TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to amend Contract No. 32497 (Agreement) with Union Bank N.A., a national banking association, of San Diego, CA, to place a limit on general indemnity obligations. (Citywide)
DISCUSSION
The City of Long Beach (City) contracts with Union Bank N.A. (Union Bank) for integrated citywide banking, cash management depository, and disbursement services across all City accounts. The service integration enhances the monitoring and control over all monetary instruments and services including electronic funds transfer (EFT), checks, coin and currency, and on-site ATM operations at three City-designated locations.
On July 12, 2011, the City Council awarded a contract to Union Bank to provide banking services for a three-year term, with seven one-year options to renew, at a rate not to exceed $275,000 annually. Following the City’s emergency declaration of the COVID-19 pandemic, on August 11, 2020, the City Council approved three additional one-year optional renewals, which extended the term of the contract to August 31, 2024.
Due to an impending corporate acquisition by US Bank, Union Bank has proposed a change to Section 19 of the Agreement which, effective August 31, 2022, would limit Union Bank’s general indemnity obligations to $500,000. The existing general indemnity provision already excludes coverage related to electronic banking transactions, wire transfers, and certain standard banking services. Such transactions always have been, remain subject to, and are governed by the California Commercial Code, not by the indemnity provision in the City’s contract. According to the California Commercial Code, except for limited exceptions, the duty of Union Bank to unconditionally defend, indemnify and hold harmless the City against liability arising from such transactions shall apply. Union Bank remains responsible for any losses arising from or in connection with the bank’...
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