Terry R. Balvin v. Rain and Hail, LLC, 943 F.3d 1134

Background

Rain and Hail, LLC issues federal crop insurance under a Standard Reinsurance Agreement with the FCIC; FCIC/RMA sets policy terms and certain interpretations must be obtained from FCIC.
In 2015 Rain and Hail issued a crop insurance policy to farmer Terry Balvin; Balvin claimed loss from delayed harvest due to moisture and blizzard, but Rain and Hail denied the claim as a “non-loss” because appraised values exceeded the policy guarantee.
Balvin invoked the policy’s arbitration clause (which incorporated AAA rules); an arbitrator denied Balvin’s claim, finding the appraised values supported denial and also finding Balvin had abandoned his crop by failing to harvest timely.
Balvin moved to vacate the arbitration award in district court; the district court vacated the award in part, concluding the arbitrator improperly interpreted a policy/procedure term (“appraised value”) without obtaining FCIC interpretation as required by the policy.
Rain and Hail appealed and Balvin cross-appealed. The Eighth Circuit reviewed de novo legal conclusions and with high deference to the arbitrator’s substantive determinations.
The Eighth Circuit held the arbitrator did not exceed his powers in relying on the appraised values (treating the dispute as evidentiary/credibility), and even if the arbitrator erred in making a good-farming-practices/abandonment finding, that error was harmless because the appraised-value ground independently supported denial; the court remanded with instructions to confirm the arbitration award.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the arbitrator exceeded his powers by interpreting a policy or FCIC procedure ("appraised value") without FCIC interpretation	Balvin: appraised-value interpretation required FCIC determination because required appraisal forms were incomplete/unsigned	Rain and Hail: the dispute was evidentiary/credibility about appraisals, within arbitrator's authority	Held: Arbitrator did not exceed powers; parties did not present a policy-interpretation question at arbitration and arbitrator made an evidentiary/credibility call
Whether the arbitrator exceeded his powers by finding Balvin abandoned the crop / making a good-farming-practices determination	Balvin: abandonment finding necessarily required a GFP determination that the policy reserves for Rain and Hail and FCIC review	Rain and Hail: arbitrator may resolve factual questions raised in arbitration; even if unusual, arbitrator acted within scope	Held: Even assuming excess in making a GFP/abandonment finding, error was harmless because denial stood on the appraised-value ground; award to be confirmed

Key Cases Cited

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (arbitrator exceeds powers only when dispensing his own brand of justice)
Beumer Corp. v. ProEnergy Servs., LLC, 899 F.3d 564 (8th Cir. 2018) (arbitrator does not exceed powers by making legal or factual errors; confirm if arguably construing contract)
SBC Advanced Sols., Inc. v. Commc’ns Workers of Am., Dist. 6, 794 F.3d 1020 (8th Cir. 2015) (extraordinary deference to arbitration awards)
Green v. SuperShuttle Int’l, Inc., 653 F.3d 766 (8th Cir. 2011) (incorporation of AAA rules permits arbitrator to decide threshold arbitrability)
Great Am. Ins. Co. v. Russell, 914 F.3d 1147 (8th Cir. 2019) (serious error by arbitrator is not grounds for vacatur if within scope of authority)
CenterPoint Energy Res. Corp. v. Gas Workers Union, Local No. 340, 920 F.3d 1163 (8th Cir. 2019) (arbitrator’s disregard of contract must be clear to justify vacatur)
Ploetz for Laudine L. Ploetz, 1985 Tr. v. Morgan Stanley Smith Barney LLC, 894 F.3d 894 (8th Cir. 2018) (standard of review: de novo legal review, factual review for clear error)
Coutee v. Barington Capital Grp., L.P., 336 F.3d 1128 (9th Cir. 2003) (arbitrator’s error that does not affect outcome may be harmless)
Brentwood Med. Assocs. v. United Mine Workers of Am., 396 F.3d 237 (3d Cir. 2005) (harmless-arbitrator-error doctrine)