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Midland Farms, LLC v. United States Department of Agriculture

United States District Court, D. South Dakota, Central Division

July 23, 2014

MIDLAND FARMS, LLC, Plaintiff,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, RISK MANAGEMENT AGENCY, FEDERAL CROP INSURANCE CORPORATION, and NAU COUNTRY INSURANCE, INC., Defendants

Page 1057

For Midland Farms, LLC, Plaintiff: Mary K. Walker, Wendell L. Hoskins , II, LEAD ATTORNEYS, PRO HAC VICE, Law Office of Wendell L. Hoskins II, Caruthersville, MO; Paul E. Bachand, LEAD ATTORNEY, Schmidt, Schroyer, Moreno, Lee & Bachand, Pierre, SD.

For United States Department of Agriculture, Risk Management Agency, Federal Crop Insurance Corporation, Defendants: Cheryl Schrempp Dupris, LEAD ATTORNEY, U.S. Attorney's Office, Pierre Office, Pierre, SD.

For NAU Country Insurance, Inc., Defendant: R. Alan Peterson, LEAD ATTORNEY, Lynn, Jackson, Shultz & Lebrun, P.C., Sioux Falls, SD; Mitch D. Carthel, Timothy C. Williams, PRO HAC VICE, Sprouse Shrader Smith P.C., Amarillo, TX.

Page 1058

OPINION AND ORDER GRANTING MOTION TO DISMISS DEFENDANT NAU COUNTRY INSURANCE, INC.

ROBERTO A. LANGE, UNITED STATES DISTRICT JUDGE.

I. INTRODUCTION

NAU Country Insurance, Inc. (" NAU" ) has filed a Motion to Dismiss the Complaint filed by Plaintiff Midland Farms, LLC (" Midland" ), Doc. 11. Midland's Complaint has two counts. Doc. 1. Count I seeks judicial review of an agency decision under, among other statutes, the Administrative Procedure Act (" APA" ), 5 U.S.C. § 701, et seq., and names as Defendants for that claim the United States Department of Agriculture (" USDA" ), the Risk Management Agency (" RMA" ), and the Federal Crop Insurance Corporation (" FCIC" ) (collectively " Agency Defendants" ). Doc. 1 at ¶ 41-42. Count II seeks a declaratory judgment and names as Defendants for that claim not only the Agency Defendants, but also NAU. Doc. 1 at ¶ 43-45. This Court grants NAU's motion to dismiss without prejudice to refiling after arbitration for the reasons explained below.

II. BACKGROUND & FACTS

A. Crop Insurance Program

In 1938, Congress passed the Federal Crop Insurance Act (" FCIA" ), 7 U.S.C. § 1501, et seq., " to promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance." Alliance Ins, Co. v. Wilson, 384 F.3d 547, 549 (8th Cir. 2004) (quoting 7 U.S.C. § 1502). The FCIA created the federal crop insurance program and established Defendant FCIC. 7 U.S.C. § 1503. FCIC is a wholly-owned government corporation situated within another Agency Defendant, the USDA, that administers and regulates the federal crop insurance program. See id.; Alliance Ins. Co., 384 F.3d at 549. Congress created Defendant RMA in 1996 to operate and manage FCIC.[1] Am. Growers Ins. Co. v. Fed. Crop Ins. Corp., 532 F.3d 797, 798 (8th Cir. 2008).

Originally, FCIC provided crop insurance coverage directly to producers. Alliance Ins. Co., 384 F.3d at 549. In 1980, Congress revised the FCIA to encourage FCIC to contract with approved, private insurance companies to sell and service crop insurance policies and have FCIC reinsure those policies. Ace Prop. & Cas. Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 994 (8th Cir. 2006) (citing 7 U.S.C. § § 1508(k)(1), 1508(b)(1)). Most crop insurance policies now are offered privately through an approved insurance provider

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(" AIP" ) and reinsured by FCIC, rather than issued by FCIC directly. See id. The terms and conditions of these policies are mandated by FCIC, published at 7 C.F.R. § 457.8, and are referred to as the " Basic Provisions." See Skymont Farms v. Fed. Crop Ins. Corp., No. 4:09-cv-65, 2012 WL 1193407, at *5 (E.D. Tenn. Apr. 10, 2012) (noting that 7 C.F.R. § 457.8 " sets forth the 'Basic Provisions' that are included in each crop insurance policy . . . ." ); Bissette v. Rain & Hail, LLC, No. 5:10-CV-40-D, 2011 WL 3905059, at *1 (E.D.N.C. Sept. 2, 2011) (" The crop insurance policy is a uniform policy, with terms and conditions mandated by RMA and published in the Code of Federal Regulations." ). Midland and NAU agree that the Basic Provisions apply to their dispute and that the Basic Provisions' arbitration clause covers Midland's claims of entitlement to coverage under the crop insurance policies. Doc. 1 at ΒΆ 25-26; Doc. 12 at 2, 9; Doc. 22 at 2, 5 ...


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