• Atlanta
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By Scott Keffer

In Michael Mitchell v. USAA General Indemnity Company, No. 09-23-00042-CV, 2025 WL 635235 (Tex. App.—Beaumont Feb. 27, 2025, no pet.), the appellate court affirmed dismissal of all Plaintiff’s claims with prejudice, finding that Plaintiff failed to preserve error for appellate review in Plaintiff’s suit for additional compensation related to his claim for property damage caused by explosions at a nearby chemical plant in Port Neches, Texas.[1]

Michael Mitchell (“Mitchell”) submitted a claim for damage to his dwelling arising from the explosion to his carrier, USAA. On August 24, 2020, Mitchell’s counsel Eric Dick of the Dick Law Firm (“Dick”) issued a letter of representation and invoked appraisal. On October 13, 2020, Dick issued a demand letter seeking $39,182.25, including $29,182.25 in actual damages, and again invoking the policy’s appraisal provision.[2] In contrast, USAA’s adjuster prepared an estimate for $4,367.11 and paid $3,367.11 after application of the $1,000 deductible.[3]

USAA denied Dick’s demand for appraisal, explaining appraisal would not resolve coverage issues raised by questions concerning the true cause of the claimed damage. Nevertheless, USAA retained an engineer to assess the difference between the parties’ scope of damage and determine the cause of the claimed damage. That engineer found that except for minor interior damage consisting of two displaced doors, Mitchell’s property was not damaged by the explosion. Instead, the discrete cracks in walls and ceilings and gaps in crown moldings were unrelated. Based on the engineer’s conclusion, USAA denied the remainder of the claim but expressed that it would not ask for return of the prior claim payment. The claim denial also cited policy exclusions for damage caused by wear/tear, marring, deterioration, and cracking of walls and ceilings.

On April 13, 2021, four days after the claim denial was issued, Mitchell filed suit alleging breach of contract and breach of the common law duty of good faith and fair dealing, as well as fraud and violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act.[4] Attached to the petition, Mitchell designated a number of experts including himself. Mitchell also moved to compel appraisal, arguing that an appraisal was necessary to assess the amount of loss. Though USAA objected, the court compelled appraisal. During the appraisal process, both appraisers tried numerous times to visit the home to assess the damage. But neither Mitchell nor Dick responded to the appraisers’ and umpire’s requests for access. Because the appraisal could not move forward without access to the property, USAA filed a motion to vacate the trial’s order compelling appraisal.

At the June 24, 2022 hearing, Dick opposed USAA’s motion to vacate and argued that Mitchell “passed away suddenly,” which undercut USAA’s argument that Mitchell intentionally tried to avoid the appraisal process.[5] The court reset the hearing so the parties could determine next steps given Dick’s assertion that Mitchell had died. The day before the reset hearing, Dick retracted his “Suggestion of Death”, stating that Mitchell was “actually very much alive and has new contact information.”[6] Dick then stated the appraisers were in contact with Mitchell and the inspection could move forward. The court, though, granted USAA’s motion to vacate the order compelling appraisal.

USAA issued discovery to Mitchell, seeking information to support the parties’ difference in the scope of loss. Upon Mitchell’s failure to respond to that discovery, USAA moved to compel. A hearing on USAA’s motion to compel was set for November 3, 2022. At that hearing, Dick sought excuse from discovery because he alleged that Mitchell died. The court reset the hearing for two weeks later. In the interim, USAA sought sanctions against Mitchell for his failure to provide timely discovery responses, some responses were contradictory, and due to Dick’s reassertion that Mitchell was deceased despite his prior retraction. In particular, USAA noted that Dick asserted Mitchell was dead on the same date that Dick signed unverified discovery responses that claimed Mitchell “answered the requests or provided information to answer the requests.”[7] USAA argued that either the response to USAA’s motion to compel was groundless when Dick affirmatively stated that Mitchell had died or the responses to interrogatories were groundless when Dick affirmatively stated Mitchell had answered the requests.

Ultimately, the trial court dismissed the case with prejudice, finding that “Plaintiff completely failed to serve his answers and responses as required by TEX. R. CIV. P. 197.2(a). . . .” and questioned how “[w]ithin hours of Plaintiff’s counsel re-asserting Plaintiff’s Suggestion of Death, Plaintiff’s counsel served discovery responses, including answers to Interrogatories, purportedly answered by Plaintiff. . . .” [8] The trial court concluded that “Plaintiff has completely failed to fulfill discovery obligations and has abused the discovery process. . . . [i]n addition, counsel for Plaintiff violated TEX. R. CIV. P. 13 by signing and filing pleadings that were groundless, brought in bad faith, or brought for the purpose of harassment. . . .”[9] Finally, the trial court confirmed that it considered lesser sanctions relative to the severe death penalty dismissal sanction; however, due to Plaintiff’s “multiple violations of the Texas Rules of Civil Procedure and violations of this Court’s orders, there are no lesser sanctions that would fully promote compliance.”[10] Mitchell moved for a new trial and for reconsideration of the trial court’s dismissal order wherein he represented that his discovery failures were the result of communication difficulties and that an appraisal award had been issued but rejected by USAA (a point that USAA denied and was later abandoned in Mitchell’s amended motion). The trial court denied Mitchell’s motions as they lacked specific arguments regarding why the death penalty sanction disposing of Plaintiff’s suit was unwarranted.

On appeal, Mitchell advanced similar arguments that the trial court erred by imposing the death penalty dismissal sanction. The appellate court agreed with USAA and also found that Mitchell’s arguments lacked the requisite specificity to support his contentions.[11] Therefore, the appellate court affirmed the trial court’s dismissal with prejudice.

The Lowdown: This case illustrates the importance of aggressively pursuing and protecting the insurers’ rights, especially in light of an insured’s failure to cooperate under the policy and applicable law. Here, the amount in controversy was relatively low, and it’s likely that the attorneys’ work and fees exceeded the amount at issue. But the insured’s and plaintiff’s counsel’s misconduct was so egregious that standing firm and fighting to enforce the policy terms and law was the right and best approach.

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[1] Mitchell, 2025 WL 635235 at *10-*12.

[2] Id. at *3.

[3] Id.

[4] Id. at *5.

[5] Id. at *6.

[6] Id.

[7] Id. at *7.

[8] Id. at *8.

[9] Id. at *9.

[10] Id. at *10.

[11] Id. at *11-*12.