State Farm Lloyds recently added to its string of civil victories in hailstorm litigation, obtaining a summary judgment win in a lawsuit brought by the Mostyn Law Firm – a suit a federal judge found “factually unsupported,” like “many” of the storm claims brought by the Houston firm.
Through firm founder Steve Mostyn, plaintiff Juan Fregoso and his wife filed suit against State Farm in Hidalgo County District Court in April 2014, seeking up to $1 million in damages.
The case was removed to federal court two months later.
The couple, after their home was damaged by the flurry of hailstorms that devastated the Rio Grande Valley in spring of 2012, filed a policy claim with State Farm, which they contend was undervalued due to inadequate inspection of the property.
Court records show State Farm estimated the loss at nearly $7,000, issuing a cash payment of $3,160.27, the amount remaining after deducting the recoverable depreciation and deductible.
After mending his home, Fregoso notified State farm repairs were complete but the costs were a “little higher” than estimated because he “decided to upgrade his roof,” saying that he “understood he was responsible for the cost of the upgrade,” court papers state.
Nevertheless, State Farm issued a supplemental payment of $1,796.17. And aside from a request for claim-related paper work, the insurer had no further communication with the couple until they filed their lawsuit two years later.
State Farm moved for summary judgment on Dec. 28, asserting the Fregosos’ breach of contract claim fails as a matter of law because they made no claim under the policy that the company did not pay.
“Until the filing of this lawsuit, Plaintiffs did not make a claim for any other damages, and all the damages identified by the Plaintiffs were included in State Farm’s estimate and paid for by State Farm,” the motion states.
“To the extent Plaintiffs now contend State Farm’s payment was insufficient, Plaintiffs did not provide any notice to State Farm until filing suit on May 22, 2014, which was nearly two years after State Farm paid replacement cost benefits on May 29, 2012.
“It appears that Plaintiffs’ position is that State Farm has a general duty under the policy to pay for damaged property even when Plaintiffs fail to notify State Farm of any such damage.”
On March 24 U.S. District Judge Micaela Alvarez granted the motion for summary judgment, dismissing the couple’s claims with prejudice.
“The Court notes that this case, like many storm related insurance breach of contract cases filed by the Mostyn Law firm, is factually unsupported,” Judge Alvarez wrote in her order.
“The Court reminds counsel of their obligations pursuant to Rule 11 of the Federal Rules of Civil Procedure that by presenting a pleading they certify that the factual contentions have evidentiary support.
“The Mostyn Law Firm appears to be wholly disregarding this obligation. The Court cautions the Mostyn Law Firm that Rule 11 authorizes the Court, on its own initiative, to impose Rule 11 sanctions.”
Commercial insurance attorney Steven Badger, a partner at Zelle LLP in Dallas, believes trial lawyers are the ones driving mass-storm litigation, promising riches to victims after bouts of severe weather.
"This case is typical of the model we see in hundreds of lawsuits all across Texas,” Badger said. “The insurance carrier pays the claim and the homeowner is happy. Two years later, the insurance company gets sued.
“These lawsuits are not about people who didn’t get their roofs paid for, but instead about people who are being promised riches by their lawyers."
State Farm is represented in part by Brian Chandler, attorney for the Houston law firm Ramey, Chandler, Quinn & Zito.
Case No. 7:14-cv-00530