Skymont Farms v. Fed. Crop Ins. Corp., 4:09-cv-65 Lee
| Decision Date | 10 April 2012 |
| Docket Number | 4:09-cv-65 Lee |
| Parties | SKYMONT FARMS, et al., Plaintiffs, v. FEDERAL CROP INSURANCE CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Tennessee |
Before the Court are three motions for summary judgment: one filed by Plaintiffs Skymont Farms, Anthony Wanamaker, Catrenia Wanamaker, and Dusty Wanamaker [Doc. 50]; one filed by Defendants Federal Crop Insurance Corporation ("FCIC"), Risk Management Agency ("RMA") and the United States Department of Agriculture ("USDA") (collectively "federal Defendants") [Doc. 54]; and one filed by Defendant NAU Country Insurance Company ("NAU") [Doc. 56]. For the reasons explained below, the Court will GRANT the motions for summary judgment filed by federal Defendants and NAU [Docs. 54 & 56] and will DENY the motion for summary judgment filed by Plaintiffs [Doc. 50].
Plaintiffs Anthony Wanamaker ("Anthony") and Catrenia Wanamaker ("Catrenia") are husband-and-wife owners of several farms which grow nursery crops, and they run their own nursery business, Dry Shave Nursery, which sells nursery crops [Doc. 53 at PageID#: 211]. Anthony and Catrenia wanted to get their sons involved in the nursery business and, to that end, gave the nursery crop on a farm called Skymont Farms ("Skymont Farms crop") to son DustyWanamaker ("Dusty") so he could start his own nursery business [id. ]. Anthony and Catrenia gifted the Skymont Farms crop to Dusty while remaining owners of the underlying land at Skymont Farms, but no document setting forth this transfer was created [Doc. 55 at PageID#: 407]. There was an understanding in the Wanamaker family, however, that if the Skymont Farms nursery business became a success, Dusty would help his parents pay down any debt they had incurred to procure and plant the Skymont Farms crop [id.].
Dusty's ownership of the Skymont Farms crop began prior to the 2006 crop year, but he began doing business under the name "Skymont Farms Nursery"1 for the 2006 crop year [Doc. 53 at PageID#: 211]. It was the first year any business in that name was in operation to sell trees or plants and the first year letterhead and materials with the Skymont Farms Nursery name were created or used [id.]. Beginning with the 2006 crop year, Dusty opened a banking account in his name doing business as Skymont Farms Nursery, managed the labor on the Skymont Farms property, determined what payments to make to laborers, and signed checks [id. at PageID#: 212]. Dusty did not own any equipment at that time and had not secured any debt in the name of the nursery [Doc. 55 at PageID#: 407].
Dusty sought to insure the Skymont Farms crop for the 2006 year, and insurance agent Richard Mackie brought him an application and plant inventory value report ("PIVR") forms to prepare and sign [Doc. 53 at PageID#: 213]. Dusty submitted the completed PIVR and application, and on February 15, 2006, he received a letter from NAU which confirmed a policy had been issued to him for the 2006 crop year [id.]. Dusty received another document from NAU dated the same daythat was titled "Confirmation" which indicated the insurance application had been accepted [id.].2 On or about April 7, 2006, a hailstorm damaged the Skymont Farms crop and Dusty filed a claim pursuant to the insurance policy issued by NAU [Doc. 1 at PageID#: 6]. The RMA joined NAU in the adjustment process due to the large size of the claim and Dusty's claim was denied by letter of June 2007 [id. at PageID#: 8; Doc. 57 at PageID#: 444]. In the letter, RMA informed Dusty the claim was being denied, in relevant part, because Dusty provided no evidence that he owned an insurable interest in the Skymont Farms crop and Dusty failed to provide valuation information as to plant sales for the previous three years as required [Doc. 57 at PageID#: 444-45; Doc. 58-5]. Plaintiffs timely appealed the denial of the claim to the National Appeals Division and, after a two day evidentiary hearing and a telephonic hearing, the hearing officer upheld the decision to deny the claim [Doc. 1 at PageID#: 8; Doc. 57 at PageID#: 445; Doc. 58-6]. Thereafter, Plaintiffs sought Director Review from the USDA, and the director upheld the denial of Plaintiffs' claim, which finalized the determination that the policy issued to Plaintiffs was void because Dusty d/b/a Skymont Farms Nursery failed to show he had a 100% insurable share of his nursery enterprise [Doc. 58-7].
As a result of the Director Review, Plaintiffs filed two separate cases: this case against NAU, FCIC, RMA, and USDA, and another case, Civil Case No. 4:09-cv-77, against the insurance agency and the agents who sold Dusty the policy in question. In the instant case, Plaintiffs allege the crop insurance claim was properly asserted under the policy and that Defendants breached their contractual obligation to Plaintiffs by failing to pay the insurance claim, such that they are jointly and severally liable for Plaintiffs' damages [Doc. 1 at PageID#: 7]. Plaintiffs further assert thatDefendants are liable for bad faith insurance settlement practices and bad faith refusal to pay pursuant to state statutes [id. at PageID#: 7-8].
By Order of April 27, 2011, and at the parties' request, the Court set a briefing schedule to address what the parties determined was a threshold issue to insurance coverage: whether Plaintiffs had an insurable interest in the subject property [Doc. 43]. All three sets of parties (Plaintiffs, the federal Defendants, and NAU) filed dispositive motions on the topic of whether Dusty had a 100% insurable interest in the subject property [Docs. 50, 54 & 56] and oral argument on the motions was held in January 2012. This threshold and dispositive issue is now ripe for review.
Summary judgment is mandatory where "there is no genuine dispute as to any material fact" and the moving party "is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A "material" fact is one that matters—i.e., a fact that, if found to be true, might "affect the outcome" of the litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The applicable substantive law provides the frame of reference to determine which facts are material. Anderson, 477 U.S. at 248. A "genuine" dispute exists with respect to a material fact when the evidence would enable a reasonable jury to find for the non-moving party. Id.; National Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001). In determining whether a dispute is "genuine," the court cannot weigh the evidence or determine the truth of any matter in dispute. Id. at 249. Instead, the court must view the facts and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); National Satellite Sports, 253 F.3d at 907. A mere scintilla of evidence is notenough to survive a motion for summary judgment. Anderson, 477 U.S. at 252; McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000).
The moving party bears the initial burden of demonstrating no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Moore v. James, No. 7:09-CV-98 (HL), 2011 WL 837179, at *1 (M.D. Ga. Feb. 2, 2011). The movant must support its assertion that a fact is not in dispute by "citing to particular parts of materials in the record." Fed. R. Civ. P. 56(c). If the moving party carries this burden, the opposing party must show that there is a genuine dispute by either "citing to [other] particular parts of materials in the record" or "showing that the materials cited do not establish the absence . . . of a genuine dispute. Id. In reply, the movant may then attempt to show that the materials cited by the nonmovant "do not establish the . . . presence of a genuine dispute." Id. A party may also attempt to challenge the admissibility of its opponent's evidence. Id.
The court is not required to consider materials other than those specifically cited by the parties, but may do so in its discretion. Id. If a party fails to support its assertion of fact or to respond to the other party's assertion of fact, the court may "(1) give an opportunity to properly support or address the fact; (2) consider the fact undisputed for purposes of the motion; (3) grant summary judgment if the motion and supporting materials . . . show that the movant is entitled toit; or (4) issue any other appropriate order." Fed. R. Civ. P. 56(e).3
Unlike the situation in most motions for summary judgment, the parties here conceded at oral argument that the material facts are not in dispute. However, the Court will briefly review the facts relied upon by the various parties in support of their respective arguments.
Addressing certain undisputed facts, Plaintiffs argue that Dusty could insure property that he received as a gift; that he qualified as an "operator" of the nursery and thus he could properly obtain insurance for the Skymont Farms crop; and that Rob Young, NAU's Regional Claims Manager, did not identify any issues with Dusty's ownership of the nursery during the claims adjustment process [Doc. 53 at PageID#: 220-23]. Plaintiffs further argue that Dusty satisfied all the requirements to have insurance attach-the completed application, the PIVR, nursery catalogs or a price list, and substantial beneficial interest information-and that he was thus entitled to coverage.
In addition, Plaintiffs assert an estoppel argument and contend that because NAU accepted Dusty's application and verified that he had coverage for the Skymont Farms crop, NAU should be estopped from denying coverage, as the grounds for denying coverage identified after the insurance claim was submitted stemmed from...
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