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The Bruce McDonald Holding Co. v. Addington, Inc.

Supreme Court of West Virginia

March 20, 2019

THE BRUCE MCDONALD HOLDING COMPANY, DAVID B. MCDONALD LAND COMPANY, OAKLEY, LLC, S.E. MCDONALD, LLC, CB MORRIS, LLC, L.O.U., LLC, GLENN T. YOST, AS ATTORNEY-IN-FACT FOR ERNEST PHIPPS CREDIT SHELTER TRUST, AND CDC REAL ESTATE, LLC, Petitioners
v.
ADDINGTON, INC., THE BRINK'S COMPANY AND PITTSTON COAL COMPANY, Respondents

          Submitted: February 12, 2019

          Appeal from the Circuit Court of Logan County Honorable James H. Young, Jr., Judge Civil Action No. 16-C-70

          Brian A. Glasser, Esq. Sharon F. Iskra, Esq. Bailey & Glasser LLP Charleston, West Virginia Nicholas S. Johnson, Esq. Bailey & Glasser LLP Washington, DC Attorneys for Petitioners

          Shawn P. George, Esq. Jennie O. Ferretti, Esq. George & Lorensen Charleston, West Virginia Attorneys for Respondent Pittston Coal Company

          Howard M. Persinger, III, Esq. Persinger & Persinger, LLC Charleston, West Virginia Counsel for Amicus Curiae WV Land & Mineral Owners Association

          W. Henry Jernigan, Jr., Esq. Alexander C. Ward, Esq. Dinsmore & Shol Charleston, West Virginia Wade W. Massie, Esq. Penn, Stuart & Eskridge Abingdon, Virginia Attorneys for Respondents Addington, Inc. and The Brink's Company

         SYLLABUS

         1. "A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent." Syllabus point 1, Cotiga Dev. Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962).

         2. "As with other contracts, the language of a lease agreement must be considered and construed as a whole, giving effect, if possible, to all parts of the instrument. Accordingly, specific words or clauses of an agreement are not to be treated as meaningless, or to be discarded, if any reasonable meaning can be given them consistent with the whole contract." Syllabus point 3, Moore v. Johnson Serv. Co., 158 W.Va. 808, 219 S.E.2d 315 (1975).

         3. "The common-law doctrine of waiver focuses on the conduct of the party against whom waiver is sought, and requires that party to have intentionally relinquished a known right. A waiver may be express or may be inferred from actions or conduct, but all of the attendant facts, taken together, must amount to an intentional relinquishment of a known right. There is no requirement of prejudice or detrimental i reliance by the party asserting waiver." Syllabus point 2, Parsons v. Halliburton Energy Servs., Inc., 237 W.Va. 138, 785 S.E.2d 844 (2016).

         4. The essential elements of the doctrine of waiver are: (1) the existence of a right, advantage, or benefit at the time of the waiver; (2) actual or constructive knowledge of the existence of the right, advantage, or benefit; and (3) intentional relinquishment of such right, advantage, or benefit.

         5. "Collateral estoppel will bar a claim if four conditions are met: (1) The issue previously decided is identical to the one presented in the action in question; (2) there is a final adjudication on the merits of the prior action; (3) the party against whom the doctrine is invoked was a party or in privity with a party to a prior action; and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action." Syllabus point 1, State v. Miller, 194 W.Va. 3, 459 S.E.2d 114 (1995).

         6. "The laws which subsist at the time and place where a contract is made and to be performed enter into and become a part of it to the same extent and effect as if they were expressly incorporated in its terms." Syllabus point 1, Franklin Sugar Ref. Co. v. Martin-Nelly Grocery Co., 94 W.Va. 504, 119 S.E. 473 (1923).

         7. "It is not the right or province of a court to alter, pervert or destroy the clear meaning and intent of the parties as expressed in unambiguous language in their written contract or to make a new or different contract for them." Syllabus point 3, Cotiga Dev. Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962).

          OPINION

          Hutchison, Justice

         The Petitioners brought this appeal from an August 25, 2017 summary judgment order of the Circuit Court of Logan County.[1] The Petitioners filed an action against the Respondents based upon a coal lease agreement between the parties.[2] The circuit court granted summary judgment against the Petitioners after concluding (1) the Respondents had no obligation to diligently mine coal; and (2) the Respondents did not have to make royalty payments based upon comparable sales by other mining companies. Additionally, the circuit court granted summary judgment against the Respondents' counterclaim. The counterclaim sought damages for Petitioners' refusal to consent to an assignment or sublease of the coal lease, and damages for alleged tortious interference with an asset agreement Respondents had with another company. In this appeal, both parties assign error to the dismissal of their respective claims. Upon careful review of the briefs, the appendix record, the arguments of the parties, and the applicable legal authority, we affirm.[3]

         I.

         FACTUAL AND PROCEDURAL HISTORY

         On June 19, 1978, the Petitioners executed a coal lease agreement with the Respondents.[4] The lease permitted the Respondents to mine coal on roughly 3, 300 acres of coal lands owned by the Petitioners in the Huff Creek area of Logan County, West Virginia.[5] The lease required the Respondents to make royalty payments to the

         Petitioners.[6] Specifically, under the lease, royalty payments were set to commence in the fifth year of the lease, with a minimum royalty payment due each year of the lease, even if the Respondents did not mine coal. Pursuant to the lease, the minimum royalty payments increased the sixth, seventh, eighth, ninth and tenth years of the lease.[7] In the eleventh year of the lease and thereafter, the annual minimum royalty returned to the amount required under the fifth year of the lease.

         In June of 1984, the Respondents gave notice to the Petitioners that they intended to terminate the lease and file an arbitration proceeding to determine whether the coal was merchantable and mineable.[8] Subsequent to the notice of termination, the Petitioners filed three civil actions against the Respondents in circuit court. The Petitioners sought to preclude arbitration and to recover unpaid rent and royalty payments.[9] The three civil actions were consolidated in the Logan County circuit court.[10] In an order entered on May 31, 1988, the circuit court found that the Respondents owed the Petitioners rent and royalty for the years 1984, 1985, 1986 and 1987. The order indicated that a hearing would be held later to determine the amount of rent and royalty owed.

         In a subsequent order dated November 1, 1988, the circuit court determined the amount of rent and royalty owed. The second order found that the Respondents owed annual rent of $60, 000.00 for each of the years 1984, 1985, 1986 and 1987. The order further found that the determination of the minimum annual royalty payment under the lease was ambiguous because the Respondents did not mine and sell any coal under the lease. The order found that a strict application of the terms of the lease would result in the Respondents not having to pay any royalty to the Petitioners, because no coal was mined. The order addressed the dilemma and the solution as follows:

Article XIII of the subject Lease provides that minimum annual tonnage royalties shall be paid, whether the coal is mined or not. It further provides that minimum royalties for unmined coal are to be based upon the actual sales prices of like quality coal sold "from the same preparation plant from which Lessors' said coal, hereby leased, was sold." Inasmuch as there was no "preparation plant from which Lessors' said coal, hereby leased, was sold" (there having been no production whatever of Lessors' coal by Lessee), a strict interpretation of the language of said Article XIII of the Lease, standing alone, would result in a finding for Defendants that no minimum tonnage royalty is payable. However, the purpose and intent of the language used, gathered from the subject Article and Lease as a whole, is to define damages and not eliminate damages, as urged by the Defendants. . . .
1. Therefore, the Court finds that Defendants should not be relieved of the obligation to pay minimum annual tonnage royalty but that such royalty shall be fixed at the minimum amount provided by Article VIII of the Lease, which is Two Dollars ($2.00) per ton.
2. Defendants owe to Plaintiffs Two Dollars ($2.00) per ton of 2, 000 pounds of coal for minimum royalties for the lease years ending, and payable on June 19th of 1984, 1985, 1986, and 1987, as follows:
a. June 19, 1984, Five Hundred Thousand Dollars ($500, 000.00); b. June 19, 1985, Six Hundred Thousand Dollars ($600, 000.00); c. June 19, 1986, Seven Hundred Thousand Dollars ($700, 000.00);
d. June 19, 1987, Eight Hundred Thousand Dollars ($800, 000.00).[11]

         The Respondents appealed the circuit court's order, but this Court denied the petition for appeal. The Petitioners did not appeal.

         After the circuit court's order of November 1, 1988, the Respondents continued to fail to mine any coal under the lease. Instead, the Respondents paid the annual minimum royalty of $500, 000.00 to Petitioners. This amount was based upon the lease's annual minimum coal production of 250, 000 tons, [12] multiplied by the $2.00 per ton requirement set by the circuit court for periods when there were no sales of comparable coal by the Respondents. The Petitioners accepted the minimum royalty payments made each year by the Respondents until 2016.[13]

         The Petitioners rejected the Respondents' 2016, royalty payment and filed the instant action on March 21, 2016.[14] The Petitioners' complaint sought (1) a declaratory judgment that the Respondents had a duty to diligently mine coal; (2) damages for breach of the duty to diligently mine coal; (3) declaratory judgment that Respondents had to pay annual minimum royalties based on comparable sales by other coal companies; and (4) damages for breach of the duty to pay royalty based on comparable sales. The Petitioners also filed an amended complaint in December of 2016, seeking damages for alleged tortious interference with the performance under the coal lease. The Respondents filed a counterclaim alleging the Petitioners wrongfully refused consent to an assignment of the coal lease, and tortuously interfered with an asset agreement they had with another company. After a period of discovery, the circuit court granted summary judgment against the Petitioners' claims and summary judgment against the Respondents' counterclaims.

         This appeal followed.[15]

         II.

         STANDARD OF REVIEW

         In this proceeding, we are called upon to review a summary judgment order of the circuit court. "A circuit court's entry of summary judgment is reviewed de novo." Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). We have long recognized that "[a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syl. pt. 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).

         Additionally, it is well recognized that "[t]he interpretation of [a] contract, including the question of whether the contract is ambiguous, is a legal determination that, like a lower court's grant of summary judgment, shall be reviewed de novo on appeal." Syl. pt. 2, Riffe v. Home Finders Assocs. Inc., 205 W.Va. 216, 517 S.E.2d 313 (1999). Mindful of the de ...


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