Lake Lure’s insurer sues town

Allegations under seal

The municipal insurance fund that provides Lake Lure’s property and liability coverage has sued the town and a private claims-management company, but the complaint explaining the allegations was provisionally filed under seal.

The Interlocal Risk Financing Fund of North Carolina filed the lawsuit Sept. 17 in Wake County Superior Court against Lake Lure and Sedgwick Claims Management Services Inc.

The docket lists claims involving contract, indemnification and money owed, along with a jury demand. The public filings reviewed for this report do not disclose how much money the fund seeks or the specific allegations against each defendant.

The case raises questions about the town’s insurance arrangement and potential financial exposure as Lake Lure continues its recovery from Hurricane Helene. The available records do not establish whether the fund is seeking repayment of insurance proceeds or another form of relief.

The complaint and 10 supporting exhibits were provisionally filed under seal. Three other exhibits were filed publicly: Lake Lure’s resolution and agreement joining the fund, a property coverage form and a flood coverage endorsement.

A public exhibit index identifies two Feb. 4, 2025, emails concerning “looking at the dam.” Other restricted exhibits include Sedgwick’s catastrophic-adjusting contract and four reports dated between October 2024 and January 2025.

Those descriptions establish that dam-related correspondence accompanies the lawsuit. They do not establish whether the allegations concern dam repairs, insurance coverage, claims handling or another issue.

The fund’s motion to seal says it does not believe the documents contain information that would justify keeping them sealed indefinitely. It sought temporary restrictions while awaiting Sedgwick’s position on potentially confidential or proprietary information.

The docket lists no order deciding the sealing request. Filing documents provisionally under seal does not mean a judge has approved keeping them sealed permanently.

Draft minutes included in the town’s Oct. 13 council packet show the council entered closed session Sept. 23 to discuss matters involving the Interlocal Risk Financing Fund. The minutes do not disclose the substance of those discussions.

The town has not issued a public statement about the lawsuit in the materials reviewed for this report.

The North Carolina League of Municipalities administers the fund, which is also known as the Property and Casualty Trust. The League is a member-governed organization that provides advocacy, municipal services and insurance administration for cities and towns.

Lake Lure joined the self-insurance pool in July 2005, according to public records. Sedgwick is a private claims-management and loss-adjusting company. Its contract with the fund is among the restricted exhibits.

Town financial records show the cost of participating in the insurance programs.

A ledger in the May 13, 2025, council packet records $159,198.03 in net expenses associated with the property and liability fund for the period labeled July 2024 through May 2025. A separate League-administered workers’ compensation pool accounts for another $39,259.62.

Together, those entries total $198,457.65 after credits. They are accounting figures for that period, rather than lifetime payment totals, and do not establish separate amounts for League membership dues or Sedgwick’s fees.

Lake Lure is represented by Allen Stahl + Kilbourne. Attorney Thomas Martin “Marty” Benson accepted service for the town Sept. 24.

Council minutes documenting the firm’s appointment earlier this year cited a need for broader expertise in municipal law, property acquisition and complex agreements. They also described reference checks, a projected annual cost increase of about $7,000 and a 10% fee discount.

Commissioner Jim Proctor opposed ending the town’s relationship with attorney William Morgan Jr. That motion passed 2-1. The three commissioners present then unanimously approved appointing the new firm.

The lawsuit comes as early voting begins Thursday, Oct. 15.

Mayor Carol Pritchett is seeking reelection, while Kathy Tanner and John Edmonds Kozma are campaigning as write-in candidates for mayor.

Four candidates are competing for two council seats: Proctor, Friedrich Jaeger-Faber, Dave Lusk and Richard Sayles. Early voting ends at 3 p.m. Oct. 31, and Election Day is Nov. 3.

The available records do not connect the lawsuit’s filing to any campaign.

For taxpayers, the central unanswered questions are what the fund alleges, how much money it seeks and what financial consequences the town could face. Those questions remain unresolved in the public records reviewed for this report.

The case is 26CV035241-910. Public records may be accessed through the North Carolina Judicial Branch’s eCourts portal.