New storm, new plaintiffs for Mostyn insurance suits

David Yates Apr. 9, 2008, 7:00am

Steve Mostyn

The Mostyn Law Firm, which filed around 500 lawsuits last year on behalf of Hurricane Rita victims, has now turned its sights toward Hurricane Humberto – the category one storm that struck the Golden Triangle area Sept. 13, 2007.

Last week, plaintiff's attorney Steve Mostyn filed two suits against State Farm and the Texas Windstorm Insurance Association in Jefferson County District Court, claiming the insurance companies denied at least a portion of his clients' policy claims following Humberto.

The Humberto suits are a variation of the suits Mostyn filed in 2007 over Hurricane Rita claims. All of Mostyn's Rita suits targeted insurance companies, which the plaintiffs claim low-balled customers after the hurricane cut a swath through Southeast Texas in 2005.

For the last two years, the Mostyn Law Firm, which bills itself as Houston Insurance Litigation Lawyers, has saturated Southeast Texas with TV and newspaper ads, urging homeowners to contact his office if they are dissatisfied with their Rita insurance payments.

Rita suits filed by Mostyn and his attorneys continue to trickle in to Texas' courts, even though for many policyholders the statute of limitations expired in October 2007. In the last two weeks, Mostyn has filed five Rita suits in Jefferson and Orange District Courts.

The statute of limitations gave Mostyn a new tactic to keep the Rita suits rolling -- using the statute of limitations itself as a reason to sue.

Last October, Mostyn filed a class-action suit in Jefferson County against Allstate, claiming the insurance company disseminated misleading statements to the public regarding the statute of limitations for filing Rita cases.

In his suit, Mostyn pointed to a Sept. 30 Beaumont Enterprise article, "Has Cutoff Point on Rita Lawsuits Passed?" in which Allstate spokesman Joe McCormick was quoted as saying that Allstate's "policies intend the deadline to be interpreted as two years and a day from the cause of loss" and that it is "a reasonable amount of time for things to be settled."

The class-action suit, J.W. Samuel et al vs. Allstate Texas Lloyds, was originally filed to restrain Allstate from speaking about the statute of limitations. It was transferred to federal court in the Eastern District of Texas-Beaumont Division on Nov. 9.

Consequently, Mostyn's own ads emphasize the time element. "… [T]here is a filing deadline for taking action and, sadly for some this deadline has already passed," one ad states.

Allstate stopped writing windstorm coverage in Texas costal counties, such as Jefferson County, last year.

Mostyn's most current suits, filed March 31, strongly suggest the attorney is now targeting Southeast Texans who believe their insurance company refused to pay the full proceeds of their Hurricane Humberto claim.

The two Humberto suits, Shawn and Christine Johnson vs. State Farm Lloyds et al and Dwight Fobbs vs. Texas Windstorm Insurance Association et al, mirror each other and Mostyn's previous Rita suits.

In nearly all of his hurricane suits, Mostyn writes that the insurance company in question "failed to perform its contractual duties to adequately compensate Plaintiffs under the terms of the Policies. Specifically, it refused to pay the full proceeds."

"Defendants misrepresented to Plaintiffs that the damage to the Property was not covered under the Policy, even though the damage was caused by a covered occurrence. Defendants' conduct constitutes a violation of the Texas Insurance Code, Unfair Settlement Practices.

"Defendants failed to explain to Plaintiffs the reasons for their offer of an inadequate settlement. Specifically, Defendants failed to offer Plaintiffs adequate compensation, without any explanation why full payment was not being made."

Only the names, including the names of hurricanes, change in Mostyn's suits.

And the plaintiffs in Mostyn's suits almost always allege that their insurance company committed several Insurance Code violations and Deceptive Trade Practice Act violations, and sue for actual and compensatory damages plus attorney's fees.

Damage from the storm was likely to cost less than $500 million, Risk Management Solutions, a California-based firm that quantifies catastrophe risks for insurance companies, said. The dollar figure included physical damages to homes and businesses, and business losses due to interruptions because of power outages and damages.

The Johnsons' case No. is D181-522

Dwight Fobbs case No. is D181-523

Judge Milton Shuffield, 136th Judicial District, has been assigned to both cases.

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