Town of Lovell terminates QSF agreement with Colorado bank

The Town of Lovell is out of the QSF business, apparently for good.

Coming out of a three-hour executive session during a special meeting on Tuesday, Feb. 25, the council voted to accept a settlement agreement with Eastern Point Trust Company, the financial entity that had threatened legal action over the town’s arrangement with Flatirons Bank and related company Justice Escrow to provide a vehicle for qualified settlement funds, which are used by lawyers following a settlement or judgement to manage large sums of money awarded in a lawsuit.

The town had been working with Flatirons Bank since 2023 in the process of establishing QSFs. However, Eastern Point Trust Company sent a cease-and-desist letter in January through the financial institution’s legal counsel stating that Flatirons Bank and other entities were in violation of the law and infringing on Eastern’s intellectual property.

The Town of Lovell’s role was administrative in nature, and the town did not actually handle the settlement funds in any way but did receive a filing fee for each transaction as the government agency of record.

The Lovell Town Council initially voted on January 24 to terminate the agreement with Flatirons Bank immediately, then met again on January 29 to discuss a proposed compromise settlement agreement with Eastern Point but tabled the agenda item and met again on January 30. During the January 30 meeting, which was attended by representatives of Flatirons Bank, the council voted to reject the compromise settlement agreement and stick to the 90-day termination provisions in the contract with Flatirons Bank.

The council addressed the QSF issue again during the regular council meeting on February 11, which was attended by Flatirons Bank president Kent Jones, who stated that Flatirons valued the relationship the bank had with the Town of Lovell and emphasized the bank’s support for the indemnification provisions within the QSF agreement.

Mayor Tom Newman told Jones at the February 11 meeting that the town would be looking into outside counsel for a second opinion in the area of tax law. The council then called a special meeting on Wednesday, Feb. 19, to sign an engagement letter that would allow the council to hire outside legal counsel to advise the town. Town Attorney Alexa Rolin of Copenhaver, Kitchen and Kolpitcke in Powell has been working closely with and advising the town throughout the weeks of the QSF issues.

February 25 meeting

After last week’s special meeting was called to order at around 6:05 p.m., the council immediately went into a closed executive session to discuss the matters surrounding potential litigation and emerged three hours later looking long-faced and exhausted, then voted to enter into the Eastern Point settlement agreement 4-1 with councilman Mike Grant opposed.

No comments were made following the vote, and the council quickly adjourned. Attending the meeting online were the outside legal counsel, Justin Daraie of Long, Reimer and Weinegar of Jackson, Wyoming, and Caleb Wilkins of Coal Creek Law, representing Eastern Point Trust.

In a follow-up interview on March 3, Rolin explained that the vote on the settlement agreement the previous week had the effect of an immediate termination of the QSF relationship with Flatirons Bank.

“The town is no longer working with Flatirons in any capacity,” she said. “The agreement is terminated.”

Asked to characterize what was going on during the three-hour executive session, Mayor Newman said during the same March 3 interview that the council members were doing everything they could to do right by the Town of Lovell and the citizens of the community.

“Ultimately, it was a big decision for the council to determine what is in the best financial interests of the town,” he said, adding that the decision was not made lightly.

Added Rolin, “The council takes their decisions very seriously, and they wanted to make sure they had as many facts before them as they could and consider all aspects of their options before making a decision. I think the underlying point that the council and everybody in the room would like to make clear is that the council was really trying to do what was best for the town.”

“That was the agonizing part,” Newman agreed. “We’ve been really, really fortunate. We have good people that want nothing more than to do what’s best for the town. Sometimes it’s hard to know for sure what that is in any situation, not even just this, but some things are very clear, and some things are not very clear.

“We have great synergy. There’s no bravado, there’s no egos. It’s just doing the right thing.”