Texas law firm sanctioned in New Orleans federal court over Hurricane Ida case

A Houston-based law firm that has filed thousands of hurricane insurance lawsuits in courts across the state was sanctioned Wednesday and ordered to pay back fees after a federal magistrate judge in New Orleans found the firm had filed suit on behalf of a client who never hired it.

Attorneys with McClenny, Moseley and Associates, including founding partner Zach Moseley, had been ordered into the courtroom by U.S. Magistrate Judge Michael B. North to explain their involvement in a hurricane insurance lawsuit filed on behalf of a Hammond woman.

Tricia Franatovich said she had been approached by a roofing company to fix her damaged roof. "When I was looking for a roofer, a company called Apex Roofing said they could help me, so I signed paperwork with them," Franatovich wrote. "It was not my intention to hire McClenny, Moseley and Associates through the roofer."

In court Wednesday, Franatovich shook her head vigorously as the firm's attorneys attempted to justify why they filed suit on her behalf.

'Assignment of benefits'

Matthew Monson, an attorney representing Franatovich's insurer, said he believes the Houston law firm may use a similar strategy to sign up many of its clients, often without their knowledge.

In a memo filed before the hearing, Monson explained how he believes the firm lines up plaintiffs.

Apex Roofing contacts homeowners offering to fix their roofs. As part of their contract with the roofing company, homeowners agree to an "assignment of benefits," which entitles the company to a portion of any insurance proceeds they may obtain, Monson told the court in his memo.

The firm then works with McClenny, Moseley and Associates, which draws up a demand letter to the insurance company, on behalf of the homeowner, who is unaware they are being represented by the firm.

If a check is cut by the insurance company, the law firm receives the check and takes out its fees and forwards the remaining proceeds to Apex Roofing, according to Monson's memo, a practice attorneys with McClenny admitted to in court on Wednesday.

At least in the case of Franatovich, North seemed concerned about this practice, suggesting the law firm and the roofing company may be lining their pockets, leaving the homeowners without the money for necessary repairs. "This lady wouldn't have had enough money to fix her roof," North told lawyers with the firm. "You got money in your pockets; she would have had to take money out of her pocket."

Franatovich had already retained legal counsel before McClenny, Moseley and Associates filed suit on her behalf. The firm was notified that she had chosen another Texas law firm to represent her.

The firm's Louisiana office filed suit anyways, resulting in two lawsuits on the same case and attracting the attention of the court.

On Wednesday, North ordered the McClenny firm to pay attorneys' fees to the lawyers representing Franatovich as well as her insurer, Allied Trust. He also ordered the firm to reimburse Franatovich for any work hours she missed to attend the hearing.

Other discipline

McClenny, Moseley and Associates has been in trouble in courts across the state.

Two weeks ago, a federal judge in Lafayette ordered the firm to pay $16,000 over the case of an Alexandria man claiming damages from Hurricane Laura, for failing to properly investigate the claim, among other offenses. McClenney had sued Allied Trust in that case, but the insurer said the firm's client had no policy with the company.

Further west, in Lake Charles, U.S. District Judge James D. Cain has held two hearings ripping the head of McClenny's Louisiana operations, William Huye, also for filing lawsuits without properly investigating claims, failing to communicate with clients and filing duplicate lawsuits.

Nevertheless, the judge recently lifted a stay on 140 of the firm's cases, something Huye had begged him to do in a December hearing.

But, in a blow to McClenny, the judge also granted motions to reimburse attorneys' fees in several cases involving United National Insurance Co., in which plaintiffs did not have a policy with United National.

Huye is also facing disciplinary action from another direction. In December, the Louisiana Attorney Disciplinary Board held a hearing to determine the appropriate punishment for improperly advertising his firm's services by failing to include required information, like an attorney's bar registration number and office address.

Other discipline might still be on the horizon. At least one bar complaint, filed by Monson and relating to the firm's methods for signing up clients, was referenced in court on Wednesday. In it, Monson claims that the firm is improperly messaging clients who sign up through generic disaster claim websites, not knowing they are engaging with a law firm.

"That's unethical; you cannot do that," North told Moseley and Huye.

Moseley insisted the firm would never do such a thing.

As for the firm's partnership with Apex Roofing, the magistrate has ordered the firm to produce a list of all cases involving the company for the court's review.

"Y'all can get working on that," North said.

Any further sanctions on the firm could have consequences for hurricane survivors across the South. Moseley has claimed his firm had signed 15,000 cases related to hurricanes Laura, Delta and Ida. After Hurricane Ian hit Florida late last year, the firm made a push to sign up clients in the Sunshine State as well.

Editor's note: This story was changed Feb. 1 to reflect updated information on motions for attorney's fees granted in cases involving United National Insurance Co.