Erie settles breach of contract insurance litigation, to receive $1.25 million [Daily Camera, Boulder, Colo.]

Oct. 30—Erie will receive $1.25 million through a negotiation settlement with National Union Fire Insurance Company over an insurance claim litigation stemming from a 2019 cyber fraud incident.

The Erie Board of Trustees unanimously approved the settlement with National Union during a special meeting Oct. 27, according to a town email.

In 2019, an unknown party pretended to be with SEMA Construction, the primary builder of the Erie Parkway Bridge, and requested a change in payment form. Erie paid the invoice to the fraudulent account resulting in a financial loss for the town.

Erie submitted a claim to cover the loss of $1,016,234 and received $150,000 from the town's primary insurer, Colorado Intergovernmental Risk Sharing Agency. National Union, the town's secondary insurer, initially only paid the town $100,000 and denied covering the rest of the claim despite Erie's $2 million policy with the company. Erie sued for breach of contract in 2020, and on Aug. 23, a U.S. District Court judge issued a ruling in the town's favor in Erie's lawsuit against National Union.

Erie initially sought an award of $766,234 in damages, plus interest, through litigation with National Union. Erie will receive $1.25 million in the settlement to cover loss from the cyber crime, associated litigation costs, interest and town staff time. According to Mayor Justin Brooks, the town will receive the settlement money within 30 days of the approval being submitted to court.

Brooks said trustees and town staff have "taken a sigh of relief" following the settlement. He said some residents called the cyber fraud scam a fiasco and blamed town staff for "losing the money."

"It's all put to bed now, and our tax payers are made whole, which is the important thing," Brooks said.

He added that town staff and trustees have often wanted to explain the scam and litigation case to residents, but were unable to due to the ongoing litigation. Brooks noted while the loss of money was not a significant portion of the town's budget, being able to recuperate those lost funds has been a "huge relief" for the town.

After the town knew about the scam, Erie changed its payment process and had staff complete cyber security training.

More information about the settlement is available at tinyurl.com/ErieSettlement.

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