For over three months in 2019, a dangerous chemical material was expanding inside a 16-inch-diameter pipe at TPC Port Neches chemical plant — rapidly forming into a polymer popcorn, pushing against the metal walls. The pipe burst the night before Thanksgiving, and over 6,000 gallons burst out forming a toxic cloud that ignited just two minutes later.
Michael Mitchell, a homeowner in Jefferson County, Texas, sued USAA GIC for allegedly underpaying his insurance claim for damages caused by the TPC explosion. Mitchell’s homeowners’ insurance policy with USAA covered damage to his dwelling, other structures, personal property, and loss of use, with a total coverage limit exceeding $250,000.
Mitchell initially sought $29,182.25 in repair costs, as estimated by his hired claims consultant, plus additional legal fees and penalties under Texas consumer protection laws. However, USAA conducted its own investigation and determined that the actual repair costs amounted to only $4,367.11, of which it paid $3,367.11 after deducting the policy’s $1,000 deductible.
Unhappy with USAA’s payment, Mitchell decided to sue, alleging breach of contract, bad faith insurance practices, and violations of the Texas Deceptive Trade Practices Act (DTPA). USAA denied liability, arguing that Mitchell’s property damage was not caused by the explosion but rather by normal wear and tear, which was not covered under the policy.
As litigation proceeded, Mitchell’s legal team faced mounting challenges, particularly in responding to USAA’s discovery requests. In a dramatic turn, Mitchell’s attorney filed a notice stating that Mitchell had died, only to retract it later, claiming his client was actually alive but had been unreachable. This inconsistency raised concerns about credibility and case management.
USAA tried to force Mitchell to comply with discovery, noting that his responses were either incomplete or contradicted prior statements. The court gave Mitchell multiple opportunities to provide information, but he repeatedly failed to produce the required documentation and did not cooperate with court-ordered procedures.
A major sticking point was the appraisal process, which Mitchell initially requested but then failed to complete. USAA argued that Mitchell refused to allow appraisers access to his home, preventing the process from moving forward. The court ultimately vacated the appraisal order, siding with USAA’s claim that Mitchell had obstructed the process.
Citing Mitchell’s noncompliance, discovery abuses, and misrepresentations, the trial court dismissed the case with prejudice, effectively barring him from refiling the lawsuit. In its ruling, the court determined that Mitchell’s repeated failures to comply with court orders justified the harsh sanction.
The appellate court upheld the dismissal, stating that Mitchell had failed to preserve his arguments for appeal by not raising them in a timely manner before the trial court. Additionally, the judges found that Mitchell’s attorney’s actions - including conflicting statements about his client’s death - undermined the integrity of the proceedings.
The court wrote that plaintiff has completely failed to fulfill discovery obligations and has abused the discovery process, concluding that lesser sanctions would not have been effective.
This case serves as a cautionary tale for policyholders engaged in disputes with their insurers. While homeowners have legal avenues to challenge denied or underpaid claims, courts expect strict compliance with procedural rules, especially when it comes to discovery obligations and honesty in filings.
For USAA and the broader insurance industry, the ruling reinforces the importance of thorough claim investigations and the ability to challenge fraudulent or unsupported claims. Insurers will likely point to this case as an example of how policyholders must engage in good faith negotiations rather than obstructing legal proceedings.
Meanwhile, the impact on Mitchell remains significant, as the dismissal with prejudice means he cannot pursue further legal action against USAA regarding this claim.
The TPC catastrophe had a huge financial effect on the chemical company.
