2008-04-03 Response to Audior's RequestCOURI, MACARTHUR &
RUPPE, P.L.L.P.
Michael C. Couri~ Attorneys ar Law Kyle R. Hartnett
Andrew J. MacArthur 705 Central Avenue East
Robert T. Ruppe«~ PO Box 369
St. Michael, .~11V 55376-0369
•.9r,~licensed;n~u;nn;~ (763) 497-1930
"'Also licensed in California (763) 497-2599 (FAX)
courimacarthur@earthlink. net
Apri13, 2008
Kern, DeWenter, Viere, Ltd.
Certified Public Accountants
7100 Northland Circle North
Brooklyn Park; h.'iNN 5528
Re: City of Albertville--Response to Auditor's Request for Information
Concerning Contingent Liabilities.
To Whom It May Concern:
As City Attorney .for the .City of Albertville, I advise you as follows in .connection
with your examination of the fmancial statements of the :City of Albertville as of December
31, 2007. This letter concerns only those claims or potential claims that have been brought
to the attention of this firm.
Subject to the foregoing and to the last paragraph of this letter, and except for the
Gold Ke Developvm~ ent, Inc. litigation and the two Edina Development Corporation
rtigation cases described below, we advise you that this .firm is not currently engaged, nor
has it been engaged any time since January 1, 2007, to give substantive attention to, or
represent the City of Albertville in connection with, pending or threatened litigation, claims,
or assessments asserted against the City of Albertville in corulection with, loss contingencies
coming within the scope of the clause (al of paragraph 5 of the Statement. ~f Policy referred
to in the last paragraph of this letter.
Except for the Gold Key Development, Inc. claim (and other party claims asserted in
the same litigation), and the Edina Development Corporation counterclaim against the City
discussed below, we are aware of no claims or assessments which we believe are probable
of assertion and must be disclosed under said paragraph 5(a) of the Statement of Policy
referred to in the last paragraph of this letter.
During the period in question, our office has assisted in representing the City in two
cases.. We are not lead counsel_ in either case. The first case involves litigation- that .was
commenced on or about July 1, 2006 and involves a breach of contract claim by .Gold Key
Development, Inc. against the City relating to the City's refusal to issue occupancy permits
Kern, DeWenter, Viere, Ltd.
Apri13, 2008
Page 2 of 3
for several properties located in the Prairie Run development as a result of several defaults
by the Developer under the Developer's Agreement. In this litigation Gold Key
Development, Inc. is seeking damages against the City in excess of $50,000.00. As the
litigation has progressed, additional parties have made claims against the City. The League
of Minnesota's Insurance Trust has provided defense for the City on this case, and the City
has retained the law firm of Iverson &Reuvers to defend the City in this action under the
Leagues insurance policy. The City cross-claimed against the former City Engineer, SEH,
Inc., alleging that should the City be found liable, SEH is liable to the City in the same
amount under the theory of engineering malpractice. To date, the Court has issued a
summary judgment order finding the City liable to Gold Key Development, but no amount
of damages has been determined as of this date. Since I do not have direct responsibility for
the defense of this case, I suggest that you contact Jason Kuboushek, Iverson Reuvers, 9321
Ensign Avenue South, Bloomington, MN 55438 (phone: 952-548-7206), as he is the
attorney now representing the City in Wright County District Court on this matter. I am
unable to provide any guidance on the City's claims related to this case, and again
suggest that you contact Mr. Kuboushek regarding that assessment.
The second case involves litigation against SEH, Inc. for engineering malpractice
related to its role as City Engineer at the time the storm water ponds were constructed in the
Albert Villas subdivisions. The City has retained the law firm of Iverson Reuvers to
represent it in this case. Since I do not have direct responsibility for the prosecution of this
case, I suggest that you contact Jason Kuboushek, Iverson Reuvers, 9321 Ensign Avenue
South, Bloomington, MN 55438 (phone: 952-548-7206), as he is the attorney now
representing the City on this matter. I do not believe this case has been filed in Wright
County District Court as of the date of this letter, but I believe it has been served upon
SEH.
This response is limited by, and in accordance with, the ABA Statement of Policy
Regarding Lawyer's Responses To Auditor's Request For Information. Sxlitho~at limiting the
generality of the foregoing, the limitation set forth in such Statement on the scope and use of
this response (paragraphs 2 and 7) are specifically incorporated herein by reference, and any
description herein of-any "loss contingencies" is qualified in its entirety by paragraph 5 of
the Statement .and the accompanying commentary (which is an integral part of the
Statement).
Consistent with the last sentence of paragraph 6 of the ABA Statement of Policy and
pursuant to the City's request, this will confirm and correct the City's understanding that
whenever, in the course of performing legal services for the City of Albertville with respect
to a matter recognized to involve an unasserted possible claim or assessment that may call
for a financial statement disclosure, we have formed a professional conclusion that the City
Kern, DeWenter, Viere, Ltd.
Apri13, 2008
Page 3 of 3
of Albertville must disclose or consider disclosure concerning such possible claim or
assessment, we, as a matter of professional responsibility to the City of Albertville, will
advise the City and will consult with the City concerning the question of such disclosure
and applicable requirements of Statement of Financial Accounting Standards No 5.
As of the date of this letter, our firm had billed the City $13,606.25 which has not yet
been paid.
If this office can be of further assistance to you in this matter, please feel free to
contact us.
Sincerely,
Michael C. Couri
Couri, MacArthur & Ruppe, P.L.L.P.
cc: Mr. Larry Kruse
Ms. Tina Lannes