Monday, April 25, 2016

Crop Insurance Update: Farmer Complaint Dismissed for Failure to State Claim

Written by M. Sean High—Staff Attorney

On February 11, 2016, the United States Court of Appeals for the Fifth Circuit issued an unpublished opinion affirming dismissal of a complaint for damages resulting from an alleged misrepresentation regarding an insurance agent’s license to sell crop insurance (Shannon v. Ham, 2016 U.S. App. LEXIS 2404).

According to the court, farmers Billy and Fannie Shannon (Shannons) filed a complaint alleging that insurance agent Bobby Ham (Ham) committed fraud by selling the couple crop insurance without a license; the result of which was a subsequent mishandling of their crop insurance policy and claims that resulted in over $200,000 in damages.

According to the court, the Shannons did not show “a causal connection between Ham’s lack of an insurance license and his mishandling of their policies.” The court asserted that Ham provided the Shannons with seven years of satisfactory insurance service without issue, and thus, “it is far more likely that Ham’s lack of licensure played no part in the Shannons’ injuries and that the claim mishandling that occurred in 2011 and 2012 is attributed to other causes.”

The court stated: “there is no direct relationship between the lie and the injury because the Shannons have not plausibly alleged that the lie had anything to do with the eventual claims mishandling.” Ultimately, the court affirmed the dismissal of the Shannons’ complaint because Ham’s faulty insurance credentials were not the proximate cause of his mishandling of the crop insurance policy and claims; the result of which meant the Shannons’ complaint failed to state a plausible claim for relief as required under 12(b)(6) of the Federal Rules of Civil Procedure. 

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