00-0787R

RESOLUTION APPROVING SETTLEMENT OF CLAIMS OF ESTATE OF STANLEY A. LEPAK, THE UNKNOWN HEIRS OF STANLEY A. LEPAK, SKIP'S WAREHOUSE SALES, RICE LAKE LUMBER, INC., MICHAEL S. LEPAK, STANLEY R. LEPAK, CATHLEEN S. MANNING, MARILYN S. ESSELSTROM, MARY KAY S. JONES, JOHN S. LEPAK, IN AN AMOUNT NOT TO EXCEED $750,000.

BY COUNCILOR HOGG:

RESOLVED, that the proper city officials are authorized to pay to estate of Stanley A. Lepak, the unknown heirs of Stanley A. Lepak, Skip's Warehouse Sales, Rice Lake Lumber, Inc., Michael S. Lepak, Stanley R. Lepak, Richard S. Lepak, Cathleen S. Manning, Marilyn S. Esselstrom, Mary Kay S. Jones, John S. Lepak and their attorneys Charles N. Nauen and Jeffrey R. Brauchle, a sum not to exceed $750,000, including all sums paid to them or to escrow for their use to date in the matter pending in the St. Louis County district court, pursuant to the terms and conditions set forth in that document entitled "settlement agreement" filed as Public Document No. ____________________, and further authorizes the proper city officials to execute on behalf of the city of Duluth the "release" filed as Public Document No. __________________, and which shall constitute full and final settlement of all claims which arise out of the remediation and condemnation of that parcel of land known as Dumpsite #1 as described in city council Resolution No. 98-0820, city of Duluth, a political subdivision of the state of Minnesota, petitioner v. the estate of Stanley A. Lepak, the unknown heirs of Stanley A. Lepak, Skip's Warehouse Sales, Rice Lake Lumber, Inc., Michael S. Lepak, Stanley R. Lepak, Richard S. Lepak, Cathleen S. Manning, Marilyn S. Esselstrom, Mary Kay S. Jones, John S. Lepak, and all other persons unknown claiming any right, title, estate, interest, or lien in the real estate described in the petition herein, respondents, St. Louis County district court File No. C1-98-602367, and Rice Lake Lumber, Inc., a Minnesota corporation, Michael S. Lepak, Stanley R. Lepak, Richard S. Lepak, Cathleen S. Manning, Marilyn S. Esselstrom, Mary Kay S. Jones and John S. Lepak, plaintiffs v. city of Duluth, a municipal corporation, defendant, federal district court, district of Minnesota, Case No. 99-153 (DWF/RLE); payment to be made from the self insurance fund.


STATEMENT OF PURPOSE:  Between 1954 and the mid-1960's, the city of Duluth operated a city dump on the site of the former Hadselfor Dairy which was located off the Rice Lake Road in the city of Duluth. In late 1955 or early 1956, Stanley Lepak settled on an adjacent parcel of land ("Lepak property"). Stanley Lepak operated several businesses on this land which today are operated by his children and which are known as Skip's Warehouse Sales and Rice Lake Lumber, Inc. In addition to the business operations, the Lepak family also resided on the Lepak property. Today only Michael S. Lepak resides on the Lepak property.

In 1984, a Minnesota pollution control agency (MPCA) well inspection revealed contamination on wells located on the Lepak property. In August of 1988, the city was identified as a responsible party. In 1989, the city initiated a remedial investigation. That report was completed and approved by the MPCA. Thereafter, the MPCA on April 23, 1997, issued its finding of fact, conclusions of law and order ("order") which set forth a remediation plan for the city dump and Lepak property. As part of the order, the city was required to obtain access to the Lepak property. Thereafter, the city initiated a condemnation proceeding in the St. Louis County district court. The litigation arising from that condemnation is identified above.

In addition to litigation related to the condemnation proceedings, litigation was initiated in the federal district court as more fully set forth above. In that matter, plaintiffs asserted claims pursuant to federal law as well as common law tort and contract theories.

The parties in each of these matters engaged in a full litigation process which included full discovery. Both matters were scheduled to be tried in their respective venues during October and November of 2000.

Prior to commencement of trial, the parties engaged in comprehensive settlement negotiations which negotiations were intended to resolve all claims asserted in both the state and federal courts. The parties were advised by legal counsel, and the city was further assisted in these negotiations by administrative officials and independent experts.

The parties were able to reach agreement and the specific terms of that agreement are more fully set forth in the settlement agreement.

The city of Duluth has investigated these claims and verified the potential damages and expenses. The civil division of the city attorney's office analyzed the city's loss exposure and costs of continuing litigation. The city attorney's office recommends this settlement.