07-0433R


RESOLUTION APPROVING SETTLEMENT OF CITY CLAIM AGAINST MINNESOTA COUNCIL ON COMPULSIVE GAMBLING, INC., IN THE AMOUNT OF $15,000.

BY COUNCILOR STEWART:

     RESOLVED, that the proper city officials are authorized to settle its claim against Minnesota Council on Compulsive Gambling, Inc., for a total amount of $15,000 arising out of a contract dispute and resulting in an action filed in St. Louis County District Court and entitled City of Duluth v. Minnesota Council on Compulsive Gambling, St. Louis County File No. 69-DU-CV-07-376; funds to be deposited in Fund 256, Agency 030, Revenue Source 4680.


STATEMENT OF PURPOSE:  This matter arises out of a contract dispute following the issuance of a legislative auditor’s report critical of the accounting practices of the Minnesota Council on Compulsive Gambling. The legislative auditor specifically identified $6,664 dollars spent by the council on items that were not specifically identified in the budget document, and $15,306 dollars in cost shifts that were not adequately explained. These two amounts total $21,970. While the legislative auditor also criticized the council’s record keeping for purposes of demonstrating that the council had satisfied deliverables, this issue was one of record keeping, and the city cannot prove that the council did not in fact produce the deliverables. The litigation process is now at a phase where the city will be required to incur significant expense to obtain the necessary auditing evidence for trial. This settlement represents a compromise of the dispute related to the $21,970 identified by the legislative auditor and enables the city to avoid additional litigation expense. Therefore, this settlement represents a compromise of the dispute related to the $21,970 identified by the legislative auditor. The city attorney recommends this settlement.