198 F. Supp. 3d 832
M.D. Tenn.2016Background
- Plaintiffs (local burley tobacco farmers in Macon County, TN) purchased federally reinsured Multiple Peril Crop Insurance (MPCI) for 2010 from ProAg through local agents Leath and Law.
- Farmers were concerned about a Basic Provisions eligibility rule requiring an insurable crop on the land one year within the prior three years.
- ProAg underwriting supervisor Tonya Peters told agents (and they relayed to farmers) that a prior hay crop would qualify the land and no RMA written agreement was required; Plaintiffs relied on that advice and planted tobacco.
- Plaintiffs suffered crop losses in 2010; ProAg initially paid claims but later rescinded coverage, asserted the acres were ineligible, and sought repayment (which ProAg received).
- Plaintiffs filed state-law negligent and intentional (fraudulent) misrepresentation claims against ProAg; defendant moved for summary judgment arguing preemption, failure to exhaust administrative remedies/arbitration, and unreasonable reliance.
- The court denied summary judgment, holding genuine fact issues exist on misrepresentation and that Plaintiffs’ claims for pecuniary loss are not preempted by federal crop-insurance law/regulations in this case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state-law misrepresentation claims are barred by federal crop-insurance preemption | Misrepresentation claims are torts separate from the MPCI policy; Plaintiffs seek tort damages unrelated to policy benefits | Federal law, regulations, and policy terms preempt extra-contractual tort claims and require FCIC determinations before awards for such damages | Court: Plaintiffs’ pecuniary losses tied to misrepresentations are not preempted here; summary judgment on preemption denied |
| Whether Plaintiffs reasonably relied on ProAg/Peters’ representations | Reliance on agent representations was reasonable; reliance is generally a fact question under Tennessee law | Reliance was unreasonable as a matter of law because Plaintiffs were bound by policy terms and should know eligibility rules | Court: Reasonable-reliance disputes create genuine fact issues; summary judgment denied |
| Whether Plaintiffs failed to exhaust mandatory administrative/arbitration remedies | Plaintiffs argue this is a tort claim not seeking policy benefits, so no administrative exhaustion/arbitration prerequisite | Defendant contends FCIC-required appeals/arbitration under the policy/regulations are prerequisites to suit | Court: Did not grant summary judgment on this ground; preemption/exhaustion arguments insufficient to dispose of tort claims at summary judgment |
| Whether Defendant is entitled to summary judgment on negligent and intentional misrepresentation claims | Plaintiffs presented evidence that agents communicated false eligibility info (Peters via agents), plaintiffs relied, and suffered damages | Defendant argues constructive knowledge of policy terms and lack of reasonable reliance; also invokes regulatory developments (FADs) to bar tort remedies | Court: Evidence permits a reasonable jury to find ProAg knowingly misrepresented eligibility; summary judgment denied on those claims |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (1976) (standard for summary judgment and genuine-issue inquiry)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting principles)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (inferences and summary judgment standards)
- Walker v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301 (Tenn. 2008) (elements of fraud/intentional misrepresentation under Tennessee law)
- Robinson v. Omer, 952 S.W.2d 423 (Tenn. 1997) (elements of negligent misrepresentation in Tennessee)
- Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947) (federal crop-insurance program preemption and federal interest in the scheme)