Town of Lovell cancels QSF agreement after legal demand

By: 
David Peck

The Lovell Town Council last week voted to pull out of an agreement with Flatirons Bank of Boulder, Colorado, in which the town has been a vehicle for settlement funds in lawsuit cases.

The town had been working with Flatirons Bank in the process of establishing qualified settlement funds (QSF), which are used by trial lawyers following a settlement or judgement to protect large sums of money when the FDIC only insures accounts to $250,000.

The arrangement was forged in 2023 when the town was approached by three individuals who sought to work with the town after speaking to a friend, Lovell native Steven Allred, who one of the men knew through Wyoming National Guard service.

Jakob Norman of Trial Lawyers for Justice from Bozeman, Montana, formerly of Casper, Kyle Heckman of Flatirons Bank and Nick Coccimiglio of Justice for Life from Alpine, Wyoming, attended the regular town council meeting on August 8, 2023, with Norman saying he heard about Lovell through his friendship with Allred.

Norman explained at the time that once a settlement or judgement in a lawsuit is reached, the person awarded the funds must have a temporary place to hold the funds, and a QSF is a vehicle to do so. The town would play an administrative role only and would not actually handle the funds or be liable in any way but would receive a filing fee as the government agency of record. The town turned the matter over to legal counsel for review at that time.

After the town legal counsel reviewed the proposed agreement and recommended some modifications, the council voted on October 17, 2023, to proceed with the agreement with Flatirons Bank, technically a 468B Fund Service Agreement.

In an interview Monday, town attorney Alexa Rolin of Copenhaver, Kitchen and Kolpitcke, LLC in Powell confirmed that the town’s role in a QSF is only administrative in nature, noting that when a settlement fund is established, the town’s role is simply to verify that the account has been opened and the money actually deposited. She said the town does not know any account details.

“We don’t actually see the money. We just know only when it is opened and funded,” Rolin said. She said the IRS tax code established the role of a municipality in the QSF settlement funds.

Town administrator Jed Nebel said the town has administered around 80 QSF approvals over the past year and a half.

Problems arise

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

Mayor Tom Newman then called a special meeting, held Friday at 11:30 a.m., to discuss the issue.

One letter is a public records request, Rolin said, and includes a spoliation notice demanding that the town not destroy any records related to the QSF arrangement, a practice Rolin said the town and legal counsel doesn’t do as a matter of practice. Town administrator Jed Nebel said he had already gathered the public records Eastern sought.

The second letter is essentially a cease-and-desist letter, demanding that the town stop working with Flatirons Bank. 

No lawsuit had been filed as of Friday, Rolin said, but she said the notice given is generally a precursor to a lawsuit. She told the council that the law firm representing Eastern Point Trust was essentially reaching out to “find out what part we are playing,” adding that, by terminating the contract with Flatirons Bank, “we may be able to distance ourselves from any fallout.”

In a follow-up interview, Rolin said Eastern Point Trust works in the same field regarding QSFs as Flatirons Bank and is claiming that proprietary information was used by Flatirons Bank, which she called a new startup, in establishing the QSF, though she said she is not privy to the actual claims Eastern is making.

During an executive session Friday, 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 calls 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 terminate the QSF contract immediately but to waive any required legal fee responsibility for Flatirons if the company agrees to terminate immediately.

Rolin said her firm sent notification of termination to Flatirons Bank on Friday.

She said Eastern Point Trust was also notified of the town council’s vote to terminate the contract on Friday.

“It is our hope that the bank will accept our offer,” Rolin said.

The town council was to meet Wednesday at noon to discuss a proposed Compromise Settlement Agreement with Eastern Point Trust Company, town administrator Nebel said.

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