Houston attorney Steve Mostyn will soon find himself in front of a federal judge explaining why he shouldn’t be sanctioned for repeatedly bringing “factually unsupported” hail lawsuits against insurers.
As previously reported, on March 24 U.S. District Judge Micaela Alvarez granted a State Farm motion for summary judgment in a hail suit, reminding Mostyn that evidence is needed when filing a claim and warning him that Rule 11 authorizes the court to impose sanctions for disregarding the obligation.
Three weeks later, on April 13 Judge Alvarez once again granted State Farm summary judgment in a separate hail lawsuit, finding that no factual issues developed in the life of the litigation to support the claims making up the action.
“The Court has previously reminded 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 order states.
“The Mostyn Law Firm appears to be wholly disregarding this obligation. The Court therefore sets John Steven Mostyn and the Mostyn Law Firm for a hearing on May 6 … to show cause why the Court should not impose Rule 11 sanctions.”
Plaintiffs Mark and Kelly Dizdar's claims arise from damage caused to their Hidalgo County home by a hailstorm that ravaged the area on March 29, 2012.
State Farm had the property inspected and estimated the loss at $8,654.13. After applying depreciation and the deductible, a payment of $4,955.60 was issued, court records show.
The couple requested a re-inspection and State Farm issued a supplemental payment of $3,125.67.
The insurance company closed the claim and had no further discussions with the Dizdars in regards to any concerns and complaints until they filed a lawsuit nearly two years later on April 16, 2014, court records show.
The case was abated while an appraisal process took place. Last fall, the parties advised the court an appraisal award had been issued and State Farm had tendered payment.
However, the plaintiffs declined to dismiss the case, arguing the appraisal award shows State Farm breached the contract by failing to properly estimate the amount of damages.
State Farm moved for summary judgment and the court found that contrary to Plaintiffs' assertions, Texas law clearly holds the discrepancy between the initial estimate and the appraisal award cannot be used as evidence of breach of contract, court records show.
“To the extent Plaintiffs even sufficiently alleged extra-contractual claims in their original petition, the bad-faith causes of action relate solely to State Farm's investigation and handling of Plaintiffs' policy claim,” the order states.
“Plaintiffs do not allege that these claims extend beyond the coverage dispute. Thus, far from providing evidence creating a genuine issue of material fact on these claims, Plaintiffs have failed to even allege an action (that) would constitute an independent injury.
“Accordingly, the Court GRANTS summary judgment in Defendants' favor on Plaintiffs' common-law and statutory claims of bad faith.”
Mostyn refuses to comment on articles produced by the Record.
State Farm is represented by Micah Kessler and Ryan Newman, attorneys for the Houston law firm Nistico, Crouch & Kessler.
Case No. 7:14-cv-00514