Insurance Law

U.S. High Court Refuses To Review Arbitration Ruling Arising From Crop Damage

WASHINGTON, D.C. — (Mealey's) The U.S. Supreme Court today rejected a nursery insured’s request to review the 11th Circuit U.S. Court of Appeals' refusal to vacate an arbitration award in favor of insurers in a coverage dispute over the insured's crop damage (Campbell's Foliage v. Federal Crop Insurance Corp., No. 13-1527, U.S. Sup.) [lexis.com subscribers may access the Petition for Writ of Certiorari for this case].

The denial of certiorari was listed on the high court’s Oct. 6 order list.

Crop Insurance

Campbell's Foliage Inc. purchased a multiple peril crop insurance (MPCI) policy from the Rural Community Insurance Co. (RCIC) to insure its crops against loss caused by excess moisture.  MPCI policies are issued pursuant to the Federal Crop Insurance Act (FCIA), underwritten by the Federal Crop Insurance Corp. (FCIC) and managed by the U.S. Department of Agriculture's Risk Management Agency (RMA).

After an adverse weather event in July 2007, Campbell's Foliage filed a claim under its 2008 MPCI policy with RCIC.  RCIC and RMA denied the claim, contending that the policy was void.  In May 2011, Campbell's Foliage sued RCIC and FCIC for breach of contract and sought a declaration as to coverage.
 
RCIC moved to compel arbitration pursuant to the policy's arbitration clause.  The U.S. District Court for the Southern District of Florida granted the motion, finding that the arbitration clause fell under the Federal Arbitration Act (FAA).  The arbitrator concluded that Campbell's Foliage was not entitled to coverage for the 2008 crop year, ruling in favor of FCIC and RCIC.

4 Statutory Grounds

On Feb. 13, 2013, Campbell's Foliage moved to vacate the arbitration award, which the District Court denied.

Relying on Hall Street Associates L.L.C. v. Mattel Inc. (552 U.S. 576, 128 S. Ct. 1396 [2008]), [enhanced version available to lexis.com subscribers], the District Court found that the four statutory grounds in Section 10(a) of the FAA were the only bases upon which it could vacate an arbitration award.  The judge opined that Campbell's Foliage was not entitled to relief because it failed to raise any of those four statutory grounds for vacatur.

Campbell's Foliage appealed to the 11th Circuit, arguing that Section 20(c) of the MPCI policy contains language providing that the arbitration award was nonbinding and subject to a more expansive form of judicial review than permitted by the FAA's Section 10.

A panel of Judges Frank M. Hull and Charles R. Wilson and Senior Judge R. Lanier Anderson affirmed, [enhanced version available to lexis.com subscribers], holding that the District Court properly concluded that the four grounds enumerated in Section 10 of the FAA were the only grounds upon which the arbitration award could be vacated.

On June 18, 2014, Campbell's Foliage appealed to the U.S. Supreme Court, arguing that the arbitration award was nonbinding and subject to more expansive judicial review.

Counsel

David A. Burt of Hawkins, Hawkins & Burt in Daytona Beach, Fla., represents Campbell's Foliage.

Donald B. Verrilli Jr. of the U.S. Department of Justice in Washington
represents Federal Crop.

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