Great Am. Ins. Co. v. Moye

• Decision Date: 29 July 2010
• Docket Number: Case No.: 8:10-CV-00330-EAK-TGW
• Citation: 733 F.Supp.2d 1298
• Parties: GREAT AMERICAN INSURANCE COMPANY, Plaintiff, v. Ronald MOYE d/b/a Moye Farms, Defendant.
• Court: U.S. District Court — Middle District of Florida

733 F.Supp.2d 1298

GREAT AMERICAN INSURANCE COMPANY, Plaintiff,

v.Ronald MOYE d/b/a Moye Farms, Defendant.

Case No.: 8:10-CV-00330-EAK-TGW.

United States District Court,

M.D. Florida,

Tampa Division.

July 29, 2010.

Jennifer Lodge Grosso, Williams, Parker, Harrison, Dietz & Getzen, Sarasota, FL, Thomas C. James, Jr., Sanders & Associates, LPA, Mason, OH, for Plaintiff.

Michael D. Martin, Martin Law Office, Lakeland, FL, for Defendant.

ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

ELIZABETH A. KOVACHEVICH, District Judge.

This cause came before this Court pursuant to both parties' motions for summary judgment. (Doc. 18 & 24). A review of the record indicates that, for the following reasons, the Plaintiff's motion for summary judgment should be DENIED, and the Defendant's motion for summary judgment should be GRANTED.

Factual and Procedural Background

The facts of the case are as follows. Great American, Plaintiff, is an Ohio Corporation engaged in the business of issuing federally reinsured crop insurance policies. Plaintiff issued the subject Multi-Peril Crop Insurance (MPCI) Policy to the Defendant, Ronald Moye, a resident of Hardee Florida. The Federal Crop Insurance Corporation (FCIC), an entity created by Congress as part of the Federal Crop Insurance Act (see 7 U.S.C. § 1501), sets forth the MPCI policy terms. These terms are codified at 7 C.F.R. § 457. After the policy took effect, the Defendant suffered a loss to his tomato crop and filed a claim with the Plaintiff. In the claim, the Defendant maintained that his loss was due to excessive moisture. The Plaintiff investigated the claim and denied indemnity because it believed that the Defendant's loss was due to disease, which was not a "covered peril" under the policy.

After being denied indemnity, the Defendant demanded arbitration, in accordance with MPCI Basic Provisions ¶ 20, to resolve disputes related to the Plaintiff's determinations about the claim. The parties employed F. Steven Herb to arbitrate the dispute, and the hearing was held November 17-19, 2009. The parties did not hire a court reporter to produce a transcript of the arbitration hearing, a fact that has provided an impediment for the Court and the parties throughout the disposition of this case. The Arbitrator found that the Defendant planted tomatoes on fifty acres of his land that previously held pepper and watermelon crops. He prepared the soil by mowing the remaining plants and vines, applying the herbicides "Round Up" and Paraquat. The Arbitrator found that this was "an acceptable, good farming practice" (Doc. 1-1 at 4). The Defendant then covered the soil with black plastic mulch to concentrate the summer heat into the soil, which the Arbitrator also found was "an acceptable good farming practice." (Doc. 1-1 at 4). The Defendant followed this with a post-planting application of "Vydate L", an insecticide/nomaticide. Further, the Arbitrator found that a tropical depression brought heavy rain to the Defendant's farm.

The Defendant subsequently filed a notice of probable loss due to excessive moisture. The claim was denied. After hearing evidence from the parties, the Arbitrator found for the Defendant and awarded him indemnity in the amount of $117,670.67. The Arbitrator issued his "Findings of Fact, Issues in Dispute, Conclusions of Law" (Doc. 1-1) (hereinafter "Arbitrator's Findings of Fact") which included the following determinations: 1) excessive moisture was the cause of Defendant's loss; 2) the Plaintiff's alternative cause was not supported by the evidence; 3) the Defendant's treatment of the soil was proper treatment; and 4) the Defendant was not required to re-plant his tomatoes.

Thereafter, the Plaintiff commenced this action by filing a complaint (Doc. 1) seeking declaratory relief, nullification of the award, and vacation of the award. The Defendant answered denying many of the Plaintiff's allegations and counterclaimed seeking confirmation of the arbitration award. (Doc. 10). Thereafter, Plaintiff responded to the counterclaim (Doc. 14); the parties filed cross motions for summary judgment (Docs. 18 & 24).

Standard of Review

If the pleadings, discovery materials, and affidavits show there is no genuine issue as to any material fact, the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the burden of showing there is not genuine issue of fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party may discharge the burden by showing that the opposing party is missing an essential element of their case. Id. at 331, 106 S.Ct. 2548. The evidence must be considered in a light most favorable to the nonmovant. Once an absence of genuine issues of fact has been shown, the nonmovant must show that there is an actual issue of fact not merely a scintilla of evidence supporting the nonmovant's position. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue for trial exists only if there is sufficient evidence to allow a jury to return a verdict for the nonmoving party. Id. at 249, 106 S.Ct. 2505. When a nonmoving party cannot make an adequate showing on a necessary element of the case on which that party bears the burden of proof, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

Judicial review of arbitration awards is extremely limited. See AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 579 F.3d 1268, 1271 (11th Cir.2009). District Courts hearing Arbitration appeals will not re-examine the merits or factual determinations of the underlying arbitration award. See Faimon v. Farmers Crop Insurance Alliance, 2006 WL 463856, *2 (D.Neb.2006); Farmers Crop Insurance Alliance v. Laux, 422 F.Supp.2d 898, 902 (S.D.Ohio 2006). Great deference must be given to the Arbitrator's decision. Borden v. Hammers, 941 F.Supp. 1170, 1173 (M.D.Fla.1996). "[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision." United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987) (emphasis added).

The Federal Arbitration Act limits the scope of judicial review of arbitration decisions. See 9 U.S.C. §§ 9-11. Although deference is given to an Arbitrator's decision, an Arbitrator's power is not unlimited, and in certain circumstances, a decision may be vacated or modified. See 9 U.S.C. §§ 10-11. A Federal Court may not vacate an arbitration award under 9 U.S.C. § 10 "merely because it is convinced that the arbitration panel made the wrong call on the law." Tucker v. Am. Bldg. Maint., 451 F.Supp.2d 591 (S.D.N.Y.2006) (quoting Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir.2004)). A court's disagreement with the merits does not justify vacation of the award. Banco de Seguros del Estado v. Mut. Marine Office, Inc., 344 F.3d 255, 260 (2d Cir.2003).

The exclusive grounds for review and vacation of an arbitration award under the Federal Arbitration Act are found at 9 U.S.C. § 10(a), which states that a court may vacate an award,

(1) where the award was procured by corruption, fraud, or undue means;(2) where there was evident partiality or corruption in the arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced: or

(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

See also, Hall Street Associates v. Mattel, 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008) (holding that 9 U.S.C. lists the exclusive grounds for judicial vacation of arbitration awards under the FAA).

As to the "exceeded their powers" provision of 9 U.S.C. § 10, "An arbitrator does not exceed his authority every time he makes an interpretive error." Mich. Family Resources, Inc. v. SEIU Local 517M, 475 F.3d 746, 752 (6th Cir.2007). If the award draws from the essence of the agreement, and is not merely the application of the arbitrator's own brand of justice, an arbitrator has not exceeded his powers. United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). An arbitrator's award fails to draw its essence from the agreement when:

"(1) it conflicts with express terms of the agreement; (2) it imposes additional requirements not expressly provided for in the agreement; (3) it is not rationally supported by or derived from the agreement; or (4) it is based on 'general considerations' of fairness and equity' instead of the exact terms of the agreement."

Beacon Journal Publishing v. Akron Newspaper Guild, Local No. 7, 114 F.3d 596, 599 (6th Cir.1997) (quoting Dallas & Mavis Forwarding Co. v. Local Union No. 89, 972 F.2d 129, 134 (6th Cir.1992) (citations omitted)). The Court's inquiry focuses on whether the Arbitrator had the power, based upon the agreement, to render a given decision. Banco de Seguros del Estado v. Mutual Marine Office, Inc., 344 F.3d 255, 262 (2d Cir.2003).

Discussion

I. Applicability of the Federal Arbitration Act

As a preliminary matter, because there was some discussion of the applicability of the Federal Arbitration Act (FAA) to this dispute, the Court must discuss its applicability in this case. The FAA applies to contracts affecting interstate commerce. See 9 U.S.C. § 2. Crop insurance contracts fall within this category and are subject to the FAA. See Nobles v. Rural Community Ins. Servs., 122 F.Supp.2d 1290 (2000) (finding the FAA applicable...