JPM-Rdp Farms, LLC v. U.S. Dep't of Agriculture-Risk Mgmt. Agency, Fed. Crop Ins. Corp., Case No: 2:17-cv-85-FtM-99CM

CourtU.S. District Court — Middle District of Florida
Writing for the CourtJOHN E. STEELE SENIOR UNITED STATES DISTRICT JUDGE
PartiesJPM-RDP FARMS, LLC, a Florida corporation, Petitioner, v. UNITED STATES DEPARTMENT OF AGRICULTURE-RISK MANAGEMENT AGENCY, FEDERAL CROP INSURANCE CORPORATION, Defendant.
Decision Date06 March 2018
Docket NumberCase No: 2:17-cv-85-FtM-99CM

JPM-RDP FARMS, LLC, a Florida corporation, Petitioner,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE-RISK MANAGEMENT AGENCY,
FEDERAL CROP INSURANCE CORPORATION, Defendant.

Case No: 2:17-cv-85-FtM-99CM

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

March 6, 2018


OPINION AND ORDER

This matter is before the Court on consideration of a Report and Recommendation (Doc. #30), filed on December 8, 2017, recommending that petitioner's Motion for Summary Judgment and Request for Oral Argument (Doc. #22) be denied, and respondent's Cross-Motion to Uphold the RMA's Final Agency Determination (Doc. #26) be granted. Petitioner filed Rule 72(b) Objections (Doc. #31) on December 21, 2017, and the United States filed a Response (Doc. #36) on January 12, 2017.

This case requires the Court to determine whether a government agency properly rejected petitioner's crop insurance claims for the loss of its 2014-15 fresh market tomato crops. The final decision of the agency found the losses were not the result of a covered cause under the insurance policy, and therefore denied

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petitioner's claims. For the reasons set forth below, the final decision of the agency is affirmed.

I.

As discussed below, the Court reviews the Report and Recommendation de novo but reviews the final agency decision under deferential standards of review.

After conducting a careful and complete review of the findings and recommendations, a district judge may accept, reject or modify the magistrate judge's report and recommendation. 28 U.S.C. § 636(b)(1); United States v. Powell, 628 F.3d 1254, 1256 (11th Cir. 2010). A district judge "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). See also United States v. Farias-Gonzalez, 556 F.3d 1181, 1184 n.1 (11th Cir. 2009). This requires that the district judge "give fresh consideration to those issues to which specific objection has been made by a party." Jeffrey S. v. State Bd. of Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990) (quoting H.R. 1609, 94th Cong., § 2 (1976)). The district judge reviews legal conclusions de novo, even in the absence of an objection. See Cooper-Houston v. Southern Ry. Co., 37 F.3d 603, 604 (11th Cir. 1994).

Under the Administrative Procedures Act, 5 U.S.C. § 701 et seq., a federal court shall set aside an agency decision that is

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"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. § 706(2)(A). "The arbitrary and capricious standard is exceedingly deferential." Jones Total Health Care Pharmacy, LLC v. Drug Enf't Admin., 881 F.3d 823, 829 (11th Cir. 2018) (citation omitted). A Court may not substitute its judgment for that of the agency so long as the agency conclusions are rational and based on the evidence before it. Miccosukee Tribe of Indians of Fla. v. United States, 566 F.3d 1257, 1264 (11th Cir. 2009). "[E]ven in the context of summary judgment, an agency action is entitled to great deference." Mahon v. U.S. Dep't of Agric., 485 F.3d 1247, 1253 (11th Cir. 2007) (citation omitted).

A court must also consider whether the final agency decision was supported by "substantial evidence" in the record. 5 U.S.C. § 706(2)(E). The substantial evidence test is similar to the arbitrary and capricious standard, but it applies to factual findings. Fields v. Dep't of Labor Admin. Review Bd., 173 F.3d 811, 813 (11th Cir. 1999). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Stone & Webster Constr., Inc. v. United States DOL, 684 F.3d 1127, 1133 (11th Cir. 2012) (citation omitted). The fact that the record may support a contrary conclusion is not enough to undermine the existence of substantial evidence. DeKalb Cty. v. United States DOL, 812 F.3d 1015, 1020 (11th Cir. 2016).

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II.

Enacted in 1938, the Federal Crop Insurance Act (the "Act" or "FCIA"), 7 U.S.C. § 1501 et seq., is designed to "promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance." Id. § 1502(a). To carry out the Act, Congress created the Federal Crop Insurance Corporation ("FCIC"), a government-owned corporation which acts as an "agency of and within the Department" of Agriculture ("USDA"). Id. § 1503. The USDA Office of Risk Management, commonly referred to as the Risk Management Agency ("RMA"), 7 C.F.R. § 400.701, supervises the FCIC and administers all programs authorized under the FCIA. 7 U.S.C. § 6933(a), (b)(1)-(3). One such program is a nationwide crop insurance program. 7 U.S.C. § 1508.

Since 1980, the FCIC both directly insures producers of agricultural commodities grown in the United States and provides reinsurance for private companies which insure such producers. 7 U.S.C. § 1508(a)(1); Williams Farms of Homestead, Inc. v. Rain & Hail Ins. Servs., Inc., 121 F.3d 630, 633 (11th Cir. 1997). This is done "under 1 or more plans of insurance determined by the Corporation to be adapted to the agricultural commodity concerned." 7 U.S.C. § 1508(a)(1). "To qualify for coverage under a plan of insurance, the losses of the insured commodity

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must be due to drought, flood, or other natural disaster (as determined by the Secretary)." 7 U.S.C. § 1508(a)(1).

To qualify for reinsurance through the FCIC, the policies must comply with the FCIA and its accompanying regulations. 7 C.F.R. §§ 457.2(b), 457.7. In effect, the FCIA establishes the terms and conditions of such re-insurance policies. A "Common Crop Insurance Policy" standard throughout the industry is used by insurers when the FCIC provides reinsurance. 7 C.F.R. § 457.8. Specific provisions relating to fresh market tomato (Dollar Plan) crop insurance are found at 7 C.F.R. §457.139. See generally Davis v. Producers Agric. Ins. Co., 762 F.3d 1276, 1284-85 (11th Cir. 2014).

III.

Petitioner purchased crop insurance for the 2015 crop year, and ultimately filed three claims seeking indemnity for losses of its fresh market tomato crops. The FCIC claim determination process is fully described in the Report and Recommendation, which is adopted and incorporated herein. (Doc. #30, pp. 3-6.) The RMA denied the claim; a United States Department of Agriculture National Appeals Division (NAD) Administrative Judge (AJ) reversed the RMA denial; and the Director of NAD subsequently reversed the Administrative Judge's decision and reinstated the RMA decision denying the claims. Petitioner now seeks judicial review of that final agency decision.

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A. Underlying Facts

The Court accepts and adopts the facts as set forth by the Magistrate Judge (Doc. #30, pp. 6-14)1. In sum:

Petitioner JPM-RDP Farms, LLC (JPM) is a farming entity that grows fresh market tomatoes in Hendry County, Florida. JPM purchased crop insurance for 259.9 acres of its 2014-15 (2015 crop year) fresh market tomato crops from Rural Community Insurance Service (the "Insurance Company"), an approved insurance provider reinsured by RMA, for a premium in excess of $220,000.00. This is a named peril policy which only covers losses caused by the perils identified in the policy. Between January and March 2015, JPM filed three notices of loss with the Insurance Company, reporting that excess rain and/or freeze caused its tomato crops to fail. JPM asserted that it was entitled to indemnities in excess of $1 million.

JPM uses crop-scouting services to monitor and assess the health of its tomato plants by assessing the occurrence and severity of insects and disease. Between November 2014 and March 2015, scouts visited JPM's farms twice weekly and created written reports as to the health status of the crops and the recommended

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control measures. Beginning December 17, 2014, these reports documented the presence of Late Blight and Tomato Yellow Leaf Curl Virus ("Yellow Leaf") spreading to JPM's tomatoes.

On January 15, 2015, a loss adjuster conducted a pre-harvest appraisal on the first and second ages of the winter crop, and reported that the first age had severe virus affecting over 50% of the plants and the second age planting had less virus and bacteria pressure. On January 16, 2015, scouts detected late blight, and petitioner was advised to use a fungicidal spray rotation of Previcur Flex, Forum, and Curzate to combat its spread. Petitioner continued to spray its fields with protective fungicide products. Due to a high number of days of heavy fog, dew, and frequent rain, the late blight continued to develop on the leaves, reaching medium to high levels.

Between January 19 and February 19, 2015, petitioner conducted two harvests of its winter crop. On the last day of the second harvest, petitioner observed the continued breakdown of the tomatoes and determined that it could not harvest any more of the crop. Petitioner requested permission to destroy the crop, which required the RMA's approval. On February 19, 2015, temperatures at the farm ranged from 28 to 32 degrees Fahrenheit for longer than 5 hours. On February 20, 2015, the scouting report showed moderate sporulation was producing on the first and second age plantings of the winter crop. On February 23, 2015, petitioner

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filed a second Notice of Loss of its winter crop due to freeze damage.

A February 24, 2015, scouting report showed that the first age of the winter crop was drying, and there was no sporulation visible. The second age showed active fungus with high sporulation, indicating that new infections were occurring, and there were new lesions and some spread. The scout advised petitioner to continue rotating fungicides, but rainfall hindered petitioner from making applications quickly.

Also on February 24, 2015, the loss adjuster conducted a field inspection and saw yellowing and blanching of the tomatoes, softness,...

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