A Federal District Judge in the Southern District of Texas, Houston Division, granted a motion for sanctions against a Plaintiff that concealed material facts during the claim process when he subsequently sued his insurer for “insurance coverage which he had clearly and inarguably forfeited through his own disingenuous actions.”  In Alexander v. State Farm Lloyds, 4:12-CV-490, 2014 WL 549389 (S.D. Tex. Feb. 11, 2014), a homeowner sued State Farm for breach of contract; violations of the Texas Insurance Code; violations of the Texas Deceptive Trade Practices Act (“DTPA”); and breach of the duty of good faith and fair dealing for damages allegedly resulting from a fire at his residence. The Policyholder sought over $1 million under the Policy's Dwelling coverage, and additional payments of approximately $77,000 for Additional Living Expenses (“ALE”), personal property damage, and securing of the Residence. The case proceeded to trial and Mr. Alexander began presenting his case in-chief.

After three days of testimony, the Court excused the jury from the courtroom and inquired as to whether there existed any arguable grounds for Mr. Alexander's claims. The Court noted that Mr. Alexander's conduct during the claims adjustment process was clearly fraudulent and more commonly engaged in by criminal defendants than civil plaintiffs. After requesting a private conference with his attorneys, Mr. Alexander moved to dismiss his claims with prejudice. State Farm subsequently filed a cross-motion requesting attorney’s fees as a condition of dismissal. The Court found that Rule 11 under the Federal Rules did not allow sanctions in this circumstance, but attorney’s fees could be awarded as sanctions under Texas Rule 13 and Chapter 10 of the Civil Remedies and Practices Code. As such, the Court dismissed the case and awarded attorney’s fees to State Farm incurred up to the date of removal.

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