8d. Memo - Baggage Optimization Phase 1 Water Damage Settlement Agreement
COMMISSION AGENDA MEMORANDUM Item No. 8d ACTION ITEM Date of Meeting April 13, 2021 DATE: March 18, 2021 TO: Steve Metruck Executive Director FROM: Pete Ramels, General Counsel Loren Armstrong, Sr. Port Counsel Janice Zahn, Asst. Engineering Director, Construction SUBJECT: Baggage Optimization Phase 1 Water Damage Settlement Agreement Amount Payable to the Port: $1,600,000 ACTION REQUESTED Request Commission authorization for the Executive Director to execute a settlement agreement to resolve claims and potential claims arising out of two TSA-owned Explosive Detection System Machines (the "EDS Machines") that were damaged and required replacement during the Baggage Optimization Phase 1 project ("BOP1"). SUMMARY The Port asserted pre-litigation claims against PCL, the general contractor on the BOP1 project, and Red Hawk Fire Protection LLC ("Red Hawk"), one of PCL's subcontractors. PCL and Red Hawk asserted that they were not contractually responsible for the replacement cost of the two waterdamaged EDS Machines. The parties (and their respective insurers) first mediated on November 4, 2020, and then continued to negotiate with the mediator's assistance until early March 2021 when the parties successfully resolved the dispute subject to authorization by the Port Commission. The proposed settlement involves an aggregate payment to the Port of $1,600,000. The settlement agreement does not constitute an admission of liability or wrongdoing on the part of any party; rather, the settlement is recommended to avoid the time, expense, disruption, and uncertainty of litigating claims. This matter was discussed in executive session. There are no attachments to this memo. Template revised September 22, 2016.
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