Lovell council elects to stick with bank in QSF issue

The Lovell Town Council last week clarified its position regarding a contract with Flatirons Bank of Boulder, Colorado, as a vehicle for settlement funds in lawsuit cases.

Meeting in special session Friday, Feb. 7, the council amended the minutes and clarified the vote taken at a special meeting on Thursday, January 30, as the town works its way through a conflict that has arisen under legal pressure from an eastern financial institution.

Lovell had been working with Flatirons Bank since 2023 in the process of establishing qualified settlement funds (QSF), which are used by lawyers following a settlement or judgement to manage large sums of money awarded in a lawsuit.

Recently, however, Eastern Point Trust Company sent two letters to the town through the financial institution’s legal counsel stating that Flatirons Bank and other entities, including the town and Justice Escrow, which works with Flatirons, were in violation of the law and infringing on Eastern’s intellectual property.

Mayor Tom Newman then called a special meeting, held Friday, Jan. 24, to discuss the issue.

One letter was a public records request, town attorney Alexa Rolin said, and included a spoliation notice demanding that the town not destroy any records related to the QSF arrangement. The second letter was essentially a cease-and-desist letter, demanding that the town stop working with Flatirons Bank. 

During an executive session January 24, the council and Rolin discussed the potential legal ramifications of the letters received and came out of the session with a plan. The contract with Flatirons Bank called for a 90-day contract termination period following notice and for Flatirons to pay the cost of any legal work associated with the agreement, but after reconvening in open session, the council voted to authorize legal counsel to seek termination of the QSF contract immediately but to waive any required legal fee responsibility for Flatirons if the company agrees to terminate immediately.

The town council was to then meet Wednesday, Jan. 29, at noon to discuss a proposed Compromise Settlement Agreement with Eastern Point Trust Company, but after an executive session, the council voted to table the settlement agreement and scheduled a second special meeting for the next day, January 30.

Attending the January 30 meeting were Jakob Norman of Trial Lawyers for Justice from Bozeman, Montana, and Nick Coccimiglio of Justice for Life from Alpine, Wyoming, both of whom had worked with the town since the beginning on the QSF arrangement. Attorney Rolin was traveling and attended the meeting by Zoom, as did several other persons from Flatirons Bank and other entities.

According to town administrator Jed Nebel, Norman spoke about the groundbreaking nature of the QSF program and said Eastern Point Trust is a competitor of Flatirons Bank and Justice Escrow and is trying to pressure the town into dropping the contract. Norman also told the council, attorney Rolin said, that an expert witness in a legal case gave the opinion that the establishment of a QSF by Flatirons and Justice Escrow using the town as a vehicle for doing so is legal.

The council discussed the matter in executive session, then voted to reject the compromise settlement agreement with Eastern Point Trust. The council then voted regarding its relationship with Flatirons Bank, a vote clarified at the February 7 special meeting.

According to Rolin the council retracted the decision not to approve QSFs immediately and agreed to stick with the termination provisions in the contract, a 90-day notice by either party, with the clock on the 90 days from the town beginning on January 24. Any modifications to the contract with Flatirons Bank, including indemnification language, are up for negotiation, Rolin said.

The minutes from January 30, as amended, now read: “Carol Miller made a motion to move forward with QSFs and Flatirons Bank during the 90-day termination period. Second by Mike Grant. All in favor. Motion passed.”

It was also announced Friday that the town received two new cease and desist letters from “a competitor of Flatirons Bank” in regard to the town’s 468B Service Agreement.

Having clarified the vote from the January 30 meeting, the council held a lengthy executive session but did not take any action upon coming out of the closed session on February 7.

With the 90-day contract termination provision still in effect, the town is still approving QSFs under the contract with Flatirons Bank pursuant to the contract with the bank, Rolin said.

February 11

The town council addressed the QSF issue again Tuesday night at the regular February council meeting, with Flatirons Bank president Kent Jones in attendance.

“We very much value the relationship we have with the town, and I know this has been a bit of a challenging time with all this that’s going on,” Jones said. “I’m very sorry you have to deal with all of this, but I want to continue to emphasize our support for the indemnification provisions within the agreement. We continue to navigate that. I’ve been in contact with Alexa on several occasions, and I know you’ve received additional letters. We sent those off to our outside counsel, who responded to those, and we’ll also continue to place funds on retainer with Alexa’s office to be able to pay the bills as incurred for her time and expense. So we’ll continue to manage that and stay in touch on that along the way.

“We want to revisit certain provisions within the agreement, and I’m quite confident we can get to a good place on those. Certainly,  our goal is to arrive at a place where we’re set for a long-term agreement, and very open as to how you’d like to approach that.”

Mayor Newman thanked Jones for making the trip to Lovell and said the town is looking into outside counsel for a second opinion in the area of tax law.

“I don’t know how long that’s going to take,” he said, and added Rolin, “We’ve reached out to one firm so far, and we’re waiting to hear back on that.”

“We still might need to get with Alexa, and if there’s anything in the indemnification language we need to review, we can get that before council when it’s appropriate,” Nebel said.

“We’ve talked about making sure the indemnification language is expanded to include agents and employees and that there will be a survival clause added, but beyond that I don’t know that there was any additional concern the council had. There will some sort of technological device provided to the town for use for those continuing QSF approvals.”

Jones said Flatirons could draft the indemnification language and “send it over for review” if that would be more efficient.

Asked if there was anything else, Rolin said, “Not right now. Once we talk with that tax attorney, they’re going to take a look at it, and if anything pops up, then we can chat about it more and address everything as one big enchilada.”

The council then went into executive session for about 10 minutes, but did not take any action upon reconvening.

Other business

In other business at the February 7 meeting, the council voted to pass on first reading Ordinance 1019, which Nebel said cleans up language in the town code under the garbage rates section of the code regarding trash receptacles to address confusion among the terms containers, dumpsters and receptacles. Nebel said the ordinance does not change garbage rates recently passed.

The council approved the ordinance on first reading with councilman Bob Mangus absent and councilman Mike Grant abstaining.