Judge Denies Firm’s Claim for Hurricane Damages Lawsuit Fees

October 16, 2023 by

A federal judge rejected a request by McClenny Moseley & Associates to claim an interest in legal fees and expenses from a hurricane damage lawsuit, saying the law firm obtained its clients illegally by using a “modern day case runner.”

Insurance defense attorney Steve Badger, a partner with the Zelle law firm in Dallas, said the order issued by US Magistrate Judge Kathleen “lays out a road map for a felony criminal prosecution.”

“She cites the Louisiana statute making it unlawful for an attorney, such as MMA’s attorneys, to pay money to a person for obtaining clients,” Badger said in an email. “She then cites the Louisiana statute making it unlawful for a person, such as Velawcity’s employees, to solicit employment for a lawyer. A violation of these statutes is punishable by a $10,000 fine and between 90 days and five years in prison.”

MMA filed a motion to intervene in a lawsuit that it filed in August 2022 on behalf of Jacob Semmes for property damage caused by Hurricane Laura and Hurricane Delta in 2020. Semmes fired MMA in March after US District Judge James D. Cain Jr. suspended all of the law firm’s Louisiana attorneys from practicing law in the Western District of Louisiana.

The Louisiana Insurance Department fined the law firm and its partners $2 million for improperly soliciting clients through an online marketing firm called Velawcity. MMA founding partner John Zachary Moseley admitted that he borrowed a total of $40 million from investors and paid Velawcity $3,000 to $3,500 for each “pre-screened client lead” that the marketing firm provided, a total of nearly $13.9 million.

Semmes’ lawsuit was one of some 1,600 that MMA filed in the Western District of Louisiana over the course of a few days just before the state’s two-year statute of limitations for Hurricane Laura claims was about to expire. Kay said in her order that the law firm cannot stake any claim to any of the contracts it made to represent clients who were illegally obtained.

“Louisiana has strong public policies against runner-based solicitation of clients, a practice sometimes known as ‘case running, and against the practice of law by non-attorneys,” her order states. “Louisiana law makes it ‘unlawful for any attorney to pay money or give any other thing of value to any person for the purpose of obtaining representation of any client.'”

A footnote attached to the opinion states that any attorney fee claim MMA makes to other lawsuits it filed will likely also be rejected unless the law firm can show that the client’s were enrolled in a different way.

Badger said Kay essentially accused the law firm of crimes.

“While any criminal liability would of course have to be decided by a jury, the legal and factual predicate for prosecution are set forth in Judge Kay’s opinion,” he said.

Semmes is now represented by Austin Marks, with the Morris Bart law firm in New Orleans. Marks filed a memorandum opposing MMA’s motion to intervene in Semmes’ lawsuit. He said the MMA’s contract to represent Semmes was generated by Velawcity. Semmes said he tried to call the law firm several times to inquire about the status of his case but spoke with an employee only once and never did get hold of an attorney.

Marks said Morris Bart has taken on approximately 2,000 clients who had been represented by MMA. He said MMA did not communicate with its clients but instead relied on data collected by Velawcity call center employees. He said the case files his firm took over are practically empty and the information in them cannot be trusted.

Marks said dozens of MMA’s former clients settled their cases a year ago and haven’t received any money.