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Insurance Lawsuits Loom Large in HD-23 Faceoff

State Rep. Craig Eiland, D-Galveston, finds himself under attack for suing a taxpayer-supported insurance fund on behalf of taxpayers in a race with Republican Wayne Faircloth, a Dickinson insurance agency owner.

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The race in the state's House District 23 isn’t just another political fight; what’s going on between Rep. Craig Eiland, D-Galveston, and Wayne Faircloth, a Republican from Dickinson, is a proxy for the differences between insurance companies and trial lawyers, between Republicans and Democrats, between newcomers and establishment candidates.

As recently as two years ago, Faircloth was among Eiland's contributors. Two major changes have taken place since 2010. That was a huge election for Republicans in Texas (and elsewhere), sending a Republican supermajority to the Texas House and Senate that was able to draw new political maps to suit the GOP. The federal courts fussed with the results and made some alterations, but the changes made HD-23 more Republican than it had been. Not overwhelmingly — this is a swing district in a state that has few of those — but more Republican than it had been. Eiland was vulnerable, at least on paper.

Second, the state's tort lobby focused on heavy litigation in the Texas Windstorm Insurance Association — known as TWIA — where lawyers were extracting big rewards on behalf of the insured who hadn't received what they were due after Hurricane Ike.

Eiland is one of those lawyers. Faircloth owns an insurance agency. Eiland is an 18-year veteran of the Legislature. Faircloth has served on the Dickinson City Council, but never in elected state office. And it is a district where a Republican ought to have reasonable odds against a Democrat.

Each takes care in interviews to say the other is a nice man with a good family. And then they start picking at each other.

The Faircloth theory: Can a Democratic trial lawyer who moved his family 200 miles out of his legislative district win another term in a swing seat in a presidential election year? Will voters continue to support a legislator who makes his living suing TWIA, a fund that is partially funded by taxpayers?

The Eiland theory: Will voters who have been rebuilding since Hurricane Ike ravaged the coast turn out an incumbent for a Republican in the insurance business whose company has canceled 11,000 policies in the area? Will they continue to support a lawmaker who helped secure funding and help for the area as it rebuilt from major storms, who sues insurance companies on behalf of businesses, governments and others who can't get what they're due without going to court?

It's a little bit ugly. An early ad from Faircloth attacked Eiland as someone who got wealthy “as a trial lawyer suing Texas businesses." and for living in a city well outside the district.

The insurance lawsuits prompted him to get into the race, Faircloth says. “He has literally siphoned TWIA dry,” he says of Eiland. Would that have been possible if TWIA was doing what it was supposed to do? “If there are still people out there who have not been paid, then shame on us. They ought to have been paid.”

Both candidates think insurance companies, many of which have been pulling back, should keep writing policies on the Gulf Coast, and both are involved, directly or indirectly, in that business. Eiland has been suing TWIA and various insurance companies over hurricane settlements. Faircloth says 7 percent of his insurance agency’s gross receipts come from TWIA policies, though he says it costs more to service those than they bring in.

Eiland says the lawsuits he has brought were the only way to get the insurance companies to cough up the money they were obligated to pay. And he’s got several government entities on his client list, saying he won $4.9 million for Galveston County, $6.5 million for the Barbers Hill ISD in Chambers County, and represented three past chairmen of the Galveston Chamber of Commerce in their storm claims. “Those are not the kinds of people generally looking for trial lawyers to sue insurance companies,” he says, defending the lawsuits as actions he’s taken on behalf of people who are also his constituents.

The residency thing is politically tricky. His wife and children live in Austin and he does, too, except for the four days per week when he's in Galveston, where his law offices are and where he's got another house.

Eiland and his wife own a $451,650 home in Galveston, according to the Galveston Central Appraisal District. The Austin house is worth $3 million, according to the Travis Central Appraisal District. It’s listed in Melissa Eiland’s name. According to those online tax records, the Eilands haven’t claimed a homestead exemption on either property.

In defense, Eiland says one of his children has special needs and is better served by schools in Austin. That's been the case since 2008, he says, pointing out that voters know about it and haven't objected. His own declared residence is in Galveston, where his law office is located. Should Eiland lose, he says, he'd keep the same arrangement. "I love Galveston," he says. "But the best thing for my children right now is to be where they are."

Eiland didn’t have a primary opponent. Faircloth was one of three candidates in the Republican race and had to win a runoff against former Chambers County Commissioner Bill Wallace in July to get this far. The incumbent had more money in the bank 30 days before the election, according to campaign finance reports filed with the Texas Ethics Commission. Eiland entered the month with $134,051 on hand to Faircloth’s $43,089.

“From my perspective, the race is about reminding local people what I’ve done locally,” Eiland says. His ads tout state aid to rebuild the University of Texas-Medical Branch, other state aid and his lawsuits to force TWIA to pay people what they owe.

His former supporter thinks the incumbent should hang it up, move to Austin, and make way for someone new.

“We need a fresh look,” Faircloth says. “People want a change. They want someone who sees things the way they see them.” 

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