Ignorance of the Law Meant Violation Was Not ‘Intentional'

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By Anandashankar Mazumdar

Nov. 27 — A farmer didn't intend to violate an obscure federal law by selling wheat seed, so his insurance company can't dismiss his pursuit of coverage, the U.S. District Court for the District of Kansas has ruled.

Farmer Brett Parker of Waterville, Kan., didn't know about the federal Plant Variety Protection Act (PVPA) of 1970—nor about another party's exclusive right to sell the wheat seed, the court said Nov. 16. Only if Parker knew, could he have expected some harm or damage to follow from his decision to advertise and sell the seed.

“If you have never heard of the Plant Variety Protection Act (PVPA), you are not alone,” the court stated at the beginning of its order rejecting Parker's insurer's motion. It ruled that the insurance company could not get the farmer's action for coverage of his legal expenses dismissed under an “intentional act” exclusion clause.

Farmer Didn't Know About the PVPA

Parker is an owner of D&B Parker Farms LLC. In September 2013, he sold some Fuller variety wheat seed to what turned out to be an undercover agent.

The agent was working for the Kansas Wheat Alliance, which held the exclusive right to sell that variety of seed pursuant to the PVPA, 7 U.S.C. §§2321-2582, a statute that creates a 25-year exclusive sui generis right to breeders of new plant varieties.

The wheat alliance then sued Parker, alleging a violation of the PVPA. Parker had a general business insurance policy with the Farm Bureau Property and Casualty Insurance Co. of West Des Moines, Iowa, and he sought coverage of his legal expenses and any liability he might face.

The Farm Bureau declined coverage under a clause of the policy that stated it would not cover loss or damages arising from an intentional act that would expected to cause harm to someone.

Parker had intentionally advertised and sold the wheat seed, the insurance company said, so his losses were not covered.

Parker ended up settling with the alliance, paying his own legal costs.

Then, Parker sued the insurance for defense and indemnification under the policy. The insurance company moved for dismissal pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim for which the law offers a remedy.

Source Material:

Parker v. Farm Bureau Prop. & Cas. Ins. Co.

July 2, 2015

Violation Was Not an ‘Intentional Act.'

“Parker had no idea of the existence of the PVPA or the protections that it grants to owners of varieties of seed wheat,” according to Parker's complaint against the insurance company.

The farmer's lack of knowledge of the PVPA and its implications meant that his act of violating the wheat alliance's PVPA rights was not intentional.

“Parker did these acts without knowledge of an obscure federal law and without knowledge of an exclusive federal license pertaining to a particular variety of wheat,” the court said. “Farm Bureau cites nothing to show that a reasonable person would have expected advertising and selling wheat seed to result in injury or damage. Only with knowledge of the exclusive license would a person expect a sale to result in damage.”

Thus, the court said, Parker had made a valid claim of breach of contract and it denied the insurance company's motion to dismiss.

The court's ruling was issued by Judge J. Thomas Marten.

Parker was represented by Martin, Pringle, Oliver, Wallace & Bauer LLP, Kansas City, Mo. Farm Bureau was represented by Thompson Ramsdell Qualseth & Warner P.A., Lawrence, Kan.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

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Text is available at: http://src.bna.com/9v.