Summary of a Recent
Judicial Development in
Crop Insurance

District Court Requires Crop Insurance
Dispute to Be Submitted to Arbitration

Harrison M. Pittman
Research Assistant Professor of Law

In Farmers Alliance Mutual Ins. Co. v. Poco, LLC, No. CV-05-5063-FVS, slip. op., 2005 WL 2035516 (E.D. Wash. Aug. 23, 2005), the United States District Court for the Eastern District of Washington held that a crop insurance dispute should be submitted to arbitration. The insureds’ crop insurance policy provided in relevant part that “[i]f you and we fail to agree on any factual determination made by us, the disagreement will be resolved in accordance with the rules of the American Arbitration Association . . . .” Farmers Alliance, 2005 WL 20335516, at *1. The insureds’ policy coverage also required the insureds to have in place a “processor contract” with a “processor.” Id. After the insureds submitted a crop loss claim for losses they suffered regarding their 2004 potato crop, a dispute arose as to whether their losses were covered due to allegations that a buyer of the insureds potatoes was not actually a “processor” but rather was in the business of packing and storing potatoes. See id. The insureds argued that the dispute involved a factual determination and, therefore, should be submitted to arbitration. See id. The court agreed with the insureds and held that “pursuant to the . . . [crop insurance policy], this case should be submitted to arbitration.” Id.I at *2. It added that its holding was consistent with other case law, including Ledford Farms, Inc. v. Fireman’s Fund Ins. Co., 184 F.Supp.2d 1242 (S.D. Fla. 2001) and Nobles v. Rural Cmty. Ins. Servs., 122 F.Supp.2d 1290 (M.D. Ala. 2000).

The case was decided on August 23, 2005; this summary was posted Mar. 3, 2006.