs to happen is that when the -- when the contract is let, the people who are managing the contract from the transportation division, or whatever division it is, they need to read the contracts and understand what the contract says, and they need to be taught. MR. KLATZKOW: Let me just stop you, Jackie. The problem you had is you had too many projects going on at the same time. So you got, you know, your A-level guy doing one contract, your B-level guy doing another contract, now you've got, like, a B-minus guy doing another contract. Now you've got, like, a C -- you were spread too thin. You had people tending to major projects going on between Immokalee to Vanderbilt to 951 and Goodlette and everything else you had going at the same time. Staff just couldn't keep up with it. CHAIRMAN COYLE: Well, wait a minute. Was this the county staff unable to keep up with it, or was it the fact that the locates weren't accurate? MR. KLATZKOW: Locates were not accurate. CHAIRMAN COYLE: Okay. Then that has nothing to do with manpower. If the locates are not accurate and I'm the contractor, I Page 10 — Item #11A (APAC-SE Inc.) June 14, 2011 have a right to expect them to be accurate. And if you -- if I go over schedule or even over cost because of failure of the county to provide accurate data, then I think I've got a good basis for a suit. MR. KLATZKOW: Well, you've hit the head on our problem. MS. HUBBARD: That's right. CHAIRMAN COYLE: So my concern is essentially this: We don't have a clear defense against that in this case, and I think we're very fortunate to be able to have a settlement agreement that doesn't hurt us. But I'm looking forward at other contracts, because I know that there are going to be areas where we're going to build something where the locates are very, very bad. The information we have about where utilities were placed is probably very old and not very accurate. With GPS capabilities now, we can do it much more accurately. But some of those things are still really, really messy. MS. HUBBARD: Yeah, they are. CHAIRMAN COYLE: And we need to give some thought to what happens if we run into this again. And the way to do that, I think, is to provide some sort of a disclaimer in the contract document that says, hey, you need to check these things out yourself because we're not sure. MS. HUBBARD: That's in the contract. CHAIRMAN COYLE: At least warn them. It is? MS. HUBBARD: Yeah, that kind of wording is in there, but I think what you're talking about is probably to go a little bit beyond, if you make -- you know, you may, to -- it's probable that, and when that happens, this is the way it will be resolved. MR. KLATZKOW: One of the things we've been discussing in the contract, you're at risk at contract, which puts all the risk on them. The problem with that is then you're paying considerably more for them. CHAIRMAN COYLE: Yeah. They're going to bid higher because -- when they have to assume the risk, they'll bid higher, and it Page 11 — Item #11A (APAC-SE Inc.) June 14, 2011 will cost you more money generally. MS. HUBBARD: But, I mean, you spend a lot of money, too. MR. KLATZKOW: I mean, our Public Utilities division generally is contractor at risk, and you get very little problems because of that. Norm took a different approach. We've had some litigation because of that, but I think all in all it's costing less than having to go to a contractor at risk. CHAIRMAN COYLE: I think that almost is always the case, because the contractor will put in a lot of extra money if you put him at risk every single time. Anyway. Okay. COMMISSIONER HENNING: I hope we can get rid of that Armadillo turtle company coming back again. MS. HUBBARD: Yes. COMMISSIONER HENNING: They were just terrible. MS. HUBBARD: They were terrible. No doubt about it. COMMISSIONER HENNING: You know, they just parked their friggin' equipment in our right-of-away and went to Mexico for an extended vacation. MS. HUBBARD: And also the materials that they put in the right-of-way got wet and -- COMMISSIONER HENNING: Yeah. MS. HUBBARD: -- and there were three explosions on the job, and Fred Sexton was able to sort of play detective. He's an excellent county employee, by the way. And they used rusted -- because the equipment was sitting in water -- COMMISSIONER HENNING: Yeah. MS. HUBBARD: -- they didn't -- they just used the equipment even though it was rusted and everything else, and that caused three major breaks. One after Perini got on the job. COMMISSIONER HENNING: They left the pipe out there for decades, and even constituents was looking at it and says, you know, Page 12 — Item #11A (APAC-SE Inc.) June 14, 2011 this stuff is out in the sun deteriorating. How long is it going to last when you put it in the ground? MS. HUBBARD: Right. Some of it did not last. CHAIRMAN COYLE: Okay. MR. KLATZKOW: Okay. MS. HUBBARD: Any other questions? CHAIRMAN COYLE: Everybody okay? COMMISSIONER HENNING: Tell them to take their rodents someplace else. MR. KLATZKOW: I will tell you that this is the last -- MS. HUBBARD: Yeah. Isn't that a strange name? MR. KLATZKOW: -- this is the last of our major construction litigations. And I talked to Leo, like, a year and a half ago, and I said, you really need to think about reserving ten million on these. The fact that we got out as cheap as we did is stunning and good, and I don't think anybody would have done as well as Jackie. COMMISSIONER FIALA: Take a bow, Jackie. MS. HUBBARD: Thank you. COMMISSIONER COLETTA: Good work. MS. HUBBARD: Thank you very much. CHAIRMAN COYLE: You can have Sunday off. MS. HUBBARD: Okay. Is it time to go back? Almost time. Shall we close it out -- the clock on the wall says a quarter to one the session was terminated. (The Closed Session concluded at 12:45 p.m.) ***** TRANSCRIPT PREPARED ON BEHALF OF GREGORY COURT REPORTING SERVICE, INC., BY TERM LEWIS, COURT REPORTER AND NOTARY PUBLIC. Page 13 — Item #11A (APAC-SE Inc.)