Kremer v. Rural Community Ins. Co.

issue of whether D&S’ breach of the vacancy condition con-
tributed to the loss.
A ffirmed in pArt, And in pArt reversed And
remAnded for further proceedings.
robert K remer , AppellAnt, v. rurAl
community insurAnce compAny,
A corporAtion, Appellee .
gAry moody, AppellAnt, v. rurAl
community insurAnce compAny,
A corporAtion, Appellee .
788 N.W.2d 538
Filed September 17, 2010. 	Nos. S-09-900, S-09-901.
1. Arbitration and Award. Arbitrability presents a question of law.
2. Judgments: Appeal and Error. When reviewing questions of law, an appellate
court resolves the questions independently of the lower court’s conclusions.
3. Final Orders: Appeal and Error. Under Neb. Rev. Stat. § 25-1902 (Reissue
2008), an appellate court may review three types of final orders: (1) an order
affecting a substantial right in an action that, in effect, determines the action and
prevents a judgment; (2) an order affecting a substantial right made during a spe-
cial proceeding; and (3) an order affecting a substantial right made on summary
application in an action after a judgment is rendered.
4. Final Orders: Arbitration and Award. Motions to compel arbitration invoke a
specific statutory remedy that is neither an action nor a step in an action. As such,
the statutory remedy is a special proceeding under Neb. Rev. Stat. § 25-1902(2)
(Reissue 2008).
5. Actions: Statutes. Special proceedings include civil statutory remedies
not encompassed in chapter 25 of the Nebraska Revised Statutes that are
not actions.
6. ____: ____. Regardless of a statutory remedy’s location within Nebraska’s stat-
utes, actions and special proceedings are mutually exclusive.
7. Federal Acts: Arbitration and Award: States: Appeal and Error. The Federal
Arbitration Act’s preemptive effect does not extend to state procedural rules for
appeals that do not defeat the act’s objectives.
8. Arbitration and Award: Appeal and Error. The list of appealable arbitration
orders under Neb. Rev. Stat. § 25-2620 (Reissue 2008) is not exclusive.
9. Judgments: Arbitration and Award. An order compelling arbitration and stay-
ing judicial proceedings is a final determination of arbitrability.
10. Final Orders: Appeal and Error. An order affects a substantial right if the order
affects the subject matter of the litigation, such as diminishing a claim or defense
that the appellant had before the court entered the order.
kReMeR v. RURAl coMMUNiTy iNS. co. 	591
cite as 280 Neb. 591
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:46 AM CST

11. Final Orders: Arbitration and Award. An order compelling arbitration or stay-
ing judicial proceedings pending arbitration is a final order under the second
category of Neb. Rev. Stat. § 25-1902 (Reissue 2008): it affects a substantial right
in a special proceeding.
12. Insurance: Contracts: Arbitration and Award. With certain exceptions, under
Neb. Rev. Stat. § 25-2602.01(f)(4) (Reissue 2008), agreements to arbitrate future
controversies concerning an insurance policy are invalid.
13. Federal Acts: Contracts: Arbitration and Award: States. The Federal
Arbitration Act, 9 U.S.c. § 2 (2006), preempts inconsistent state laws that apply
solely to the enforceability of arbitration provisions in contracts evidencing a
transaction involving commerce.
14. Federal Acts: Insurance: States. Under the federal Mccarran-Ferguson Act,
state law regulating the business of insurance preempts federal law that does not
specifically govern insurance.
15. ____: ____: ____. Under the Mccarran-Ferguson Act, there are three elements
for determining whether a state law controls over (reverse preempts) a federal
statute: (1) The federal statute does not specifically relate to the business of insur-
ance; (2) the state law was enacted for regulating the business of insurance; and
(3) the federal statute operates to invalidate, impair, or supersede the state law.
16. ____: ____: ____. The primary concern for disputes under the first clause of 15
U.S.c. § 1012(b) (2006) is whether the state law regulates the core components
of the business of insurance: the contractual relationship between the insurer and
insured; the type of policy that can be issued; and its reliability, interpretation,
and enforcement.
17. Statutes: Insurance: Contracts: Arbitration and Award. A statute precluding
the parties to an insurance contract from including an arbitration agreement for
future controversies regulates the insurer-insured contractual relationship. Thus,
it regulates the business of insurance.
18. Federal 	Acts: 	Insurance: 	Contracts: 	Arbitration 	and 	Award. 	The
Federal Arbitration Act does not preempt Neb. Rev. Stat. § 25-2602.01(f)(4)
(Reissue 2008).
19. Insurance: Agriculture: Corporations. The Federal crop insurance corporation
is a wholly owned government corporation within the U.S. Department of
Agriculture, established to regulate the crop insurance industry.
20. ____: ____: ____. The Federal crop insurance corporation’s regulations require
applicants to apply on one of the corporation’s prescribed policy forms, which
contain arbitration provisions for all policies reinsured by the corporation.
21. Constitutional Law: Federal Acts: States. Under the Supremacy clause of the
U.S. constitution, state law that conflicts with federal law is invalid.
22. Federal Acts: States: Intent. Federal law preempts state law when it conflicts
with a federal statute or when the U.S. congress, or an agency acting within the
scope of its powers conferred by congress, explicitly declares an intent to pre-
empt state law. Preemption can also impliedly occur when congress has occupied
the entire field to the exclusion of state law claims.
23. Federal Acts: Insurance: Agriculture: Corporations: States. The Federal crop
insurance Act and the Federal crop insurance corporation’s regulations express
an intent to preempt state law that conflicts with the corporation’s regulations.
592 	280 NebRASkA RePoRTS

24. Insurance: Agriculture: Corporations: Statutes: Contracts: Arbitration
and Award. The Federal crop insurance corporation’s regulations requir-
ing arbitration and the preclusion of arbitration agreements under Neb. Rev.
Stat. § 25-2602.01(f)(4) (Reissue 2008) conflict because they cannot both
be enforced.
25. Federal Acts: Insurance: Agriculture: Statutes: Contracts: Arbitration and
Award. Under the Mccarran-Ferguson Act, Neb. Rev. Stat. § 25-2602.01(f)(4)
(Reissue 2008) does not reverse preempt federal law under the Federal crop
insurance Act because the Federal crop insurance Act specifically relates to the
business of insurance.
26. Federal Acts: Insurance: Agriculture: Corporations: Contracts: Agents. An
agent’s or loss adjuster’s statement cannot bind the Federal crop insurance
corporation when the statement is inconsistent with governing federal law.
Appeals from the District court for Hamilton county:
michAel J. owens, Judge. Affirmed.
kent e. Rauert, of Svehla, Thomas, Rauert & Grafton, P.c.,
for appellants.
charles W. campbell, of Angle, Murphy & campbell,
P.c., l.l.o., and Jeffrey S. Dilley, of Henke-bufkin, P.A., for
appellee.
heAvicAn, 	c.J., 	wright, 	connolly, 	gerrArd, 	stephAn,
mccormAcK, and miller-lermAn, JJ.
connolly, J.
i. SUMMARy
Robert kremer and Gary Moody, two insureds, appeal from
the district court’s decisions in their actions to enforce compro-
mise and settlement agreements with their crop insurer, Rural
community insurance company (Rcic). in each case, the
insured alleged that Rcic’s adjuster agreed to pay specified
amounts to the insureds. in both cases, Rcic moved to dismiss
the action or, alternatively, to compel arbitration and stay the
proceedings. in both cases, the court compelled arbitration and
stayed judicial proceedings.
We are asked to decide two issues: Whether this court has
jurisdiction to review an order that stays judicial proceedings
and compels arbitration; and whether federal law preempts
Neb. Rev. Stat. § 25-2602.01(f)(4) (Reissue 2008), which pre-
cludes arbitration agreements for future controversies relating
kReMeR v. RURAl coMMUNiTy iNS. co. 	593
cite as 280 Neb. 591

to insurance policies. We conclude that the orders are final
and that we have jurisdiction. We also conclude that federal
regulations under the Federal crop insurance Act (FciA)1
preempt § 25-2602.01(f)(4). Thus, the district court did not
err in compelling the insureds to arbitrate their disputes
with Rcic.
ii. bAckGRoUND
The court found that Rcic issued the “Multiple Peril crop
insurance” (MPci) policies under the FciA and that the Federal
crop insurance corporation is the reinsurer for all MPci poli-
cies. The court determined that all MPci policies contain a
dispute resolution provision like the following paragraph from
the policies at issue:
20. Mediation, Arbitration, Appeal, Reconsideration,
and Administrative and Judicial Review.
(a) if you and we fail to agree on any determination
made by us except those specified in section 20(d), the
disagreement may be resolved through mediation . . . .
if resolution cannot be reached through mediation, or
you and we do not agree to mediation, the disagreement
must be resolved through arbitration in accordance with
the rules of the American Arbitration Association (AAA),
except as provided in sections 20(c) and (f), and unless
rules are established by [the Federal crop insurance
corporation] for this purpose.
(emphasis omitted.)
The court rejected the insureds’ argument that they were
attempting to enforce their settlement agreement instead of
seeking relief under the policy. The court declined to decide
whether their alleged agreement with the adjuster was enforce-
able. it determined that their claim was directly attributable to
their policy and therefore within the scope of their arbitration
provision. in each case, it sustained Rcic’s motion to compel
arbitration and issued a stay of judicial proceedings pend-
ing arbitration.
1 7 U.S.c. § 1501 et seq. (2006).
594 	280 NebRASkA RePoRTS

iii. ASSiGNMeNTS oF eRRoR
The insureds assign that the court erred in (1) sustaining
Rcic’s motions to compel arbitration and stay the proceedings
because their dispute does not fall within the scope of the arbi-
tration provisions and (2) not deciding whether the parties had
reached enforceable compromise and settlement agreements.
iV. STANDARD oF ReVieW
[1,2] Arbitrability presents a question of law.2 A jurisdic-
tional issue that does not involve a factual dispute presents
a question of law.3 And when reviewing questions of law,
we resolve the questions independently of the lower court’s
conclusions.4
V. ANAlySiS
1. Jurisdiction
Rcic contends that an order that compels arbitration and
stays judicial proceedings is not a final order. The insureds
disagree. They contend that the district court’s decision in each
case was a final order issued in a special proceeding. Relying
on State ex rel. Bruning v. R.J. Reynolds Tobacco Co.,5 they
argue that a trial court’s ruling on a motion to compel arbi-
tration affects a substantial right whether the court grants or
denies the motion.
Neb. Rev. Stat. § 25-2620 (Reissue 2008) explicitly autho-
rizes appeals from judicial orders denying an application to
compel arbitration or granting an application to stay arbitra-
tion. but § 25-2620 is silent as to whether a party may appeal
an order granting an application to compel arbitration or to
stay judicial proceedings. in that circumstance, we look to our
2 See, Good Samaritan Coffee Co. v. LaRue Distributing, 275 Neb. 674, 748
N.W.2d 367 (2008); Smith Barney, Inc. v. Painters Local Union No. 109,
254 Neb. 758, 579 N.W.2d 518 (1998).
3 Smeal Fire Apparatus Co. v. Kreikemeier, 279 Neb. 661, 782 N.W.2d 848
(2010).
4 See Eikmeier v. City of Omaha, ante p. 173, 783 N.W.2d 795 (2010).
5 State ex rel. Bruning v. R.J. Reynolds Tobacco Co., 275 Neb. 310, 746
N.W.2d 672 (2008).
kReMeR v. RURAl coMMUNiTy iNS. co. 	595
cite as 280 Neb. 591

general final order statute to determine whether the order is
final and appealable.6 Next, we determine whether permitting
an appeal under state procedural rules would undermine the
goals and policies of the Federal Arbitration Act (FAA).7
(a) Arbitrability Hearings Are
Special Proceedings
[3,4] Under Neb. Rev. Stat. § 25-1902 (Reissue 2008), an
appellate court may review three types of final orders: (1) an
order affecting a substantial right in an action that, in effect,
determines the action and prevents a judgment; (2) an order
affecting a substantial right made during a special proceeding;
and (3) an order affecting a substantial right made on summary
application in an action after a judgment is rendered.8 in Webb
v. American Employers Group,9 we held that motions to compel
arbitration invoke a specific statutory remedy that is neither an
action nor a step in an action. As such, the statutory remedy is
a special proceeding under § 25-1902(2).10
but Rcic contends that this case is distinguishable from
our earlier arbitration cases because here, the district court
stayed judicial proceedings instead of dismissing the action.
So Rcic argues that each proceeding was merely a step within
the overall action under the first category of final orders and
not a special proceeding. And because the orders did not have
the effect of determining the action and preventing a judgment,
Rcic argues that they are not final.
We recognize that State ex rel. Bruning11 provides some sup-
port for Rcic’s argument. There, we did focus on the relief
6 See id.
7 9 U.S.c. § 1 et seq. (2006). See State ex rel. Bruning, supra note 5, cit-
ing Webb v. American Employers Group, 268 Neb. 473, 684 N.W.2d 33
(2004).
8 See Kilgore v. Nebraska Dept. of Health & Human Servs., 277 Neb. 456,
763 N.W.2d 77 (2009).
9 Webb, supra note 7.
10 See id.
11 State ex rel. Bruning, supra note 5.
596 	280 NebRASkA RePoRTS

granted in the proceeding invoked by the defendants’ motion
to compel arbitration. because the court granted the motion
and dismissed the judicial proceeding, we concluded that the
order was final under the first category of § 25-1902: an order
affecting a substantial right in an action that, in effect, deter-
mines the action and prevents a judgment. on further reflec-
tion, however, we conclude that our focus on the remedy was
incorrect. by focusing on the relief granted, the order lost its
characterization as a special proceeding order and became an
order within an action.
[5,6] A proceeding’s characterization cannot hinge upon the
remedy because it cannot be both a special proceeding and a
step within an action. As we have often stated, special proceed-
ings include civil statutory remedies not encompassed in chap-
ter 25 of the Nebraska Revised Statutes that are not actions.12
This statement does not mean that statutory remedies within the
civil procedure statutes are never special proceedings because,
as Webb13 illustrates, they sometimes are located within those
statutes. but regardless of a statutory remedy’s location within
Nebraska’s statutes, actions and special proceedings are mutu-
ally exclusive.14 Thus, we determine whether an order issuing a
stay of judicial proceedings in a proceeding to compel arbitra-
tion is a final, appealable order under the special proceeding
category of final orders.
(b) FAA Rules on Appealable orders Do Not Preempt
State Procedural Rules for Appeals
We recognize that a federal court order compelling arbitra-
tion is not appealable under the FAA unless the trial court
dismissed the underlying court action. Section 16 of the FAA
provides that “(a) [a]n appeal may be taken from . . . (3) a final
decision with respect to an arbitration that is subject to this
12 See, e.g., State v. Pratt, 273 Neb. 817, 733 N.W.2d 868 (2007); In re
Guardianship of Sophia M., 271 Neb. 133, 710 N.W.2d 312 (2006).
13 Webb, supra note 7.
14 See id.
kReMeR v. RURAl coMMUNiTy iNS. co. 	597
cite as 280 Neb. 591

title.”15 in Green Tree Financial Corp.-Ala. v. Randolph,16 the
U.S. Supreme court stated that § 16(a)(3) “preserves immedi-
ate appeal of any ‘final decision with respect to an arbitration,’
regardless of whether the decision is favorable or hostile to
arbitration.” The court held that under § 16(a)(3), when a
federal district court “has ordered the parties to proceed to
arbitration, and dismissed all the claims before it, that decision
is ‘final.’”17
Further, this rule applies whether the party seeking arbitra-
tion moves to compel arbitration after the opposing party has
commenced a court action or initiates an independent proceed-
ing solely to compel a party to arbitrate.18 The court concluded
that applying different rules of finality based on this distinction
was unsupported by the legislation.
it is true that the court also pointed out that a federal court
order entering a stay of judicial proceedings, instead of a dis-
missal, is not appealable under § 16(b)(1) of the FAA.19 Since
1988, § 16(b) has precluded an appeal from an interlocutory
order granting a stay pending arbitration or compelling arbitra-
tion.20 but the FAA’s § 16(b) does not preempt our appellate
procedural rules.
[7] in Webb, we concluded that the FAA’s preemptive effect
does not extend to state procedural rules for appeals that do
not defeat the FAA’s objectives: “‘There is no federal policy
favoring arbitration under a certain set of procedural rules and
the federal policy is simply to ensure the enforceability of pri-
vate agreements to arbitrate.’”21 Many other state courts have
15 9 U.S.c. § 16.
16 Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79, 86, 121 S. ct.
513, 148 l. ed. 2d 373 (2000).
17 Id., 531 U.S. at 89.
18 See id.
19 See id. See, also, 9 U.S.c. § 16(b).
20 See 15b charles Alan Wright et al., Federal Practice and Procedure
§ 3914.17 (2d ed. 1992).
21 Webb, supra note 7, 268 Neb. at 481, 684 N.W.2d at 40-41. See, also, Volt
Info. Sciences v. Leland Stanford Jr. U., 489 U.S. 468, 109 S. ct. 1248,
103 l. ed. 2d 488 (1989).
598 	280 NebRASkA RePoRTS

reached the same conclusion.22 And the U.S. Supreme court
has never held that §§ 3 and 423 of the FAA, which are proce-
dural sections, apply to state courts.24
but the law is torn in two directions. A substantial split of
authority exists among state courts over whether a party may
appeal from an order compelling arbitration.25 Some state
courts have held that under their state procedural rules, orders
compelling arbitration and staying judicial proceedings are
interlocutory and not appealable. These courts reason that a
party adversely affected by an order compelling arbitration
can raise the issue in an appeal from an order confirming the
arbitrator’s award.26 other courts have reasoned that their state
statute that specifically lists the arbitration orders that a party
may appeal is exclusive and does not include an order compel-
ling arbitration.27
[8] in contrast, other courts hold that their state legislatures’
silence in such statutes does not mean the list of appealable
orders is exclusive.28 We agree. in State ex rel. Bruning,29 we
22 See, e.g., So. Cal. Edison Co. v. Peabody Western Coal, 194 Ariz. 47,
977 P.2d 769 (1999); Muao v. Grosvenor Properties Ltd., 99 cal. App.
4th 1085, 122 cal. Rptr. 2d 131 (2002); Simmons v. Deutsche Financial
Services, 243 Ga. App. 85, 532 S.e.2d 436 (2000); Wells v. Chevy Chase
Bank, 363 Md. 232, 768 A.2d 620 (2001); Clayco Const. Co. v. THF
Carondelet Dev., 105 S.W.3d 518 (Mo. App. 2003); Superpumper, Inc. v.
Nerland Oil, Inc., 582 N.W.2d 647 (N.D. 1998); Toler’s Cove Homeowners
v. Trident Construction Co., 355 S.c. 605, 586 S.e.2d 581 (2003).
23 See 9 U.S.c. §§ 3 and 4.
24 See Volt Info. Sciences, supra note 21.
25 See Annot., 6 A.l.R.4th 652 (1981).
26 See, Chem-Ash, Inc. v. Ark. Power & Light Co., 296 Ark. 83, 751 S.W.2d
353 (1988); Muao, supra note 22; Lane v. Urgitus, 145 P.3d 672 (colo.
2006); Weston Securities Corp. v. Aykanian, 46 Mass. App. 72, 703 N.e.2d
1185 (1998); Toler’s Cove Homeowners, supra note 22.
27 See, e.g., So. Cal. Edison Co., supra note 22; Muao, supra note 22; Weston
Securities Corp., supra note 26; Toler’s Cove Homeowners, supra note
22.
28 See, e.g., Wein v. Morris, 194 N.J. 364, 944 A.2d 642 (2008); Gilliland v.
Chronic Pain Associates, 904 P.2d 73 (okla. 1995).
29 State ex rel. Bruning, supra note 5.
kReMeR v. RURAl coMMUNiTy iNS. co. 	599
cite as 280 Neb. 591

implicitly concluded that the list of appealable arbitration
orders under § 25-2620 is not exclusive.
other state courts also hold that a party resisting arbitra-
tion may appeal an order compelling arbitration regardless of
whether the trial court’s order also dismissed the court action.30
These courts reason that an order compelling arbitration (1)
completely disposes of all the issues before the court in that
proceeding, leaving nothing for the parties to litigate; and
(2) removes the trial court’s jurisdiction over the underlying
dispute. They also conclude that permitting appeals from both
dismissals and stays creates more certainty and uniformity in
their state appellate process.31
We recognize that an order issuing a stay within an action
or proceeding is usually interlocutory and not appealable
absent a statute or court rule permitting an interlocutory
appeal.32 yet, we have recognized that a stay which is tanta-
mount to a dismissal of an action or has the effect of a per-
manent denial of the requested relief should be appealable as
a final order.33
We believe that reasoning applies here. Under Nebraska’s
Uniform Arbitration Act, whether a court dismisses or stays
the court action, the order has the same effect: The parties
cannot litigate their dispute in state courts because by enforc-
ing the arbitration agreement, the order divests the court of
30 See, Dewart v. Northeastern Gas Transmission Co., 139 conn. 512, 95
A.2d 381 (1953); Simmons, supra note 22; Evansville-Vanderburgh Sch.
v. Teachers Ass’n, 494 N.e.2d 321 (ind. App. 1986); Iowa Mgmt. &
Consultants v. Sac & Fox Tribe, 656 N.W.2d 167 (iowa 2003); Wells,
supra note 22; Sawyers v. Herrin-Gear Chevrolet Co., Inc., 26 So. 3d 1026
(Miss. 2010); Wein, supra note 28; Lyman v. Kern, 128 N.M. 582, 995 P.2d
504 (N.M. App. 1999); Okla. Oncology & Hematology v. US Oncology,
160 P.3d 936 (okla. 2007).
31 See, e.g., Sawyers, supra note 30; Wein, supra note 28.
32 See, e.g., Department of Children and Families v. L.D., 840 So. 2d
432 (Fla. App. 2003); Cole v. Cole, 971 So. 2d 1185 (la. App. 2007);
Washington v. FedEx Ground Package System, 995 A.2d 1271 (Pa. Super.
2010).
33 In re Interest of L.W., 241 Neb. 84, 486 N.W.2d 486 (1992), quoting
Carpenter v. Carpenter, 326 Pa. Super. 570, 474 A.2d 1124 (1984).
600 	280 NebRASkA RePoRTS

jurisdiction to hear their dispute.34 in either case, the only
other proceedings authorized by the act are initiated by sepa-
rate applications to the court: an application to confirm an
arbitration award,35 an application to vacate an award,36 or an
application to modify or correct an award.37 our arbitration
statutes allow these proceedings even if the parties never dis-
puted arbitrability because they are related to the enforceabil-
ity of an arbitration award.
[9] As the U.S. Supreme court recognized in Green Tree
Financial Corp.-Ala., while the FAA provides separate pro-
ceedings related to enforcing an arbitration award, “the exis-
tence of [an enforcement proceeding as a] remedy does not
vitiate the finality of” a court’s resolution of the parties’ pre-
liminary dispute over arbitrability.38 obviously, a court would
not revisit its decision from an earlier proceeding that the
dispute was arbitrable. So we agree with courts that hold that
an order compelling arbitration and staying judicial proceed-
ings is a final determination of arbitrability. but our analysis is
not complete: Under our final order statute, an order must also
affect a substantial right.
[10] We have often stated that an order affects a substantial
right if the order affects the subject matter of the litigation,
such as diminishing a claim or defense that the appellant had
before the court entered the order.39 Just as an order refusing to
compel arbitration diminishes a party’s claim that it is entitled
to arbitrate,40 so does an order compelling arbitration diminish
34 See Wein, supra note 28.
35 Neb. Rev. Stat. § 25-2612 (Reissue 2008).
36 Neb. Rev. Stat. § 25-2613 (Reissue 2008).
37 Neb. Rev. Stat. § 25-2614 (Reissue 2008).
38 Green Tree Financial Corp.-Ala., supra note 16, 531 U.S. at 86. See,
also, Daginella v. Foremost Ins. Co., 197 conn. 26, 495 A.2d 709 (1985);
Matter of Hosiery Mfrs. Corp. v. Goldston, 238 N.y. 22, 143 N.e. 779
(1924).
39 See, e.g., Miller v. Regional West Med. Ctr., 278 Neb. 676, 772 N.W.2d
872 (2009).
40 See Webb, supra note 7.
kReMeR v. RURAl coMMUNiTy iNS. co. 	601
cite as 280 Neb. 591

a party’s claim that it is entitled to litigate in court.41 These
claims cannot be effectively vindicated after the party has been
compelled to do that which it claims it is not required to do.42
As the Maryland court of Appeals stated, “The policy against
delay must be weighed against the more fundamental principle
that a party who has not agreed to arbitrate a particular dispute
cannot be compelled to arbitrate it.”43
[11] More important, an order that disposes of all the
issues presented in an independent special proceeding obvi-
ously affects the subject matter of the litigation. by “indepen-
dent special proceeding,” we mean one that is separate from the
issues raised in any underlying dispute and is not a phase in a
protracted special proceeding with interrelated phases (as in
juvenile cases, for example). We conclude that an order com-
pelling arbitration or staying judicial proceedings pending arbi-
tration is a final order under the second category of § 25-1902:
it affects a substantial right in a special proceeding.
As noted, after determining whether an arbitration-related
order is final under § 25-1902, we determine whether permit-
ting an appeal from the order undermines the FAA’s goals and
objectives. We determine that it does not. As the U.S. Supreme
court has stated, “The FAA contains no express pre-emptive
provision, nor does it reflect a congressional intent to occupy
the entire field of arbitration.”44 And other courts have con-
cluded that state appellate procedures only affect the timing
of an appeal; they neither preclude the enforcement of a valid
arbitration agreement nor interfere with the parties’ substantive
rights.45 Further, permitting an appeal is consistent with the
41 See Evansville-Vanderburgh Sch., supra note 30. compare Williams v.
Baird, 273 Neb. 977, 735 N.W.2d 383 (2007).
42 See, e.g., In re Estate of Rose, 273 Neb. 490, 730 N.W.2d 391 (2007).
43 Wells, supra note 22, 363 Md. at 249, 768 A.2d at 629, citing First Options
of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. ct. 1920, 131 l. ed. 2d
985 (1995). See, also, State ex rel. Bruning, supra note 5.
44 Volt Info. Sciences, supra note 21, 489 U.S. at 477.
45 See, Simmons, supra note 22 (citing cases); Weston Securities Corp., supra
note 26.
602 	280 NebRASkA RePoRTS

Supreme court’s holding in Green Tree Financial Corp.-Ala.46
that a party may appeal from a final decision on the arbitrabil-
ity of a dispute. Having determined that an order compelling
arbitration and staying judicial proceedings is a final order
on arbitrability, we have jurisdiction. Having disposed of the
jurisdictional issue, we come at last to the merits of the court’s
order to arbitrate.
2. the fAA does not preempt nebrAsKA’s preclusion of
Agreements to A rbitrAte future controversies
in insurAnce policies
As noted, the court found that Rcic issued the MPci poli-
cies under the FciA and that all MPci policies contain a provi-
sion requiring mediation or arbitration. but the parties fail to
recognize that the arbitration provision in each policy is invalid
under Nebraska law because it required arbitration of future
controversies related to an insurance policy.
[12] Section 25-2602.01 addresses two types of arbitra-
tion agreements: (1) agreements to arbitrate existing contro-
versies47 and (2) agreements to arbitrate future controver-
sies.48 The statute provides that such agreements are valid
and enforceable except in specified circumstances. but under
§ 25-2602.01(f)(4), agreements to arbitrate future controver-
sies concerning an insurance policy are invalid, with certain
exceptions that are not applicable here. So unless federal law
preempts § 25-2602.01, the arbitration provisions in these
insurance policies were invalid.
[13,14] “Under the FAA, written provisions for arbitra-
tion are ‘valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any
contract.’”49 Section 250 of the FAA preempts inconsistent
state laws that apply solely to the enforceability of arbitration
46 See Green Tree Financial Corp.-Ala., supra note 16.
47 See § 25-2602.01(a).
48 See § 25-2602.01(b).
49 Aramark Uniform & Career Apparel v. Hunan, Inc., 276 Neb. 700, 703,
757 N.W.2d 205, 209 (2008), quoting 9 U.S.c. § 2.
50 9 U.S.c. § 2.
kReMeR v. RURAl coMMUNiTy iNS. co. 	603
cite as 280 Neb. 591

provisions in contracts “evidencing a transaction involving
commerce.”51 because of the U.S. Supreme court’s expansive
interpretation of this phrase, the FAA governs whether an arbi-
tration provision in a contract touching on interstate commerce
is enforceable.52 but under the federal Mccarran-Ferguson
Act,53 state law regulating the business of insurance preempts
federal law that does not specifically govern insurance.
Subsection (a) of 15 U.S.c. § 1012 provides that “[t]he busi-
ness of insurance . . . shall be subject to the laws of the several
States which relate to the regulation or taxation of such busi-
ness.” Section 1012(b) sets out the state law exemptions:
No Act of congress shall be construed to invalidate,
impair, or supersede any law enacted by any State for the
purpose of regulating the business of insurance, or which
imposes a fee or tax upon such business, unless such Act
specifically relates to the business of insurance: Provided,
That [the federal antitrust statutes] shall be applicable to
the business of insurance to the extent that such business
is not regulated by State law.
(emphasis supplied.) (emphasis in original.)
congress passed the Mccarran-Ferguson Act to overturn a
U.S. Supreme court decision under the commerce clause that
threatened the continued supremacy of states to regulate “the
activities of insurance companies in dealing with their policy-
holders.”54 The U.S. Supreme court has interpreted the second
clause of § 1012(b) to provide an exemption to an insurer
from antitrust scrutiny if its challenged practices constitute
the “business of insurance” and are regulated by state law.55
The first clause, which is at issue here, shields state regula-
tion of the insurance business from federal preemption under
51 See Hunan, Inc., supra note 49.
52 See id. See, also, Smith v. Pacificare Behavioral Health of CA, 93 cal.
App. 4th 139, 113 cal. Rptr. 2d 140 (2001).
53 See 15 U.S.c. §§ 1011 through 1015 (2006).
54 SEC v. National Securities, Inc., 393 U.S. 453, 459, 89 S. ct. 564, 21 l.
ed. 2d 668 (1969).
55 See Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 219,
99 S. ct. 1067, 59 l. ed. 2d 261 (1979).
604 	280 NebRASkA RePoRTS

congress’ commerce clause authority, whether dormant or
exercised, unless the federal statute specifically relates to the
business of insurance.56
[15] Under the Mccarran-Ferguson Act, federal courts have
set out three elements for determining whether a state law con-
trols over (reverse preempts) a federal statute: (1) The federal
statute does not specifically relate to the business of insurance;
(2) the state law was enacted for regulating the business of
insurance; and (3) the federal statute operates to invalidate,
impair, or supersede the state law.57 Applying this test, the
only question for determining whether Nebraska law controls
over the FAA is whether Nebraska’s restriction of arbitra-
tion agreements in insurance policies regulates the business
of insurance.
in SEC v. National Securities, Inc.,58 the court first inter-
preted the Mccarran-Ferguson Act in a dispute under the first
clause of § 1012(b). it explained that in enacting the Mccarran-
Ferguson Act,
congress was concerned with the type of state regula-
tion that centers around the contract of insurance . . . .
The relationship between insurer and insured, the type of
policy which could be issued, its reliability, interpretation,
and enforcement—these were the core of the “business
of insurance.” . . . but whatever the exact scope of the
statutory term, it is clear where the focus was—it was on
the relationship between the insurance company and the
policyholder. Statutes aimed at protecting or regulating
this relationship, directly or indirectly, are laws regulating
the “business of insurance.”59
in examining the act, the court held that a state law that
protected insurance stockholders from inequitable mergers
56 American Ins. Assn. v. Garamendi, 539 U.S. 396, 123 S. ct. 2374, 156 l.
ed. 2d 376 (2003).
57 American Bankers Ins. Co. of Florida v. Inman, 436 F.3d 490 (5th cir.
2006); Standard Sec. Life Ins. Co. of New York v. West, 267 F.3d 821 (8th
cir. 2001).
58 National Securities, Inc., supra note 54.
59 Id., 393 U.S. at 460 (emphasis supplied).
kReMeR v. RURAl coMMUNiTy iNS. co. 	605
cite as 280 Neb. 591

was not a regulation of the insurance business: “The crucial
point is that here the State has focused its attention on stock-
holder protection; it is not attempting to secure the interests
of those purchasing insurance policies.”60 The court recog-
nized that the state had approved the merger at issue under a
statute that also required it to find that the merger would not
reduce the security of or services to policyholders. That part
of the statute was a regulation of the insurance business and
exempt from preemption by federal law. but to the extent the
statute protected shareholders, it did not regulate the insur-
ance relationship.
later, in Department of Treasury v. Fabe,61 the court held
that a state priority statute for insurer liquidations was not pre-
empted by a federal priority statute for bankruptcy obligations.
To the extent that the state statute protected policyholders by
giving their claims a higher priority than the federal govern-
ment’s claims, it regulated the business of insurance.
[16] in Fabe, the court reemphasized its holding in National
Securities, Inc. that the primary concern for disputes under
the first clause of § 1012(b) is whether the state law regu-
lates the core components of the business of insurance: the
contractual relationship between the insurer and insured; the
type of policy that can be issued; and its reliability, interpreta-
tion, and enforcement. it determined that the phrase “business
of insurance” has a broader meaning under the first clause of
§ 1012(b) than under the second clause: “The broad category
of laws enacted ‘for the purpose of regulating the business of
insurance’ consists of laws that possess the ‘end, intention,
or aim’ of adjusting, managing, or controlling the business
of insurance.”62
every federal appellate court to address this issue has
held that state laws restricting arbitration provisions in insur-
ance contracts regulate the business of insurance and are not
60 Id. (emphasis supplied).
61 Department of Treasury v. Fabe, 508 U.S. 491, 113 S. ct. 2202, 124 l. ed.
2d 449 (1993).
62 Id., 508 U.S. at 505.
606 	280 NebRASkA RePoRTS

preempted by the FAA.63 These courts have reasoned that such
state laws regulate core components of the insurance business
by legislating how disputed claims can be resolved.64 Applying
factors that the Supreme court set out under the second clause
of § 1012(b),65 these courts have also asked whether the law
has the effect of transferring or spreading a policyholder’s
risk. They have reasoned that a state’s restriction of arbitration
clauses affects the transfer of risk by (1) placing limits on the
parties’ agreement to spread risk66 or (2) introducing the pos-
sibility of a jury verdict into the process for resolving disputed
claims.67 Alternatively, they have simply stated that any con-
tract of insurance is an agreement to spread risk.68
Reasonable people might disagree whether statutes restrict-
ing arbitration agreements in insurance policies affect the
transfer of risk. but we do not consider this issue dispositive.
First, even for disputes under the second clause of § 1012(b),
no factor is dispositive in itself whether an insurer’s practice
constitutes the “business of insurance.”69 More important, the
court in Fabe explained that these factors were intended
to define
the scope of the antitrust immunity located in the second
clause of § [101]2(b). We deal here with the first clause,
which is not so narrowly circumscribed. . . . To equate
laws “enacted . . . for the purpose of regulating the busi-
ness of insurance” with the “business of insurance” itself
63 See, Inman, supra note 57; McKnight v. Chicago Title Ins. Co., Inc., 358
F.3d 854 (11th cir. 2004); West, supra note 57; Stephens v. American
Intern. Ins. Co., 66 F.3d 41 (2d cir. 1995); Mutual Reinsurance Bureau v.
Great Plains Mut., 969 F.2d 931 (10th cir. 1992). See, also, Smith, supra
note 52.
64 See West, supra note 57; Mutual Reinsurance Bureau, supra note 63.
65 See Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 102 S. ct. 3002,
73 l. ed. 2d 647 (1982).
66 See Mutual Reinsurance Bureau, supra note 63.
67 Inman, supra note 57; West, supra note 57.
68 See, Stephens, supra note 63; Mutual Reinsurance Bureau, supra note 63.
69 See Pireno, supra note 65.
kReMeR v. RURAl coMMUNiTy iNS. co. 	607
cite as 280 Neb. 591

. . . would be to read words out of the statute. This we
refuse to do.70
[17,18] We conclude that under Fabe, the National Securities
test71 is the more relevant test for disputes under the first clause
of § 1012(b). Applying that test, we conclude that a statute
precluding the parties to an insurance contract from including
an arbitration agreement for future controversies regulates the
insurer-insured contractual relationship. Thus, it regulates the
business of insurance. So we agree with federal courts that
the FAA does not preempt such statutes. Specifically, we hold
that the FAA does not preempt Nebraska’s § 25-2602.01(f)(4).
but we are not done. The FAA is not the only federal law that
we consider in determining whether § 25-2602.01(f)(4)’s pre-
clusion of agreements to arbitrate future controversies in crop
insurance policies is preempted.
3. federAl regulAtions under the fciA preempt
nebrAsKA’s prohibition AgAinst Agreements
to A rbitrAte future controversies in A
crop insurAnce policy reinsured by the
federAl crop insurAnce corporAtion
As noted, the district court found that Rcic issued this
crop insurance policy under the FciA and that the Federal
crop insurance corporation (the corporation) is the reinsurer
for all MPci policies. The court further determined that all
MPci policies contain the same alternative dispute resolu-
tion provision.
[19] The corporation is a wholly owned government corpo-
ration within the U.S. Department of Agriculture, established
to regulate the crop insurance industry.72 “Private insurance
companies offer crop insurance and are then reinsured (and
regulated) by the [corporation].”73 Subsections (e) and (l) of
7 U.S.c. § 1506 authorize the corporation to adopt rules and
regulations necessary to conduct its business. Subsection (a)(1)
70 Fabe, supra note 61, 508 U.S. at 504 (emphasis omitted).
71 See National Securities, Inc., supra note 54.
72 Acceptance Ins. Companies, Inc. v. U.S., 583 F.3d 849 (Fed. cir. 2009).
73 Id. at 851.
608 	280 NebRASkA RePoRTS

of 7 U.S.c. § 1508 authorizes the corporation to “insure, or
provide reinsurance for insurers of, producers of agricultural
commodities . . . under 1 or more plans of insurance deter-
mined by the corporation to be adapted to the agricultural
commodity concerned.”
[20] Under this authority, the corporation has promulgated
regulations prescribing the terms for common crop insurance
policies.74 The corporation’s regulations specifically require
applicants to apply on one of the corporation’s prescribed
policy forms.75 Those forms contain arbitration provisions for
all policies reinsured by the corporation.76
Also, 7 U.S.c. § 1506(l) provides in part:
State and local laws or rules shall not apply to contracts,
agreements, or regulations of the corporation or the par-
ties thereto to the extent that such contracts, agreements,
or regulations provide that such laws or rules shall not
apply, or to the extent that such laws or rules are inconsist-
ent with such contracts, agreements, or regulations.
Under its statutory authority to regulate private crop insur-
ance contracts, the corporation has also promulgated regula-
tions providing that state and local governments cannot pass
laws or promulgate rules that affect or govern its agreements or
contracts.77 And the regulations specifically preclude state and
local governments from exercising approval authority over the
policies it issues.78
[21,22] Under the Supremacy clause of the U.S. constitution,
state law that conflicts with federal law is invalid.79 Federal law
preempts state law when it conflicts with a federal statute or
when the U.S. congress, or an agency acting within the scope
of its powers conferred by congress, explicitly declares an
74 See 7 c.F.R. part 457 (2010).
75 See § 457.8(a).
76 See § 457.8(b).
77 See 7 c.F.R. § 400.352(a) (2010).
78 See § 400.352(b)(3).
79 Zannini v. Ameritrade Holding Corp., 266 Neb. 492, 667 N.W.2d 222
(2003).
kReMeR v. RURAl coMMUNiTy iNS. co. 	609
cite as 280 Neb. 591

intent to preempt state law.80 Preemption can also impliedly
occur when congress has occupied the entire field to the exclu-
sion of state law claims.81
[23-25] We conclude that the FciA and the corporation’s
regulations express an intent to preempt state law that conflicts
with the corporation’s regulations. Further, the corporation’s
regulations requiring arbitration and the preclusion of the arbi-
tration agreement under § 25-2602.01(f)(4) conflict because
they cannot both be enforced. And because the FciA and
the 	corporation’s 	regulations 	specifically 	deal 	with 	insur-
ance, they invoke the exception under the Mccarran-Ferguson
Act’s § 1012(b). That is, under the Mccarran-Ferguson Act,
Nebraska’s § 25-2602.01(f)(4) does not reverse preempt federal
law under the FciA because the FciA specifically relates to
the business of insurance.82 because the Mccarran-Ferguson
Act does not apply, the corporation’s regulations requiring
arbitration preempt state law and are enforceable.
[26] Moreover, the insureds cannot evade the arbitration
requirement by claiming that they are enforcing their settlement
agreement with the adjuster. An agent’s or loss adjuster’s state-
ment cannot bind the corporation when the statement is incon-
sistent with governing federal law.83 And each crop insurance
policy’s arbitration provision is clearly broad enough to cover
disputes over adjustment actions: “if you and we fail to agree
on any determination made by us,” the disagreement must be
resolved through mediation or arbitration. (emphasis supplied.)
We conclude that the district court did not err in determining
that the insureds’ dispute is subject to arbitration.
80 See, In re Interest of Elias L., 277 Neb. 1023, 767 N.W.2d 98 (2009);
Zannini, supra note 79. See, also, Fidelity Federal Sav. & Loan Assn. v. De
La Cuesta, 458 U.S. 141, 102 S. ct. 3014, 73 l. ed. 2d 664 (1982).
81 See Zannini, supra note 79.
82 See, In re 2000 Sugar Beet Crop Ins. Litigation, 228 F. Supp. 2d 992 (D.
Minn. 2002); IGF Ins. Co. v. Hat Creek Partnership, 349 Ark. 133, 76
S.W.3d 859 (2002).
83 See, OPM v. Richmond, 496 U.S. 414, 110 S. ct. 2465, 110 l. ed. 2d 387
(1990); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 68 S. ct. 1, 92
l. ed. 10 (1947).
610 	280 NebRASkA RePoRTS

Vi. coNclUSioN
We determine that an arbitration order which directs the
parties to arbitrate their dispute and stays the underlying
judicial action is a final, appealable order in a special pro-
ceeding under the second category of § 25-1902. We deter-
mine that § 25-2602.01(f)(4), which precludes provisions to
arbitrate future controversies in insurance contracts, is not
preempted by the FAA. Under the Mccarran-Ferguson Act,
§ 25-2602.01(f)(4) regulates the business of insurance and
reverse preempts the FAA. but § 25-2602.01(f)(4) is pre-
empted by the FciA and its implementing regulations, which
require arbitration. The Mccarran-Ferguson Act does not apply
because the FciA specifically relates to the business of insur-
ance. Finally, we conclude that the arbitration provision in
each crop insurance policy requires the parties to arbitrate
disputes over adjustment actions. The district court did not err
in ordering arbitration.
A ffirmed.
STATe v. RUFFiN 	611
cite as 280 Neb. 611
stAte of nebrAsKA, Appellee , v. lAmont ruffin,
Also Known As lAmont rolAnd, AppellAnt.
789 N.W.2d 19
Filed September 17, 2010. 	No. S-09-972.
1. Judgments: Appeal and Error. When dispositive issues on appeal present ques-
tions of law, an appellate court has an obligation to reach an independent conclu-
sion irrespective of the decision of the court below.
2. Jurisdiction: Affidavits: Fees: Appeal and Error. A poverty affidavit serves as
a substitute for the docket fee otherwise required upon appeal, and an in forma
pauperis appeal is perfected when the appellant timely files a notice of appeal and
a proper affidavit of poverty.
3. Affidavits: Good Cause: Appeal and Error. Generally, in the absence of good
cause evident in the record, it is necessary for a party appealing to personally sign
the affidavit in support of her or his motion to proceed in forma pauperis.
Petition for further review from the court of Appeals, irwin,
sievers, and moore, Judges, on appeal thereto from the District
court for buffalo county, John p. icenogle, Judge. Judgment
of court of Appeals affirmed.