Texas homeowners will see higher insurance premiums or deductibles if state legislators do not curb alleged abuses relating to hailstorm lawsuits, according to Texans for Lawsuit Reform.
The organization, a highly vocal opponent of the tactics of some trial lawyers, issued the call after one high profile law firm suffered another setback over its attempt to secure a huge settlement for one of its clients.
State Farm Lloyds successfully defended itself against a $1 million claim taken by a homeowner demanding extra-contractual damages. A jury decided against the plaintiff, who was represented by Mostyn Law, a firm headed by Steve Mostyn.
This ruling followed an earlier stinging rebuke of the same firm by U.S. District Court Judge Micaela Alvarez in a separate case.
“The Court has observed an unacceptable and systematic practice by Plaintiffs’ counsel — the Mostyn Law Firm — of filing numerous and unfounded claims,” Alvarez stated in a judicial notice. “In many of these cases, the only issue truly in dispute is whether or not State Farm Lloyds adequately estimated and paid Plaintiffs according to the terms of the contract. Nevertheless, the Mostyn Law Firm finds it worth everyone’s time and energy to lop upon their breach claim numerous extra-contractual theories without any apparent justification.”
Lucy Nashed, communications director for Texans for Lawsuit Reform, told Texas Business Daily that “hailstorm lawsuit abuse has nothing to do with helping homeowners and everything to do with making storm-chasing lawyers rich.”
“This is just another example of the inflated demands that are a hallmark of this unnecessary lawyer-driven lawsuit abuse,” Nashed said of the latest case, which on Jan. 11 a jury decided was without merit. “Unfortunately the victims are Texas homeowners, who will all see higher insurance premiums or deductibles, or reduced or lost coverage if the Texas Legislature doesn’t stop this lawsuit abuse soon.”
In the most recent case that went to trial in Dallas County, plaintiff Maria Ontiversos filed a claim two years after a hailstorm damaged her home. She alleged fraud, breach of contract and breach of the duty of good faith and wanted $1 million in damages. A month after the filing, State Farm offered to settle and give Ontiveros $18,600 for her damages and Mostyn Law $5,000 for attorney’s fees, court records reveal. This was rejected.
The plaintiff was previously awarded a payment $6,980.02 after the damage was inspected by a claims adjuster.
State Sen. Kelly Hancock (R-North Richland Hills), chair of the Senate Committee on Business and Commerce, has been studying the issue over the last year. Any legislation will go through his committee. Lt. Gov. Dan Patrick also has named hailstorm lawsuit reform a top priority.
A bill introduced in 2015 that included limiting payouts and other measures failed to pass.
State Sen. Larry Taylor (R-Friendswood) introduced the hailstorm legislation last session. His spokesman said he is not sponsoring the hailstorm bill this session, but will support it.
The House Insurance Committee held a hearing last month that was addressed by trial lawyers and reform advocates, including Lee Parsley, general counsel for Texans for Lawsuit Reform.
“The fix is to rein in the ability to collect lawyers’ fees from door-to-door solicitation of clients,” Parsley told Texas Business Daily in a statement. “That already violates the statutes, but district attorneys do not prosecute.”
Parsley said that the legislation should state that if it can be shown in court that clients were solicited, then the fees cannot be collected.
The number of lawsuits linked to hailstorms has increased in recent years across the state, but there are various and differing estimates on the extent of the spike. The Texas Department of Insurance is compiling a report on the cost of weather-related claims and the extent of litigation.