The plaintiff, a farming company, demanded arbitration against Diversified Crop Insurance Services over the nonpayment of federally reinsured claims. The plaintiff brought several claims under policies it had purchased from Diversified, to which Diversified denied coverage, due to a misstatement of the farm's location and a separate clerical omission as to the number of acres covered, both of which were allegedly errors committed by Diversified's agent. The arbitrator found for the plaintiff and trebled damages against Diversified.
When the plaintiff moved to confirm the award, the court considered whether the arbitrator exceeded her authority by basing her decision on extra-contractual state law remedies, which are preempted by federal law associated with Diversified's reinsurance coverage from the Federal Crop Insurance Corporation. The court found that the arbitrator did exceed her authority by finding that "the farm was uninsured, and therefore not covered by the policy, yet award[ing] damages in negligence, breach of fiduciary duty, and constructive fraud because she attributed the lack of coverage to Diversified and its agents." The court found further evidence of the arbitrator's exceeding the scope of her authority in the fact that she trebled the awards under North Carolina's Unfair and Deceptive Trade Practices Act. As such, the court vacated the award. Williamson Farm v. Diversified Crop Insurance Services, Case No. 5:17-CV-513-D (USDC E.D.N.C. Mar. 26, 2018).
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