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 Plaintiffs motion for summary judgment should be
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 Plaintiffs 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.
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,
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:
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).
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 to FCIC insurance contracts); In re 2000 Sugar Beet Crop Ins. Litig., 228 F.Supp.2d 992, 995 (2002). Therefore, the FAA is applicable in this case, and this Court will review the disputed award in accordance with the FAA.
MPCI ¶ 20 provides for binding arbitration of disputes. Plaintiff has argued that the term "judicial review," contained in the policy terms, somehow abrogates the binding nature of the arbitration to which the parties submitted. In Svancara v. Rain and Hail, 2009 WL 1652220 (D.Neb.2009), the Plaintiff farmer was seeking judicial review of an arbitration award under the terms of a crop insurance contract identical to the instant contract. Id. at *1. There, the Plaintiff lost in arbitration and
In the instant case, the language of ¶ 20 is clear and makes the arbitration binding. The Plaintiff was permitted to seek judicial review of the award. Because the FAA is applicable to this dispute, the Plaintiff is not entitled to de novo review of the arbitration award, and must seek relief under the FAA, subject to the limited judicial review that the FAA prescribes. See AIG Baker Sterling Heights, LLC, 579 F.3d at 1271. Moreover, a more exacting judicial review would likely be impossible in this case, given the failure of the parties to procure a court reporter's transcript of the arbitration hearing.
This Court will not sit as the arbitrator to re-evaluate the merits or make factual determinations. Arbitration, as an alternative to expensive litigation, should be given deference by this Court. Misco, 484 U.S. 29, 38, 108 S.Ct. 364. Plaintiff has appealed the arbitration award, which is permissible under the agreement, but has put forth many arguments that would require this Court to reconsider the underlying merits of this arbitration. To the extent that the Plaintiff requests this Court to reconsider the merits it will not do so. The narrow review permitted by the FAA requires this result. Faimon, 2006 WL 463856, *2. Moreover, this Court will not overturn the Arbitrator's decision because a party disagrees with his conclusions, even if the Arbitrator's conclusions are "silly," or if he made "serious" or "improvident" errors. Michigan Family Res., 475 F.3d 746, 753 (6th Cir.2007).
Plaintiff makes three arguments directly addressing factual determinations by the arbitrator. First, Plaintiff asserts that there is no genuine issue of material fact as to the un-insurability of Defendant's land. In Section III, "subsection a" of Plaintiff's summary judgment motion (Doc. 18). Plaintiff argues that the Arbitrator's conclusion that the land was insurable was "clearly erroneous" and contrary to the evidence produced at the hearing. (Doc. 18 at 10-14). Plaintiff cites the depositions tendered at the hearing, which contain the testimony of various "agricultural experts" who agree with the Plaintiff's view that the land was uninsurable. However enlightening, this objection does not fall within the narrowly defined category of arguments this Court will entertain on appeal of an arbitration award. This is an objection to the factual determinations of the arbitrator and this Court will not sit as the arbitrator and re-evaluate the underlying merits of the arbitration. As a matter of law, this Court cannot sustain these objections to the Arbitrator's award.
Additionally, in Section III, "subsection b," Plaintiff asserts that there are no genuine issues of material fact as to whether the Defendant's loss was the direct result of a covered peril. (Doc. 18 at 3). Specifically, the Plaintiff argues that the arbitrator "wrongly concluded" that a covered peril caused the crop damage, and that the Defendant cannot prove that a covered peril was the cause of loss (Doc. 18 at 14-17). This question was answered by
Further, in Section III, "subsection c," Plaintiff takes issue with the Arbitrator's conclusion that this was a claim for indemnity rather than a claim for replanting payment. Plaintiff suggests that the Defendant should have replanted his tomatoes. The Arbitrator, at ¶¶ 32-33 of the Arbitrator's Findings of Fact (Doc. 1-1), found that this argument was not supported by the evidence, and concluded that this was a proper indemnity claim. Again, although the Plaintiff may not agree with this conclusion, mere disagreement supported by objective evidence does not allow this Court to overturn the Arbitrator's decision. As a matter of law, this Court cannot sustain these objections to the Arbitrator's award.
Aside from the previous arguments, Plaintiff asserts that there is no genuine issue of material fact as to the Arbitrator's misinterpretation and misapplication of the policy terms. Plaintiff argues that this misinterpretation and misapplication necessitates nullification of the Arbitration award in accordance with MPCI Basic Provisions ¶ 20(a)(1) (Doc. 1-2). This paragraph states, in pertinent part,
The Plaintiffs papers seem to conflate certain issues relevant to this discussion. The Court has identified both an argument that the misapplication and misinterpretation requires nullification, and an argument that the arbitrator's failure to obtain an interpretation of the terms from FCIC requires nullification. The Court addresses both arguments in turn.
The Fresh Market Tomato (Dollar Plan) (Doc. 1-3) contains various provisions, one of which defines "insurable acreage." Specifically, ¶ 9(b)(3) states, "we will not insure any acreage on which tomatoes ... have been grown and the soil was not fumigated or otherwise properly treated before planting tomatoes." (Doc. 1-3 Emphasis added). Plaintiff asserts that when the Arbitrator concluded that Defendant properly treated the soil, he "misapplied" various policy provisions and violated the MPCI Basic Provisions ¶ 20(a)(1). According to the Plaintiff, this misapplication requires nullification of the award.
Plaintiff's argument is, in a sense, a continued objection to the factual determinations of the Arbitrator. Arguing that the Arbitrator "misinterpreted" or "misapplied" the Fresh Market Tomato (Dollar Plan) ¶ 9(b)(3) is wholly different than the argument that the Arbitrator was prohibited from interpreting ¶ 9(b)(3), which the Court does address below. The former is what the Plaintiff has argued in its papers. Specifically, Plaintiff asserts that the Arbitrator "made his own slightly nonsensical determination of what constituted proper pre-planting soil treatment." (Doc. 18 at 20-21). Plaintiff goes on to argue that the Arbitrator's consideration of the Defendant's post-planting practices to determine
The lack of focused argument in the Plaintiffs papers compels this Court to address what it perceives as the Plaintiffs alternative argument. Specifically, whether the Arbitrator, by concluding that the Defendant did in fact "properly treat" his soil, violated the MPCI Basic Provision ¶ 20(a)(1) thereby nullifying the award. However, the first question is whether ¶ 20(a)(1) is applicable at all in this dispute. It is this Court's opinion that the Arbitrator's determination that the acreage was "otherwise properly treated" was not a policy or procedure interpretation falling within the nullification provision of MPCI Basic Provisions ¶ 20(a)(1).
According to ¶ 20(a)(1), the parties must get an interpretation from FCIC when a dispute involves one of the following: 1) whether a policy or procedure is applicable: 2) how a policy or procedure is applicable; or 3) the meaning of a policy or procedure. It is apparent that the first two situations are not present in the instant case. Both parties understood that ¶ 9(b)(3) was applicable and permitted other treatment than fumigation because of the various differences in geographical region. (See Doc. 18 at 20). Secondly, there was not a question of how "otherwise properly treated" fit into the dispute; if it was not properly treated, then there was to be no indemnity.
The third provision of 20(a)(1), applicable when a dispute involves the meaning of a policy or procedure, cannot be dismissed as easily. Logically, the instant dispute involved the meaning of "properly treated." For example, in order to decide if the land was properly treated, a person must first know or decide what it means to be properly treated. Although on the surface, the logic behind the resolution of this dispute involved some degree of interpretation, this Court believes the Arbitrator made a factual determination, not a procedural interpretation in coming to his conclusion.
The Arbitrator was correct when stating this dispute did not involve policy interpretation, because it was clear as to what "properly treated" meant. Commentary concerning ¶ 9(b)(3) in the Federal Register supports the conclusion that "properly treated" meant having treatment designed to protect against nematodes.
Additionally, if nullification were appropriate in this dispute, the policy terms of ¶ 9(b)(3) would be nonsensical. The plain language of the requirement that the land be "fumigated or otherwise properly treated," would have to be interpreted as requiring that the land be "fumigated or treated in a manner approved by the FCIC." This not only seems inefficient and contrary to the parties' intentions, but it would wholly strip arbitrations of any importance when they concern a factual dispute over soil preparation.
Plaintiff asserts that there is no genuine issue of material fact as to the Arbitrator's misinterpretation and misapplication of the policy terms. Plaintiff argues that this misinterpretation and misapplication necessitates vacation of the arbitration award under 9 U.S.C. § 10. Plaintiffs allege that the Arbitrator's award must be vacated because he displayed manifest disregard to the law and exceeded the scope of his authority.
Although the scope of judicial review of arbitration awards was always very narrow, the Eleventh Circuit formerly recognized a judicially created ground for vacation in FAA cases. This was the "manifest disregard" ground for vacation. See e.g., Monies v. Shearson Lehman Bros., 128 F.3d 1456 (11th Cir.1997). However, in Hall Street Associates v. Mattel, 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008), the Supreme Court made clear that 9 U.S.C. § 9 required confirmation of an award unless there were grounds for vacation or modification under §§ 10-11. With this decision, the Court rejected the non-statutory grounds recognized in various circuits.
In response, some circuits have meshed the "manifest disregard" ground for vacation into the § 10(a)(4) "exceeded their scope" provision. See Comedy Club Inc. v. Improv West Associates, 553 F.3d 1277 (9th Cir.2009). The Eleventh Circuit, however, has rejected this approach and regards the statutory bases as exclusive. See Frazier v. CitiFinancial, 604 F.3d 1313 (11th Cir.2010). Therefore, there is no legal basis for this Court to vacate the arbitrator's award for "manifest disregard of the law."
Plaintiff does seek vacation of the arbitration award on statutory grounds. Specifically, Plaintiff contends that the award should be vacated pursuant to 9 U.S.C. § 10(a)(4) because the Arbitrator exceeded the scope of his authority when he misinterpreted and misapplied terms of the contract.
The Arbitrator's determination that the Defendant's land was "otherwise properly treated" does not require vacation under 9 U.S.C. § 10(a)(4). Plaintiff asserts that there is no genuine issue of material fact as to the Arbitrator's misapplication of the policy terms. Misapplication or misinterpretation of the contract terms is not sufficient for vacation under § 10(a)(4). Mich. Family Resources, Inc., 475 F.3d at 752. Although the Arbitrator's
The Arbitrator did not exceed his powers by concluding that the Defendant had sufficiently proven that his loss was the result of a covered peril. Plaintiff asserts that the Arbitrator misapplied and misinterpreted the contract terms and erroneously placed the burden on the Plaintiff to show that the loss was not the result of a covered peril. (Doc. 18 at 22-23).
MPCI Basic Provisions ¶ 14(a) (Doc. 1-2) states that before receiving indemnity, the Defendant must comply with all the policy provisions. Included in the provisions is ¶ 14(e), which required that the Defendant prove his loss was the direct result of a covered peril. As evidence of the Arbitrator's misapplication of the terms, the Plaintiff points to ¶ 28 of the Arbitrator's Findings of Fact, where he states "[Great American]'s alternative theory of causation, disease, was not supported by the preponderance of the evidence." The Plaintiff asserts that this shows the Arbitrator shifted the burden and led to his erroneous conclusion that the Defendant was entitled to indemnity. This Court does not agree that such a mistake occurred, or that it would require vacation under § 10(a)(4). Even if the Arbitrator misinterpreted the terms of the contract, the award still draws its essence from the agreement. The Arbitrator's Findings of Fact, at ¶ 29, state that the Defendant satisfied the terms of the contract because excess rain caused the Defendant's loss. By stating that the Plaintiff failed to prove an alternative cause of loss, the Arbitrator did not negate his conclusion that excess rain was the cause of the Defendant's loss. The terms of the contract required the Defendant to prove his loss was the direct result of a covered peril, and the Arbitrator agreed with the Defendant.
The Plaintiff concedes that the Defendant "needed to prove that the covered peril was the actual, unavoidable cause of loss, and not merely 51% of the cause." (Doc. 18 at 23). Nowhere in the Arbitrator's Findings of Fact does the Arbitrator suggest that the actual and direct cause of the loss was anything except excessive rain. The agreement required proof that a covered peril was the actual cause, and that is what the Arbitrator determined at ¶ 29 of his Findings of Fact. This determination did not conflict with the express terms of the agreement, it did not impose additional requirements not expressly provided for in the agreement, and it was rationally supported by or derived from the agreement. Beacon Journal Publishing, 114 F.3d at 599. Therefore, the Arbitrator's determination and award draws from the essence of the agreement and should not be vacated under 9 U.S.C. § 10(a)(4).
The Arbitrator did not exceed his authority by concluding that the Defendant was not required to replant his crops in accordance with Fresh Market Tomato (Dollar Plan) ¶ 9(b)(1) (Doc. 1-3). Plaintiff asserts that the Arbitrator "misinterpreted the policy by reading in additional conditions to ¶ 9(b)(1) and then waiving the policy's replant requirement." (Doc. 18 at 24). Again, because an Arbitrator's "silly" and "improvident" conclusions or interpretations are not alone sufficient, this Court cannot vacate the award on this ground. Michigan Family Res., 475 F.3d at 753. The Court rejects the Plaintiffs argument as a matter of law.
For the above stated reasons, the Court finds that while there are no genuine issues of material fact the Plaintiffs Motion
In response to the Plaintiffs motion for summary judgment, the Defendant filed a cross motion for summary judgment. Defendant asserts that there are no other documents properly before the court other than the Arbitrator's Findings of Fact, and further, that they are entitled to judgment as a matter of law.
The court has previously determined what is properly before this Court (see Doc. 35 "Order on Defendant's Motions"). However, the Court agrees that the Defendant is entitled to judgment as a matter of law because the Arbitrator's award does not in any way violate the provisions of 9 U.S.C. § 10.
For the above stated reasons, the Court finds no genuine issues of material fact and grants the Defendant's Motion for Summary Judgment as a matter of law.
Under the FAA, there is a strong presumption favoring the confirmation of arbitration awards. Riccard v. Prudential Ins. Co. of Am., 307 F.3d 1277, 1288-89 (11th Cir.2002). Therefore, the District Court's grant of confirmation is usually routine or summary. Id. As discussed above, there are no legally sufficient grounds for vacation of the award under the FAA. Because there are no grounds for vacation under 9 U.S.C. § 10, the award is confirmed.
This Court will not re-evaluate the merits or the Arbitrator's factual findings. The parties agreed to a binding arbitration subject to judicial review under the Federal Arbitration Act. This Court gives great deference to the Arbitrator's findings. Plaintiff disagrees with the Arbitrator's conclusions and asserts that he misinterpreted and misapplied the terms of the agreement. However, disagreement over interpretation, application, and conclusions are not sufficient to vacate an Arbitration award under the FAA and nullification is not appropriate. Plaintiff also asserts that the Arbitrator exceeded the scope of his authority when he misinterpreted and misapplied terms of the agreement. The award, however, draws from the essence of the agreement and should be confirmed. Accordingly, it is
