Rare Case – Court Sanctions Pro Se Litigant For Bad Faith Insurance Coverage Case

Alexander v. State Farm Lloyds, Dist. Court, SD Texas 2014 – Google Scholar.

This is a decision of the federal court for the Southern District of Texas. The case is sadly typical, except for its outcome. A pro se litigant brought a coverage case against State Farm after his home burned down. Unfortunately for him, the district court found that he repeatedly lied to State Farm in the claims process and after the lawsuit was filed.

The court found that the plaintiff misrepresented his need for additional living expenses and submitted fraudulent documents to support a claim for storage expenses.

Plaintiff then filed a coverage case in federal court. Three days into the jury trial, he dismissed his claims with prejudice. When State Farm sought sanctions, he retained lawyers to defend him.

“Mr. Alexander’s attorneys argue that he cannot be sanctioned, because his fraudulent actions—euphemistically referred to as “foolishness,” as if Mr. Alexander is an errant teenager and not a well-educated, upper middle class adult with a six-figure salary and a million-dollar home—all occurred prior to the filing of the lawsuit. (Doc. No. 73, at 25-26.) They contend that Mr. Alexander never lied during the course of the lawsuit, and therefore never displayed contempt for the judicial process. (Id.) The Court takes exception to the claim that Mr. Alexander never lied during the course of the lawsuit. The Court was present during Mr. Alexander’s testimony at trial. It observed the difficulty encountered by SFL’s trial counsel as she attempted to extract answers from Mr. Alexander to even the simplest questions. (Doc. No. 60, at 133-40.)

But more importantly, even assuming that Mr. Alexander had been completely forthcoming with his past misdeeds during the course of the lawsuit, his decision to sue SFL despite these misdeeds was itself contemptuous of the judicial process. Mr. Alexander is no simpleton. He works or has worked in the finance industry. He has an advanced degree. He operates multiple businesses. At trial, when it suited his purposes, he could be articulate, even persuasive. In short, Mr. Alexander is a sophisticated actor, and he understood the consequences of his behavior. He voided his policy by lying to SFL. He had been refunded all of his premiums. He had no arguable basis for receiving any more money from SFL. And he sued it anyway.

This is not simply a case in which a plaintiff thought the law was against him, but hoped that the jury would be moved by emotion. Lawsuits like that, although objectionable, are commonplace. This case involved conduct which could be said to extend beyond civil fraud to criminality. Mr. Alexander used the judicial system as a continuation of his lawless efforts to exploit the July 24, 2005 fire to squeeze additional money from SFL. There was no basis for recovery that was even colorable. Mr. Alexander hoped to deceive this Court and a jury using the same tactics that had already failed on SFL.

Mr. Alexander’s actions were manifestly in bad faith. Sanctions are warranted.”  The court granted sanctions under Rule 11 and its inherent authority.

Edward X. Clinton, Jr.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s