Summary of a Recent
Judicial Development in
Crop Insurance

Court of Federal Claims Lacks Jurisdiction
Over Crop Insurance Dispute

Harrison M. Pittman
Staff Attorney

Summary of Decision

In Texas Peanut Farmers v. United States, 59 Fed. Cl. 70 (Fed. Cl. 2003), the United States Court of Federal Claims held that it lacked jurisdiction to hear a crop insurance dispute brought by several peanut farmers.

Background

Several peanut farmers (hereinafter plaintiffs) purchased crop insurance policies to insure their 2001-2002 crops. See id. at 70. The policies required legal disputes arising under them to be brought in accordance with the provisions of 7 U.S.C. § 1508(j), which provides, in relevant part, that if a claim for indemnity is denied "an action on the claim may be brought against the . . . [Federal Crop Insurance Corporation] or Secretary only in the United States district court for the district in which the insured farm is located." Id. (emphasis omitted).

Prior to 2002, the plaintiffs' "quota" peanuts were covered at $0.31 per pound, and their "non-quota" peanuts were covered at $0.16 per pound. See id. In 2002, however, Congress repealed the peanut quota program. See id. Congress left the non-quota peanut program intact, but changed the non-quota peanut level of coverage to $0.1775 per pound. See id. at 70-71. Thus, all of the plaintiffs' peanut crops became insured at $0.1775 per pound, rather than at $0.31 per pound. See id. at 71. After the plaintiffs' peanut crops were seriously damaged in 2002, they filed loss claims seeking indemnity at the $0.31 per pound level of coverage for which they originally contracted. See id. They were informed, however, that their losses would only be covered at $0.1775 per pound. See id. The plaintiffs then brought an action against the United States Department of Agriculture (USDA) to recover the difference between the $0.31 and $0.1775 levels of coverage. See id.

Arguments

The plaintiffs raised two main arguments. See id. First, the plaintiffs argued that the Court of Federal Claims could exercise jurisdiction over the action because the Federal Crop Insurance Corporation (FCIC) was not a party to the action. See id. at 72. They asserted that the FCIC was not a party since it was the USDA that breached their crop insurance contracts when it implemented the 2002 legislation that repealed the peanut quota program. See id. Second, the plaintiffs argued that if the Claims Court lacked exclusive jurisdiction, then it could exercise concurrent jurisdiction with federal district courts under the "Little" Tucker Act, 28 U.S.C. § 1346. See id. The USDA contended that the Claims Court lacked subject matter jurisdiction over the plaintiffs' action because, under the language of the plaintiffs' crop insurance policies and under 7 U.S.C. § 1508(j), the plaintiffs action could only be brought in a federal district court. See id.

Analysis and Holdings

The court held that it lacked jurisdiction to hear the plaintiffs' breach of contract claims. See id. It stated that "[t]he statute governing claims under a FCIC crop insurance policy makes it clear that jurisdiction lies in the United States district court in the district where the peanut farms are located." Id. at 72-73. It added that

It is well-settled that where there is a specific jurisdictional statute, it is controlling. "[A] contract will not fall within the purview of the Tucker Act if Congress has placed jurisdiction over it elsewhere." Here, there is a specific jurisdictional statute governing crop insurance contract claims. Plaintiffs are therefore bound by that statute. . . . In these circumstances this court has no choice but to dismiss plaintiffs' breach of contract claims.

Id. (citations omitted).

The case was decided on December 16, 2003; this summary was posted Sept. 1, 2004.