Mostyn fights to disqualify TWIA counsel as agency considers settlements

By Marilyn Tennissen | Apr 2, 2013

Last week, the board of the Texas Windstorm Insurance Association met to consider taking the agency into receivership due to the thousands of pending Hurricane Ike lawsuits. Instead, the board agreed to consider a settlement offer from Houston attorney Steve Mostyn.

Mostyn submitted a written offer to “agree on a process” to settle about 1,200 pending lawsuits against TWIA, according to the Corpus Christi Caller Times.

He said his offer would “stop the clock” in ongoing Ike litigation to allow both sides to come to the table in hopes of reaching a settlement.

But exactly who will be across the table from Mostyn is pending before a Texas appeals court.

Since late 2012, the Houston law firm Martin Disiere Jefferson & Wisdom LLP has represented TWIA, the state’s quasi-governmental insurance carrier of last resort for coastal counties.

Mostyn and Texas City attorney Craig Eiland, who is also a state representative for District 23, are on plaintiffs’ steering committees in litigation against TWIA and objected to MDJW as counsel for the windstorm agency.

The attorneys and others, including Beaumont’s Weller Green Toups & Terrell, claim that MDJW did work for Eiland on his Hurricane Ike cases and therefore cannot now work on TWIA’s behalf.

Their objections were noted by Galveston County 212th Judicial District Court Judge Susan Criss, who agreed to disqualify MDJW as TWIA’s state coordinating counsel.

However, according to an article in Law360, the plaintiffs’ attorneys “concocted a conflict of interest between the firm and TWIA after settlement efforts relating to 400 of Mostyn’s cases stalled."

Mostyn denies the allegation that he is unhappy that MDJW was replacing TWIA adjuster Anthony Biello, with whom Mostyn had been able to "quickly settle" thousands of cases.

He claims his relationship with Biello was purely professional and that he had settled 4,000 cases with TWIA "before Tony ever got there," according to the Law360 article.

MDJW denies it ever litigated against TWIA and claims that Eiland developed a friendship with Christopher Martin, founding partner of Martin Disiere Jefferson & Wisdom, during a previous legislative session.

Since Martin had in-depth knowledge of insurance law, the congressman would occasionally call “Professor Martin” to discuss cases, according to court papers.

The calls were informal, and Martin was not paid, the firm claims. When Eiland did use Martin as an expert, proper letters of engagement were drawn and Martin was paid.

The law firm says Judge Criss based her decision to disqualify MDJW on a single email between Martin and Eiland.

Martin claims he was only responding to Eiland’s generic questions about insurance industry customs and practices.

The firm is fighting Criss’s order and has appealed to the Texas First District Court of Appeals.

MDJW wrote that only two legal grounds for dismissal: 1) violation of TDRPC 1.09 concerning an alleged conflict of interest in an attorney’s representation of a former client, and 2) the alleged possible risk of disclosure of confidential information by Martin.

The brief states that “both of these grounds fail as a matter of law, which compels reversal of the disqualification order.”

The "evident purpose of their motion to disqualify was as an improper trial tactic,” the appellate brief said. “In this case, when asked ‘why are we here’ at one of the hearings, Mostyn admitted that the reason is he had ‘only 400 cases left’ and TWIA was no longer settling as he wished.”

“Martin lives on an island called Fantasy Island,” Mostyn said to Law360.

Court papers show that in the meantime, former Texas Supreme Court Justice Dale Wainwright of Bracewell Giuliani in Houston is lead counsel for TWIA, as of March 13.

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