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`Dustin A. Martinsen, OSB No. 144907
`Butler & Looney, P.C.
`P.O. Box 430
`Vale, OR 9791
`Phone: (541) 473-3111
`Fax: (541) 473-3731
`Email: dustin@butlerlooney.com
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`Nathan J. Arnold WSBA No. 45356
`Arnold & Jacobowitz PLLC
`2701 First Avenue, Suite 200
`Seattle, WA 98121
`(206) 769-3759; Fax (206) 866-3244
`Nathan@CAJlawyers.com
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`Counsel for Plaintiff
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF OREGON
`PENDLETON DIVISION
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`FROERER FARMS, Inc., an Oregon corporation,
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`CASE NO. 2:22-cv-01035
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`COMPLAINT
`Jury Trial Demanded
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`)
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`Plaintiff,
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`v.
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`UNITED STATES DEPARTMENT OF
`AGRICULTURE, and FEDERAL CROP
`INSURANCE CORPORATION,
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`
`) ) )
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`Defendants.
`I.
`INTRODUCTION
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`1. After faithfully paying federal crop insurance policy premiums and complying with all
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`other relevant policy terms and conditions, Plaintiff, Froerer Farms, Inc. (“Froerer Farms”), was
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`denied claim benefits due to arbitrary and capricious agency interpretations which purported to let
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`the carrier retroactively void the policy because Froerer Farms’ authorized representative was
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`supposedly incompetent to sign. Froerer Farms comes to this Court for a declaration of its rights.
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`II.
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`PARTIES, JURISDICTION, VENUE, DEMAND FOR JURY TRIAL
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`COMPLAINT - 1
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 2 of 8
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`2. Plaintiff Froerer Farms, Inc. is an Oregon corporation doing business within the District of
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`Oregon, with its principal place of business in Malheur County.
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`3. The Federal Crop Insurance Corporation (“FCIC”) is a wholly owned government
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`corporation managed by the Risk Management Agency (“RMA”) of the United States Department
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`of Agriculture (“USDA”).
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`4. This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 5 U.S.C. § 702.
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`5. Venue lies properly in this Court under 28 U.S.C. § 1391(e)(1).
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`6. Trial by jury is hereby demanded.
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`III.
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`FACTS
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`7. Congress passed the Federal Crop Insurance Act (“FCIA”) in 1938, and enacted significant
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`updates in 1980 and 1994.
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`8. The purpose of the FCIA was and is to protect farmers from vagaries of the market and
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`nature and to encourage innovation.
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`9. It was not Congress’s intent for hyper-technical agency regulations and carrier-friendly
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`interpretations to provide windfalls to insurance companies.
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`10.
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`Under the FCIA, crop insurance programs are administered by the FCIC and RMA,
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`which have authorized several approved insurance providers (“AIPs”) to issue policies under terms
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`and conditions approved by the FCIC, subject to FCIC regulations and guidance.
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`11.
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`In 2016, by corporate resolution, Froerer Farms authorized Chase Froerer to pursue
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`crop insurance on its behalf.
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`12. Froerer Farms also executed a Power of Attorney form to confirm Chase Froerer’s
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`authority. Anticipating that it would purchase insurance from Rain and Hail L.L.C., Froerer Farms
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`specified that the power of attorney was “in connection with crop insurance polic(ies) issued or to
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`COMPLAINT - 2
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 3 of 8
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`be issued through Rain and Hail, L.L.C.,” but also specified that he was empowered to, among
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`other things, “make application(s) for insurance” on Froerer Farms’ behalf.
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`13. Froerer Farms’ broker ultimately directed Mr. Froerer in submitting an application on
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`behalf of Froerer Farms to Hudson Insurance Company (“Hudson”) instead.
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`14. Hudson accepted the application and issued a Whole Farm Revenue Protection crop
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`insurance policy (the “Policy”) to Froerer Farms.
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`15. In 2019, after two years of faithfully paying premiums, submitting reports as required,
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`and substantially performing all other obligations under the Policy, Froerer Farms submitted a
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`claim for loss of revenue to Hudson under the Policy.
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`16. On or about June 17, 2019, Hudson rejected the claim, alleging that the Power of
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`Attorney had not authorized Chase Froerer to execute the crop insurance application and that it
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`was retroactively void.
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`17. Froerer Farms initiated arbitration against Hudson.
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`18. Pursuant to Policy terms, the parties to that arbitration jointly sought determinations from
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`FCIC as to the interpretation of the Policy and related regulatory guidance, particularly the FCIC’s
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`General Standards Handbook (the “Handbook”), which provides standards for AIPs’
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`administration of crop insurance policies.
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`19. The most relevant provisions interpreted by USDA were WFRP Policy Section 4(h) and
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`Handbook §§ 854 and 855, reproduced below in most relevant part:
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`WFRP Policy Section 4(h) states:
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`4. Life of Policy, Termination, and Cancellation
`***
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`(h) Any person may sign any document relative to crop insurance coverage on
`behalf of any other person covered by such a policy, provided that the person
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`COMPLAINT - 3
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 4 of 8
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`has a properly executed power of attorney or such other legally sufficient
`document authorizing such person to sign. You are still responsible for the
`accuracy of all information provided on your behalf and may be subject to the
`consequences in section l5(j), and any other consequences, including
`administrative, criminal or civil sanctions, if any information has been
`misreported.
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`General Standards Handbook
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`854 Signatures
`A. Requirement
`Any crop insurance document requiring a signature must be signed by the
`person whose signature is required (e.g., the applicant must sign the
`Application). A POA or other legally sufficient document is required for any
`person who is authorized to sign on behalf of the required person. If the
`applicant is a minor, the parent or court-appointed guardian must sign all
`documents that require a signature unless the minor has been legally
`emancipated.
`B. Acceptable Signature Types
`Acceptable signatures for crop insurance include the:
`(1) signature of the required person (e.g., applicant, insured, or grantor);
`(2) signature of the authorized representative (or attorney-in-fact) granted by a
`POA; and
`(3) signature of the authorized representative granted by a legally sufficient
`document.
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`855. Power of Attorney
`Insureds may grant a third-party the authority to sign crop insurance documents
`on their behalf if a legally executed POA is provided to the AIP.
`A. POA Types
`(1) A POA that is executed in accordance with the laws of the state of execution
`is acceptable for crop insurance purposes. Such POA must be in writing and
`specify the powers granted to the authorized representative by the grantor. A
`POA is executed when it is signed.
`….
`B. POA Requirements
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`(1) Authority
`POAs which grant authority to sign contracts and legally bind the grantor(s) are
`sufficient for crop insurance purposes. The POA must specify the person
`authorized, the period of authorization, and powers granted.
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`Exception: Oral or open powers of attorney are not acceptable. An oral
`or open POA is a POA that does not specify who the authorized
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`COMPLAINT - 4
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 5 of 8
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`representative receiving the power is at the time of execution.
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`20. The term “legally sufficient document” is not defined in the Policy or Handbook.
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`21. After receiving the initial claim denial, Froerer Farms executed an additional Power of
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`Attorney to Chase Froerer, which expressly authorized him retroactively to “negotiate, acquire,
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`and manage all matters involving insurance policies” for Froerer Farms.
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`22. Despite Froerer Farms’ express written corporate resolution and the two executed
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`Powers of Attorney, FCIC interpreted its Policy and Handbook adversely to Froerer Farms and in
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`favor of Hudson in every particular.
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`23. Under the FCIC’s interpretations, Hudson was not obliged to honor Froerer Farms’
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`claim and the Policy was void ab initio.
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`24. Copies of the FCIC’s interpretations, from which review is sought herein, are attached
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`hereto as Exhibits A–F.
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`25. The FCIC’s interpretations were plainly erroneous, arbitrary, and capricious in at least
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`the following points:
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`a. The FCIC reads ¶ 4(h) of the Policy, which on its face plainly applies only
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`to submissions by already-covered insured persons, to apply to
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`applications for policies by uncovered persons. Based on
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`this
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`interpretation, the FCIC wrongly concluded that an applicant cannot ratify
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`the actions of an intended agent with a subsequently executed Power of
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`Attorney.
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`b. The FCIC reads “other legally sufficient document” to mean, as to a
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`corporate applicant, only its Articles of Incorporation, even though
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`COMPLAINT - 5
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 6 of 8
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`nothing in the Policy or Handbook suggests that restriction and in fact
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`expressly allows authorization through all other legally sufficient
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`documents.
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`c. The FCIC reads ¶ 4(h) of the Policy and §§ 854 and 855 of the Handbook
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`to go to the validity of the Policy as against the AIP, so that a Policy
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`application, signed by an authorized agent of the applicant whose
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`authorization has some defect in form according to the FCIC’s other
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`erroneous readings, is entirely ineffective and void ab initio, regardless of
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`the intent of both the applicant and the AIP to be bound, and even though
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`nothing in the Policy or Handbook suggests that the result of such an
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`immaterial failure would have this effect, and even though the signature-
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`authority guidance provisions are plainly intended for the benefit of
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`farmers, not of the AIP.
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`26.
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`In arriving at these determinations, the agency relied on factors which Congress has not
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`intended it to consider.
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`27.
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`In arriving at these determinations, the agency entirely failed to consider an important
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`aspect of the problem.
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`28.
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`In arriving at these determinations, the agency offered an explanation for its decision
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`that runs counter to the evidence before the agency.
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`29. These determinations are so implausible that they could not be ascribed to a difference
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`in view or the product of agency expertise.
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`30. Froerer Farms sought review of these interpretations by the USDA National Appeal
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`COMPLAINT - 6
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 7 of 8
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`Division (“NAD”).
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`31. The NAD issued a determination of non-appealability of these issues.
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`32. No further level of administrative review exists and Froerer Farms has exhausted
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`administrative remedies.
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`IV. CAUSE OF ACTION
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`33. Plaintiff incorporates all allegations set forth above as if fully stated herein.
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`34. Froerer Farms is entitled under 5 U.S.C. § 702 to judicial review of the FCIC
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`interpretations.
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`35. The FCIC interpretations are plainly erroneous, arbitrary, capricious, and run counter to
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`the plain intent of Congress and the plain meaning of the FCIC’s own regulation and guidance.
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`36. The Court should reverse the FCIC interpretations.
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`37.
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`If necessary, Froerer Farms is also entitled under 28 U.S.C. § 2201 to a declaration of
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`its rights, where an actual controversy exists between the parties as to the meaning of the Policy,
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`Handbook, and any incorporated regulations, and the rights of Froerer Farms thereunder.
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`WHEREFORE, Plaintiff respectfully requests that the Court enter judgment in its favor as follows:
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`PRAYER FOR RELIEF
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`A. Reversing the FCIC as to its interpretations attached hereto;
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`B. Declaring the Policy valid and effective;
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`C. Any other relief, including attorneys’ fees, the Court judges to be proper, permitted under
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`FRCP 54(c), 5 U.S.C. § 702, 28 U.S.C. § 2201, or other applicable law.
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`//
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`//
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`COMPLAINT - 7
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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`Case 2:22-cv-01035-HL Document 1 Filed 07/15/22 Page 8 of 8
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`DATED this 15th day of July 2022.
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`BUTLER & LOONEY, P.C.
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` /s/ Dustin A. Martinsen
`Dustin A. Martinsen, OSB No. 144907
`Butler & Looney, P.C.
`P.O. Box 430
`Vale, OR 97918
`Phone: (541) 473-3111
`Fax: (541) 473-3731
`Email: dustin@butlerlooney.com
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`ARNOLD & JACOBOWITZ PLLC
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`/s/ Nathan J. Arnold
`Nathan J. Arnold WSBA No. 45356
`Arnold & Jacobowitz PLLC
`2701 First Avenue, Suite 200
`Seattle, WA 98121
`(206) 769-3759; Fax (206) 866-3244
`Nathan@CAJlawyers.com
`PHV Application Pending
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`COMPLAINT - 8
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`BUTLER & LOONEY, P.C.
`PO BOX 430
`VALE OR 97918
`(541) 473-3111
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