Argued: December 13, 2018
from the United States District Court No. 5:17-cv-00513-D;
5:16-mc-00018-D for the Eastern District of North Carolina,
at Raleigh. James C. Dever III, District Judge.
Matthew William Buckmiller, STUBBS & PERDUE, P.A.,
Raleigh, North Carolina, for Appellant.
Jefferson Allen, HUNT ROSS & ALLEN, Clarksdale,
Mississippi, for Appellee.
M. Crump, BROWN, CRUMP, VANORE & TIERNEY, L.L.P.,
Raleigh, North Carolina, for Appellee.
KEENAN, FLOYD, and THACKER, Circuit Judges.
THACKER, CIRCUIT JUDGE.
case, Williamson Farm ("Appellant") challenges the
district court's decision to vacate an arbitration award
that Appellant won against Diversified Crop Insurance
("Appellee"), a private insurance company that sold
federal crop insurance policies to Appellant. Appellant
asserts that the district court erred in denying its motion
to confirm the arbitration award and granting Appellee's
motion to vacate on the basis that the arbitrator exceeded
the strong presumption in favor of confirming arbitration
awards pursuant to the Federal Arbitration Act
("FAA"), we hold that Appellee met its heavy burden
to prove that the arbitrator exceeded her powers by awarding
extra-contractual damages, contrary to both the policy and
binding authority from the Federal Crop Insurance Corporation
("FCIC"). Therefore, we affirm.
Background on the Federal Crop Insurance Program
policies at issue in this case are federal crop insurance
policies, which Appellee sold pursuant to the Federal Crop
Insurance Act ("FCIA"), 7 U.S.C. §§ 1501-
1524, 1531, and accompanying regulations issued by the FCIC.
These policies are not typical private insurance agreements,
so a brief discussion of the federal government's role in
crop insurance agreements is necessary.
federal crop insurance program provides farmers and
agricultural entities in the United States with crop
insurance protection, a venture that was considered too risky
for traditional private insurers when the FCIA was enacted in
1938. As the Supreme Court explained, "the Government
engaged in crop insurance as a pioneer. Private insurance
companies apparently deemed all-risk crop insurance too great
a commercial hazard." Fed. Crop Ins. Corp. v.
Merrill, 332 U.S. 380, 383 n.1 (1947).
provide this protection to farmers, the FCIA established the
FCIC, a government corporation within the United States
Department of Agriculture's Risk Management Agency that
administers the federal crop insurance program. 7 U.S.C.
§ 1503. The FCIC does not directly issue crop insurance
policies to farmers. Instead, it relies on "approved
insurance providers" -- private insurers such as Appellee --
to issue federal crop insurance policies to farmers like
Appellant. 7 U.S.C. § 1502(b)(2). Then, when certain
eligibility conditions are met, the FCIC reinsures the
approved insurance providers' losses and reimburses their
administrative and operating costs.
order to qualify for reinsurance through the FCIC, approved
insurance providers must comply with the FCIA and the
accompanying regulations issued by the FCIC governing the
sale, issuance, and servicing of federal crop insurance
policies. 7 C.F.R. § 400.168; see also Felder v.
Fed. Crop Ins. Corp., 146 F.2d 638, 640 (4th Cir. 1944);
Davis v. Producers Agric. Ins. Co., 762 F.3d 1276,
1284 (11th Cir. 2014). Accordingly, "even though the
crop insurance policy is between the farmer and an approved
insurance provider," the FCIA "establishes the
terms and conditions of insurance." Davis, 762
F.3d at 1284 (citation omitted).
all approved insurance providers issue a uniform policy
drafted by the FCIC known as the "Common Crop Insurance
Policy," the text for which is provided at 7 C.F.R.
§ 457.8. Both policies at issue in this case mirrored
the Common Crop Insurance Policy. Additionally, the FCIC sets
premium rates for each county and crop insured, subsidizes
and receives premiums, and pays claims. In short, the FCIC is
extensively involved in and exerts control over all aspects
of the federal crop insurance program.
Farm Service Agency ("FSA"), another agency within
the Department of Agriculture, works with the Risk Management
Agency and the FCIC to implement the federal crop insurance
program through FSA's network of state and county field
offices. As relevant to this case, insureds and approved
insurance providers are required to submit program
eligibility, acreage reporting, and other necessary forms to
their local FSA office in order to receive federal crop
insurance coverage through the FCIC.
Appellant's Underlying Policy Claims
case centers on two policies issued by Appellee to insure
Appellant's 2013 crops: (1) the Richmond County Policy;
and (2) the Montgomery County Policy. Under the Richmond
County Policy, Appellee listed Farm Number
2172. Under the Montgomery County Policy,
Appellee listed Farm Numbers 1870 and 4168.
many years, Appellant purchased its crop insurance through
insurance agent Lynn Saintsing, until Saintsing sold his
agency to Appellee in 2012. During his time as
Appellant's insurance agent, Saintsing's regular
practice was to help Appellant complete the necessary forms
and submit them to the proper FSA office to insure
not unusual for a farm located in one county to be
administered by an FSA office in another county, based on the
owner's preferences or if the farm's county did not
have an FSA office. Such was the case with Appellant's
Farm 2172, which was located in Montgomery County. In 1996,
the Montgomery County FSA office closed, and administration
of Farm 2172 shifted to Richmond County. Accordingly, since
1996, Farm 2172 had been listed on forms filed with the FSA
office in Richmond County even though it was located in
Montgomery County. Saintsing was aware of this, since he
helped Appellant fill out the forms and prepare maps of the
to Appellee's acquisition of Saintsing's insurance
agency, Saintsing issued Appellant a single policy that
covered all of Appellant's crops regardless of the county
in which the farm was located.
Crop Loss Claim: Farm 2172
trouble began for Appellant after Saintsing sold his business
to Appellee in 2012. Unlike the single policy previously
issued by Saintsing, Appellee issued Appellant separate
policies for each county in which a farm was geographically
located, regardless of where the farm was administered.
Saintsing -- then an agent for Appellee -- helped Appellant
prepare the necessary forms to be submitted to the FSA. But
on those forms, Saintsing listed Farm 2172 on the Richmond
County Policy (where it was administered), rather than the
Montgomery County Policy (where it was geographically
2013, Appellant experienced crop loss due to deer on Farm
2172 and expected this loss to be covered under its crop
insurance policy. Therefore, Appellant filed a claim for the
loss with Appellee. However, Appellee denied the claim
"on the technicality that Farm 2172, located in
Montgomery County, was listed on [forms] filed with the FSA
in Richmond County and was therefore listed on the wrong
policy." J.A. 13. As noted, Saintsing had assisted Appellant
in completing these forms and facilitated their filing with
Prevented Planting Claim: Farms 1870 and 4168
also seeks recovery for a prevented planting
claim under the Montgomery County Policy. The
summer of 2013 was excessively rainy. As a result, Appellant
was unable to plant on Farms 1870 and 4168.
the period that Appellant was unable to plant, another of
Appellee's agents, Jason Nifong, visited Appellant's
farmland to aid Appellant in preparing its FSA forms. During
this visit, Nifong advised Appellant that it could file a
prevented planting claim as a result of the rainy weather.
Following Nifong's visit, Appellant chose to file a
prevented planting claim and did not attempt to plant on
in preparing the FSA forms, Nifong failed to note the
prevented planting acres on the correct form, and he did not
explain to Appellant that failure to report the acres on that
specific form would bar the prevented planting claim.
Ultimately, Appellee denied Appellant's claim based on
this failure to report.
sought arbitration pursuant to Section 20(a) of the policy
based on Appellee's denials of its crop loss and
prevented planting claims. See J.A. 207, §
20(a) ("If you and we fail to agree on any determination
made by us . . . ...