McALLEN – In March, mega attorney Steve Mostyn found himself in a small Texas border town far from his Houston home, called there to appear before a federal judge and explain why he shouldn't be sanctioned for filing baseless hail lawsuits against insurance companies.

Eight months later, on Dec. 13, U.S. District Judge Micaela Alvarez put Mostyn Law on notice, hammering the firm for the “systematic practice” of filing “numerous and unfounded” storm claims.

“In a bout of cosmic irony, the Mostyn Law Firm has unleashed a hailstorm of its own upon the Court in the form of baseless claims,” Judge Alvarez wrote. “The Court is not pleased.”

While Judge Alvarez opted not to impose sanctions, she did caution Mostyn Law against future violations, reminding the firm that it “would do well to submit filings that are befitting of the legal profession.”

The notice stems from a slew of hailstorm lawsuits Mostyn Law brought on behalf Mark and Kelly Dizdar against State Farm Lloyds.

The couple, claiming several of their properties were damaged by the spring 2012 hailstorms that ravaged the Rio Grande Valley area, sued State Farm for allegedly failing to sufficiently reimburse them.

Judge Alvarez found that in many of the cases, the “only issue truly in dispute” is whether or not State Farm adequately estimated and paid policyholders.

“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,” the notice states.

“It comes as no surprise that the Mostyn Law Firm’s extra-contractual claims arise not only unjustifiably, but also uniformly — they are undoubtedly part of a template the Mostyn Law Firm uses in hailstorm petitions.”

Judge Alvarez offered Mostyn Law several “bits of advice,” first and foremost recommending the firm start bringing meaningful claims based on fact, not hope.

“(Mostyn Law) should not copy and paste throw-away claims to its filings,” the notice states. “The Court is not to be treated like flypaper—hoping that something sticks.”

Judge Alvarez also reminded the firm that disputed damages are often not a valid basis for breach, as State Farm contracts contain standard appraisal provisions, and that underpayment, by itself, is not a basis for extra-contractual claims.

“Merely heaping more and more evidence of underpayment upon itself does not equal an extra-contractual claim,” the notice states.

Lastly, Judge Alvarez found it troubling “to see instances in which the insured and insurer appeared to resolve all disputes under the contract, and then years later suit is filed for no apparent reason — putting aside the attorney knocking on the insured’s door.”

Steve Badger, a Zelle LLP attorney who specializes in insurance litigation, says Judge Alvarez is reacting to a hail lawsuit crisis transpiring all across the state.

“This is not just a Mostyn Law Firm issue,” Badger said. “Plaintiffs’ lawyers who can only wish they were Steve Mostyn are filing hundreds of boilerplate, cut-and-paste petitions alleging cause of action and statutory violations with absolutely no factual support whatsoever. They all read exactly the same. They are all probably written by a paralegal with no lawyer involvement.”

Badger says it’s become a “sue now, investigate never” model, with the expectation being that the insurance industry would settle any lawsuit – meaning there was no need for trial lawyers to conduct an investigation or develop facts to support their allegations.

“At least with my clients, that is no longer the case,” Badger said. “Like the 12 lawyers in my office who do nothing but defend hail lawsuits, Judge Alvarez has also seen enough of these lawsuits to know what they really are all about.”

Sadly, trial lawyers and consumer advocate groups all still contend there is “no Texas hail lawsuit crisis,” Badger says.

“Instead of continuing to stick their head in the sand and reciting their shallow ‘Insurance Company Bad’ mantra, perhaps it’s time to acknowledge there is a problem in their ranks and work cooperatively with the insurance industry and other interested stakeholders in finding ways to stop the bad conduct,” he added.

In the past decade, the Mostyn Law Firm has filed tens of thousands of lawsuits against insurers in the wakes of storm-related disasters.

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The Mostyn Law Firm
3810 W Alabama St
Houston, Texas - 77027

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