John Van Curen, as Trustee v. FEDERAL CROP INSURANCE CORPORATION and RISK MANAGEMENT AGENCY

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN VAN CUREN, as Trustee and Plan
Administrator of the Chapter 11 Estate of
Michael Hat, f/k/a Michael Hat Farming
Company,
Plaintiff - Appellant,
v.
FEDERAL CROP INSURANCE
CORPORATION and RISK
MANAGEMENT AGENCY,
Defendants - Appellees.
No. 14-15855
D.C. No. 3:13-cv-04601-CRB
MEMORANDUM*
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted April 11, 2016
San Francisco, California
Before: THOMAS, Chief Judge and REINHARDT and CHRISTEN, Circuit
Judges.
FILED
JUN 02 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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John Van Curen, chapter 11 bankruptcy trustee (“trustee”) for Michael Hat
(“debtor”), appeals the district court’s order granting the Federal Crop Insurance
Corporation’s (“FCIC”) motion to dismiss or, in the alternative, motion for
summary judgment. The trustee sought to enforce a decision by the National
Appeals Division of the United States Department of Agriculture reversing prior
decisions of the United States Department of Agriculture’s Risk Management
Agency (“RMA”) and awarding the bankruptcy estate insurance proceeds from
claims made by the debtor on a crop insurance policy with American Growers
Insurance Company (“AGIC”), which was reinsured by FCIC. We reverse.
Because the parties are familiar with the complex history of this case, we need not
recount it here, except as necessary to explain our decision.
I
The district court erred in dismissing the action for lack of subject matter
jurisdiction. The court relied on the trustee’s decision not to seek arbitration
within the time limits provided in the relevant crop insurance policy prior to
seeking administrative review. It reasoned that the time limitations contained in
the crop insurance policy at issue, read in conjunction with 7 U.S.C.
§ 1508(j)(2)(B), imposed a non-waivable jurisdictional bar precluding a suit
against the government.
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Statutes limit a court’s jurisdiction when they govern a court’s adjudicatory
capacity. Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011). The
Supreme Court has instructed that “claim-processing rules” ordinarily do not create
jurisdictional bars. Id. As the Supreme Court explained, these “rules . . . seek to
promote the orderly progress of litigation by requiring that the parties take certain
procedural steps at certain specified times.” Id. It noted that “[f]iling deadlines . . .
are quintessential claim-processing rules.” Id.
Congress is, of course, free to attach to such rules “the conditions that go
with the jurisdictional label.” Id. However, there must be a “‘clear’ indication that
Congress wanted the rule to be ‘jurisdictional.’” Id. at 436 (quoting Arbaugh v. Y
& H Corp., 546 U.S. 500, 515-16 (2006)). Congress need not “incant magic
words” to signal the jurisdictional effect of a limitations statute. United States v.
Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015). Courts instead may review a
statute’s text, context and interpretive history to determine “whether a statute ranks
a requirement as jurisdictional.” Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,
166-68 (2010); see also Kwai Fun Wong, 135 S. Ct. at 1632 (approving use of
“traditional tools of statutory construction” in jurisdictional inquiry).
The statute in question, 7 U.S.C. § 1508(j)(2)(B), is not a jurisdictional
limitations statute. First, the text does not define or limit a reviewing court’s
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“adjudicatory capacity.” Henderson, 562 U.S. at 435. The provision identifies
neither the “classes of cases” nor the “persons” subject to the district court’s
“adjudicatory authority.” Reed Elsevier, 559 U.S. at 160-61. Second, no long
history of Section 1508 jurisprudence compels the conclusion that the provision
has jurisdictional effect. Cf. John R. Sand & Gravel Co. v. United States, 552 U.S.
130, 134 (2008) (describing 100-year-old line of decisions holding that Court of
Federal Claims limitations statute had jurisdictional effect), Bowles v. Russell, 551
U.S. 205, 210 (2007) (describing “consisten[t] . . . holdings” on question whether
28 U.S.C. § 2107 had jurisdictional effect). Neither the Supreme Court nor our
court has ruled on the question whether 7 U.S.C. § 1508(j)(2)(B) has jurisdictional
effect.
Rather, § 1508(j)(2)(B) is the “quintessential claim-processing rule[].”
Henderson, 562 U.S. at 435. The limitations statute appears within a paragraph
entitled, “[c]laims for losses,” and prefaced with the language, “[u]nder rules
prescribed by the Corporation, the Corporation may provide for adjustment and
payment of claims . . . .” See 7 U.S.C. § 1508(j)(1). The lack of jurisdictional
effect is especially evident in this context, where the alleged failure to file a claim
stems not from regulation or statute, but from a private contract of insurance.
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II
The district court also erred in its alternative holding that the trustee’s
indemnity claims were time-barred. The court concluded that the trustee’s failure
to seek arbitration within the 12-month period required by the crop insurance
policy precluded the trustee from recovering from the agency. However, the
arbitration required by the policy and the federal administrative agency actions
were two entirely separate processes. Therefore, the trustee’s decision not to seek
arbitration did not preclude an administrative award from the agency.
In this case, the agency elected to participate, and adjust the crop insurance
claim, which was its right. That adjustment followed an agreement between RMA
and the Nebraska Department of Insurance, which assumed supervisory control
over AGIC. Under the agreement, RMA, acting on behalf of FCIC, would
guarantee AGIC’s insurance policies if it were liquidated. A Nebraska state court
entered an order authorizing the Nebraska Department of Insurance to liquidate
AGIC and enjoining any “actions at law or in equity or in arbitration” against
AGIC. The liquidator sent notice to policy holders informing them that RMA
would assume control over federally reinsured policies. The trustee and the
liquidator ultimately reached a stipulation whereby the estate’s insurance claims
would be deemed denied by the liquidator, with the trustee retaining the right to
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pursue the claims with RMA. The trustee pursued the claims with RMA, which
denied the claims and requested that the estate refund monies paid by AGIC. After
mediation, the case was reopened, and a second RMA decision was issued again
denying the trustee’s claims and seeking repayment. The trustee appealed the
second RMA decision to the National Appeals Division of the United States
Department of Agriculture. The National Appeals Division ultimately determined
that RMA had erroneously denied the claims, and that it owed the estate
approximately an additional $2.3 million.
The agency’s authority over the trustee’s claims derives from the Standard
Reinsurance Agreement (“SRA”) between the agency and AGIC. That agreement
includes (1) a “cut-through” provision that “transferred to FCIC” all “eligible crop
insurance contracts affected” by the Nebraska court’s 2005 liquidation order, and
(2) a January 2003 amendment that “assign[ed] to FCIC all of [AGIC’s] rights of
action to recover any funds improperly paid under any eligible crop insurance
contract[.]”
Those SRA provisions effected a guarantee contained in the policy’s
preamble: that the trustee’s claim would be “settled in accordance with the
provisions of this policy and paid by FCIC” if the insurer could not pay the
trustee’s loss. Cf. Olsen v. United States, 665 F. Supp. 2d 1225, 1230 (E.D. Wash.
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2009) (“Olsen II”) (“FCIC thereafter acquired the authority to administer the
policy in accordance with its terms.”). Multiple policy provisions structured
indemnity determinations. See, e.g., ¶ 3(d) (reserving right to revise indemnities
paid based on inaccurate production guarantees); ¶ 6(e) (reserving right to
determine indemnities based on submitted acreage reports); ¶ 14 (Our Duties)
(“We recognize and apply the loss adjustment procedures established or approved
by the [FCIC].”). Indeed, the agency’s April 2010 and May 2011 determinations
cited to some of these and to other policy provisions to adjust the trustee’s losses.
Those determinations, made by “employee[s] . . . of the Agency” denied “program
benefits” to the trustee. See 7 C.F.R. § 400.90 (2016). The determinations
therefore amounted to “adverse decision[s]” subject to exclusive and unconditional
administrative relief under applicable federal regulations. See 7 C.F.R. § 400.90
(2016) et seq.
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The National Appeals Division confirmed the separate administrative and
arbitration procedures in its decision, noting that under 7 C.F.R. § 11.1, it was
“unable to adjudicate disputes between a participant and an insurance provider.”1
The agency presents no authority for the agency’s contrary proposition: that
the administrative and judicial review provisions of 7 C.F.R. Parts 11 and 400 do
not attach to an adverse decision made by RMA following an assignment in
liquidation. Instead, salient authority points the other direction: multiple
regulatory and contractual provisions make plain that any principles of state
law—including those regarding assignment—do not apply to federal crop
insurance policies when inconsistent with the “purpose, intent, or authority of the
[Federal Crop Insurance Act].” 7 C.F.R. § 400.351 (2016). Accordingly, any
interpretation of state law that encumbers “actions authorized by [7 C.F.R.
Part 400]”—including the trustee’s rights to the administrative and judicial relief
contemplated by Subpart J— cannot stand. See 7 C.F.R. § 400.352 (2016).
1 The National Appeals Division rejected RMA’s argument that the claims
were time-barred as “convoluted,” noting that, on one hand, RMA was claiming
the right to require higher refunds on the claims from the trustee but, on the other
hand, the trustee was precluded from arguing for claim restoration. It further
concluded that there was “nothing in the regulations or handbooks preventing [the
trustee] from arguing that, not only is the RMA decision seeking $2.4 million from
[the trustee] erroneous, but RMA also owes [the trustee] additional indemnities
because RMA incorrectly adjusted the claims.”
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Indeed, that was the agency’s position during the Olsen litigation, in which it
successfully contended that the arbitration provisions in a similar contract had no
bearing on the administrative process, and that the arbitrator’s award could not be
enforced against the agency. See Olsen v. U.S. ex rel. U.S. Dep’t of Agric., 546 F.
Supp. 2d 1122, 1126 (E.D. Wash. 2008) (“Olsen I”).
In the final analysis, this appeal is confined to agency action. The claims
against AGIC were settled with the state liquidator, which agreed that the claims
could proceed before the agency in accordance with the liquidator’s memorandum
of understanding with the agency. The RMA made two determinations.2 The
trustee administratively appealed to the National Appeals Division, which issued a
final opinion. The trustee was entitled to seek judicial review of that determination
within one year. See 7 C.F.R. § 11.13(b) (2016); 7 U.S.C. § 1508(j)(2)(B). In this
unusual circumstance, the trustee is not appealing the decision, but asking the court
to enforce it. Regardless, the trustee timely filed his complaint on October 4, 2013,
less than one year after either the December 2012 Director Review Determination
or the agency’s January 2013 implementation letter.
III
2 We need not decide whether the RMA could have initially rejected Van
Curen's claim as untimely. Once it decided to adjust the claim and seek additional
funds from the estate, it waived any time bar.
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In sum, we reverse the district court’s dismissal of the action based on lack
of jurisdiction and its alternative grant of summary judgment. Given our resolution
of the issues, we need not, and do not, reach any other issue urged by the parties.
REVERSED.
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