THOMAS L. LUDINGTON, District Judge.
On June 5, 2017, a group of farmers and incorporated farms filed suit against a number of insurance companies, the United States Department of Agriculture, the Risk Management Agency, and the Federal Crop Insurance Corporation. ECF No. 1. The Plaintiffs are dry bean farmers in Michigan, Minnesota, and North Dakota who have not received indemnity for crop insurance to which they believe they are entitled. On November 22, 2017, the Federal Defendants and Insurance Defendants both filed motion to dismiss. ECF No. 51, 52. On March 8, 2018, Plaintiffs filed a motion for leave to file a second amended complaint which corrects the names of certain Plaintiffs. ECF No. 64. On April 18, 2018, the Court issued an order granting the motions to dismiss and also granting the motion for leave to file an amended complaint. ECF No. 70. In that order, the Court dismissed without prejudice all Plaintiffs who do not farm or reside in the Eastern District of Michigan. The Court also dismissed all Insurance Defendants after concluding that the Plaintiffs had failed to comply with the contractual requirements for bringing suit found within the insurance policies. On May 2, 2018, Plaintiffs filed a motion for reconsideration. ECF No. 74. In the motion, Plaintiffs argue that the plaintiffs from outside the Eastern District of Michigan should have been transferred to the proper venue instead of dismissed. They also argue that the claims against the Insurance Defendants should not have been dismissed because the Insurance Defendants never refused to provide indemnification (which would have triggered the mandatory arbitration provisions of the policies) and because Plaintiffs' claim for contractual damages from the Insurers can be advanced without first receiving a determination of noncompliance with the policy from the FCIC or undergoing arbitration. For the following reasons, the motion for reconsideration will be granted in part.
The relevant allegations were summarized in the Court's April 18, 2018, opinion and order. ECF No. 70. That summary will be adopted in full here. The following paragraph from that prior opinion provides a basic introduction to the case:
April 18, 2018, Op. & Order at 2, ECF No. 70.
Plaintiffs have filed a motion for reconsideration. Pursuant to Eastern District of Michigan Local Rule 7.1(h), a party can file a motion for reconsideration of a previous order, but must do so within fourteen days. A motion for reconsideration will be granted if the moving party shows: "(1) a palpable defect, (2) the defect misled the court and the parties, and (3) that correcting the defect will result in a different disposition of the case." Michigan Dept. of Treasury v. Michalec, 181 F.Supp.2d 731, 733-34 (E.D. Mich. 2002) (quoting E.D. Mich. LR 7.1(g)(3)). A "palpable defect" is "obvious, clear, unmistakable, manifest, or plain." Id. at 734 (citing Marketing Displays, Inc. v. Traffix Devices, Inc., 971 F.Supp.2d 262, 278 (E.D. Mich. 1997). "[T]he Court will not grant motions for rehearing or reconsideration that merely present the same issues ruled upon by the Court, either expressly or by reasonable implication." E.D. Mich. L.R. 7.1(h)(3). See also Bowens v. Terris, No. 2:15-CV-10203, 2015 WL 3441531, at *1 (E.D. Mich. May 28, 2015).
Plaintiffs raise two arguments in their motion for reconsideration. First, they argue that the Court should have transferred the Minnesota Plaintiffs to the District of Minnesota instead of dismissing them without prejudice for lack of venue. Second, Plaintiffs argue that the Court should not have dismissed the Insurance Defendants. Neither argument identifies a palpable defect in the Court's prior order. Nevertheless, in the interests of justice, the Court will reinstate the claims of the Minnesota Plaintiffs against the Federal Defendants and transfer them to the District of Minnesota. Plaintiffs' present arguments simply demonstrate exactly why their claims against the Insurance Defendants must be dismissed, and so no relief is warranted in that respect.
In the April 18, 2018, opinion and order, the Court concluded that 7 U.S.C. § 1506(d), part of the Federal Crop Insurance Act, identifies limitations on venue for claims brought against the FCIC. See April 18, 2018, Op. & Order at 17-19. That provision specifies that "[a]ny suit against the Corporation shall be brought in the District of Columbia, or in the district wherein the plaintiff resides or is engaged in business." § 1506(d). Based on that language (and related precedent), the Court dismissed without prejudice all Plaintiffs who did not specifically allege that they farmed in the Eastern District of Michigan.
Plaintiffs argue that the Court should have transferred the Plaintiffs from Minnesota to the District of Minnesota instead of dismissing them. Plaintiffs argue that transfer is typically preferable to dismissal, especially when dismissal might prejudice the plaintiff. And Plaintiffs indicate that, if forced to file anew in the District of Minnesota, their claims against the FCIC might be barred by the six year statute of limitations under the Administrative Procedure Act. See 28 U.S.C. § 2401. Plaintiffs rely upon 28 U.S.C. § 1406(a), which specifies that if a district court determines that venue is lacking in a case, it "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought."
Although the Insurance Defendants argued that venue was improper at the pleading stage, the Plaintiffs did not cite § 1406(a) or seek transfer to a proper district. Rather, they argued (incorrectly) that venue was proper in the district of the named class representative (even though class certification has not been sought, much less granted).
Now, Plaintiffs argue for the first time that the improperly joined Plaintiffs should be transferred to a proper venue. Section 1406(a) is manifestly discretionary, and so there was no error in declining to sua sponte transfer several named Plaintiffs to another district (especially when proper venue existed in two districts, and Plaintiffs had provided no indication of where they wished to litigate their claims). Nevertheless, because Plaintiffs have now expressly requested transfer and have identified potential prejudice which might result from dismissal, their request will be granted. Plaintiffs Rich Elbert, Jeff A. Kosek, and Reichmann Land & Cattle LLP will be reinstated, and those Plaintiffs will be transferred to the District of Minnesota.
Next, Plaintiffs argue that the Court should not have dismissed the Insurance Defendants. A brief review of the Court's prior analysis will be helpful. The Insurance Defendants argued that that they should be dismissed pursuant to Section 20 of the Basic Provisions of the crop insurance policies which Plaintiffs entered into with them. In accepting that argument, the Court relied upon the language of the Basic Provisions.
ECF NO. 49, Ex. B.
Id.
April 18, 2018, Op. & Order at 22-23.
Id.
The Court explained the interrelationship of these provisions as they relate to the present case as follows:
April 18, 2018, Op. & Order at 23-25 (emphasis added).
Now, Plaintiffs repackage arguments which were previously rejected. Specifically, Plaintiffs argue, once again, that the Insurance Defendants never made any "determinations" which would trigger the arbitration agreement:
Mot. Recon. at 6-7, ECF No. 74 (emphasis added).
Despite the assertion that the Insurance Defendants made no determination which would be subject to arbitration, Plaintiffs admit that they did make an "arbitration demand[]" on each of the Insurer Defendants." Id. at 8 (citing Ex. C.).
Plaintiffs thus contradict themselves. On the one hand, they contend that no arbitration demand was required because no determination was made by the Insurance Defendants. On the other hand, Plaintiffs argue that their claims against the Insurance Defendants are not barred because they unsuccessfully sought arbitration.
And, in the next breath, Plaintiffs admit that any claims they may have against the Insurance Defendants require success against the Federal Defendants. See id. at 6 ("When the RMA breached its duty to set the harvest price based on the actual market price, and instead set the harvest price equal to the projected price, Plaintiffs were left without a remedy; that is, under the terms of the policy, there was no insurable loss.); at 7-8 ("Plaintiffs agree that any request for arbitration would be premature (as well as not permitted by the contract), however Plaintiffs did not in fact miss the opportunity to seek arbitration."); at 10 ("[T]his lawsuit involves judicial review of a determination by the FCIC, and not judicial review of a determination by an Insurer following arbitration.").
In other words, Plaintiffs admit that they currently have no claim against the Insurance Defendants. In fact, in the following passage from the motion for reconsideration, Plaintiffs essentially admit this fact:
Mot. Recon. at 13.
As the Court explained in the April 18, 2018, opinion and order, Plaintiffs' claims against the Insurance Defendants—to the extent Plaintiffs must first establish that the Federal Defendants improperly calculated the harvest price for 2015—are unripe. See April 18, 2018, Op. & Order at 26. Assuming that Plaintiffs prevail on their claims against the Federal Defendants, Plaintiffs will, for the first time, have a cognizable claim for indemnity against the Insurance Defendants. If the Insurance Defendants refuse indemnity, that decision would constitute a "determination," thus triggering mandatory arbitration under § 20(a)(1). The Plaintiffs would then have a year to arbitrate, after which they could seek judicial review. This procedure is clearly outlined in the Basic Provisions. Thus, contrary to Plaintiffs' assertion, the insurance contracts at issue already specify the process for the "just and orderly payment of claims." Mot. Recon. at 13.
Plaintiffs express concern that any request for indemnification from the Insurance Defendants will be summarily denied because such claims must typically be made within 45 days after the harvest price is released. As explained in the prior order, this "issue has not been briefed and is unripe." April 18, 2018, Op. & Order at 24. In effect, Plaintiffs wish to litigate the merits of the indemnity claim before it ever arises. But federal courts "have no power to offer an advisory opinion, based on hypothetical facts." Commodities Exp. Co. v. Detroit Int'l Bridge Co., 695 F.3d 518, 525 (6th Cir. 2012). If the Plaintiffs prevail against the Federal Defendants, and if the Insurance Defendants nevertheless refuse to indemnify Plaintiffs, and if Plaintiffs do not prevail at arbitration, then the question of Plaintiffs' entitlement to indemnity will be properly framed for judicial review. At the present time, it is not.
Plaintiffs have not identified any palpable error in the Court's prior opinion, and so the Insurance Defendants will not be reinstated.
Accordingly, it is
It is further
It is further
