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Hail firm Mostyn Law is being besieged

By: The Record

Three years ago, State Farm defeated an attempt by the Mostyn Law Firm to inflate the claim of Hidalgo County homeowners already compensated for 2012 hail damage.

A couple of months later, State Farm triumphed over another Mostyn client trying to boost the compensation already received.

Around the same time, a former client sued firm founder Steve Mostyn (now deceased) for inflating a storm policy claim for Hurricane Ike damage, then quitting on him when the insurer balked and leaving him liable for the company’s legal bills.

Soon, other disgruntled clients arose.

Now, McAllen attorney J. Michael Moore has filed a breach of contract suit against the Mostyn Firm in Hidalgo County District Court.

Moore claims he had a “Joint Case Handling Agreement” with Mostyn Law for hail litigation against insurance companies, that he “substantially performed” under the agreement (while Mostyn Law “did not”), and that Mostyn Law “has failed and refused, and continues to fail and refuse, to honor the Agreement.”

What’s happening to Mostyn Law?

“We have seen a number of other lawsuits brought by lawyers, public adjusters, estimators, and others fighting with one another over referral fees, commissions, and estimate charges in these matters,” says Steven Badger, a Zelle LLP attorney who represents the insurance industry in hail- and-wind related litigation. “[T]he underlying lawsuits giving rise to these disputes are about lining the pockets of those who have found a way to inject themselves into the insurance claims process.”

Badger points out that mass storm litigants are often signed up for lawsuits at booths set up outside grocery stores and flea markets.

“Then boilerplate lawsuits are drafted by non-lawyer staff and filed,” he continues. “No investigation of the underlying merit of the dispute is ever conducted by a real lawyer. Not surprisingly, a significant number of these lawsuits are entirely without merit and are either dismissed or settled for nuisance value.”

Badger says “this is one of the primary reasons” why insurance premiums keep going up in Texas.

Infighting among the opportunists should help put an end to this abuse.

Mostyn Law sued by hail attorney, claims firm failed to pay up for Hidalgo County suits

By: David Yates

A law firm that was once king when it came to Texas storm litigation has been sued by a Hidalgo County attorney claiming he is owed money from the wave of lawsuits that were brought after hailstorms devastated the Rio Grande Valley six years ago.

Seeking more than $1 million in damages, J. Michael Moore, a McAllen attorney, filed a breach of contract suit against the Mostyn Law Firm on Oct. 24 in Hidalgo County District Court.

Beginning in the spring of 2012, a series of severe hailstorms swept through Hidalgo County (arguably the birthplace of mass hail litigation), causing damage to thousands of area residents and businesses.

According to the lawsuit, Moore and Mostyn Law, along with a third firm, entered into a “Joint Case Handling Agreement” for hail litigation against insurance companies.

Moore claims he “substantially performed” under the agreement, while Mostyn Law “did not.”

“Plaintiff has made written demand for compliance with the Agreement, but Defendant has failed and refused, and continues to fail and refuse, to honor the Agreement,” the suit states.

Steven Badger, a Zelle LLP attorney who represents the insurance industry in hail and wind related litigation, says he’s not surprised by the lawsuit.

“We have seen a number of other lawsuits brought by lawyers, public adjusters, estimators and others fighting with one another over referral fees, commissions, and estimate charges in these matters,” said Badger. “It illustrates that as much as anything else the underlying lawsuits giving rise to these disputes are about lining the pockets of those who have found a way to inject themselves into the insurance claims process.”

Badger has been an outspoken critic of fraud and abuse.

And while the Dallas attorney says he’s not familiar with the underlying dispute between Moore and Mostyn Law, he believes one of the general problems in mass storm litigation is that homeowners are signed up for lawsuits at booths set-up outside grocery stores, flea markets, and church events.

“No lawyers are present at these booths, only marketing employees, Badger said. “Homeowners are essentially promised ‘free money’ from their insurance companies, without regard to whether their insurance claims were wrongly denied or underpaid. The homeowners are then flipped from the flea market attorney to the litigation attorney.

“Then boilerplate lawsuits are drafted by non-lawyer staff and filed. No investigation of the underlying merit of the dispute is ever conducted by a real lawyer. Not surprisingly, a significant number of these lawsuits are entirely without merit and are either dismissed or settled for nuisance value.”

Badger says in the end, everyone loses, including the homeowner.

“The insurance companies spend enormous amounts of money responding to these baseless matters,” he added. “If Texans want to know why their insurance premiums keep going up, this is one of the primary reasons.”

Moore’s attorneys, Ray Thomas and David Sanchez, did not respond to requests for comment.

Moore is seeking actual and special damages, plus court costs and attorney’s fees.

Records show Gravely & Pearson offered to ‘counsel’ school districts hit by Harvey at ‘NO COST’

By: David Yates

SAN ANTONIO – Days after Hurricane Harvey hit, a law firm specializing in suing insurance companies offered to counsel school districts hammered by the storm “behind the scenes” and at “NO COST.”

Gravely & Pearson, a San Antonio-based law firm is no stranger to storm litigation and has “successfully recovered … awards for thousands of policy holders,” the firm says on its website.

According to records obtained from Gregory-Portland ISD, Michelle Cruff, Gravely & Pearson’s vice president of client relations, emailed the district’s superintendent, Dr. Paul Clore, on Aug. 31, less than a week after Harvey made landfall.

“Hi Dr. Clore! I hope all is okay with you and this hurricane,” Cruff writes in the email. “I wanted to inform you, in the event you are having issues with the districts carrier, we can assist you behind the scenes at no cost like we did with West ISD during their process after the fertilizer plant explosion.”

Gravely & Pearson filed suit on behalf of West ISD in 2014, estimating the blast caused $50 million in damages.

“I have attached our insurance recovery brochure,” the email continues. “We are assisting other districts with their questions, concerns, etc. Please call me anytime you have questions.”

The “insurance recovery brochure” Cruff sent the district leads with the following sentence: “Gravely & Pearson recognized for the largest insurance verdict in Texas two years in a row, 2011 and 2012, according to Verdict Search.”

Cruff is responsible for building and maintaining client and potential client relationships and coordinating the firm’s overall marketing strategy, according to the firm’s website.

She did not respond to requests for comment.

Gregory-Portland ISD isn’t the only district that received an offer of help.

Records also show on Sept. 5, five days after Harvey finished its devastating crawl along the Texas coast, Arturo Almendarez, Calallen ISD’s superintendent, received an email with the subject line: “HELP from Gravely & Pearson.”

Calallen is a suburb of Corpus Christi in Nueces County.

“The devastation wrought by Hurricane Harvey has affected many Texas communities, including many members of the Texas Association of Community Schools,” the email reads. “You will be looking to your insurance companies/risk pools for help. While our thoughts are with the members of your community in their efforts to repair and rebuild, we also know that insurance policies are often difficult to understand and full of technical language that can be used to potentially limit recovery for damaged property.

“As part of our ongoing efforts to support your community, Gravely & Pearson, L.L.P. is offering, at NO COST, advice and counsel regarding insurance claims or coverage questions for any members of the Texas Association of Community Schools in need as a result of this unfortunate event.

“As always, we are standing by to assist you with legal advice regarding your insurance issues.”

The email was distributed by the Texas Association of Community Schools, which represents smaller districts.

For the past several years, The Record has reported on school districts landing multi-million dollar awards after suing the Texas Windstorm Insurance Association and insurance companies in the wakes of major hurricanes and hailstorms.

Suspected storm-related lawsuit abuse has been an ongoing issue in Texas since for the past decade. Last year, the state legislature sought to remedy the matter by passing House Bill 1774.

Gravely & Pearson founders Marc Gravely and Matthew Pearson did not respond to requests for comment.

The Record sought to ascertain how many school districts Gravely & Pearson contacted following Harvey and if the firm now represents any of those districts as a result.

Contreras: Hail Yes, Reform Works

By: Sergio Contreras

For 20 years, Texas has stood on the forefront of common-sense lawsuit reform aimed at ensuring our courts are used for justice, not greed.

Over the years, those changes have included reining in outrageous damage awards, court shopping and out-of-state asbestos lawsuits that had nothing to do with Texas.

These and other reforms have allowed the state to shed its reputation as the nation’s poster child for lawsuit abuse.

As last year’s hailstorm lawsuit reform law marks its one-year anniversary, we once again see Texas solidifying its reputation as a national leader in stopping questionable legal practices.

In the case of hailstorm lawsuit reform, it was Rio Grande Valley Citizens Against Lawsuit Abuse (RGVCALA) that first uncovered signs of abuse in our courts. Their landmark 2014 study found that half of all hailstorm lawsuits were filed in the two-month period of March-April 2014, as the statute of limitations neared for insurance disputes from the Hidalgo County hailstorms.

In fact, between April 1, 2012 and April 30, 2014 a total of 5,740 hailstorm cases were filed in Hidalgo County. And, of those cases, 2,513 were filed in March and April of 2014, meaning just under half of all the Hidalgo County hailstorm cases were filed in the final two months of the period reviewed. The study also examined lawsuit courthouse filings and revealed that this rush to the courthouse involved only a small number of law firms.

Passage of reforms to weather-related lawsuits became a priority for the Texas Legislature in 2017. The law that was passed and took effect just one year ago preserves access to our courts for legitimate claims.

The new law limits lawsuit abuse by giving insurance companies 60 days to resolve a claim before being taken to court. It also preserves Texas homeowners’ right to sue, while ensuring that natural disasters aren’t used for financial gain driven by personal injury lawyers.

And, the reforms preserve some of the nation’s strongest consumer protections against insurers that unfairly deny or delay weather-related claims.

The bottom line is the normal insurance claims process has not changed, and a homeowner’s ability to file suit and receive full damages for unpaid claims does not change with this new law either.

So, has it worked?

The numbers speak for themselves.

According to property and casualty insurance lawsuit data compiled by Texans for Lawsuit Reform, prior to the passage of hailstorm lawsuit reform (between Jan. 1, 2014 and Aug. 31, 2017), over 34,000 weather-related suits were filed, including a spike of 1,553 lawsuits in August 2017, filed just prior to the new lawsuit reform law taking effect.

Available data for the first four months after the hailstorm reforms took effect shows an average of only 85 weather-related lawsuits filed each month.

Weather-related lawsuits are down to levels not seen since 2012.

Hailstorm lawsuit reform was designed to discourage unscrupulous personal injury lawyers, adjusters and contractors from preying on Texans impacted by weather-related events. One year in and we’ve seen it working and that’s good news for all Texans – except for greedy personal injury lawyers.

Provost Umphrey lawyer working with storm attorney named in barratry scheme, dozens of insurers sued by father-son duo

By: David Yates

BEAUMONT – While a father-son attorney duo isn’t particularly remarkable, a court records search shows that a Provost Umphrey lawyer has worked with his son, whose name was previously mentioned in a barratry scheme, on dozens of storm lawsuits throughout Texas.

On June 22, Kent Livesay, an Edinburg attorney who made his living suing insurance companies, was sentenced to five years in prison after pleading guilty to insurance fraud and barratry – a scheme that involved illegally paying roofers and adjusters to drum up clients after a hailstorm strike.

During his sentencing, Livesay offered testimony naming three other Texas lawyers allegedly involved in the barratry scheme, one of which was Chad T. Wilson, a Houston-area attorney specializing in insurance litigation.

Wilson previously has said Livesay is “full of crap” and that he had “never spoken to that guy in my life.”

Court records show Chad Wilson has filed hundreds of lawsuits against insurance companies in Texas counties.

Since 2012, Chad Wilson has filed 225 lawsuits in Harris County, nearly all of them against insurance companies. The attorney has also filed 32 lawsuits against insurers in Dallas County.

In a lot of the cases, another law firm is present on the filings – the Provost Umphrey Law Firm in Beaumont. The PU attorney handling those cases is David Wilson, Chad Wilson’s father.

The senior Wilson has filed more than 100 lawsuits in Harris County, most of which are against insurers and in conjunction with his son. In Dallas County, David Wilson matched his son’s total, filing 32 suits against insurers.

Court records also show the father-son attorney combo worked on several storm cases together in Hidalgo County, arguably the birthplace of mass hailstorm litigation.

And while David Wilson’s name appears alongside his son’s on dozens of cases, the Beaumont trial lawyer said that he had “never heard” of Jorge Garcia until reading a July 19 Record article about his son.

When asked how he became involved in his son’s insurance litigation, David Wilson said Provost Umphrey “works with lawyers from all over the country” and that he specifically has been helping his son with insurance litigation since 2014.

“We (PU) have a lot of experience in storm litigation,” David Wilson said. “Plus, it’s fun to go to court with your son.”

PU became well acquainted with storm litigation after Hurricane Rita pummeled Southeast Texas in 2005, filing numerous suits on behalf of Jefferson County residents unhappy with their insurance payouts.

The firm was again a player following Hurricane Ike in 2008.

Reinsurance expert: Biggest challenge in Texas is legal fraud, says HB 1774 a ‘fantastic step in the right direction’

By: David Yates

Everything is bigger in Texas, including the legal fraud that ensues after every hailstorm or hurricane it seems.

The Insurance Council of Texas recently held its 26th annual symposium, a gathering of professionals and industry experts who explored topics ranging from current issues to future challenges for those in attendance.

One of the events at the symposium included a roundtable discussion featuring three global reinsurance experts, a prominent panel that included James Mitchell, senior vice president of RenaissanceRe Syndicate 1458 at Lloyds of London.

For the past 25 years, RenaissanceRe, which specializes in risk mitigation, has researched and modeled atmospheric hazards and the economic impact of catastrophic storms.

And when it comes to the Lone Star State, apparently “Texas is one of the most challenging states to quantify,” according to Mitchell.

“The biggest challenge in Texas is legal fraud,” Mitchell said, pointing to the mass reopening of claims following storm strikes.

The roots of mass storm litigation against Texas insurers can be traced back to 2005 after Hurricane Rita. Following Hurricane Ike in 2008, trial lawyer advertised heavily for potential clients and thousands of lawsuits were filed as a result.

Four years later, two hailstorms pounded the Hidalgo County area, providing a new opportunity to employ the hurricane model. From that time on, reports began surfacing of roofers and adjusters going door-to-door to solicit clients for attorneys after every hailstorm strike within the state.

From 2012 to 2016, the Texas Department of Insurance reported a 1,400 percent increase in weather-related lawsuits. Over the five-year period, storm-chasing lawyers filed nearly 40,000 lawsuits in Texas, according to Texans for Lawsuit Reform.

Many of the suits filed were brought two years after the property owner made a claim for hail damage — sneaking the lawsuit in under the statute of limitations.

Mitchell said it’s important that insureds are compensated accordingly and that the money goes toward repairing damage and not to legal fees.

Trial lawyers work on a contingency fee basis, taking anywhere from 30 to 40 percent of settlement proceeds from a hail lawsuit, plus expenses.

To stop the abuse, the Texas Legislature passed House Bill 1774 last year, giving insurers a chance to resolve a disputed claim before a lawsuit is filed.

Mitchell called HB 1774 a “fantastic step in right in direction.”

Hartwell Dew, an executive at Guy Carpenter who moderated the discussion, said more time was needed to measure the true impact of the bill but that initial results were encouraging.

“The verdict’s still out,” Dew said. “But so far so good.”

One symposium attendee says HB 1774 has already had a “tremendous impact.”

Abraham Padron, who runs the Safe Guard Insurance Agency in Hidalgo County, told the Record that prior to 2012, a homeowner had a choice between 10 to 15 insurance agencies.

“Post 2012, that number dropped to one or two … with rates tripling in some cases,” Padron said. “Since the bill, a lot of companies have come back, not all of them, but a lot. More players means more competitive rates.”

After the 2012 hailstorms, Padron said storm-chasing lawyers swopped in and targeted the less affluent members of the community, setting up shop at flea markets and grocery stores.

Last month, Kent Livesay, a former attorney from the Hidalgo County area, was sentenced to five years in prison for paying roofers and adjusters to sign up hail victims for his firm.

While the impact of HB 1774 still may not be quantifiable yet, there is another possible measure that may help reduce litigation against insurers – the plain language initiative.

To kickoff the symposium, opening remarks were given by Texas Insurance Commissioner Kent Sullivan, who told attendees clear plain language in insurance policies would help insurers defend themselves in court.

Sullivan, who has 35 years of legal experience, said technical language “creates a deep hole in the courtroom,” and that more “user friendly” language could possibly increase consumer awareness and satisfaction.

“I’m not saying I have all the answers, but this ought to be the start of a new discussion,” Sullivan said, adding that new tools are needed so consumers can better navigate their policies.

ICT’s Property & Casualty Insurance Symposium began July 12 and ended the next day.

Attendees also heard from experts on the Texas market, digital insurance and even a historical look at the Texas Windstorm Insurance Association and the FAIR plan.

“The symposium serves several purposes,” said Mark Hanna, an ICT spokesperson. “It’s a great networking event because every company doing business in Texas is represented.

“And if you want to know what is going on in the Texas insurance marketplace, the list of speakers at the symposium provides it.”

Lawyer who tried to bilk insurance companies out of $300,000 sentenced to prison

By: Stephen English & Mitch Mitchell

A former attorney with offices in Arlington and McAllen, Texas was sentenced to five years in prison Friday after pleading guilty to insurance fraud and barratry, or litigation for profit, the Tarrant County district attorney’s office said.

Richard Kent Livesay schemed to bill insurers for fraudulent hailstorm damage to roofs without the knowledge or consent of homeowners, the district attorney said.

He was arrested in June of last year, said Samantha K. Jordan of the district attorney’s office. He would have received more than $300,000 in fraudulent payments if his fraud hadn’t been discovered first by investigators from the Texas Department of Insurance, Jordan said.

“Texas attorneys take a solemn oath to uphold the laws of this state,” Tarrant County District Attorney Sharen Wilson said in a statement. “Breaking that oath to game the system for a quick buck is an unacceptable abuse of trust.”

In addition to his prison sentence, Livesay will be required to provide restitution to his victims, surrender his law license and testify against others who authorities say participated in the scheme.

“We hope this sentence sends a message that this conduct will not be tolerated in our county,” said Matt Smid, the Tarrant County prosecutor who handled the case.

Tarrant County is one of six locations around the state where the Texas Department of Insurance has embedded prosecutors and investigators in district attorneys’ offices focused on fighting insurance fraud.

Livesay began filing fraudulent claims in May 2014 and continued through July 2016, Jordan said.

Livesay’s license to practice law was suspended for one year in 2017, according to an agreed judgment with the State Bar of Texas. Livesay entered into the agreement after a State Bar of Texas review panel ruled that he engaged in behavior that constituted professional misconduct.

The Imperfect Storm: Harvey Litigation Will Be Fought Under Hailstorm Bill’s Rules, While ‘Menchaca’ Looms in the Background

By: Stephen Pate

When Hurricane Harvey made landfall in late August 2017, it was the first major hurricane to hit Texas since Hurricane Ike, nine years before, which spawned a wealth of litigation against carriers.

Most of these cases have been resolved by 2017, leaving many policyholder and carrier attorneys with extra time on their hands. Harvey litigation undoubtedly means these lawyers will be back in business, but several other significant events mean they now operate on a much different playing field than before.

One event was arguably good for carriers. This was the passage of the so-called “Hailstorm Bill,” an act designed to curb the actions of “storm chaser” attorneys, and applicable to Hurricane claims. The statute took effect Sept. 1, 2017—shortly after Harvey had finished its destruction.

Another event was arguably good for the policyholder: the Texas Supreme Court’s April 2017 decision in USAA Texas Lloyds v. Menchaca ,which, seemingly meant that bad faith causes of action were revived in Texas. This article examines the Hailstorm Bill’s and Menchaca’s impact on Harvey litigation. Finally, It addresses a third issue—the flood exclusion, the “elephant in the room” for Harvey litigation.

“Hailstorm Bill”, Chapter 542A of the Texas Insurance Code, has already impacted Harvey litigation. It has several new requirements that policyholder’s attorneys find rigorous. An important requirement that the policyholder, in his demand letter, must state that he will allow a carrier the opportunity to inspect his property if request to do so is made within 30 days of the demand letter. This “sleeper” requirement is especially fruitful for Harvey claims. Harvey was a massive catastrophe. Many so-called “Stormtroopers” were called in from all over the country to quickly adjust an overwhelming amount of claims. Many times, some things were missed—by the carrier, or by the policyholder. The inspection allows any missed damages to be adjusted and paid if covered. Lawsuits can be avoided. Consumers and carriers both win. Only lawyers—from both sides—lose out on fees.

Another important provision allows for carriers to indemnify adjusters if they are sued. A typical tactic for policyholder’s attorneys was to sue an in-state adjuster in order to defeat removal to Federal Court. This provision puts a stop to improper joinder and should mean federal courts will see more Harvey suits. Realistically, though, it may mean that less suits are filed. Policyholder attorneys who cannot maintain a case in a state court unfavorable to carriers may settle cases rather than see them removed.

There are many changes regarding attorney fees in the new statute with sliding scales regarding their recovery, designed to prevent the award of huge amounts on small claims. There is another “sleeper” provision here: under the new statute, policyholder attorneys must supply a statement justifying their attorney fee with “contemporaneous time records.” Plaintiffs attorneys do not like to keep time sheets and are not used to doing so. When asked for statements, they cannot produce them. Additionally, the interest rate has gone from 18 to 10 percent as the Prompt Payment Act penalty.

Still, despite the Hailstorm Bill, policyholder’s attorneys are heartened by the Texas Supreme Court’s decision in USAA Texas Lloyds v. Menchaca (2018) on bad faith. The case was first decided in April 2017. Upon motion for rehearing, a deeply divided court issued a new opinion April 13 2018. In Menchaca, a Hurricane Ike case, a jury found that USAA did not breach its contract with Menchaca. However, the jury did award Menchaca $11, 500 (equal to her contract claim), for a bad faith failure to perform a reasonable investigation. The trial court upheld that finding. In the past, the absence of a breach of contract finding would mean no recovery. Now, while the Texas Supreme Court has remanded the case for a new trial, the language in its opinion indicates that it would support a recovery for bad faith in the absence of a breach of contract.

Much has been written and much will be written about Menchaca. This article is about its legal ramifications. Policyholder’s attorneys had been discouraged for years about Texas Appellate Courts limiting or eliminating bad faith awards. Now they argue Menchaca means that bad faith is back, and that bad faith should be a serious component of a first party lawsuit.

So, while there is something good for both the policyholder and for the carrier in recent statutes and rulings impacting Harvey litigation, it remains to be seen whether the volume of Harvey litigation will reach Hurricane Ike levels. However, there is one immutable factor that would argue against it: Harvey is noted as a “flood event” rather than a “wind event,” at least in the vast metropolis of Houston. Many policies—both homeowners and commercial—exclude flood loss. Innovative policyholder attorneys are scratching their heads to come up with ways around the flood exclusion; but many will admit that it cannot be done.

There will be claims that what is said to be flood damage is actually wind damage—but that will be a hard sell. Instead, there are now lawsuits being filed against agents and brokers for failing to inform policyholders that they needed flood insurance. Yet, without actual misrepresentations, the agents and brokers may have no liability. Probably, the real Harvey battles will be fought over covered losses where the issue of quantum will be the main one—in other words, how much is owed? These battles will be fought under the Hailstorm Bill’s rules, and with Menchaca looming in the background.

Hidalgo County jury finds in favor of USAA following trial of $1M Mostyn Law hail suit

By: David Yates

BEAUMONT – A Hidalgo County jury recently found USAA Texas Lloyds complied with its insurance policy with a couple claiming the insurer undervalued their claim for hail damage.

Seeking up to $1 million in damages, George and Dahlia Halow filed suit against USAA on March 29, 2014 – two years after their home was allegedly damaged.

Almost four years after the suit was filed, the case went to trial and ended with a judgment in favor of the insurance company on Feb. 27, court records show.

The Halows claim their home was damaged by the March 2012 hailstorm that swept through the area and caused massive damage.

The couple claims the storm caused substantial structural and exterior damage to their home, and also damaged personal belongings, including a picnic table and trampoline.

USAA assigned an allegedly “improperly trained” adjuster, who performed a “substandard inspection,” which led to the Halows claims being undervalued.

The suit accuses the defendants of setting out to underpay on properly covered damages.

“As a result of these Defendants’ unreasonable investigation of the claim, including not providing full coverage for the damages sustained by Plaintiffs, as well as under-scoping the damages during their investigation and thus denying adequate and sufficient payment to Plaintiffs to repair their home, Plaintiffs’ claim was improperly adjusted,” the suit states.

“Defendant USAA failed to perform its contractual duties to adequately compensate Plaintiffs under the terms of the Policy.”

When the jury was asked if USAA failed to comply with the insurance policy, they answer with a unanimous “No.”

The plaintiffs are represented by Mostyn Law attorney Gregory Cox.

Texas off ATRA’s ‘Judicial Hellholes’ list, hail lawsuit reform cited as ‘Point of Light’

By: David Yates

AUSTIN – For the past two years, two of Texas’ more litigious venues caught the attention of the American Tort Reform Association — Hidalgo County, arguably the birthplace of mass hailstorm litigation, and the Eastern District of Texas, a hot spot for patent infringement cases.

On Dec. 5, ATRA released its latest “Judicial Hellholes Report,” – a ranking of states and venues that the group sees as the nation’s most unfair handlers of civil litigation.

Neither Hidalgo County, which has made the list twice in as many years, or the Eastern District earned a spot on ATRA’s list this year.

In fact, the 2017 report lists a tort reform measure aimed at ending storm lawsuit abuse as a Point of Light.

According to Texans for Lawsuit Reform, preliminary analysis of lawsuit filings shows an 84 percent reduction in weather-related lawsuits since House Bill 1774 took effect in September.

“The Legislature put Texas consumers first by passing House Bill 1774 to shut down lawsuit abuse that was making property insurance more expensive and less accessible for Texans,” said Lucy Nashed, TLR’s communications director.

“For over two decades, Texas has fought back against personal injury trial lawyers and their job-killing agenda, passing common-sense reforms … this commitment has made Texas a national example for smart reforms.”

While Texas can now be seen as a beacon for tort reform, the state is no stranger to ATRA’s list, with state courts and communities appearing 17 times in 16 years in the annual report.

“That’s why we’ll remain vigilant in defending existing reforms,” said Roger Borgelt, chairman of Citizens Against Lawsuit Abuse of Central Texas.

“Hailstorm lawsuit reform was a focal point for our education and advocacy this year. It’s heartening to see this landmark legislation – cracking down on fraudulent storm litigation – included among the ‘points of light’ in this year’s Judicial Hellholes report.”

Two years ago, the report named the Eastern District of Texas among the nation’s worst judicial hellholes.

ATRA says the federal district drew patent plaintiffs from across the nation because of a “rocket docket” of expedited trials, general unwillingness to dismiss cases, a high plaintiff-win rate and larger-than-average awards for damages.

“In May 2017, however, the Supreme Court unanimously ended the ED Texas’s reign as the nation’s busiest patent infringement court,” the report states.

“The high court’s ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC generally requires patent-holding plaintiffs to bring lawsuits only where an allegedly infringing defendant is incorporated, or where there has been an act of infringement and the defendant has a regular and established place of business.

“Already the ruling is having an impact. Patent cases formerly concentrated in the ED Texas are shifting to Delaware, where many businesses are incorporated, and other states that have real connections to claims.”

In 2016, 1,647 patent infringement cases were filed in the Eastern District while Delaware’s federal court hosted just 455.

“In the weeks immediately following TC Heartland, these two courts experienced a ‘complete flip’ in the volume of cases,” the report states. “Attorneys expect cases to be treated more evenhandedly in Delaware, where federal judges are described as “no-nonsense.”

ATRA is a nonprofit organization that works to educate the public about the civil justice system and tort law. It has compiled the Judicial Hellholes report since 2002.

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