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Bruhn Farms Joint Venture v. Fireman's Fund Insurance Co.

United States District Court, N.D. Iowa, Western Division

May 8, 2015


For Bruhn Farms Joint Venture, Plaintiff: Bradley J Nelson, LEAD ATTORNEY, Norelius & Nelson, PC, Denison, IA; Scott H Peters, LEAD ATTORNEY, Peters Law Firm PC, Council Bluffs, IA.

For Fireman's Fund Insurance Company, Defendant: Elizabeth Thornton Bufkin, William Kurt Henke, LEAD ATTORNEYS, PRO HAC VICE, Henke - Bufkin, PA, Clarksdale, MS; Michael W Ellwanger, Rawlings Ellwanger Jacobs Mohrhauser & Nelson, L.L.P., Sioux City, IA.




This case is before me on defendant's February 27, 2015, motion (Doc. No. 24) for summary judgment. Plaintiff has filed resistance materials (Doc. Nos. 25, 29, 30) and defendant has filed a reply (Doc. No. 31). Neither party has requested oral argument. See N.D. Ia. L.R. 7(c). The motion is fully submitted and ready for decision.


Plaintiff Bruhn Farms Joint Venture (Bruhn) commenced this action on October 3, 2013, by filing a petition (Doc. No. 3) against defendant Fireman's Fund Insurance Company (FFIC) in the Iowa District Court for Crawford County. The petition alleges that Bruhn and FFIC are parties to a contract of insurance. Doc. No. 3 at ¶ ¶ 5-6. The petition further alleges that hail storms in 2012 damaged Bruhn's crops, that the damage is covered by the insurance contract and that FFIC has failed to fully compensate Bruhn for the amount of the loss. Id. at ¶ ¶ 7-10. Bruhn seeks damages for breach of contract and also contends that punitive damages are appropriate on a theory of first party bad faith. Id. at pp. 2-4.

FFIC filed a notice (Doc. No. 2) of removal to this court on November 4, 2013, invoking the court's diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). FFIC then filed an answer (Doc. No. 6) denying Bruhn's operative allegations and raising various affirmative defenses. This case was referred to me (Doc. No. 12) on January 16, 2014, after the parties unanimously consented to trial, disposition and judgment by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c)(3). Discovery has now closed and trial is scheduled to begin July 13, 2015. See Doc. Nos. 22, 23.


Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when " the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A material fact is one that " 'might affect the outcome of the suit under the governing law.'" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, " the substantive law will identify which facts are material." Id. Facts that are " critical" under the substantive law are material, while facts that are " irrelevant or unnecessary" are not. Id.

An issue of material fact is genuine if it has a real basis in the record, Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)), or when " 'a reasonable jury could return a verdict for the nonmoving party' on the question." Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248). Evidence that only provides " some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, or evidence that is " merely colorable" or " not significantly probative," Anderson, 477 U.S. at 249-50, does not make an issue of material fact genuine.

As such, a genuine issue of material fact requires " sufficient evidence supporting the claimed factual dispute" so as to " require a jury or judge to resolve the parties' differing versions of the truth at trial." Anderson, 477 U.S. at 248-49. The party moving for entry of summary judgment bears " the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue." Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise, designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323.

In determining if a genuine issue of material fact is present, I must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88. Further, I must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, " because we view the facts in the light most favorable to the nonmoving party, we do not weigh the evidence or attempt to determine the credibility of the witnesses." Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004). Instead, " the court's function is to determine whether a dispute about a material fact is genuine." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376-77 (8th Cir. 1996).


Viewing the evidence most favorably to Bruhn, the relevant facts are as follows: Rural Community Insurance Agency, Inc., d/b/a Rural Community Insurance Services (RCIS), acting as managing general agent for FFIC, issued a policy of crop-hail insurance to Bruhn, designated as policy number IA-090-120853 (the Policy). The Policy afforded coverage during the 2012 crop year to those crops identified by line, county and legal description in the Policy Declaration Page. The Policy afforded coverage for direct loss due to hail and certain other, specified perils.

Section 4(a) of the Policy's General Provisions stated:

The amount payable by acre will be the limit of insurance applying on the date of loss multiplied by the percentage of loss. However, the amount payable may not exceed the actual cash value of the portion of the crop destroyed by perils insured against.

Doc. No. 24-3 at 17. Section 3(c) of the Policy's General Provisions stated:

[T]he percentage of loss will be determined using the crop-hail loss adjustment procedures published by National Crop Insurance Services or, in the absence of such procedures, other procedures as determined by us, for the particular crop insured and the applicable crop year.

Id. at 16-17. For crop year 2012, National Crop Insurance Services (NCIS) did, in fact, publish crop-hail loss adjustment procedures for the crops at issue.

Bruhn sustained a significant hail loss on or about September 11, 2012,[1] and reported that loss to RCIS.[2] Adjustment of the loss was assigned to RCIS adjuster Galen Sornson. While the adjustment process was pending, Bruhn requested and obtained approval from RCIS to harvest its crops and leave " check strips" for the adjusters. Because the loss potentially involved over 5,000 acres, a six-person team (including Sornson and his supervisor, Larry Grieme) was assembled to work the loss.

The team of adjusters arrived at the Bruhn farm on October 29, 2012,[3] and spent the following two days adjusting the loss. The adjusters completed their counts using the check strips that had been left in the fields and reported that sufficient check strips were left in each field to complete the adjustment process. According to their survey sheets, the adjusters determined that 4,120.5 acres of soybeans had payable hail losses. In addition, the adjusters inspected certain corn acreage with respect to an earlier loss.[4]

Based on the crop-hail loss adjustment procedures set forth in the respective NCIS manuals, the RCIS adjusters found losses ranging from 2.3% to 71.4%. Using the survey information obtained by the adjusting teams, Sornson completed the proof of loss for the September 11 claim on or around October 30, 2012. Sornson attempted to meet with Alan Bruhn on October 30, 2012, to discuss the proof of loss, but Alan was sick and unable to meet. Sorenson faxed a copy of the proof of loss to Alan on November 5, 2012.

Bruhn did not agree with the adjusters' calculations and, therefore, refused to sign the proof of loss. On November 28, 2012, RCIS issued payment to Bruhn for the amount RCIS had determined was payable for the losses to soybeans and corn: $417,636 for the loss, less a premium credit of $184,578, for a net payment of $233,058. A check in that amount was delivered to Alan's residence via FedEx on December 4, 2012.

Grieme conducted a " high dollar" review of the Bruhn claim in late November 2012 and determined that the loss had been properly adjusted in accordance with NCIS crop-hail procedures. After the claim had been adjusted and paid, Bruhn's agent, Nielsen, contacted both Rod Nelson (manager of RCIS's Regional Service Office) and Chuck Eldredge (RCIS's National Claim's Manager) to request that RCIS reconsider its payment determination. Eldredge then asked Larry Burkhart, RCIS's Crop-Hail/Named Peril Field Claims Manager, to meet with Alan. The meeting took place in Mapleton, Iowa, on December 18, 2012. During the meeting, Burkhart advised Alan that he would conduct a review of the claim and would, among other things, look at Bruhn's historical yields, which Alan suggested would show the ...

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