162 F.3d 1264 (10th Cir. 1998), 97-8028, Meyer v. Conlon

Docket Nº:97-8028.
Citation:162 F.3d 1264
Party Name:Douglas S. MEYER, Plaintiff-Counter-Defendant-Appellant, v. Jay CONLON, individually, and National Farmers Union Property & Casualty Company, a foreign corporation, Defendants-Appellees, Rain and Hail Insurance Service, Inc., an Iowa corporation, Defendant-Counter-Claimant-Appellee.
Case Date:December 21, 1998
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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162 F.3d 1264 (10th Cir. 1998)

Douglas S. MEYER, Plaintiff-Counter-Defendant-Appellant,


Jay CONLON, individually, and National Farmers Union

Property & Casualty Company, a foreign

corporation, Defendants-Appellees,

Rain and Hail Insurance Service, Inc., an Iowa corporation,


No. 97-8028.

United States Court of Appeals, Tenth Circuit

December 21, 1998

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[Copyrighted Material Omitted]

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Thomas D. Birge of Birge & Mayers, P.C., Denver, Colorado, for Plaintiff-Appellant.

Loyd E. Smith of Murane & Bostwick, L.L.C., Cheyenne, Wyoming, for Defendants-Appellees.

Before BRORBY, KELLY, and HENRY, Circuit Judges.


After Rain and Hail refused to pay Douglas S. Meyer's crop insurance claim, he sued, under diversity jurisdiction in federal court, Rain and Hail, National Farmers Union (Rain and Hail's parent company), and Jay Conlon (a Rain and Hail agent). The defendants moved for summary judgment, asserting that federal statutes preempted Mr. Meyer's state law claims and, in the alternative, that they were entitled to summary judgment on the merits. The district court rejected their preemption argument but granted their summary judgment motion on the merits. See Meyer v. National Farmers Union Prop. & Cas. Co., 957 F.Supp. 1492 (D.Wyo.1997). Mr. Meyer appeals, and we affirm.


The Federal Crop Insurance Act ("FCIA") established the Federal Crop Insurance Corporation ("FCIC") to encourage farmers to purchase multiple peril crop insurance, 1 which protects farmers against loss from natural disasters, such as hail and disease. To achieve this goal-and in lieu of setting up a government bureaucracy to process claims-the FCIC makes crop insurance available three ways: (1) licensed private insurance agents and brokers sell policies issued directly by the FCIC; (2) the FCIC reinsures private insurers that issue crop insurance policies, with the FCIC paying the private insurance companies' operating and administrative costs for the reinsured policies; and (3) county offices of the Agricultural Stabilization and Conservation Service provide the insurance directly to farmers. Mr. Meyer acquired his crop insurance through the second method; Rain and Hail sold him the policy and was reinsured by the FCIC.

A crop insurance policy sets a per acre crop production guarantee and pays the farmer for any difference between the guaranteed yield and the actual amount the farmer harvests. The per acre crop production guarantee is set by (a) considering the past production of the particular farmer or, (b) if there are no adequate past production records, using a formula provided by regulation. The terms of the insurance policy must be fixed by a certain date, which is set by regulation, and the farmer pays the policy premium after the farmer brings the crop to market. Paying the premium after the crop is sold creates the unusual contractual situation in which the farmer has insurance before he has paid his premium.

On April 13, 1994, Mr. Meyer, a Wyoming resident, applied to Rain and Hail for crop insurance to cover his bean crop. The parties dispute at what amount per acre Rain and Hail actually guaranteed Mr. Meyer's bean crop, but no evidence suggests that it was at more than 999 pounds per acre.

On June 22, 1994, Mr. Meyer's crop was damaged by hail. Mr. Meyer notified Rain and Hail of the hail damage, and, on June 29, an adjuster from Rain and Hail came to assess Mr. Meyer's crop. The parties dispute whether the adjuster told Mr. Meyer that the crop was a total loss, although the adjuster admits that the crop was damaged. On July 6, three Rain and Hail adjusters went to Mr. Meyer's farm and reexamined his crop. The parties dispute whether the adjusters told Mr. Meyer that the beans were not going to make it and would have to be torn up, although one of the adjusters admits to offering Mr. Meyer a payment under the policy to replant 50 to 60 acres.

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On July 11, one of Rain and Hail's adjusters called to tell Mr. Meyer that the University of Nebraska Extension Service had found disease in the bean plants. Mr. Meyer claims to have had a conversation with Mr. Conlon the next day in which Mr. Meyer said he was going to plow under the crop and wanted payment under the policy at 999 pounds per acre. According to Mr. Meyer, Mr. Conlon refused, stating that he would only pay under a lower yield per acre. Mr. Conlon denies this conversation.

Mr. Meyer claims he regarded Mr. Conlon's alleged refusal to honor the 999 pound figure as meaning that he actually had no insurance coverage and decided his only recourse was to try to salvage the damaged crop. In September, Mr. Meyer harvested the beans at a rate of 1,126 pounds per acre. Mr. Meyer contends that in order to bring the crop in at this level, he had to secure expert advice, water the beans almost 24 hours a day, weed and cultivate 520 acres by hand, and replant 100 acres. Mr. Meyer's expert asserts that Mr. Meyer's efforts were extraordinary, and that the bean crop should have been declared a total loss and adjusted at 999 pounds per acre. According to Mr. Meyer, his extra efforts cost more than $68,000 in excess of what it would have cost to bring an undamaged crop to market.

When Rain and Hail found out that Mr. Meyer was bringing in a crop, it sought unsuccessfully to collect the premium under an assignment previously executed by Mr. Meyer. The assignment was in favor of a seed company that had sold Mr. Meyer seed on credit, and allowed Rain and Hail to collect its premium out of the proceeds of Mr. Meyer's crop sold to or by the seed company. On October 1, the insurance premium came due under the contract, and on November 14, Rain and Hail filed suit against Mr. Meyer in Iowa to collect the premium. Mr. Meyer's policy provided that the premium was to be paid in Iowa, and Rain and Hail's Iowa attorney filed an affidavit stating that suing out-of-state defendants in Iowa was the company norm.

On November 21, Rain and Hail sent Mr. Meyer a letter demanding he remit payment of the premium to its Montana office. Mr. Meyer did not pay the premium.

On January 25, 1995, an Iowa court entered default judgment against Mr. Meyer for the premium amount after service attempted by certified mail was returned as unclaimed. Later, the Iowa court set aside the judgment when it found that the post office had not delivered the mail to Mr. Meyer. In setting aside the judgment, the Iowa court noted that although Rain and Hail knew Mr. Meyer had retained counsel to handle the crop insurance dispute and, in fact, was involved in ongoing settlement discussions with Mr. Meyer's lawyer, it had not informed Mr. Meyer's attorney of the pending Iowa suit before requesting default judgment.

On August 2, Mr. Meyer filed this action against National Farmers Union, Rain and Hail, and Jerry Conlon for: (1) breach of contract; (2) negligent document preparation; (3) negligent misrepresentation; (4) bad faith/breach of duty of good faith and fair dealing in insurance contracts; (5) abuse of process; (6) intentional interference with a contractual relationship; and (7) outrageous conduct/intentional infliction of emotional distress. The district court granted summary judgment for the defendants on all of Mr. Meyer's claims, and he appealed. However, he did not pursue his intentional interference with a contractual relationship claim before our Court, and we consider that claim abandoned. We will address his other arguments in turn.


  1. Standard of Review

    We review a summary judgment ruling de novo, applying the same legal standard as used by the district court pursuant to Fed.R.Civ.P. 56(c). See Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir.1996). "Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Id. (quoting Wolf v. Prudential Ins. Co. of

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    Am., 50 F.3d 793, 796 (10th Cir.1995)). A "material fact is one which might affect the outcome of the dispute under the applicable law." Ulissey v. Shvartsman, 61 F.3d 805, 808 (10th Cir.1995). "An issue of material fact is genuine if a reasonable jury could return a verdict for the non-movant." Kaul, 83 F.3d at 1212 (quoting Wolf, 50 F.3d at 796). We examine the factual record and reasonable inferences drawn from it in the light most favorable to the non-movant. See id. "If there is no genuine issue of material fact in dispute, then we next determine if the substantive law was correctly applied by the district court." Id. (quoting Wolf, 50 F.3d at 796).

  2. Preemption

    In State of Kansas ex rel. Todd v. United States, 995 F.2d 1505 (10th Cir.1993), our Court held that "the FCIC can promulgate regulations preempting state laws 'not consistent with the purpose, intent, or authority of the [FCIA].' " Id. at 1509 (quoting 7 C.F.R. § 400.351) (emphasis added). Today, the defendants ask us to go one step further and hold that no state law causes of action are consistent with the FCIA and FCIC regulations, that federal law has preempted all state law causes of action pertaining to FCIC crop insurance contracts. 2 Because we need not consider Mr. Meyer's state law causes of action if the FCIA and its implementing regulations have preempted them, we will resolve the preemption issue first. Then, because we find federal law does not preempt state law causes of action consistent with the FCIA and FCIC regulations, we will turn to Mr. Meyer's claims.

    The United States Constitution's Article VI Supremacy Clause...

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