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Mt. Valley Farms and v. Federal Crop Insurance

February 7, 2012

MT. VALLEY FARMS AND
LUMBER PRODUCTS, L.L.C. MT. VALLEY TIMBER RESOURCES, L.L.C. PLAINTIFFS,
v.
FEDERAL CROP INSURANCE, U.S. DEPT. OF AGRICULTURE, DEFENDANT.



The opinion of the court was delivered by: Hon. John E. Jones III

Hon. Mildred E. Methvin

MEMORANDUM

THE BACKGROUND OF THIS MEMORANDUM IS AS FOLLOWS:

This matter is before the Court on the Report and Recommendation ("R&R") of Magistrate Judge Mildred E. Methvin (Doc. 25), filed on October 31, 2011, which recommends that this court reverse an administrative decision of the Risk Management Agency ("RMA) of the United States Department of Agriculture ("USDA"), and enter judgment in favor of Plaintiffs, finding that they followed good farming practices ("GFP") in 2009, thus permitting their crop insurance claims be paid. Defendant Federal Crop Insurance Corp. ("Defendant" or "FCIC") filed objections to the R&R on November 11, 2011, to which the Plaintiffs responded. (Docs. 28 and 30). Accordingly, this matter is ripe for disposition. For the reasons set forth below, the Court will adopt the Magistrate Judge's R&R in its entirety.

I. BACKGROUND*fn1

Plaintiffs Mt. Valley Farms and Lumber Products, L.L.C. and Mt. Valley Timber Resources, L.L.C. ("Lumber" and "Timber" respectively or "Plaintiffs" collectively) own and operate apple and peach orchards on separate tracts of land in Adams County, Pennsylvania. Plaintiffs each purchased a crop insurance policy from Agriserve covering their 2009 apple crops.*fn2 The policies covered losses caused by "drought, flood, or other natural disaster," but not losses caused by "the failure of the producer to follow good farming practices." The term good farming practices ("GFP") is defined in the Common Crop Insurance Policy Basic Provisions under the Act as:

The production methods utilized to produce the insured crop and allow it to make normal progress toward maturity and produce at least the yield used to determine the production guarantee or amount of insurance, including any adjustments for late planted acreage, which are:

(1) for conventional or sustainable farming practices, those generally recognized by agricultural experts for the area ... [The insurer] may, or [the producer] may request [the insurer] to, contact FCIC to determine whether or not production methods will be considered to be "good farming practices." (Doc. 7-1, at 37). Bulletin MGR-05-010 states that it is the provider's responsibility to decide:

[W]hether (1) production methods that were used by the producer, or will be used by the producer, are considered GFP in accordance with the terms of the policy, and (2) that the producer followed GFP for the insured unit in question. This will typically occur during the loss adjustment process. (Doc. 7-1, at 26).

In March of 2009, Agriserve sent its inspector and adjuster, Ronald Sollenberger ("Sollenberger"), to Plaintiffs orchards to determine the ability of the Plaintiffs to receive insurance coverage. Sollenberger reported on the Plaintiffs' fertilization program, feral bee pollination process, management of the orchard operations, and of the orchards' condition. Sollenberger's report indicated that 95-100% of the Plaintiffs' acreage was insurable, and that the trees had "sufficient vigor to produce the average yield computer for this unit." (Doc. 7-1, at 67).

On April 13, 2009, Lumber filed a loss claim with Agriserve, and Timber filed similar loss claims on April 13 and July 28, 2009 for the loss of Plaintiffs' 2009 apple crop. In aid of evaluating of the claims, Agriserve sent Sollenberger to inspect plaintiffs' orchards on four separate occasions, three of which were during the growing season. Agriserve also hired Win Cowgill ("Cowgill"), Professor and Head of Rutgers Cooperative Extension in New Jersey, to evaluate Plaintiffs' operations and issue an export report. Agriserve also considered, in connection with the claims evaluation, a report of the USDA Farm Service Agency ("FSA").

Sollenberger's reports attributed the damage done to Plaintiffs' orchards to poor weather and other factors outside of the farmers' control. Cowgill's report, however, conflicted with Sollenberger's four reports. Although Cowgill recognized that he had not observed the orchards during the bloom season, Cowgill nonetheless offered his speculation that "with trees in such a weakened state[,] it would be hard to envision that they had adequate bloom to set crop." (Doc. 7-1, at 78). He declared that Lumber and Timber were "not a well-managed orchard operation." (Id.). The FSA report similarly offered a poor review of the farming practices utilized by Plaintiffs.

On November 16, 2009, Agriserve denied both Plaintiffs' insurance claims, substantially relying upon Cowgill's report and that of the FSA, and largely ignoring the reports of its own adjuster, Sollenberger. Agriserve based its denial of Plaintiffs' claim on its determination that Plaintiffs did not follow recognized GFP for the 2009 crop year. In response, Plaintiffs requested administrative review of Agriserve's decision. The Raleigh Regional Office ("RRO") of the USDA's RMA determined that the Plaintiffs had failed to follow GFP in five respects. On reconsideration, the RMA affirmed the RRO's GFP finding on three of the five grounds. Plaintiffs thereafter sought judicial review of the RMA's decision in this Court. The matter was subsequently referred to Magistrate Judge Methvin for her review. ...


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