TRANSMITTAL LETTER FOR BOARD MEETING OF APRIL 5, 2012
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Authority to increase purchase order and amend agreement for Dykema Gossett PLLC, to continue to represent the District in the lawsuit of Metropolitan Water Reclamation District of Greater Chicago v. Terra Foundation et al., Case No. 06-CH-13817, involving the District's interest in the alley adjacent to its Main Office Building (100 East Erie Street) in an amount of $100,000.00, from an amount of $3,860,000.00, to an amount not to exceed $3,960,000.00, Account 101-30000-601170, Purchase Order 3054932
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Dear Sir:
In September 2005, a direct voucher was issued to the law firm of Schwartz Cooper Greenberger & Krauss to commence legal work regarding the impact of proposed development of privately owned land on the District's alley located east of and adjacent to its Main Office Building. Because the initial legal work exceeded $10,000.00, on February 2, 2006, the Board of Commissioners authorized the Purchasing Agent to issue a purchase order to the law firm of Schwartz Cooper Greenberger & Krauss in an additional amount not to exceed $10,000.00. In the summer of 2008, the law firm of Schwartz Cooper merged with and now operates under the name of Dykema Gossett PLLC ("Special Counsel"), and, therefore, this and other purchase orders issued to Schwartz Cooper were assigned to the law firm of Dykema Gossett PLLC, so that the same attorneys could continue to represent the District in pending matters.
As of March 22, 2012, the attached list of change orders has been approved. The effect of these change orders resulted in an increase in an amount of $3,850,000.00 from the original purchase order. The current contract value is $3,860,000.00. The prior approved change orders reflect a 38,600% increase in the original contract value.
This matter which began as a discussion with the adjacent property owners concerning the parties' respective rights to use the District's alley has developed into contentious litigation. The litigation began when the District filed a declaratory action in the Circuit Court of Cook County seeking the Court's interpretation of the applicable easement documents. The Defendant countered by filing for a preliminary injunction and damages, (Metropolitan Water Reclamation District of Greater Chicago v. Terra Foundation et al., Case Number 06 CH 13817). After hearings, the Court entered a preliminary injunction that expanded the Defendant's easement rights for two of the three buildings beyond what the District believes are provided for in the easement document. But, the Court upheld the District's position that the Defendant had no easement rights with respect to the third building (664 North Michigan Avenue). The District appealed a portion of the ruling to the Illinois Appellate Court, First Judicial District, Fourth Division - MWRD v. Terra Foundation et al., and 664 North Michigan Avenue, et al., v. MWRD - Docket Number 08-2223. The Appellate Court affirmed the ruling of the lower court.
In its damage claim, the Defendant alleges that it is entitled to damages due to the District's conduct with respect to the alley. The discovery, with respect to the Defendant's counter-claim, has been intensive and the District's Special Counsel has had to retain qualified expert witnesses to counter the Defendant's experts with respect to the damage claim. The payment to the damage expert is included in the legal fees and said amount is in excess of $1,000,000.00. Additionally, Special Counsel was required to defend against the Defendant's allegation that a District police officer had improperly interfered with the developer's right to enter or leave the alley in contravention of the preliminary injunction. Hearings were held and the Court found the District in contempt and its Order, among other things, included an award of attorney's fees in favor of the Defendant. The Appellate Court heard arguments on the District's appeal of the Court's contempt ruling and reversed the trial court's rulings, and vacated the attorney's fee award.
The trial on the Defendant's damage claim concluded in November 2011. At the conclusion of the evidence, the Court ordered the parties to submit post-trial briefs, heard oral arguments in February 2012, and ordered that the parties submit proposed findings of fact and conclusions of law. The parties are now awaiting the Judge's decision.
In addition to the post trial work, the District expended additional funds in negotiating ongoing alley reconstruction work by the developer and maintenance requirements of the alley by the respective parties. Further, it is expected that regardless of the Court's decision on the pending matters its decision will be appealed by one of the parties, if not both.
Additional funds in the amount of $100,000.00 are required for Special Counsel's continued representation of the District in the subject case.
This change order is in compliance with the Illinois Criminal Code since the change is germane to the contract.
It is hereby recommended that the Board of Commissioners authorize the Director of Procurement and Materials Management to execute a change order to increase the purchase order and amend the agreement in an amount of $100,000.00 (2.6% of current contract value), from an amount of $3,860,000.00, to an amount not to exceed $3,960,000.00.
Funds are available in Account 101-30000-601170.
Requested, Ronald M. Hill, General Counsel, RMH:SM:rg
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for April 5, 2012
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