2008-063ORDINANCE NO. ~ DO~'O~3
CONSIDER AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON,
TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A THIRD AMENDED .
CONTRACT FOR PROFESSIONAL LEGAL SERVICES WITH KELSEY, KELSEY,
COLLISTER & HICKEY FOR PROFESSIONAL LEGAL SERVICES RELATING TO
LITIGATION STYLED CITY O!' DENTON V. REICHMANN PETROLEUM CORP., CAUSE
NO. 2006-40169-362, CURRENTLY PENDING IN THE 362ND DISTRICT COURT OF
DENTON COUNTY, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS
THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City Council deems it necessary, appropriate, and in the public interest
to engage Kelsey, Kelsey, Collister & Hickey to provide professional legal services relating to
litigation styled City of Denton v. Reichmann Petroleum Corp., in the 362"a District Court,
Denton County, Texas, Cause No. 2006-40169-362; and
WHEREAS, City staff has reported to the City Council that there is a substantial need for
the hereinabove described professional services, and that limited City staff cannot adequately
perform the legal services with its own personnel; and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act," generally provides that a city may not select a provider of
professional services on the basis of competitive bids, but must select the provider of
professional services on the basis of demonstrated competence, knowledge, and qualifications,
and for a fair and reasonable price; and the City Council hereby finds and concludes that the law
firm of Kelsey, Ke]sey, Collister & Hickey is appropriately qualified under the provisions of the
law to be retained as outside legal counsel for the City; and
WHEREAS, the City Council has provided in the City budget for the appropriation of
funds to be used for the procurement of the foregoing professional legal services, as set forth in
the Third Amended Contract for Professional Legal Services; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTTON 1: The recitations in the preamble are true and correct and are incorporated
herewith as part of this ordinance.
SECTION 2: The City Manager is hereby authorized to execute a Third Amended
Contract for Professional Legal Services with Kelsey, Kelsey, Collister & Hickey for
professional legal services relating to litigation styled City of Denton v. Reichmann Petroleum
Corp., in the 362"`~ District Court, Denton County, Texas, Cause No. 2006-40169-362 in
substantially the form attached hereto and incorporated herein by reference.
SECTION 3: The award of this agreement is on the basis of the demonstrated
competence and qualifications of Kelsey, Kelsey, Collister & Hickey and the ability of Kelsey,
Kelsey, Collister & Hickey to perform the professional legal services needed by the City for a
fair and reasonable price.
SECTION 4: The expenditure of funds as provided in the attached Third Amended
Contract for Professional Legal Services is hereby authorized.
SECTION 5: This ordinance shall become effective immediately upon its passage and
approval. J/~
PASSED AND APPROVED this the "/`i~r day of ~ ,(~(i , 2008.
6' ~ m~~~~
PERRY R. McNEILL, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
s \our documents\ordinances\08\kekey-reichman Third amendment ordinance.doc
2
APPROVED AS TO LEGAL FORM:
THIRD AMENDED
CONTRACT FOR PROi•'ESSIONAL LEGAL SERVICES
STATE OF TEXAS
COUNTY OF DENTON
This Third Amended Contract for Professional Legal Services, made and entered into this '
the ~j' day of ~~~, 2008 by and between Kelsey, Kelsey, Collister & Hickey, `
2225 East McKinney, Denton, Texas 76209, hereinafter referred to as "Consultant", and the City
of Denton, a Texas municipal corporation, 215 East McKinney, Denton, Texas .76201,
hereinafter referred to as '`City".
WHEREAS, due to .unanticipated delays and expenses associated with the stay of
litigation proceedings by the bankmrptcy action currently pending in the Banlmiptcy Court for
the Eastern District of Texas, Corpus Christi Division, which further necessitated a subcontract
with local banlmtptcy counsel, the previous estimate of litigation expense will-soon be exceeded.
It is therefore necessary to revise previous cost estimates contained within the existing Contract
for Professional Legal Services, regarding pending litigation styled City of Denton v. Reichmann
Petroleum Corp., in the 362"d District Court, Denton County, Texas, Cause No: 2006-40169-362
and further expand its scope to include representation of the City's interests in a related
bankruptcy proceeding, pending in the U.S. District Court for the Southern District of Texas,
Corpus Christi Division, Cause No. 06-20804; and-
WHEREAS, Consultant is willing to perform such services in a professional manner as
an independent contractor; and
WHEREAS, City desires to engage Consultant to render the professional services in
connection therewith, and Consultant is willing to p;oxide such services;
NOW, THEREFORE, in consideration of the promises and mutual obligations herein, the '
parties hereto do hereby mutually AGREE as follows:
I. SCOPE OF SERVICES
Consultant shall perform the following services in a professional manner working as an
independent contractor not under the direct supervision and control of City:
Services to be provided:
1. Consultant shall evaluate the relevant facts and circumstances and shall advise City, by ';
written opinion, with respect to its options and the legality of such options, regazding
reseazching and responding to requests for legal services.
2. Consultant shalt also consult; as requested, with the City Manager, the City Attorney, and
any other designated City staff respecting any and alt aspects of -the services to be
performed under this Agreement.
3. Consultant shall perform all the professional services required. in a timely fashion, and
shall complete same in compliance with schedules established by City through its City
Attomey, through discussions with Consultant, as appropriate to carry out the terms and .
conditions of this Agreement. .
4. Consultant shall, as directed by the City through its Ciry Attorney, appear on behalf of
City and represent the City as trial counsel in the civil actions referenced in the recitals, ',.
subcontracting through approved local counsel as necessary.
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2. TERM
This Agreement. shall be for a term of 36 months, beginning effective March 15, 2007
and ending on Mazch,15, 2010. This Agreement may be sooner terminated in accordance with
the provisions hereof. Time is of the essence of this Agreement, and Consultant shall make alt
reasonable efforts to complete the services set forth herein as expeditiously as possible during the
term of this Agreement, and to meet the schedules established by City, through its City Attorney,
or as the progress of this mattermay require.
3. COMPENSATION AND METHOD OF PAYMENT
A. Consultant shall chazge the following fees,for its professional services hereunder, based on
the following fees for its professional services hereunder, based on the following hourly
billing rates for the attorneys and support staff involved in this matter:
Principal Attorney $240/hour
Local Bankruptcy Counsel $225/hour
Paralegals $75/lrour
Time will be billed at cnc tenth (1) hour minimum billing increments. Additiorially,
Consultant is authorized to subcontract legal services to a qualified bankruptcy attorney, as
local counsel, under the terms set forth in this Agreement.
B. Consultant will try to reduce costs whenever feasible by utilizing qualified principals,
associates, pazalegals, and law clerks. Consultant shall. bill City through the submission of
itemized invoices, statements, and other documcrrtation, together with supporting data
indicating the progress of the work and the services performed on the basis of monthly
statements showing hourly rates indicating who performed the work, what type of work was
done, and descriptions and/or details of all services rendered, along with specific description
and supporting documentation, if available, respecting any reasonable and necessary out-of-
pocket expenses incun•ed.
Third Amended Contract Far Professional Legal Services -Page 2
C. Consultant estimates and City agees that all. chazges for the legal services hereunder,
including reasonable out-of-pocket expenses, shall not exceed one hundred thousand dollars
($100,000), and Consultant agrees to notify City and seek a modification of the Contract
should the total fees exceed such amount.
D. City shall either pay directly or reimburse Consultant, as the case may be, for reasonable and
necessary actual out-of-pocket expenses, including but not limited to, long-distance
telephone, telecopier, reproduction, ovcmight courier, on-line research, and travel. All
copies will be chazged at the rate of ten cents ($0.10). per. copy for copies made within
Consultant's offices, with as much photocopying as possible being. done by outside vendors
at bulk rates or by the city to reduce costs if bulk copying is necessary. -The parties agee that
there will be no charges for outgoing telecopier. or incoming telecopier. Whenever feasible,
City encourages. cost savings by the use of computer files in Microsoft Word or Adobe
Acrobat formats, attached to a-mail transmissions.
E. The parties anticipate invoices or statements for services will be generated on a monthly
basis and that said invoices or statements will be sent on of about the 1 sc day of each month.
City shall make payment to Consultant within 30 days of the satisfactory completion of
services and receipt of an itemized invoice on statement. All reimbursable expenses,
including, but not necessarily limited to travel, lodging, and meals shall be paid at the actual
cost, pursuant to the terms, conditions, and limitations hereinabove set forth. All invoices
and bills shall be approved for payment by the City Attorney or Deputy City Attomey.
F. It is understood that Consultant shall work with'the coordination and general supervision of
the City Attorney or the Deputy City Attorney.
G. Al] notices, billing statements and invoices shall be made in writing and may be given by
personal delivery or by mail. Notices and invoices sent by mail shall be addressed to: Jerry
E. Drake, Jr., Deputy City Attomey, 215 East McKinney, Denton, Texas 76201: When so
addressed, the notice, invoice, and/or payment shall be deemed given upon deposit in the
United States Mail, postage prepaid. In alh other instances, notices, invoices, and/or
payments shall be deemed given at the time of actual delivery. Changes may be made in the
names and addresses of the responsible person or office to whom notices, invoices, and/or
payments aze to be sen*., .provided reasonable vrritte.^, notice is o ver..
4. PROFESSIONAL COMPETENCY
A. Consultant agrees that in the performance of these professional services, Consultant shall be
responsible for the level of competency and shall use the same degree of skill and care
.presently maintained by other practicing professionals performing the same or similaz types
of work. For the purpose of this Ageement, the key persons who will be performing most of
the work hereunder shall be Richazd H. Kelsey, Scott Hickey, and bankruptcy local counsel
Patricia Constant. However, nothing herein shall limit Consultant from using other qualified,
and competent members of its firm to perform the services required herein. However,
nothing herein shall limit Consultant from using other qualified and competent members of
its firm or firms serving as local counsel to perform the services required herein.
Third Amended-Contract For Professional Legal Services -Page 3
Y
B. Al] legal opinions and other legal documents prepared or obtained under the terms of.this
Agreement aze instruments of service and City shall retain ownership and a property interest
. therein If this Ageement is terminated at any time for any reason prior to payment to
Consultant for work under this Agreement, all such documents prepared or obtained under
the terms of the Agreement shall upon termination be delivered to and become the property
of City upon request and without restriction on their use or furthei compensation to
Consultant.
5. ESTABLISHMENT AND MAINTENANCE OF RECORDS
Full and accurate records shall be maintained by Consultant at its place of business -with
respect to all matters covered by this Agreement. Such records shall be maintained for a period
of at least three yeazs after receipt of final payment under this Agreement.
6. AUDPI'S AND INSPECTION
The City shall have the right to audit and make .copies of the books, records and
computations pertaining to this agreement. The Contractor shall retain such books, records,
documents and other evidence pertaining to this agreement during the contract period and five
yeazs thereafter, except if an audit is in progress or audit Endings aze yet unresolved, in which
case records shall be kept until all audit tasks aze completed and resolved. These books,
records, documents and other evidence shall be available, within 10 business days of written
request. Further, the Contractor shall also require all Subcontractors, material suppliers, and
other payees to retain all books, records, documents and other evidence pertaining to this
agreement, and to allow the City similar access to those doctments. -All books and records
will be made available within a 50 tnile radius of.::the City of Denton. The cost of the audit
will be borne by the City unless the audit reveals an overpayment of 1 % or greater. If an
overpayment of 1 % or greater occurs, the reasonable cost of the audit, including any travel
costs, must be borne by the Company which .must be payable within five business days of
receipt of an invoice.
Failure to comply with the provisions of this section shall be a material breach of this
contract and shall .constitute, in the City's sole discretion, grounds for termination thereof.
Each of the terms "books", "records", "documents" and "other evidence", as used above, shall
be construed to include drafts and electronic files, even if such drafts or electronic files aze
subsequently used to generate or prepare a fmal printed document.
7. ACCOMPLISHMENT OF PROJECT
Consultant shall commence, carry on, and complete any and all projects with all
practicable dispatch, in a sound, ewnomical and efficient manner, and, in accordance with the
provisions hereof and all applicable laws. !n accomplishing the projects, Consultant shall take
such steps as aze appropriate to ensure that the work involved is properly coordinated with
related work being carried on by City.
Third Amended Contract For Professional Legai Services -Page 4
8. INDEMNITY AND INDEPENDENT CONTRACTOR RELATIONSHIP
A. Consultant shall perform all services as an independent contractor not. under the direct
supervision and control of City. Nothing herein shall be construed as creating a relationship
of employer and employee between the parties. City and Consultant ogee to cooperate in the
defense of any claims, actions, suits, or proceedings of any kind brought by a third party
which may result from or directly or indirectly arise from any negligence and/or errors or
omissions on the part of Consultant, or from any.breach of Consultant's obligations under this
Agreement. In the event any litigation or claim is brought under this Agreement in which
City is joined as a part, Consultant shall provide suitable counsel to defend City and
Consultant against such claim; provided however, that Consultant shall have the right to
proceed with competent counsel of its own choosing. Consultant agrees to defend,
indemnify and hold harmless City and all of its officers, attorneys, agents, servants, and
employees against any and all such claims to the extent of coverage by Consultant's
professional liability policy. Consultant agrees to pay all expenses, including but not limited
to attorney's fees, .and satisfy all judgments. that may be incurred or rendered against
Consultant's professional liability insurance policy. Nothing herein constitutes a waiver of
any rights or remedies City may have to pursue under either law or equity, including, without
limitation, a cause of action for specific performance or for damages, a loss to City, resulting
from Consultant's negligent errors or omissions, or breach of contract, and all such rights and
remedies aze expressly reserved.
B. Consultant shall maintain and shall cause to be in force at all times during the term of this
Agreement, a legally binding policy of professional liability insurance, issued by an
insurance carver approved to do business in,the State of Texas by the State Insurance
Commission, which carrier must be rated by Best Rated Carvers, with a rating of "A--" oz
higher. Such coverage shall cover any claim hereunder occasioned by Consultant's negligent
professional act and/or error or omission, in an amount not less than $200,000 per occurrence
and $600,000 in the aggregate. In the event of change or cancellation of the policy by the
insurer, Consultant hereby covenants to immediately advise City thereof; and in such event,
Consultant shall, prior to the effective date of change or cancellation, serve a substitute
policy furnishing the same coverage to City. Consultant shall provide a copy of such policy
and ahe declarations page of the existing policy to City through its City Attorney,
simultaneously with the execution of this Agreement.
9. TERMINATION OF AGREEMENT
A. In connection with the work outlined in this Agreement, it is agreed and fully understood by
Consultant that City may cancel or indefinitely suspend further work hereunder or terminate
this Agreement at any time upon written notice to Consultant, Consultant shall cease all work
and labor being performed under this Agreement. Consultant may terminate this Agreement
by giving City 60 days written notice that Consultant is no longer in a position to continue
representing City. Consultant shall invoice City for all work satisfactorily completed and
shall be compensated in accordance with the terms of this Agreement. All reports and other
Third Amended Conhact For Professional Legal Services - Page 5
documents, or data, or work related to the project shall become the property of City upon
termination of this Agreement.
B. This Ageement maybe temunated in whole or in part, in writing, by either party in the event
of substantial failure by the other party to fulfill its obligations under this Ageement through
no fault of the terminating party. Provided, however, that no such termination may be
effected, unless the other party is given [1) written notice (delivered by certified mail, return
receipt requested) of intent to terminate, and .not less than 30 calendaz days to cure the
failure; and [2] an opportunity for consultation with the terninating party prior to
termination.
C. Nothing contained herein or elsewhere in this Ageement shall require City to pay for any
work which is unsatisfactory or which is not submitted in compliance with the terms of this
Agreement.
10. ALTERNATE DISPUTE RESOLUTION
Consultant agees that, if necessary, it will use its best efforts to resolve any disputes
regarding the Ageement through the use of mediation or other forms of alternate dispute
resolution set forth in Chapter 154 of the Texas Civil Practice and Remedies Code.
11. ENTIItE,AGREEMENT
This Ageement represents the entire ageement and understanding between the parties,
and any negotiations, proposals, or oral ageements are intended to be integated herein and to be
superseded by this written Ageement. Any supplement or amendment to this Ageement to be
effecfive shall be in writing and signed by City and Consultant.
12. COMPLIANCE WITH LAWS
Consultant shall comply with all federal, state, and local laws, rules, regulations, and
ordinances applicable to the work covered hereunder as they may now read or hereafter be
amended, including but not limited to the Texas Disciplinary Rules of Professional Conduct.
13. GOVERNING LAW
Nor the purpose of determining place of ageement and law governing same, this
Ageement is entered into in the City and County of Denton, State of Texas,, and shall be
governed by the laws of the State of Texas. Venue and jurisdiction of any suit or cause of action
arising under or in connection with this Ageement shall be exclusively in a court of competent
jurisdiction sitting in Denton County.
Third Amended Contract For Professional Legal Services -Page 6
14. DISCRIMINATION PROHIBITED
In performing the services required hereunder, Consultant shall not discrimiriate against
any person on the basis of race, color, religion sex, national origin or ancestry, age, or physical
handicap.
15. PERSONNEL
A. Consultant represents that it has or will secure at its own expense all personnel required to
perform all the services required under this Agreement. Such personnel shall riot be
employees or have any contractual relations with City. Consultant shall inform City of any
conflict of interest or potential conflict of interest that may arise during the term of this
Agreement, in accordance with Consultant's responsibilities under the Texas Disciplinary
Rules of Professional Conduct.
B. All services required hereunder will be performed by Consultant or under its direct
supervision. All personnel engaged in work shall be qualified and shall be authorized or
permitted under state and local laws to perform such services.
16. ASSIGNABILITY
Consultant shall not assign any interest in this Agreement and shall not transfer any
interest in this Agreement (whether by assignment, novation, oc otherwise) without the prior
written consent of City thereto.
17. SEVERABILITY
ALl agreements and covenants contained herein are severable, and in the event any of
them, with the exception of those contained in sections headed "Scope of Services",
"independent Contractor Relationship," and "Corripensation and Method of Payment" hereof,
shall be held to be invalid by any court of competent jurisdiction, this Agreement shall be
interpreted as though such invalid agreements or covenants were not contained herein.
18. RESPONSIBILITIES FOR CLAIMS AND LIABILITY
Approval by City shall not constitute nor be deemed a release of the responsibility and
liability of Consultant for the accuracy and competency of its work; nor shall such approval be
deemed to be an assumption of such responsibility of City for any defect in any report or other
documents prepared by Consultant, its employees, officers, agents and consultants.
19. MODIFICATION OF AGREEMENT
No waiver or modifcation of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the party to be charged
therewith, and no evidence of any waiver or modification shall be offered or received in evidence
in any proceeding arising between the parties hereto out of or affecting this Agreement, or the
Third Amended Contract For Professional Legal Services =Page 7
rights or obligations of the parties hereunder, unless such waiver or modification is in writing,
duly executed as aforesaid; and, the parties further agree that. the provisions of this section will
not be waived as herein set forth.
20. CAPTIONS
The captions of this Agreement aze for infoitnational purposes only and shall not in any
way affect the substantive terms or conditions of this Agreement.
21. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives, successors, and assigns
where permitted by this Agreement.
IN WITNESS HEREOF, the City of Denton, Texas, has caused this Third Amended
Contract for Professional Legal Services to be executed by its duly authorized City Manager, and
Consultant has executed this Agreement through its duly authorized undersigned partiier, dated
this the v~ day of ~~ 2008.
CITY OF DENTON
GEORGE C. CAM
CITY MANAGER
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APP ED AS TO LEGAL FORM:
EDWIN M. SNYDER ,triTY ATTORNEY
., ;'
Third.Ameaded Contrnct For Professional Legal Services -Page 8
KELSEY, KELSEY, COLLISTER &
HICKEY
BY:
RICHARD .KELSEY ' £ U
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Third Amended Contract For Professional Legal Services -Page 9