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Overdorff v. Nau Country Insurance Co.

United States District Court, W.D. Pennsylvania

July 31, 2018

BRADLEY OVERDORFF, Plaintiff,
v.
NAU COUNTRY INSURANCE COMPANY, Defendant.

          OPINION AND ORDER RE: ECF NO. 9

          Maureen P. Kelly Chief Magistrate Judge

         Plaintiff Bradley Overdorff ("Plaintiff or "Overdorff') initiated this action on January 18, 2018, against Defendant NAU Country Insurance Company ("Defendant" or "NAU"), with a Complaint to Vacate Award of Arbitrator. ECF No. 1. Through his Complaint, Overdorff alleges that the designated arbitrator exceeded his authority in concluding that Overdorff failed to timely initiate arbitration of an underlying crop insurance dispute and therefore was barred from obtaining relief Overdorff seeks an Order vacating the arbitrator's Final Award. ECF No. 1-3.

         Pending now before the Court is a Motion to Dismiss filed on behalf of NAU for failure to state a claim upon which relief may be granted. ECF No. 9. NAU contends that pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., Overdorff s failure to file suit within three months of the arbitrator's Final Award precludes judicial consideration or review of the instant Complaint. Alternatively, NAU contends that the arbitrator correctly determined that jurisdiction was lacking as a result of Overdorff s failure to timely commence arbitration proceedings, and so relief is not warranted or available here. For the reasons that follow, the Motion to Dismiss will be granted.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In the context of the pending Motion to Dismiss, the following facts alleged in the Complaint are accepted as true. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). Overdorff is an individual who at all times relevant to this proceeding, operated a farm of approximately 150 acres in Indiana County, Pennsylvania. ECF No. 1 ¶¶ 1, 3. Overdorff purchased crop insurance through NAU for his 2011 corn crop. Id. ¶¶ 2, 4. Crop insurance is issued directly or reinsured through the Federal Crop Insurance Corporation ("FCIC") pursuant to the Federal Crop Insurance Act, 7 U.S.C. § 1501, et seq., and is administered by the federal Risk Management Agency ("RMA"). In this case, NAU's policy was reinsured by the FCIC, with administrative oversight by the RMA.[1]

         After sustaining damage to his corn crop for the year 2011, Overdorff presented a claim under the policy, which was paid by NAU in the amount of $ 13, 417. ECF No. 1 ¶¶ 5-7. On March 26, 2013, pursuant to its oversight function, RMA conducted a compliance review, and determined that Plaintiff abandoned his 2011 corn crop and had failed to follow good farming practices. Id. ¶ 8. Based upon these findings, RMA concluded that Plaintiff had not sustained a covered loss. In accordance with RMA's determination, on July 17, 2013, [2] NAU served Overdorff with a Notice of Debt equal to the indemnity payment remitted, and cited both crop abandonment and failure to follow good farming practices as the basis for the decision. Id. ¶ 10. In the Notice of Debt, NAU demanded payment in the amount of $13, 417 within thirty (30) days, and further stated:

If you do not agree with our decision, you may seek a review of the decision by filing a written request for review within thirty (30) days from the date of this letter. Your written request must be filed with this office at the address shown above and must be submitted with any information you have regarding our decision. A review does not take the place of or limit your right to arbitration.

ECF No. 15-3 at 16 (emphasis added).[3]

         Overdorff timely sought review of the decision, but did not initiate arbitration proceedings. Overdorff and NAU exchanged correspondence over the course of the next two years, regarding whether Plaintiff had exercised good farming practices. ECF No. 1 ¶¶ 11, 12. By letter dated July 22, 2015, NAU notified Overdorff that RMA determined that reconsideration based upon alleged good farming practices would not to be afforded. NAU reminded Overdorff that an appeal of the original decision could be pursued in accordance with the identified provisions of the crop insurance policy, including the arbitration provision. Id. ¶ 13. It is apparent that because the Notice of Debt was also predicated upon a conclusion that Overdorff had abandoned the crop at issue, RMA determined that the issue of whether Overdorff exercised "good farming practices," an alternative basis for denial of coverage, was moot. ECF No. 1-3 at 4; 15-3 at 40. Thereafter, Overdorff commenced arbitration proceedings.

         In pertinent part, the NAU policy at issue expressly provides as follows:

20. Mediation, Arbitration, Appeal, Reconsideration, and Administrative and Judicial Review.
(a) If you and we fail to agree on any determination made by us except those specified in section 20(d) [with respect to good farming practices] or (e) [suit against the FCIC for determinations made by it], the disagreement may be resolved through mediation ... If you and we do not agree to mediation, the disagreement must be resolved through arbitration in accordance with the rules of the American Arbitration Association (AAA), ....
(b) Regardless of whether mediation is elected:
(1) The initiation of arbitration proceedings must occur within one year of the date we denied your claim or rendered the determination with which you disagree, whichever is later;
(2) If you fail to initiate arbitration in accordance with section 20(b)(1) and complete the process, you will not be able to resolve the dispute through judicial review;
(3) If arbitration has been initiated in accordance with section 20(b)(1) and completed, and judicial review is sought, suit must be filed not later than one year after the date the arbitration decision was rendered; and
(4) In any suit, if the dispute in any way involves a policy or procedure interpretation, regarding whether a specific policy provision or procedure is applicable to the situation, how it is applicable, or the meaning of the any policy provision or procedure, an interpretation must be obtained from FCIC in accordance with 7 CFR part 400, subpart X or such other procedures as established by FCIC. Such interpretation will be binding.
(c) Any decision rendered in arbitration is binding on you and us unless judicial review is sought in accordance with section 20(b)(3). Notwithstanding any provision in the rules of the AAA, you and we have the right to ...

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