Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 1 of 12
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`UNITED STATES DISTRICT COURT
`MIDDLE DISTRICT OF ALABAMA
`SOUTHERN DIVISION
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`MICHAEL W. SHELLEY AND
`HUDSON T. SHELLEY
`
`PETITIONERS,
`
`UNITED STATES OF AMERICA,
`FARM SERVICE AGENCY, UNITED STATES
`DEPARTMENT OF AGRICULTURE,
`
`DEFENDANTS.
`
`CASE NO.
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`102C JUL 11 A 20
`KFTT, K
`cOURT
`1:T ALA
`1:20-cv-505-RAH-WC
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`PETITION FOR JUDICIAL REVIEW OF ADMINISTRATIVE ACTION,
`AND HEARING DE NOVO
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`PARTIES
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`1. Your Petitioners, Michael W. Shelley and Hudson T. Shelley, file this petition
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`for administrative review and hearing de novo against the United States of
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`America, and the Farm Service Agency, United States Departrnent of
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`Agriculture, (Agency) pursuant to Title 5 USC § 706; 7 USC § 7996; 28 USC
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`§ 2341 et seq. and 7 C.F.R. §§ 706, 718.2, 11.13 & 1437) on the final Agency
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`Action as set forth herein.
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`2. The Petition arises from the denial of claim benefits under the Noninsured
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`Crop Disaster Assistance Program (NAP) under the provisions of the Federal
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`Agricultural Improvement and Reform Act of 1966. (7 USC § 7333).
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`3. Michael W. Shelley seeks relief from the Appeal Determination dated
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`December 19, 2019, and subsequent denial by the Director, USDA National
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`Appeals Division, Secretary of Agriculture, March 31, 2020, case number
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`2018 01 CRK Squash 2019S000397. (Exhibit One, attached hereto and
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`specifically incorporated herein by reference.)
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`4. Hudson T. Shelley seeks relief from the Appeal Determination dated
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`December 19, 2019, and subsequent denial by the Director, USDA National
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`Appeals Division, Secretary of Agriculture, on March 31, 2020, case number
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 2 of 12
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`2018 01 CRK Squash 2019S000398. (Exhibit Two, attached hereto and
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`specifically incorporated herein by reference).
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`5. Your Petitioners have exhausted all administrative remedies, including County
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`Committee, State Committee, USDA National Appeals Division, Secretary of
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`Agriculture and Director Review; and this Petition seeks to appeal those final
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`Agency actions, review the Agency actions de novo, and be granted equitable
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`relief.
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`6. The Respondent Farm Service Agency (FSA) is an authority of the
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`Respondent, United States Department of Agriculture.
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`7. The records of the Agency Actions, as well as various statutes and regulations,
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`are attached and specifically incorporated herein by reference.
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`JURISDICTION AND VENUE
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`8. This Court has jurisdiction pursuant to 5 USC § 706; 7 USC § 1508(b)(c)(h);
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`7 USC §§ 6998, 7333 & 7996; 7 C.F.R. § 1437; 7 C.F.R. § 11; 28 USC §§
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`1331, 1391, 1346(a),1402(a); 28 USC § 2341 et. seq.;
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`9. Venue is proper in the United States District Court for the Middle District of
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`Alabama, Southern Division, because your Petitioners, Michael W. Shelley
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`and Hudson T. Shelley, are United States Citizens over the age of 21 years,
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`who reside in Houston County, Alabama, and some of the actions complained
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`of herein occurred in Houston County, Alabama. The entire administration
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`activity of the Shelleys' farming is conducted from Ashford, Houston County,
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`Alabama. (28 USC § 2343).
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`GENERAL FACTS
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`10. Your Petitioners have farmed various crops in south Alabama, Georgia and
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`Florida for many years. Family members are multi-generational farmers of
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`both row crop and specialty crops, including squash, watermelons, greens,
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`tomatoes, cucumbers and various other crops, forages and seed. Petitioners'
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`principle purposes of business are agriculture.
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 3 of 12
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`11. Annually, Petitioners finance the next year's crops through local banks, often
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`assigning crops, production, insurance and disaster payments as collateral in
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`order to buy seed, fertilizer, herbicides, insecticides, costs of labor, equipment
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`and irrigation, among other costs necessary to produce, harvest and sell crops.
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`12. In crop year 2018 Petitioners, as they and their families have historically done,
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`engaged in farming by announcing their intention to plant, produce and harvest
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`various crops and to acquire NAP coverage for specialty crop losses due to
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`disaster because of damaging weather, such as drought, excessive moisture,
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`freeze, etc.; adverse natural occurrences, such as earthquake or flood; and
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`conditions related to damaging weather or adverse natural occurrences, such
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`as excessive heat, disease or insects, any of which occurs during the coverage
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`period. (Ex.1, pp 0091-94; Ex. 2, pp56-57; Ex. 3, NAP Basic Coverage).
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`13. One of the crops Petitioners planned to plant was Crookneck Squash, a
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`specialty crop grown for food, and eligible for NAP coverage.
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`14. Petitioners are eligible producers as defined under NAP.
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`15. NAP coverage requires a producer such as the Petitioners to work with the
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`Farm Service Agency (FSA) in the state and county where the farm is located
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`to complete the necessary forms to obtain and enforce NAP benefits. The FSA
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`is created by Congress to serve the farmers and to assist them to obtain benefits
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`from Congressionally mandated programs.
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`16. The Petitioners' fanns in question are located in Jackson County, Florida,
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`(Jackson) and the Petitioners made applications for coverage through the
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`Jackson FSA office.
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`17. The application form for obtaining NAP coverage is designated CCC-471.
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`18. This Petition for Review arose as a result of the denial of eligibility for benefits
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`under the 2018 NAP claims filed by Petitioners on 01 CRK Squash based on
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`the arbitrary and unreasonable conclusion that 01 CRK Squash was not
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`selected for coverage on their respective CCC-471 application forms.
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`19. Petitioners dispute the Agency Action and allege that a reasonable view of all
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`the facts and forms clearly indicate that CRK Squash was the intended crop on
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`the application.
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 4 of 12
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`20. On January 31, 2018 each Petitioner, through the designated Power of
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`Attorney, Todd Shelley, timely filed a form CCC-471 application for NAP
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`coverage and orally informed the Agency the application was for crooked neck
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`squash.
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`21. Even though the Agency designates different pay codes for different varieties
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`of squash, the agency only assigns one identifying crop code for all squash,
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`which is the number 0155, and that number is inserted in the application by the
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`Jackson Agency regardless of the type of squash being planted.
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`22. The Application Form CCC-471 contains spaces for designating the crop and
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`variety, but the instructions for completing CCC-471 required the Jackson
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`County Office to complete items 1-11 on form CCC-471 which contain the
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`designation crop and variety. (Ex. 4, Handbook for Agency, Para.23, G
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`"Instructions for Completing CCC-471").
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`23. Although the producer orally answered the question on variety as "crooked
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`neck" squash, the Agency failed to complete the blank as instructed and,
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`instead, inserted "sum" as the squash variety, a computer entry which was the
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`responsibility of the Agency. The producer signed the forms under the
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`mistaken belief that the Agency had correctly designated both the crop and the
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`variety.
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`24. In failing to specify the type of squash as crooked neck, the Agency not only
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`violated its own rules, but also set the stage for its later "bootstrapping" its
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`'compounded negligence in denying the claims.
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`25. In addition to filing form CCC- 471, each Petitioner was also required to file
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`form FSA-578 verifying the crop and acreage planted for crop year 2018.
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`(Acreage report). (7 C.F.R. § 1437.11; Ex. 3, NAP at req.10).
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`26. Petitioner Hudson T. Shelley timely filed, on 4/27/18, an acreage report that
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`listed the crop as crooked neck squash (CRK) on his 25.66-acre farm for
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`planting period 01, and included all required information. (Ex. 2, pp 0050-52).
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`27. Petitioner Michael W. Shelley timely filed, on 5/14/18, an acreage report that
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`listed the crop as crooked neck squash (CRK) on his 65.10-acre farm for
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`planting period 01, and included all required information. (Ex. 1, pp 0080-82).
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 5 of 12
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`28. The acreage report is combined with the application for NAP coverage to
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`determine the type squash crop and acreage for which the Petitioners are
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`eligible for benefits.
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`29. FSA-578 acreage report states:
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`"THE INFORMATION WILL BE USED TO COLLECT PRODUCER
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`CERTIFICATION OF THE REPORT OF ACREAGE OF
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`CROPS/COMMODITIES AND LAND USE DATA WHICH IS NEEDED IN
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`ORDER TO DETERMINE PRODUCER ELIGIBILITY TO PARTICIPATE
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`IN AND RECEIVE BENEFITS UNDER FSA PROGRAMS." (Ex. 1, p 0050;
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`Ex.2 p 0050).
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`30. Therefore, as of the filing of the acreage reports in FSA-578, despite any
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`mistake by the Agency in completing the application form CCC- 471, the
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`Agency had been paid the service fee, had received the designation of
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`Crookneck Squash on the Petitioner's farm and had the information needed in
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`order to determine Petitioner's benefits in the event of a disaster that would
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`trigger a claim.
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`31. Although squash, like other crops, uses single pay codes for different varieties,
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`and although there is a blank where the Jackson Office could have designated
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`"CRK" for this variety of squash, FSA either unreasonably or arbitrarily chose
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`not to do so.
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`32. The Jackson Office also unreasonably and arbitrarily chose to ignore the timely
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`filed acreage report that clearly designated CRK as the type squash planted on
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`Petitioner's farm.
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`33. Since the Petitioners paid the service fees, committed to paying any future
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`premium and filed a comprehensive acreage report, they should be entitled to
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`pursue and receive a claim payment for CRK squash.
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`34. Since no premium would be due unless there was a disaster, then the Defendant
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`is not prejudiced, would suffer a windfall by its own incompetence and cost
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`the Petitioner and its bankers substantial sums of money and damages.
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`35. Rather than view the NAP coverage as requiring a comprehensive scheme of
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`interaction among the farmer, the adjuster and the Agency, FSA chose, instead,
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 6 of 12
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`to seize on the crop variety noted in the Application, omitted by FSA's own
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`mistake, compounded by failing to compare the required acreage report to the
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`application that the NAP coverage requires it to review. It is arbitrary,
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`unreasonable and contrary to Congressional mandate not to review all forms
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`and information mandated by NAP basic provisions.
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`"Acreage Report — A report required by section 10 of these Basic
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`Provisions that contains, in addition to other required information, your
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`report of your share of all planted or prevented planted acreage of an eligible
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`crop or commodity in the administrative county." (Ex. 3, NAP 1.
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`Definitions, emphasis added).
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`36. To ignore the required report, filed long before any loss occurred, that clearly
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`shows the Petitioners' intentions to designate CRK squash in the NAP
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`application and deny coverage and payments to the Petitioners and banks
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`would allow the FSA to use its own negligence and arbitrariness as a pretext
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`for denial of benefits and is arbitrary, capricious, unreasonable and grossly
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`inequitable.
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`COUNT ONE
`REVIEW AND HEARING DE NOVO
`MICHAEL W. SHELLEY CLAIM
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`37. Petitioner Michael W. Shelley (Michael) incorporates foregoing paragraphs
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`one through thirty-six (1-36), as if set forth herein verbatim.
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`38. On May 14, 2018 Michael filed his form FSA 578 acreage report that clearly
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`designated CRK Squash on his 65.10 acres.
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`39. On July 5, 2018, Michael submitted a notice of loss and documents for his
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`crookneck squash for losses suffered as a result of heat, excessive
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`moisture/precipitation and plant disease. (Ex 1, pp. 0040-0044).
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`40. On March 5, 2019, Michael submitted a NAP payment application for losses
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`to his crookneck squash. (Ex. 1, pp 0015-0042)
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`41. On June 26, 2019 the local Agency committee notified Michael it had
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`disapproved his application for payment because he had failed to submit an
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`"eligible notice of loss" along with the application for payment. The committee
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 7 of 12
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`cited 1-NAP(Rev.2), paragraph 675 as authority for its decision. (Ibid. at
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`0004). However, Michael had submitted his notice of loss on July 5, 2018 with
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`documentation, and the Agency arbitrarily failed to inform Michael how and
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`in what manner his notice of loss was not "eligible as required by paragraph
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`675. (Ex. 5, 1-NAP (Rev. 2, par. 675).
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`42. On the same day, and in another letter, the County Executive Director for the
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`Agency notified Michael that his "notice of loss" had been disapproved for
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`failure to purchase 01 CRK Squash by the application closing date. (Ex. 1, p
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`0007). However, the agency ignored Michael's acreage report that designated
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`the crop and the type of squash intended for NAP coverage.
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`43. Neither the local committee nor the Chairman of the Agency referenced the
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`May 14, 2018 acreage report required under section ten (10) of NAP basic
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`coverage that described the planting of CRK Squash on his farm in arbitrary
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`and unreasonable disregard of both the requirement for the report and the
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`intended use of the report "WHICH IS NEEDED IN ORDER TO
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`DETERMINE PRODUCER ELIGIBILITY TO PARTICIPATE IN AND
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`RECEIVE BENEFITS UNDER FSA PROGRAMS." (Ex. 1 p 0080; Ex. 2 p
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`0050).
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`44. Had the Agency reviewed all the forms and information submitted by Michael,
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`it would have been readily apparent that his intention was for the Agency to
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`have listed CRK Squash on his NAP application, and would have seen that his
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`acreage report confirmed that intention. It is unreasonable and arbitrary to
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`ignore required documents in order to justify the denial of claim benefits.
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`PRAYER FOR RELIEF
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`Your Petitioner respectfully requests that this Court take jurisdiction of this matter,
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`and award the following relief to the Petitioner:
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`a. Find that the Agency decision constitutes prejudicial error and is unwarranted by
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`the facts to the extent that the facts are subject to a trial de novo by this reviewing
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`Court; and
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`b. Hold unlawful and set aside the Agency action, findings, and conclusions that
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`denied benefits for crop year 2018;
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 8 of 12
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`c. Declare the ruling by the Administrative Law Judge and the Director to be contrary
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`and capricious and in excess of statutory jurisdiction or short of statutory right;
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`d. Award such other, further and different relief to which your Petitioner is entitled.
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`COUNT TWO
`HUDSON T. SHELLEY CLAIM
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`45. Petitioner Hudson T. Shelley (Hudson) incorporates foregoing paragraphs one
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`through forty-four (1-44) as if fully set forth herein.
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`46. On April 27, 2018, Hudson filed his form FSA 578 acreage report that clearly
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`designated CRK Squash on his 25.66 acres. (Ex. 1, p 0050-53), and on June 4,
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`2018, Hudson submitted a notice of loss and documents for his crookneck
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`squash for losses suffered as a result of heat, excessive moisture/precipitation
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`and plant disease. (Ex 2, pp. 0027, 0040-0044).
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`47. On June 13, 2018, the U.S. Department of Agriculture, Farm Service Agency,
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`received an inspection report by a Loss Adjuster on Hudson's CRK planting.
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`(Ex. 2, p 0015)
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`48. On April 18, 2019, Hudson submitted a NAP payment application for losses
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`to his CRK squash. (Ex. 1, pp 0012-0019)
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`49. On June 27, 2019, the local Agency committee notified Michael it had
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`disapproved his application for payment because he had failed to submit an
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`"eligible notice of loss" along with the application for payment. The committee
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`cited 1-NAP(Rev.2), paragraph 675 as authority for its decision. (Ibid. at
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`0004). However, Hudson had submitted his notice of loss on June 4, 2018,
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`with documentation, and the Agency arbitrarily failed to inform Hudson how
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`and in what manner his notice of loss was not "eligible' as required by
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`paragraph 675. (Ex. 5, 1-NAP (Rev. 2, par. 675)).
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`50. On the same day, and in another letter, the County Executive Director for the
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`Agency notified Hudson that his "notice of loss" had been disapproved for
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`failure to purchase 01 CRK Squash by the application closing date. (Ex. 2, p
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`0007). However, the agency ignored Hudson's acreage report that designated
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`the crop and the type of squash intended for NAP coverage.
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 9 of 12
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`51. Neither the local committee nor the Chairman of the Agency referenced the
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`April and June, 2018 acreage reports describing the planting of CRK Squash
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`on his farm, nor the June 13, 2018 inspection report, but instead, made an
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`arbitrary and unreasonable disregard for the requirements for NAP coverage
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`expressly set forth under the definitions and in section 10 of NAP basic
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`coverage.
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`52. Had the Agency reviewed all the forms and information submitted by Hudson,
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`it would have been readily apparent that his intention was for the Agency to
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`have listed CRK Squash on his NAP application, and would have seen that his
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`acreage report confirmed that intention. It is unreasonable and arbitrary to
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`ignore required documents in order to justify the denial of claim benefits.
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`PRAYER FOR RELIEF
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`Your Petitioner respectfully requests that this Court take jurisdiction of this matter,
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`and award the following relief to each separate Petitioner:
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`a. Find that the Agency decision constitutes prejudicial error and is unwarranted by
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`the facts to the extent that the facts are subject to a trial de novo by this reviewing
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`Court; and
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`b. Hold unlawful and set aside the Agency action, findings, and conclusions that
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`denied benefits for crop year 2018;
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`c. Declare the ruling by the Administrative Law Judge and the Director to be contrary
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`and capricious and in excess of statutory jurisdiction or short of statutory right; and
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`d. Award such other, further and different relief to which your Petitioner is entitled.
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`COUNT THREE
`EQUITABLE RELIEF
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`53. Petitioners adopt and incorporate herein by reference the foregoing paragraphs
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`one through fifty-two (1-52) as if set forth verbatim.
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`54. Each Petitioner followed through on his intention to plant CRK squash,
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`incurred costs of planting, including, but not limited, to plants, herbicide, labor
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 10 of 12
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`and machinery, along with partial harvesting, in detrimental reliance that the
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`NAP application for coverage was timely filed for NAP disaster coverage for
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`their spring CRK squash.
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`55. Petitioners further expended time and effort in completing and filing the FSA
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`acreage report required under the policy of insurance contract to receive NAP
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`coverage on its CRK squash.
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`56. In denying coverage the Respondents failed to review the acreage reports even
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`though they were required by NAP basic provisions, a requirement that would
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`clarify any misunderstanding about the variety of squash for which coverage
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`was applied.
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`57. Petitioners paid a service fee that has not been refunded. At the time of
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`submitting the application for NAP coverage, each Petitioner paid the required
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`service fee to be an eligible participant in the NAP program for the crop year
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`2018.
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`58. In addition to paying the service fee upon filing the application, Petitioner is
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`required to pay a premium, due January 15, on the year following the crop year
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`for which coverage was obtained. (Ex. 3, NAP at 33).
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`a. The premium is thus paid in arrears based upon the happening of a
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`disaster event; and the
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`b. Suffering a loss by the Petitioner.
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`c. But no premium payment is due at the tirne of filing the Application;
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`59. Petitioners were prepared to pay any premium due in the event of a disaster,
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`and, since no premium would be due unless there was a disaster, then the
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`Defendant is not prejudiced, would suffer a windfall by its own incompetence
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`and cost the Petitioner and its bankers substantial sums of money and damages.
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`60. Petitioners verbally informed the Respondents of the variety squash to be
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`planted.
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`61. Respondent has not been injured in any way from the misunderstanding about
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`the variety of squash planted, and have received a windfall from the service
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`fee paid by your Petitioners.
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 11 of 12
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`62. The failure of the Respondents to review acreage reports, a material
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`requirement for NAP coverage, resulted in a misunderstanding of the squash
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`variety planted, and together with the ambiguous designation of code 155 for
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`all varieties of squash caused the FSA to deny NAP coverage for which the
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`Court should grant modification of the contract or other equitable relief.
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`PRAYER FOR RELIEF
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`WHEREFORE your Petitioners request that upon judicial review, or with a hearing
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`de novo, this Court will declare that the Petitioners acted in good faith reliance upon the
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`actions of the Agency, or otherwise made a good faith effort to comply with the NAP
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`requirements, to grant equitable relief, to set aside the Agency determination and allow
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`Petitioners to receive NAP benefits for crop year 2018, and to otherwise:
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`a.
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`Find that the Agency decision constitutes prejudicial error and is
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`unwarranted by the facts to the extent that the facts are subject to a trial de novo by this
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`reviewing Court; and
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`b.
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`Hold unlawful and set aside the Agency action, findings, and conclusions
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`that denied benefits for crop year 2018;
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`c.
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`Declare the ruling by the Administrative Law Judge and the Director to be
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`contrary and capricious and in excess of statutory jurisdiction or short of statutory right;
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`d.
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`Grant equitable relief and declare NAP coverage on CRK Squash for crop
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`year 2018;
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`e.
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`f.
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`entitled.
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`Award the relief request under Counts One and Two above; and
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`Award such other, further and different relief to which your Petitioner is
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`Case 1:20-cv-00505-RAH-WC Document 1 Filed 07/17/20 Page 12 of 12
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`Respectfully submitted this the tto day of July, 2020.
`
`eorge L Beck Jr. (BEC011)
`Attorney for Plaintiff
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`Al _Pi _.11 /d
`Nancy L. E. • I ADM)
`Attorney for Plaintiff
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`OF COUNSEL:
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`Mr. George L. Beck Jr. Esq.
`Mrs. Nancy L. Eady, Esq.
`MORRIS HAYNES LLP
`131 Main Street (35010)
`Post Office Box 1660
`Alexander City, Alabama 35011
`Telephone: 256-329-2000
`Facsimile: 256-329-2015
`Email: gbeck@mhhlaw.net
`Email: neady@mhhlaw.net
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