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Emails show ‘culture of racism’ at Texas Windstorm Insurance Association, lawyer says

By Tim Eaton - American-Statesman Staff
Published Tuesday, December 10, 2013 8:14 PM
Original Printed at http://www.statesman.com/news/news/state-regional/offensive-emails-show-culture-of-racism-in-quasi-s/ncHD6

While poring through an ocean of legal documents, a Houston-based trial lawyer stumbled upon several emails to and from employees of Texas Windstorm Insurance Association that disparaged Hispanics, Arabs and African-Americans, often using racist language.

Lawyer Steve Mostyn, who is representing the Brownsville Independent School District in a case over unpaid claims, found the racist and hateful emails among nearly a million other documents from the often-maligned Texas Windstorm Insurance Association, or TWIA, that he obtained through the discovery process in the case.

The offensive emails demonstrate a culture of racism within the quasi-governmental agency that directly led to the refusal to pay legitimate claims for damages caused by Hurricane Dolly in 2008 to more than 50 campuses belonging to the Brownsville school district, Mostyn said. The district was 98.2 percent Hispanic when the storm hit, according to an official report by the Texas Education Agency.

"Race was a factor considered in the denial of claims," Mostyn told the American-Statesman.

TWIA officials didn't respond to interview requests.

Most of the bigoted emails obtained by Mostyn don't make reference to specific claims; at least one does, but none refer to the Brownsville school district claims. Many of the emails are crude or offensive jokes or anti-immigrant "petitions," sent to and from high-ranking TWIA officials in 2008 and 2009. Several of the emails contained the most offensive terms for African-Americans, Hispanics and other minorities and were sent to TWIA officials from people outside the agency. It's not clear who many of those people are, or whether TWIA officials responded with approvals or denunciations.

Mostyn, a lawyer who has made millions suing TWIA, the insurer of last resort for coastal Texans, filed a complaint Tuesday with the Texas Department of Insurance related to racist emails. The department has had oversight because of TWIA's precarious financial situation following thousands of lawsuits after Hurricane Ike struck Texas in 2008.

In the two-pronged complaint, the Mostyn Law Firm said that TWIA "failed in its duty to promptly pay and reasonably investigate claims" and that the Texas Department of Insurance "failed to use its administrative oversight to investigate TWIA's race-based claims handling decisions."

Mostyn's firm also formally requested the appointment of a special investigator to review "the apparent culture of racism at the Texas Windstorm Insurance Association." Additionally, the investigator should look into the fallout from any race-based claims handling decisions on Texas homeowners, school districts, businesses and government entities, the Mostyn Law Firm said in the complaint.

A spokesman for the insurance department said Tuesday he couldn't comment because officials hadn't seen the complaint.

Racist emails

One of the emails obtained by Mostyn was forwarded by Bill Knarr, the now-deceased head of catastrophe claims at TWIA, to Reggie Warren, who once served as TWIA's vice president of claims but no longer works for the association. The message contains offensive language about undocumented immigrants and further proves that racism was acceptable within parts of TWIA, Mostyn said.

The email originally was sent from an independent adjuster from Corpus Christi who appeared to be named Merlin Orr. It says: "Have you noticed that if you rearrange the letters in the words 'illegal immigrants' and add a few more letters, it spells out: '(Expletive) off and go home you hairy faced, sandal wearing, bomb making, benefit grabbing, goat (expletive), smelly rag head Bastards' How weird is that??"

Above the forwarded portion of the email, Knarr writes: "Merlin is having a good day."

Other emails sent by TWIA officials are titled, "White Guilt is Dead" and "Wake up White Boy," the latter detailing a horrific double murder in Tennessee that it says hasn't gotten due attention in the media because the victims were white and the accused black.

The email concludes: "Pass this around, and maybe, just maybe, it will land in the hands of someone in the media or politics, that has the guts to stand up for the white people!! Or don't because you don't have the guts either!!"

State Rep. Eddie Lucio III, a Democrat whose district includes Brownsville, said he hadn't heard Tuesday about Mostyn's case or the emails, but he said if the accusations are true it "would be extremely troubling."

Lucio said he will ask for a full briefing from the Texas Department of Insurance.

Brownsville school district Superintendent Carl Montoya said he couldn't comment on the emails or lawsuit because of pending litigation, but he said the district was forced to spend "a lot of money fixing various pieces of the district's schools" following Hurricane Dolly.

Isolated incidents?

Even before Mostyn's discovery of the offensive emails, the Brownsville school district case against TWIA seemed like slam-dunk, the lawyer said.

Mostyn pointed to a deposition of an adjuster hired by TWIA, Leonard Steve Borgman, who said he inspected just six of more than 50 campuses where the district said damage had occurred.

"You denied those claims without even stepping foot on those campuses?" Mostyn asked in a deposition taken on Nov. 20.

Borgman answered yes.

Mostyn then asked if Borgman considered his behavior to be a reasonable investigation. Borgman answered no.

Also as part of the deposition, Mostyn showed Borgman photos of damage to district buildings, which Borgman acknowledged to likely be the result of wind damage.

Later in the deposition, Mostyn asked if it was Borgman's decision or someone else's at TWIA to not return to Brownsville district properties. Borgman responded: "Both, I guess."

Mostyn also asked Borgman about racist emails in the deposition. Borgman said that Knarr often sent racist jokes through emails, but Borgman said he usually deleted them.

But one work-related email exchange between Knarr and an outside adjuster contained language that some might consider offensive and was no joke, Borgman testified after Mostyn presented the email to him in the deposition.

The email dealt with TWIA customer and Galveston resident Alejandro Gutierrez and his desire to receive a higher payout and a reasonable place to live since Hurricane Ike damaged his property in 2008. Mostyn said that Knarr proved that there was the rampant culture of racism that was directly affecting the handling of claims when he wrote: "Mexican working the system" and "Mexican get no more money for displacement."

Mostyn said that he suspects the emails he stumbled upon in the Brownsville case don't represent isolated incidents. The Mostyn Law Firm has asked the association for all emails both to and from TWIA management from March 2007 to March 2010 that contain a variety of racist phrases as well as ethnic identifiers, such as Arab and Mexican. Mostyn also is asking for emails with the phrases "white power" and "white pride."

It's possible that Mostyn's second request for documents might turn up evidence that TWIA officials rejected racist messages. But TWIA's lawyers objected to Mostyn's request, calling it irrelevant and part of a "fishing expedition," according to legal documents.

"In the course of perusing the 1,000,000 or so documents obtained by Mr. Mostyn, he has apparently found instances of crude or racist, or both, behavior and attitudes," TWIA lawyers said. "That said, if Plaintiff or Mr. Mostyn can identify the use of racist terminology under circumstances where an inference can be drawn that a racist viewpoint played a role in a claims decision, TWIA will agree to a narrower scope of a search to determine if such is the case."

The judge in the case has yet to decide if Mostyn's request will be granted.

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