John MCCLENDON d/b/a JRM Land Co., LLC, an Arkansas Limited Liability Co., Appellant
FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, Appellee
FROM THE LEE COUNTY CIRCUIT COURT [NO. 39CV-17-23], HONORABLE
CHRISTOPHER W. MORLEDGE, JUDGE
& Perry, PLLC, Marianna, by: Jesse B. Daggett and Brett M.
Waldrip, for appellant.
Law Firm, PLLC, Little Rock, by: J. Cotten Cunningham and M.
Evan Stallings, for appellee.
M. BROWN, Judge
appeal arises from a grant of summary judgment deciding a
contract dispute between John McClendon and Farm Bureau
Mutual Insurance Company of Arkansas ("Farm
Bureau"). Appellant filed suit against Farm Bureau for
breach of contract and negligence based on its failure to pay
on a grain-loss claim. More specifically, appellant contended
that Farm Bureaus failure to send notice thirty days prior
to the expiration of appellants policy, pursuant to Arkansas
Code Annotated section 23-88-105, constituted negligence.
Appellant further contended that Farm Bureaus failure to
give notice that the policy was set to expire prevented the
policy from expiring and that Farm Bureau breached its
contract with appellant by failing to cover appellants grain
loss. Alternatively, appellant argued that Farm Bureaus
failure to give notice was in and of itself a breach of
contract and in contravention of section 23-88-105. The trial
court granted summary judgment in favor of Farm Bureau
finding that section 23-88-105 was not applicable to
appellants contract with Farm Bureau because appellants
policy was a casualty insurance policy, not a property
insurance policy, and that Farm Bureau owed appellant no
duty. Appellant argues on appeal that the trial court erred
by finding that the statute was inapplicable to the contract
he had with Farm Bureau. Additionally, he maintains that
since the contract with Farm Bureau was covered under the
statute, Farm Bureaus failure to give the required notice
resulted in the policy being extended as a matter of law
until Farm Bureau complied with the law. We hold that summary
judgment in this case was not appropriate, and accordingly,
we reverse and remand.
facts in this case are not disputed. Appellant owns a farm
and grain bins located in Lee County, Arkansas. He uses his
farming operation to store the grains that are produced.
Appellant took out a ninety-day Term Grain Policy (policy
number TGO1043867) on July 6, 2015, for $ 270,000 in coverage
to cover the bushels of wheat crop that had not been sold and
remained on appellants property. Appellant paid the $ 437.40
premium associated with the policy. Based on the terms of the
policy, it was to expire on October 4, 2015. On December 23,
2015, a tornado struck the bins, causing extensive damage to
the 45,027 bushels of wheat that remained unsold. Appellant
was able to sell nearly
33,000 bushels at a drastically reduced rate; however, over
12,000 bushels remained unsold and without value. Appellant
contacted Farm Bureau about his loss following the storm and
Farm Bureau refused to cover the loss because appellants
policy had expired about eighty days prior to the loss.
filed a complaint on February 24, 2017, against Farm Bureau
for damages in the amount of $ 227,100.71 plus a 12% penalty.
He also sought attorneys fees, pre-judgment interest, and
costs. Farm Bureau filed an answer on March 20, 2017, seeking
to have the complaint dismissed. Appellant filed an amended
complaint on May 18, 2017, specifically alleging breach of
contract and negligence. Farm Bureau filed an answer on June
6, 2017. Farm Bureau filed a motion for summary judgment on
January 17, 2018, arguing that appellants contract with Farm
Bureau had expired at the time of appellants loss and that
due to the unique and highly specialized nature of the
contract in question, Arkansas Code Annotated section
23-88-105 did not apply. Thus, Farm Bureau maintained that
there was no duty on its part to notify appellant about the
expiration of his policy. Farm Bureau filed a brief in
support of its summary-judgment motion the same day.
Appellant filed a motion for partial summary judgment on
January 25, 2018, contending that he was entitled to summary
judgment as a matter of law. He filed a response to Farm
Bureaus motion and a brief in support of his
partial-summary-judgment motion the same day. Farm Bureau
filed a combined reply and response on February 14, 2018.
Farm Bureau filed a supplement to its February 14 filing on
March 12, 2018, seeking to include a letter from a
representative of the Arkansas Insurance Department that was
in response to a question asked by appellants
attorney. Appellant filed a motion to exclude
the letter as well as a reply to Farm Bureaus response on
March 21, 2018.
hearing on the motions took place on March 22, 2018. The
court addressed the motion to exclude first and agreed with
appellant that the letter should not come in as evidence. The
court then heard arguments from each side concerning their
competing summary-judgment motions. The court filed an order
on May 18, 2018, granting Farm Bureaus motion for summary
judgment and denying appellants motion for partial summary
judgment. The order stated in pertinent part:
3. That Farm Bureau denied Plaintiffs grain loss claim from
the December 23, 2015 tornado due to the fact that the Policy
had lapsed some eighty (80) days prior on October 4, 2015.
Plaintiff denies that the policy expired on October 4, 2015
because Farm Bureau did not comply with and give the notices
required by Ark. Code Ann. § 23-88-105. Plaintiff contended
that the failure of Farm Bureau to comply with Ark. Code Ann.
§ 23-88-105 was evidence of negligence, a breach of contract
and that the policy remained in effect at the time of the
loss because of Farm Bureaus failure to follow the law.
4. That, on July 6, 2015, the Plaintiff expressly sought out
insurance from Farm Bureau for his grain. On that same date,