In Re: Peanut Crop Insurance Litigation ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1513
In Re: PEANUT CROP INSURANCE LITIGATION, MDL-1634.
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PEANUT FARMERS,
Plaintiff - Appellant,
v.
WILLIAM J. MURPHY, Administrator, Risk Management Agency,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. Malcolm J. Howard,
Senior District Judge. (4:05-cv-00008-H)
Submitted: April 7, 2011 Decided: April 13, 2011
Before WILKINSON, KING, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
R. Daniel Boyce, BOYCE & ISLEY, PLLC, Raleigh, North Carolina,
for Appellant. George E. B. Holding, United States Attorney,
Eric D. Goulian, R. A. Renfer, Jr., Assistant United States
Attorneys, Raleigh, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Appellants (the “Peanut Farmers”) appeal the district
court’s order granting summary judgment to the Government and
dismissing the Peanut Farmers’ breach of contract and due
process claims. Finding no error, we affirm.
The Peanut Farmers’ crops were, at times relevant to
this appeal, reinsured by the Federal Crop Insurance Corporation
(“FCIC”), which is in turn administered by the U.S. Department
of Agriculture’s (“USDA”) Risk Management Agency (“RMA”). The
Peanut Farmers each purchased a Multiple Peril Crop Insurance
(“MCPI”) policy for their peanut crops for the 2002 crop year.
The Appellees in this case include the Secretary of Agriculture
and the administrator of the RMA, but will be collectively
referred to as “the Government.”
Prior to 2002, statutes authorized the Secretary of
Agriculture to set quotas on the amount of peanuts that could be
marketed as food in the United States. Shares of the annual
national quota were allocated to specific farms on the basis of
their past production history. 7 U.S.C. § 1358-1 (2000)
(repealed 2002). Holders of rights under the quotas derived
significant benefits from the ability to sell peanuts in the
domestic market as food, thus commanding the higher price
dictated by the value of food-use peanuts. “Non-quota” peanuts,
by contrast, commanded a lower market price because their end-
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use (conversion to meal or peanut oil) value was significantly
lower than that of food-use peanuts.
The difference in value of “quota” and “non-quota”
peanuts was reflected in the amount that each type of peanut
loss was indemnified under the MCPI policy. During the crop
years immediately preceding 2002, the loss of quota peanuts was
indemnified at a rate of 31 cents per pound, while non-quota
peanuts losses were indemnified at a rate of 16 cents per pound.
The rate at which the Government was to pay under an MCPI policy
depended on the allocation of quota to the insured farm. We
previously summarized the formula in part as follows:
If an insured farm has not been allocated an effective
poundage marketing quota, . . . the entire production
would be insured at the non-quota rate. Thus, when an
annual farm poundage quota allocation for an insured
farm is “zero,” none of that farm’s peanut production
is insured at the quota rate. . . . After determining
the amount of insured quota and non-quota peanuts,
those amounts are multiplied by their respective price
elections.
In re Peanut Crop Ins. Litg., 524 F.3d 458, 465 (4th Cir. 2008).
In late 2001 and early 2002, the USDA announced its
peanut quotas for the 2002 crop year. The USDA also informed
holders of quota rights that pending legislation might alter or
rescind the peanut quota program. In early 2002, the President
signed into law the Farm Security and Rural Investment Act of
2002, Pub.L. No. 107-171, §§ 1301-1310, 116 Stat. 134, 166-83
(2002) (the “2002 Farm Bill”). In relevant part, the 2002 Farm
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Bill repealed the peanut quota system, replaced it with other
price support measures, and mandated that the amount used to
calculate indemnity for non-quota peanut losses under the 2002
MCPI policy would increase from 16 cents per pound to 17.75
cents per pound. 2002 Farm Bill § 1310(c). After crop losses
in 2002, the Peanut Farmers sought indemnification and were
indemnified at the 17.75 cent rate pursuant to the 2002 Farm
Bill.
The Peanut Farmers instituted a series of lawsuits
that challenged the outcome of their indemnification requests.
Ultimately, several class actions against the Government were
consolidated in the district court for pretrial proceedings.
The court granted summary judgment in favor of the Peanut
Farmers on their breach of contract claims, and the Government
appealed. Barnhill v. Davidson, No. 4:02-cv-00159-H (E.D.N.C.
July 22, 2004). On appeal, we concluded that the court erred,
vacated its judgment, and remanded for disposition of the Peanut
Farmers’ remaining claims. In re Peanut Crop Ins. Litig., 524
F.3d at 458. On remand, the district court granted summary
judgment in favor of the Government on the Peanut Farmers’ due
process claims. The Peanut Farmers noted a timely appeal.
We review de novo a district court’s order granting
summary judgment and view the facts in the light most favorable
to the nonmoving party. Rowzie v. Allstate Ins. Co., 556 F.3d
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165, 167 (4th Cir. 2009). Summary judgment is appropriate when
no genuine issue of material fact exists and the moving party
“is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). Summary judgment will be granted unless “a reasonable
jury could return a verdict for the nonmoving party” on the
evidence presented. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986).
While the Peanut Farmers raise several claims of
error, they are, at bottom, a reiteration of the same basic
argument: they allege that they were entitled to certain
benefits under the MCPI policy and that the Government deprived
them of those benefits without due process of law. * Our review
of those claims leads us to conclude that they all rest on
premises that we rejected in our first review of this case.
First, the Peanut Farmers assert that they were
entitled to the benefit of the 31 cent indemnity rate and they
were deprived of that right when the 2002 Farm Bill was enacted.
They refer to this as a “contract right” and note that they
*
The Peanut Farmers additionally claim that they were
subject to an unlawful taking without compensation in violation
of the Fifth Amendment. This argument was not raised in the
complaint, and was not brought before the district court until
the Peanut Farmers’ response to the Government’s motion for
summary judgment after remand, seven years after the complaint
was filed. Because the argument was not presented before the
district court in a timely manner, we do not consider it.
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relied on the benefits conferred by the MCPI policies. This
court, however, has rejected that argument. We concluded that
the 31 cent rate was not guaranteed by the MCPI policy and that
the 2002 Farm Bill did not actually adversely amend the MCPI
policies. Accordingly, the Peanut Farmers’ arguments that they
were subject to an adverse retroactive legislative action and
deprived of a contract right without due process are unavailing.
In addition, the Peanut Farmers claim that they relied
on the 31 cent rate, and that because of their reliance, the
2002 Farm Bill was arbitrary and they should be entitled to the
difference in rates. Again, though, we concluded that, at least
with respect to the Peanut Farmers’ theory of reasonable
reliance in the contract context, any actual reliance they have
shown was not reasonable. In re Peanut Crop Ins. Litig., 524
F.3d at 475-76. The Peanut Farmers were on notice well before
they signed the 2002 MCPI policies that the Government might
eliminate the quota system altogether. Moreover, as we
discussed, there has been “persistent congressional refinement
of the peanut quota program,” and the Peanut Farmers cannot
argue they were taken by surprise by this legislative action.
Id. at 476.
We see no reason to conclude that the Peanut Farmers’
unreasonable reliance should be accorded more weight in the
context of their due process arguments. While we remain
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sympathetic to the Peanut Farmers’ losses, the law of this case
is clear that where the Government has provided ample warning of
pending legislative changes and where the insured is dealing in
an area of heavy, and frequently shifting, government
regulation, there is no basis to argue reliance on the pre-
existing statutory scheme.
Accordingly, we affirm the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
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