Meyer v. National Farmers Union Prop. and Cas. Co., 95-CV-170-J.

Citation957 F.Supp. 1492
Decision Date03 February 1997
Docket NumberNo. 95-CV-170-J.,95-CV-170-J.
PartiesDouglas S. MEYER, Plaintiff, v. NATIONAL FARMERS UNION PROPERTY AND CASUALTY COMPANY, a foreign corporation; Rain and Hail Insurance Service, Inc., an Iowa corporation; and Jay Conlon, individually, Defendants.
CourtUnited States District Courts. 10th Circuit. District of Wyoming

Douglas G. Madison, Brandin Hay, Dray, Thomson & Dyekman, Ken McCartney, Law Offices of Ken McCartney, Cheyenne, WY, Kevin E. Burr, Vincent G. Toenjes, Moye, Giles, O'Keefe, Vermeire & Gorrell, Denver, CO, Todd Kastetter, Tom Roberts, Roberts & Zboyan, Denver, CO, Douglas S. Meyer, Wheatland, WY, Kenneth S. Copple, Fort Collins, CO, Charles S. Bloom, Osborn & Bloom, Fort Collins, CO, for Douglas S. Meyer.

Loyd E. Smith, Murane & Bostwick, Cheyenne, WY, for Rain and Hail Insurance Service Inc., an Iowa corporation, Jay Conlon, a Montana citizen, National Farmers Union Property & Casualty Company, a foreign corporation.

ORDER DENYING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT ON PREEMPTION ISSUE AND OTHERWISE GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

ALAN B. JOHNSON, Chief Judge.

This matter came before the court on December 6, 1996, for hearing on defendants' Motions for Summary Judgment. The court has considered the Motions, all materials filed in support of and in opposition to the motion, has heard argument of counsel and is fully advised.

I. INTRODUCTION

This diversity case involves a farmer's disputed claim of loss of bean crop covered by multiple peril crop insurance (MPCI). Plaintiff Douglas Meyer is the farmer who was issued a MPCI policy on his 1994 bean crop. He is suing two insurance companies and the manager of one of the companies alleging wrongdoing in connection with the acreage report submitted with the policy, the handling of his claim and the insurance company's attempt to collect the insurance premium.

II. FACTUAL AND PROCEDURAL BACKGROUND

In 1994, Douglas Meyer, a farmer in Platte County, Wyoming decided to insure his 1994 pinto bean crop through Multiple Peril Crop Insurance from National Farmers Union Property and Casualty Company (NFU) issued through its managing agent Rain and Hail. Rain and Hail is an Iowa corporation that NFU has appointed to supervise and conduct its crop insurance business in several states, including Wyoming.

Defendant Jay Conlon is the manager and treasurer of Rain and Hail's Wyoming and Montana divisions. Mr. Conlon works out of Rain and Hail's Great Falls, Montana, office.

Multiple Peril Crop Insurance (MPCI) is a specialized type of federally regulated and subsidized insurance made available to farmers pursuant to the Federal Crop Insurance Act of 1939. 7 U.S.C. §§ 1501-1521. In general, MPCI provides a form of catastrophic insurance protecting farmers from losses resulting from specified perils such as hail. The insurance guarantees that the farmer will have the equivalent of a crop production at a specified level per acre.

In this case, the MPCI policy was issued to Douglas Meyer by NFU through NFU's managing general agent Rain and Hail under the auspices of a reinsurance contract NFU and Rain and Hail maintain with the Federal Crop Insurance Corporation (FCIC). In this case the FCIC made MPCI available by reinsuring private insurers that sell crop insurance policies in the insurer's name. 7 U.S.C. §§ 1507(c), 1508.

Douglas Meyer's father, Fred Meyer, a farmer himself, initially discussed crop insurance with an insurance agent. Based on production figures provided by the Meyers, the agent wrote up a proposal for multiple peril coverage containing a per acre guarantee of 999 pounds per acre. The proposal stated:

(2) This is a proposal only and does not constitute a binding offer of insurance.

(3) Actual coverage and premium is subject to certified yields, percent of interest, unit structure and actual planted acres.

(4) Actual coverage and premium may be subject to Non-standard Classification System (NCS) adjustments.

It is not clear if it was Fred Meyer or Douglas Meyer who gave the initial production figures to the agent. Douglas Meyer then sent in a signed application containing blanks for production numbers. Douglas Meyer understood when he signed the blank document that the agent, Jerry White, was going to Alden Prosser's feed operation and the ASCS office to get the actual production numbers.

Rain and Hail determined that the Meyer crop records were insufficient and figured production based upon county averaging data. However, Rain and Hail apparently miscalculated and on May 9, 1994, Rain and Hail issued an Acreage Report that provided an acreage guaranty of only 579 pounds of beans per acre. Rain and Hail later recalculated the amount to be a per acre guaranty of 805 pounds per acre. There is a disputed issue of fact over when this recalculated figure was given to Douglas Meyer. The agent says that he never spoke with Douglas Meyer about the 579 figure before June 29, 1994. White depo. p. 172. Douglas Meyer says he spoke with the agent about the 579 figure before then. D. Meyer depo. p. 133.

On May 20, 1994, Rain and Hail responded to a request from Prosser Feed & Seed, a creditor that was advancing seed to Douglas Meyer, and sent it an Assignment of Proceeds and Loss Payable Agreement. This Assignment was signed by Douglas Meyer, by Mr. Prosser and also by Mr. Conlon on behalf of Rain and Hail. The Assignment contained the 999 pounds per acre figure. The record does not reveal who inserted the 999 figure from the original proposal onto the Assignment. The Assignment also provided that Rain and Hail could collect the premium out of proceeds of Douglas Meyer's crop sold to or by Prosser Feed. The Assignment contains the policy number but has a blank for the amount of the premium. The estimated premium is shown as $6,215. The Assignment provides: "The agent will provide Lender [Prosser Feed] with the policy summary and/or application and amount of premium within thirty (30) days after receipt of the acreage report." The Assignment also provides: "This agreement is not binding upon the Insurance Company until signed by its Managing General Agent, Rain and Hail Insurance Service, Inc." According to the affidavit of plaintiff's expert, the Assignment "constituted a binding agreement for insurance as far as custom in the industry is concerned." Briscoe Aff. ¶ 4.

On June 22, 1994, a severe hail storm struck Douglas Meyer's crop and he notified Rain and Hail his crop was damaged.

On or about June 29, 1994, Rain and Hail issued an acreage report to Douglas Meyer which contained the 805 pounds per acre figure. Douglas Meyer, accompanied by his father, went to the agent's office to sign the report because federal regulations set June 30, 1994, as insurance cutoff date. When he saw the 805 figure, Douglas Meyer disputed the amount. The insurance agent put through a call to Mr. Conlon on the speaker phone and introduced Douglas Meyer and his father. Mr. Conlon mentioned that plaintiff's father had an outstanding debt to Rain and Hail for unpaid crop insurance premiums. This debt was from 1989. A heated discussion between Mr. Conlon and Fred Meyer followed. Douglas Meyer finally signed the acreage report under protest because he did not want to miss the deadline. On the Acreage Report Mr. Meyer hand-wrote the following, "I am signing the acreage report to confirm by deadline date the acreage of beans I planted and location. I dispute the average yield and the estimated coverage figures on this report."

It is after the June 29 heated discussion that the parties' versions of events differ markedly. June 29, 1994, was also the day Rain and Hail adjusters first arrived to inspect plaintiff's hail-damaged crop. The adjusters also came back two weeks later, on July 6, to look at the damage and sent samples to the University of Nebraska extension service for examination. There is a dispute of fact over what the adjusters told Douglas Meyer. He says that they told him the crop was total loss. The adjusters say that they never told the Meyers that the bean crop was a total loss. Hall depo. p. 159.

Thereafter, Rain and Hail investigated plaintiff's claim of loss on the bean crop. Plaintiff contends that Rain and Hail failed to adjust the claim in a proper and timely manner. Plaintiff makes much of Rain and Hail's adjusters' alleged lack of paperwork, notes and other documentation of the investigation and contacts.

Douglas Meyer alleges that on July 12, 1994, he called Mr. Conlon and told him he was going to plow up the damaged crop and asked when he could expect payment of the 999 pound guaranty. Douglas Meyer says Mr. Conlon told him he would only live up to one of the lower yields, at which point Fred Meyer took the phone to talk with Mr. Conlon, who reiterated the company would not pay the 999 per acre figure but would honor one of the lower figures (presumably the 579 or the 805 per acre figure). Douglas Meyer alleges that Mr. Conlon said, regarding the 999 per acre in the Assignment of Proceeds, "I don't give a shit what I signed."

Douglas Meyer contends that as a result of that conversation he decided because he was not going to receive the 999 figure he really had no coverage and therefore no money for a replacement crop, so he decided to harvest the damaged crop.

In contrast, Mr. Conlon says he never spoke to either Douglas Meyer or to Fred Meyer on July 12, 1994. Conlon depo. p. 116.

Plaintiff eventually harvested his crop at the rate of approximately 1,126 pounds per acre. Plaintiff says this rate was achieved only by heroic measures on his part including spraying, extra labor to hand weed the beans, and continual watering.

Later in the summer, one of Rain and Hail's adjusters stopped into Prosser Feed's elevator to see if plaintiff was bringing a crop in. Upon ascertaining plaintiff was bringing in a crop, Rain and Hail's lawyer sent Prosser Feed a demand letter for payment of the insurance premium...

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