Eleventh Circuit Reverses District Court's Vacatur of Arbitration Award | Practical Law

Eleventh Circuit Reverses District Court's Vacatur of Arbitration Award | Practical Law

In Davis v. Producers Agricultural Insurance Company, the US Court of Appeals for the Eleventh Circuit held that the district court erred in vacating an arbitrator's decision to deny the plaintiff's crop insurance claim.

Eleventh Circuit Reverses District Court's Vacatur of Arbitration Award

Practical Law Legal Update 5-577-7125 (Approx. 3 pages)

Eleventh Circuit Reverses District Court's Vacatur of Arbitration Award

by Practical Law Litigation
Published on 08 Aug 2014 • USA (National/Federal)
In Davis v. Producers Agricultural Insurance Company, the US Court of Appeals for the Eleventh Circuit held that the district court erred in vacating an arbitrator's decision to deny the plaintiff's crop insurance claim.
On August 6, 2014, the US Court of Appeals for the Eleventh Circuit in Davis v. Producers Agricultural Insurance Company held that the district court erred in vacating an arbitrator's decision to deny the plaintiff's claim (No. 13-10648, (11th Cir. Aug. 6, 2014)).
Curtis Davis was a farmer in Georgia who maintained a crop insurance policy under Producers Agricultural Insurance Company (ProAg). After a low yield in 2008, Davis submitted a claim to ProAg. In June 2009, ProAg requested more information to support Davis's claim and gave him 30 days to respond. In July 2009, about 40 days after ProAg's prior letter, ProAg formally denied Davis's claim because it had not received a response. Four months after the denial in November 2009, David responded and filed for arbitration of his claim. During arbitration, the arbitrator denied Davis's claim in its entirety, finding that his November response was untimely.
Davis thereafter filed an action in district court, seeking vacatur of the arbitration award on the grounds that the arbitrator exceeded his power under section 10(a)(4) of the FAA. He argued that:
  • The arbitrator engaged in interpretation, which is a power reserved for the Federal Crop Insurance Corporation (FCIC), rather than application of the policy terms.
  • Failure of the arbitrator to issue the award within 30 days after the close of the hearing, as required by Rule 41 of the American Arbitration Association (AAA) Commercial Arbitration Rules and Mediation Procedures, required vacatur of the award.
The district court granted summary judgment for Davis, finding that the arbitrator impermissibly engaged in interpretation of policy. In its decision, the district court analyzed whether ProAg's June letter should be considered an extension provided in the policy or whether it was a new, first request for information not required in the policy (and therefore not subject to the policy's deadlines). It concluded that the timeliness issue decided by the arbitrator was the type of matter reserved for interpretation by the FCIC, and not subject to arbitration. ProAg appealed.
The Eleventh Circuit cited the FCIC's amicus curiae brief and noted that the FCIC had exercised its prerogative and provided an interpretation making clear in an earlier ruling that an insurer can impose a reasonable deadline. The reasonableness of the deadline was therefore a matter for the arbitrator to consider.
The court also rejected Davis's argument that the arbitrator's failure to issue the award within the 30 days provided in AAA Rule 41 was grounds for vacatur. Following case law and AAA Rule 37, the court found that Davis waived this argument when he did not object to the expiration of the 30-day period until after he received the award. Additionally, he did not suffer any prejudice from the brief delay in the issuance of the award.