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Welsh Farms, LLC v. United States Department of Agriculture

United States District Court, S.D. Mississippi, Northern Division

April 15, 2014

WELSH FARMS, LLC, Plaintiff,


DANIEL P. JORDAN, III, District Judge.

This agricultural dispute is before the Court on two motions to dismiss filed by Defendant Bozeman Joint Venture. The first claims failure to join a necessary party under Rule 19 of the Federal Rules of Civil Procedure. The second relies on Mississippi's three-year statute of limitations. Also before the Court is Plaintiff Welsh Farms, LLC's motion to dismiss the United States's counterclaims. Responses-and some replies-have been filed, though the briefing on all issues is at best sparse. The Court, having considered what the parties submitted, finds that the first motion to dismiss [9] should be denied and that the second [27] should be granted in part. Plaintiff's motion to dismiss [22] is terminated.

I. Facts and Procedural History

This case involves monies Defendant Bozeman Joint Venture received in exchange for planting hardwood trees on 122.6 acres of property-trees which were in fact never planted. The payments were made as part of the Conservation Reserve Program (CRP) by the Madison County Farm Service Agency (a local office of the United States Department of Agriculture). In very general terms, the CRP provides cost-sharing and rental payments to landowners who discontinue planting crops and take steps to conserve and improve the land's soil, water, and wildlife resources. See 16 U.S.C. § 3831.

According to the Complaint, Bozeman Joint Venture, which owned the subject property until 1998, was obligated under a CRP contract with the USDA to plant hardwood trees, but never did. Nevertheless, Bozeman accepted cost-sharing and rental payments from the USDA. From 1998 to 2001, nonparty Bogue Chitto Timber Company owned the property, and in 2001, Welsh Farms purchased it and continued participation in the CRP, thereby receiving rental payments. When Welsh Farms attempted to sell the property in 2009, it discovered that the promised trees had not been planted-a fact the USDA was investigating.

On May 4, 2009, the USDA requested a refund from Welsh Farms of cost-sharing and rental payments on the property dating back to 1998, including payments made to prior owners. Welsh Farms appealed and, through all levels of review, the decision was upheld. So, Welsh Farms filed this action against Bozeman Joint Venture, the USDA, and Michael E. Earwood, who issued a title opinion on the property. Welsh Farms seeks two forms of relief: 1) monetary damages against Bozeman Joint Venture and Michael Earwood; and 2) judicial review of the USDA's administrative decision. Compl. [1] at 1. Plaintiff's position is that the USDA's decision is erroneous and it does not owe repayment, but if Plaintiff does, it should be reimbursed by Bozeman Joint Venture for payments Plaintiff may be forced to make on that Defendant's behalf.

II. Bozeman Joint Venture's First Motion to Dismiss

In its first motion to dismiss, Bozeman Joint Venture contends that necessary parties were excluded from Plaintiff's Complaint. Defendant therefore invokes Rule 19, seeking an order adding additional parties or alternatively dismissing the Complaint.[1] More specifically, Defendant notes that under the controlling regulations, all subsequent owners of the property were subject to the CRP contract and therefore "assume[d] all obligations of the CRP contract of the previous participant." See 7 C.F.R. § 1410.51.

In this case, Bozeman Joint Venture was the original owner and admittedly failed to plant the trees as promised. But others owned the property after Bozeman Joint Venture, including Bogue Chitto Timber Company, LLC, C. Victor Welsh III, and Plaintiff Welsh Farms. Defendant therefore argues that Welsh Farms should have sued all other owners, including itself. Otherwise, the argument continues, the Court could not accord complete relief and Bozeman Joint Venture would be potentially exposed to multiple claims.

Welsh Farms responded, arguing that "[t]he damages which Welsh Farms seeks against Bozeman are specific to the amount of cost share payments Bozeman received for tree planting that the Deputy Director found did not take place on the subject property. Welsh Farms does not ask [sic] damages against Bozeman for payments received by third parties." Pl.'s Reply [13] at 2. Bozeman Joint Venture seems to accept that so limited there would be no Rule 19 issue-it has offered no argument or authorities disputing that point in its two-page reply. Instead, Defendant simply disputes Welsh Farms's description of the relief it seeks in its Complaint, arguing that Plaintiff is actually seeking compensation for all past payments to all previous owners through the unjust-enrichment claim and in the other causes of action. Def.'s Reply [14] at 2 (quoting Pl.'s Compl. [1] ¶ 30).

The Complaint does not support Bozeman Joint Venture's expansive interpretation. The disputed unjust-enrichment count states that "Bozeman should be required to refund all payments received by it to Madison FSA and/or reimburse Welsh Farms for payments refunded on Bozeman's behalf. " Def.'s Reply [14] at 2 (quoting Pl.'s Compl. [1] ¶ 30) (emphasis added). This language clearly limits the relief sought to the payments Bozeman Joint Venture received. To the extent it can be read otherwise, Welsh Farms has now unequivocally waived any such claim. As for the remaining causes of action, they will be dismissed as discussed below. Absent any other argument or authority from Defendant, it has not shown that Rule 19 requires joinder or dismissal.

III. Bozeman Joint Venture's Second Motion to Dismiss

In its Complaint, Plaintiff asserts state-law claims of unjust enrichment, breach of contract/warranty, detrimental reliance, and negligent misrepresentation against Bozeman Joint Venture. Compl. [1] at 9-10. Defendant submits that all of these claims are subject to the general three-year statute of limitations found in Mississippi Code section 15-1-49 and are time-barred. Section 15-1-49, the "catch all" statute of limitations, provides that a cause of action for a latent injury should be commenced within three years of the date the plaintiff "has discovered, or by reasonable diligence should have discovered, the injury." Defendant avers that because Welsh Farms was aware of the lack of trees by May 4, 2009, when the Madison FSA demanded a refund, its claims-filed June 14, 2012- are untimely.

There is no dispute that the statute of limitations for these claims is three years and that Welsh Farms had notice of the alleged breach no later than May 4, 2009. "A cause of action accrues when it comes into existence as an enforceable claim, that is, when the right to sue becomes vested...." Rankin v. Mark, 120 So.2d 435, 437 (Miss. 1960) (internal quotations omitted). But Welsh Farms responds in a four-page memorandum by arguing that "the Mississippi Supreme Court and Fifth Circuit have ...

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