Plants, Inc. v. Fireman's Fund Insurance Company et al.

This is the second of two similar but separate civil actions and appeals among the same
parties. At issue is the scope of a binding arbitration clause in a federally-reinsured multiple
peril crop insurance policy and the scope of federal preemption of common law claims. The
insured, a nursery in Warren County, Tennessee, suffered a catastrophic loss of stock,
primarily trees and shrubs, due to a severe freeze in April of 2007. The insured submitted a
claim for indemnity. The adjuster determined, due to “under-reporting of inventory”, that the
insured was only entitled to recover $115,822. Instead of pursuing arbitration pursuant to the
policy of insurance, the insured filed this action asserting common law claims against the
insurer, its adjustment firm, and the independent insurance agency that solicited the policy,
for negligent misrepresentation, breach of duty of care, negligence, breach of contract, and
statutory bad faith. The trial court summarily dismissed the claims against the insurer and its
adjustment firm finding there were no issues of material fact and the insurers were entitled
to summary judgment as a matter of law because the policy mandated arbitration. On appeal,
the insured contends that its state law claims are not barred by the policy. The insurer and its
adjustment firm disagree contending that all claims related to the insurance policy must be
submitted to arbitration and additionally assert that the insured’s common law claims are
preempted by federal law. We have determined the claims for breach of contract, breach of
duty of care, and statutory bad faith are preempted by federal law; however, the claims for
negligence and negligent misrepresentation are not preempted by federal law and these two
claims do not fall within the scope of the arbitration provision. Therefore, we affirm in part,
reverse in part, and remand for further proceedings in accordance with this decision.