Dixon v. Producers Agric. Ins. Co.

• Decision Date: 28 July 2016
• Docket Number: Case No. 2:14-cv-00034,C/w : Case Nos. 2:14-cv-00035, 2:14-cv-00036
• Citation: 198 F.Supp.3d 832
• Parties: Thomas DIXON, Jimmy Fishburn, and Mark Eller, Plaintiffs, v. PRODUCERS AGRICULTURE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Tennessee

198 F.Supp.3d 832

Thomas DIXON, Jimmy Fishburn, and Mark Eller, Plaintiffs,

v.PRODUCERS AGRICULTURE INSURANCE COMPANY, Defendant.

Case No. 2:14-cv-00034

C/w : Case Nos. 2:14-cv-00035, 2:14-cv-00036

United States District Court, M.D. Tennessee, Northeastern Division.

Filed July 28, 2016

Lawrence Alan Poindexter, Rochelle, McCulloch & Aulds, Lebanon, TN, for Plaintiffs.

Lea C. Owen, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Henry E. Hildebrand, IV, Dunham Hildebrand LLC, Nashville, TN, M. Bradford Sanders, Thomas C. James, Jr., Sanders & Associates, LPA, Mason, OH, Jamie Ballinger-Holden, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Knoxville, TN, for Defendant.

MEMORANDUM

KEVIN H. SHARP, UNITED STATES DISTRICT JUDGE

Pending before the Court is Defendant's Motion for Summary Judgment (Docket Entry No. 64). The motion has been fully briefed by the parties.¹

RELEVANT FACTS AND PROCEDURAL HISTORY

During the 2010 crop year, Plaintiffs were in the business of raising burley tobacco in Macon County, Tennessee.² Defendant is an insurance company and is an Approved Insurance Provider ("AIP"), meaning that Defendant issues Multiple Peril Crop Insurance Policies ("MPCI Policies") to farmers, which are reinsured by the Federal Crop Insurance Corporation ("FCIC"). Defendant has two agents, David Leath ("Leath") and Donald Law ("Law"), who maintain offices in Macon County, Tennessee, through whom Plaintiffs purchased their MPCI Policy for the 2010 crop year from Defendant.

Prior to the 2010 crop year, Plaintiffs and other farmers in Macon County, Tennessee became concerned about the eligibility of certain lands for coverage under the MPCI Policy. Specifically, they were concerned about a requirement that, for a burley tobacco crop to be eligible for coverage, an insurable crop must have been grown on the land in question one year within the last three years to qualify for coverage.³ Having no special expertise in crop insurance, Plaintiffs and the other farmers sought the advice of Defendant through its agents, Leath and Law.

In February 2010, representatives from ProAg were invited to a dinner put on by Law and Leath for the benefit of the local burley tobacco farmers. Representatives from ProAg were invited to speak on any new developments concerning insurance coverage, and any new requirements for eligibility. Defendant accepted this invitation and sent Tonya Peters ("Peters"), an underwriting supervisor for Defendant, to speak at the event. She discussed new changes, one of which was for a burley tobacco crop to be eligible for crop insurance there must have been an insurable crop grown on the property in question one year within the last three years. Peters also indicated that if a farmer did not meet this three year requirement, that a written agreement between the respective farmer and the Risk Management Association ("RMA") would have to be executed in order for the respective farmer's burley tobacco crop to be eligible for insurance coverage.

Dixon, Fishburn, Eller, Leath, Law, as well as other local farmers, attended this event and, at the end of the event, Leath and Law informed Peters that several of the burley tobacco farmers they represented would need to enter a written agreement with RMA and requested her assistance in accomplishing that. On April 20, 2010, Leath and Law visited Peters at her office in Lexington, Kentucky to discuss the preparation of the RMA written agreements. At that meeting, Peters represented to Leath and Law that she was "their savior" because if the respective farmers in question had raised a hay crop on the land in question one year within the last three years that it would qualify for burley tobacco insurance—the hay crop would be considered an insurable crop. These representations were passed onto Plaintiffs by both Leath and Law upon their return from Kentucky. Peters confirmed this information in an email to Leath on September 3, 2010.⁴

Plaintiffs, relying upon the information supplied by ProAg, each planted and raised a burley tobacco crop for the 2010 crop year. Further, Plaintiffs obtained coverage under their MPCI Policies from Defendant on the burley tobacco crops, for which they paid Defendant a substantial premium, all without seeking a written agreement with the RMA.

During the crop year of 2010, Plaintiffs each suffered a loss on their burley tobacco crops and filed a claim with Defendant. Initially, Defendant paid Plaintiffs' claims.⁵ In June 2012, Defendant notified Plaintiffs that their burley tobacco crops for the year 2010 were not eligible for coverage under the MPCI Policy. The correspondence stated that the land in question had not been in production, with an insurable crop on it one year within the last three previous years and demanded Plaintiffs return the amount previously paid on their claims, less the amount of the premium. These amounts have been repaid to Defendant in full.

ANALYSIS

Plaintiffs brought this action against Defendant, alleging two state law claims, negligent misrepresentation and intentional misrepresentation. According to Defendant, Plaintiffs' claims are barred for the following reasons: (1) Plaintiffs' claims for extra-contractual damages are prohibited by the terms of their federally reinsured insurance policies and crop insurance-related rules and regulations, (2) each of the Consolidated Plaintiffs failed to comply with a mandatory, time-limited claim appeal mechanism (arbitration) that the federal government requires in the federal crop insurance policies at issue as a prerequisite to the right to file suit, and (3) to the extent that Plaintiffs relied upon the representations alleged in their Amended Complaints, such reliance was not reasonable, or justified. (Docket Entry No. 65 at 1-2).

I. Standard of Review

A party may obtain summary judgment if the evidence establishes there are not any genuine issues of material fact for trial and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c) ; Covington v. Knox County School Sys. , 205 F.3d 912, 914 (6th Cir.2000). The moving party bears the initial burden of satisfying the court that the standards of Rule 56 have been met. See Martin v. Kelley , 803 F.2d 236, 239 n. 4 (6th Cir.1986). The ultimate question to be addressed is whether there exists any genuine issue of material fact that is disputed. See Anderson v. Liberty Lobby , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Covington , 205 F.3d at 914 (citing Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If so, summary judgment is inappropriate.

To defeat a properly supported motion for summary judgment, the nonmoving party must set forth specific facts showing that there is a genuine issue of material fact for trial. If the party does not so respond, summary judgment will be entered if appropriate. Fed. R. Civ. P. 56(e). The nonmoving party's burden of providing specific facts demonstrating that there remains a genuine issue of material fact for trial is triggered once the moving party shows an absence of evidence to support the nonmoving party's case. Celotex , 477 U.S. at 325, 106 S.Ct. 2548. A genuine issue exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. In ruling on a motion for summary judgment, the Court must construe the evidence in the light most favorable to the nonmoving party, drawing all justifiable inferences in its favor. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The standard remains the same when both parties move for summary judgment. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991). "When reviewing cross-motions for summary judgment, the court must evaluate each motion on its own merits and view all facts and inferences in the light most favorable to the nonmoving party." Wiley v. United States (In re Wiley), 20 F.3d 222, 224 (6th Cir.1994).

II. Application of Law

A. Misrepresentation Claims

Plaintiffs have brought claims against Defendant for negligent and intentional misrepresentation. Defendant first insists that Plaintiffs are deemed to have constructive knowledge of the policy provisions, arguing "[i]t is a longstanding principle that policyholders in federal insurance programs, such as the Federal Crop Insurance Program, are deemed to know the policy terms and cannot ‘plead ignorance to the technical provisions' in the policy's requirements."⁶ (Docket Entry No. 65 at 16). Defendant next argues that Plaintiffs' misrepresentation claims fail because their alleged reliance of the representations was unreasonable as a matter of law. (Id. at 17).

First, Plaintiffs counter, they are not suing on the policy or denial of coverage, or the process utilized in reviewing and making the decision—"[t]hey are not pleading ignorance." (Docket Entry No. 88 at 7). Further, Plaintiffs argue that "[t]his argument is another back door attempt at asserting preemption. Defendant is once again stating Plaintiffs are held to specific terms of the policy. Once again this is not a suit on the policy." (Id. ). As to Defendant's argument on reliance, Plaintiffs contend that under Tennessee law reasonable reliance is a question of fact in either intentional or negligent misrepresentation.⁷ (Id. at 11).

In Tennessee, there is not a separate cause of action for intentional misrepresentation. Fairway Village Condo. Assoc., Inc. v. Conn. Mutual Life Ins. Co., 934 S.W.2d 342, 347 (Tenn.Ct.App.1996). Rather, intentional misrepresentation is an element of fraud. Id. However, "the two are often used interchangeably in common parlance." Id. ; see also Parks v. Fin. Fed. Sav. Bank, 345 F.Supp.2d 889, 895 (W.D.Tenn.2004) (noting that "under Tennessee law, there is not a separate cause of action for intentional misrepresentation" and that "intentional misrepresentation is an element of...