Mostyn ditched client after hurricane suit soured, malpractice claim alleges

By David Yates | Dec 7, 2015

After Hurricane Ike ravaged his business, all Tony Nouri wanted was a fair settlement of approximately $120,000 from his insurance provider, which was only wiling to pay about a quarter of that amount.

After Hurricane Ike ravaged his business, all Tony Nouri wanted was a fair settlement of approximately $120,000 from his insurance provider, which was only willing to pay about a quarter of that amount.

So, he turned to Houston attorney Steve Mostyn, who purportedly demanded millions from an insurance provider then abandoned his client once the carrier called the claim fraudulent and fought back, according to recently filed court documents.

Claiming he was left holding the bag, Nouri’s business, Rankin Road, filed a first amended third-party petition against Mostyn, the Mostyn Law firm, Mitchell Templeton, Sean Russell, Michael Ramsey and Amber Mostyn on Dec. 1 in Harris County District Court.

The petition against Mostyn stems from a complaint filed in 2010 on Rankin Road’s behalf against Underwriters at Lloyds of London, Gulf Coast Claims and two individuals.

The Mostyn Law Firm, which has reaped hundreds of millions of dollars from insurance providers in the aftermath of Hurricane Ike, represented Nouri at the time.

According to the petition against Mostyn, Nouri and his business submitted a claim for insurance proceeds after Ike made landfall on Sept. 13, 2008, seeking a little more than $120,000 to repair his business. Lloyds paid $32,988.70, claiming the other damages sought were preexisting or unrelated.

In turn, Nouri responded to a Mostyn advertisement, hoping for a quick and fair resolution. Nouri, who had previously never been involved in civil litigation, says he was unfamiliar with the process, so he handed over all documents related to the matter to Mostyn and put his trust in the Houston law firm.

“Prior to filing suit, Mostyn sent an initial demand letter to (Lloyds) on behalf of Rankin Road for $3.2 million,” the petition states. “The $3.2 million claim was entirely a creation of Mostyn, made without Rankin Road’s knowledge, input or consent.

“Nouri asked why Mostyn was making a $3.2 million dollar claim for repairs to his building that he bought in 2000 for $850,000. Mostyn’s agents told him to trust his attorneys.”

Nouri maintains Mostyn never bothered to cure his lack of understanding or inform him of the possible consequences, asserting that he had very little communication with his lawyers throughout the litigation process.

“From the beginning of the engagement, Nouri told Mostyn that he simply wanted to recover for the remaining repairs,” the suit states. “Nouri left the means and all issues relating to the claim and the litigation to his attorneys, as Mostyn repeatedly requested.

“Nouri relied entirely on Mostyn. Mostyn made all decisions concerning the lawsuits, up to and including specific allegations, without consulting Rankin Road.”

At Mostyn’s instruction, Nouri says he never spoke to the experts the law firm sent to inspect his property, yet the experts included “boilerplate language” in their reports stating that they met with the “homeowner” (even though it was a commercial building) and that Nouri identified the damage caused by the hurricane.

“In their reports, Mostyn’s experts indiscriminately identified any and all potential repairs to the building, regardless of whether the damage was caused by the hurricane,” the suit states.

“Their reports identified only $339,914.31 in damage, raising the question as to why Mostyn made a $3.2 million demand prior to suit.”

Nouri goes on to allege the experts included damages that were already paid for from a separate claim, and that Mostyn continued to press for millions of dollars, having Nouri, an “unsophisticated litigant,” sign off on discovery responses without reading and understanding them.

“In short, Nouri swore that the responses were true because his attorneys’ told him that they were true,” the petition states, adding that although Nouri provided Mostyn with documents regarding the needed repairs, the firm produced very little of it, if any, to Lloyds.

Around two years into the litigation, Nouri asked Mostyn to drop the case, citing it was “taking too long” and he and his wife were suffering from health problems. Mostyn resisted and sent Mitch Templeton to change his mind, the petition states.

Templeton told Nouri that the Rankin Road claim was strong and promised the firm would “take care of everything” and that he would not have to do anything. Mostyn continued to litigate the claim, making demands and filing pleadings without consulting Nouri.

Seeking court costs and attorney’s fees, Lloyds and the other defendants filed a counterclaim on Jan. 21, 2014, alleging Rankin Road’s Ike claim was fraudulent, groundless and brought in bad faith or for the purpose of harassment, court records show.

“During the pendency of the underlying suit, Defendants sought death penalty sanctions and attorneys’ fees against Mostyn for filing frivolous pleadings and suppressing evidence of fraud,” the petition states.

In October 2014, Mostyn sent two staff members to Nouri’s home to secure his signature to drop the claim and was told the firm would make sure that no lawsuit or counterclaim would be left pending against Rankin Road.

On Oct. 6, 2014, Mostyn non-suited the insurance defendants without obtaining a dismissal of the counterclaim or a resolution of the motion for sanctions. A month later, the firm filed a motion for summary judgment (which was later amended) arguing that the counterclaim was a “baseless litigation tactic,” the petition states.

Following a Jan. 9, 2015, hearing, the trial court ruled that Mostyn had not given proper notice on the amended motion and denied the first motion for summary judgment.

On Jan. 29, 2015, Mostyn filed a motion to withdraw as Nouri’s counsel, citing “an alleged conflict of interest,” the petition states.

“Mostyn never secured a ruling on the amended motion for summary judgment they filed … prior to their withdraw,” the petition states. “The court denied that motion on June 12, 2015.”

The defendants’ active counterclaim seeks damages from Rankin Road for costs incurred arising out of “Mostyn’s conduct,” claiming damages for fraud, breach of contract, filing a frivolous action based on the $3.2 million demand, the refusal to produce any meaningful discovery, and the claims for repairs asserted by Mostyn’s experts that were unrelated to Hurricane Ike.

According to legal fee invoices, more than $1 million of the insurance defendants’ representation costs were incurred after Nouri had asked Mostyn to drop the case.

“By following Mostyn’s advice, what started as an attempt by Nouri to secure a quick and fair settlement, ended with Rankin Road being left with the inability to recover on the claims, mounting attorneys’ fees, costs, and exposure to Defendants’ counterclaims,” the petition states.

Nouri is accusing Mostyn and his attorneys of negligence and breach of fiduciary duty.

He is suing for actual damages, attorneys’ fees and the economic damages he should have been able to recover from the insurance defendants.

Tamara Madden, attorney for the Houston law firm Johnson, Trent, West & Taylor, represents him.

Nouri is also represented by the Law Office of Steven M. Duble.

Case No. 2010-25885

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