Shields Legal Group Protects Insurance Company Against Frivolous and Groundless Suit Brought by Plaintiff’s Attorney Who Had Filed Multiple Suits Alleging Bad Faith Denials of Insurance Claims.

A homeowner’s property insurer faced a lawsuit brought by a policyholder, claiming that the insurer wrongfully denied her alleged claim for property damaged caused by a Texas hailstorm. The policyholder was represented by a well-known attorney who also represented numerous other policyholders alleging similar types of bad faith claims against not only the insurer, but other insurance companies as well. After hiring Shields Legal Group to defend the bad faith litigation, our team achieved a complete dismissal of the plaintiff policyholder’s claims and won an award of our client insurer’s legal fees incurred against both the plaintiff policyholder and her attorney.

Introduction

Our client, a highly respected homeowner’s property insurer, was sued by a plaintiff policyholder for breach of contract, violations of the Texas Insurance Code, deceptive trade practices, and other claims, arising from the insurer’s alleged bad faith denial of the plaintiff’s claim for hail damage under her homeowner’s policy. The plaintiff policyholder sought to hold the insurer liable for substantial damages, punitive damages, and legal fees. The attorney representing the plaintiff policyholder also represented several other policyholders on whose behalf he had filed similar bad faith lawsuits against not only our client insurer, but other insurance companies as well.

Problem

Insurance companies are not strangers to disputes with policyholders over denials of coverage. However, in this case, the plaintiff policyholder had hired a well-known attorney to aggressively pursue the litigation. Given the multiplicity of similar suits pending against the insurer, all brought by the same attorney, the insurer faced a dilemma with respect to the plaintiff policyholder’s suit: (1) whether to settle the questionable, highly disputed claim early as a means to cap the potential exposure on the plaintiff policyholder’s claim, or (2) whether to litigate the plaintiff policyholder’s bad faith claims and vigorously defend the denial of coverage, potentially subjecting the insurer to greater risk of exposure. The insurer turned to Shields Legal to assess the insurer’s global risk in view of the multiple suits facing the insurer.

Solution

Backed by the Shields Legal litigation team, the insurer not only vigorously defended the denial of coverage, but successfully pursued an award of the insurer’s legal fees against both the policyholder and her attorney for bringing a meritless suit. It is extremely rare for an insurance company to recover their legal fees resulting from the filing of a frivolous lawsuit.

Here, the secret to success for our client insurer was our team’s diligence, focus, and attention to detail during the written and deposition discovery process which enabled our team to determine that (1) the plaintiff policyholder’s expert witness designations were falsified and (2) the plaintiff policyholder’s claims lacked evidentiary support and were meritless.

Armed with the written and deposition discovery that had been meticulously procured, our litigation team crafted a creative “out of the box” procedural mechanism, utilizing our intricate knowledge of the applicable laws and rules of procedure, to enable our client insurer to pursue recovery of its legal fees. Upon presentation of the factual record to the trial court, the Judge found that the plaintiff policyholder and her well-known attorney had brought a frivolous and groundless lawsuit solely for the purpose of harassment and granted a summary judgment in our client insurer’s favor. Upon request of the plaintiff policyholder and her attorney, a jury trial was conducted on the issue of legal fees. The jury awarded our client insurer all of its legal fees incurred through the trial as well as any appeals.

Conclusion

As a result of Shields Legal’s efforts, a denial of coverage suit brought against our client insurer was exposed as meritless, and a loud message was conveyed to other would-be plaintiff policyholders and plaintiff’s attorneys in Texas that if they decide to pursue meritless denial of coverage claims against our client insurer, they had better be prepared to substantiate their claims.