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Balvin v. Rain And Hail, LLC

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

August 21, 2018

TERRY R. BALVIN, Plaintiff,
v.
RAIN AND HAIL, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER REGARDING MOTION TO VACATE, Doc. 11, AND MOTION TO CONFIRM ARBITRATION AWARD, Doc. 14

          Lawrence L. Piersol, United States District Judge

         This case arises out of Defendant Rain and Hail, LLC's denial of Plaintiff Terry Balvin's claim for crop insurance benefits under Plaintiffs federally reinsured multiple peril crop insurance policy. The matter was arbitrated on December 15, 2017, and the arbitrator ultimately concluded that Defendant's denial of benefits was proper. Now pending before the Court is Plaintiffs Amended Motion to Vacate Arbitration Award, Doc. 11, and Defendant's Motion to Confirm Arbitration Award, Doc. 14. Having reviewed the pleadings, for the reasons below, the Court grants Plaintiffs Motion to Vacate and denies Defendant's Motion to Confirm.

         BACKGROUND

         In 2015, Plaintiff purchased the relevant multi-peril crop insurance policy, Policy No. MP-0753754 (the Policy), with revenue protection to cover approximately 2,077 acres of corn and soybeans among seventeen fields located in Bon Homme County, South Dakota. Specifically, the Policy covered 1,130.3 acres of corn at a .75 level. The Policy is reinsured pursuant to the Federal Crop Insurance Act, which is administered by the Federal Crop Insurance Corporation (FCIC). The Policy was issued in accordance with the Federal Crop Insurance Act and is codified in federal regulations at 7 CFR § 457.8. The basic provisions have the full force and effect of federal law. See Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 385 (1947).

         In October of 2015, Plaintiff cut about 23 acres of corn for silage. During the October 13 to November 20 interval, there was virtually no precipitation for 34 straight days. On October 19, adjuster Allen Skotvold recorded a moisture content of about 22%. On October 23, there was an inch of rain. During the 34-day stretch between October 13 and November 20, Plaintiff combined 947 acres of beans in eight days but did not combine any corn, though the corn and bean fields were adjacent to each other. It snowed 12 inches on November 20 and on December 4, 2015, Plaintiff submitted a claim on his remaining corn crop, Claim No. 15-005951, under the Policy based on his assertion that "excess moisture" prevented him from harvesting his corn during the period of coverage due to "significant amount[s] of excess moisture, as well as a severe blizzard and large snowfall late in the season." The deadline for completing the harvest, referred to as the "end of the insurance period" (EOIP), was December 10, 2015. On December 18, Allen Skotvold, an independent adjuster, checked on Plaintiffs "unharvest claim." Skotvold testified to driving around the county mapping Plaintiffs fields when he saw neighboring fields that had "maybe two acres left standing" in places. He testified that though Plaintiff had full fields of corn left standing, there were no other full fields standing in the area. Skotvold did not drive in the fields, but testified that they were "dry enough to do anything you wanted to."

         On January 11, 2016, Skotvold had a phone conversation with Plaintiff. Skotvold's notes from the phone conversation assert that Plaintiff "has not attempted to do any more harvesting" and noted the need for an appraisal, though "[s]ome fields may not be accessible due to snow drifts." On January 29, Skotvold returned to do the appraisal. Skotvold found the moisture content of the corn was 14.8% and appraised the net yield at 193.1 bushels per acre. Skotvold, however, did not sign the appraisal because he thought the yield was "possibly" too low and not fairly representative of Plaintiff s claim for determining Actual Production History. Skotvold testified that on January 29 he observed snow here and there, a little bit of snow where shaded, but nothing "you would need to plow through," nothing that would keep Plaintiff from harvesting.

         At arbitration, Plaintiffs neighbor Jerome Nedved testified that the topography of his farmland is "real similar" to that of the Plaintiff. Nedved raised and harvested 400 acres of corn in 2015 and testified to harvesting about half of that before the EOIP. He harvested the remaining corn acreage at the end of February and the first part of March. Nedved testified that the ground firmed up for about three days at the end of February and for a couple of days in early March, and the "corn stalks were still standing up pretty good." Snowfall records indicate that from February 9, 2016 through March 15, 2016, there were only three days on which there was measurable snowfall, the highest being 0.7 inches. It was during that 35 day stretch that Nedved was able to finish harvesting his corn.

         Plaintiff himself combined about 78 acres on February 25-27 in a field called "Doc's 80" and obtained a yield of 61.79 bushels per acre- Plaintiff kept a diary of his daily activities, which he referred to as a "Timeline" and the notes from that time state "Knee deep plus track in field," and "Corn laying flat in both fields." On March 30, adjuster Justin Morrison appraised four of Plaintiffs fields. All the fields appraised out above Plaintiffs guarantee.

         Plaintiffs entry to his Timeline on June 17, 2016 states "Rain Storm w/ terrible Hurricane Type Winds out of Northeast-Laid all 2015 corn Flat-Blew the stalks w/roots right out of the ground." Plaintiffs Timeline also documents a meeting on June 20 with a former employee of Defendant, who took pictures for a 2016 prevent-plant claim. According to Plaintiffs notes "He told me today that if he was me-He would Pursue a claim on the 2015 unharvested corn-but he wanted his name left out of it." The former employee of the Defendant, at the time he evaluated Plaintiffs claim, was then an employee of Diversified Crop Insurance Services (DCIS), with whom Plaintiff had filed a claim that he was prevented from planting his 2016 bean crop in a timely manner. That employee, in an Adjuster Special Report made to support Plaintiffs claim with DCIS, stated that he "didn't see where [Plaintiff] would have had an opportunity to get the 2015 crop harvested and planted to the 2016 spring crop." He also noted that Plaintiffs fields "were still wet and the 2015 crop was still standing" on June 21, 2016. The pictures taken that day have since disappeared. The arbitrator, in considering the former employee's report as evidence, noted that the statement was made just a few days after the wind and rain storm, which would account for the fields being wet.

         On July 14, 2016, Plaintiff resumed combining the 2015 corn. After completing the investigation of the loss claim, Defendant "withdrew" or "released" the claim as a "non-loss" claim. Plaintiff filed a demand for arbitration, claiming crop insurance indemnity for his loss in the sum of $451,042.00. The arbitration hearing was held on December 15, 2017 and declared closed on January 29, 2018. On February 7, 2018, the arbitrator, Waldine H. Olson, denied Plaintiffs claim for losses on his 2015 corn crop, concluding that 1) "Claimant had windows of opportunity, both during and after the EOIP, to harvest his 2015 corn crop;" 2) "For unexplained reasons, Claimant abandoned his 2015 corn crop by failing to harvest the crop in a timely manner, even though he was allowed the opportunity to continue harvesting after the EOIP;" and 3) "The 2015 corn crop suffered additional loss or deterioration before a majority of the crop was eventually harvested."

         STANDARD OF REVIEW

         "This Court's review of an arbitration award is limited and the arbitrator's decision is entitled to 'an extraordinary level of deference.'" See Hasel v. Kerr Corp., Civ. No. 99-1376, 2010 WL 148437 at *3 (D. Minn. 2010) (quoting Stark v. Sandberg, Phoenix & Von Gontard, PC, 381 F.3d 793, 798 (8th Cir. 2004). Indeed, the Court's "scope of review of [a]n arbitration award ... is among the narrowest known to the law." Bhd. Of Maint. Of Way Employees v. Terminal R.R. Ass 'n, 307 F.3d 737, 739 (8th Cir. 2002).

         "It is not enough for [Plaintiff] to show that the [arbitrator] committed an error-or even a serious error." Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp.,559 U.S. 662, 671 (2010). "It is only when [an] arbitrator strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice that his decision may be unenforceable." Major League Baseball Players Assn. v. Garvey,532 U.S. 504, 509 (2001) (per curiam) (internal quotations omitted). "An arbitrator derives his or her powers from the parties' agreement to forgo the legal process and submit their disputes to private dispute resolution" and "arbitrators must not ...


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