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Driver v. Pro Ag Management, Inc.

United States District Court, M.D. Tennessee, Nashville Division

October 18, 2017

RONALD G. DRIVER, Plaintiff,



         Now before the Court is a Motion to Stay Pending Arbitration (Doc. No. 39) filed by Pro Ag Management, Inc. (“Pro Ag”), and a Motion to Compel Arbitration (Doc. No. 42) filed by Ronald G. Driver. Those Motions have been fully briefed[1] by the parties (Doc. Nos. 40, 43, 44, 45-1, 45), and both Motions will be granted.

         I. Factual Background

         For purposes of the pending motions only, the following facts appear undisputed: Driver is a farmer who lives in Macon County, Tennessee. He grows soybeans and Burley tobacco. Pro Ag and ARMtech Insurance Services, Inc. (“ARMtech”) are approved insurance providers (“AIPs”)[2] authorized to issue Multiple Peril Crop Insurance (“MPCI) coverage under the Federal Crop Insurance Act (“FCIA”), 7 U.S.C. § 1501, et seq.

         In 2011, Driver's crops were insured under a policy issued by Pro Ag, and he received indemnity for lost soybeans in the amount of $6, 139. For the next few years, Driver's crops were insured under policies issued by other AIPs.

         At some point in 2014, Pro Ag determined that Driver had been overpaid $2, 129 for the 2011 soybean indemnity. Driver did not dispute this alleged overpayment, and agreed to repay ten percent immediately, with the remainder due within a year. He signed a “Pro Ag Payment Agreement - Indemnity Overpayment, ” memorializing the agreement on August 8, 2014, and thought he had a year from then to repay the balance. However, under the written terms of the Payment Agreement, the payment had to be postmarked on or before August 1, 2015.

         In 2015, Driver planted 228.3 acres of Burley tobacco. That tobacco was planted in two counties in Tennessee, and three counties in Kentucky. All of the crops were insured through five separate policies issued by ARMtech.

         After bad weather severely damaged the crop, an ARMtech adjuster authorized Driver to destroy 100 acres of tobacco. Based on Driver's calculation, that destruction resulted in a payable indemnity under the ARMtech policies in the combined amount of $448, 712.

         On August 5, 2015, Driver was informed by David Leath, an insurance agent, that the entire balance on the 2011 overpayment was due August 1, 2015, and that Driver risked losing crop insurance coverage because he did not pay by that date. The next morning, Driver and Leath contacted Jeanie Bonewitz, Pro Ag's National Crop Accounting Manager, in an effort to resolve the matter, but were told that there was nothing Driver could do.

         Undeterred and not wanting to lose his crop insurance, Driver sent Pro Ag a cashier's check via FedEx delivery in the amount of $1, 916, which represented the balance of the 2011 overpayment. Driver called Bonewitz to tell her that the check had been sent, but was again told that nothing could be done. Driver then contacted Jeffrey Van Landingham, Pro Ag's Executive VP, who also advised Driver nothing could be done, other than to appeal the determination to the National Appeals Division of the United States Department of Agriculture (“USDA”). Driver also contacted Sam Bruce, National Litigation Manager for ARMTech, and Scarlet Boyd of the Risk Management Agency (“RMA”), which is an agency of the USDA that manages the Federal Crop Insurance Corporation (“FCIC”).

         Meanwhile, Pro Ag received and deposited Driver's $1, 916 payment, and reinstated his insurance effective August 6, 2015, the date the cashier's check was given to FedEx. Nevertheless, on August 12, 2105, Bonewitz notified the RMA that Driver was ineligible for insurance coverage for crop year 2015. In turn, the RMA notified ARMtech on August 18, 2015, that Driver was ineligible for federally-reinsured crop insurance coverage for the 2015 crop year.

         Even though the $448, 712 claim was pending, ARMtech suspended the claims process. It thereafter refused to pay the claim.

         Based on these events, Driver filed his Complaint alleging negligence by both ARMtech and Pro Ag. The essence of his claim is that neither Defendant advised him of the existence of the February 24, 2015, Informational Memorandum PM-15-010 under the Agricultural Act of 2014, which provided that, subject to certain conditions, AIPs could reinstate a policy if the insured demonstrated that the ineligibility was due to the failure to pay a delinquent debt owed to the AIP or FCIC. Nor did either Defendant provide Driver with a “Request for AIP Authorized Reinstatement, ” as required by the Informational Memorandum. Driver also claims that Pro Ag negligently failed to transmit his request for reinstatement to the RMA which led the agency to determine on August 19, 2015 that he was ineligible for insurance for the 2015 crop year.

         In addition to filing suit in this Court, Driver filed a Demand for Arbitration pursuant to the RDA's Bulletin No. MGR-12-003.1. In those proceedings Driver disputed the determinations by Pro Ag and ARMtech that (1) he was ineligible for crop insurance in 2015; (2) he was not eligible for reinstatement under the Informational Memorandum; (3) his 2015 ...

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