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Iaeger Energy Development, LLC v. Moore

Supreme Court of Appeals of West Virginia

January 13, 2020

Iaeger Energy Development, LLC, a West Virginia limited liability corporation, Marco Land Co., Inc., a West Virginia corporation, and Vivian L. Watkins, as Administratrix of the Estate of Myrtle L. Davis, Defendants Below, Petitioners
v.
Terry W. Moore and Cedar Branch Mining, LLC, a West Virginia limited liability company, Plaintiffs Below, Respondents

          McDowell County 15-C-24-S and 15-C-43-M

          MEMORANDUM DECISION

         Petitioners Iaeger Energy Development, LLC, Marco Land Co., Inc., and Vivian L. Watkins, Administratrix of the Estate of Myrtle L. Davis, by counsel Elizabeth G. Kavitz, J.A. Curia, III, David J. Mincer, and Adam K. Strider, appeal the Circuit Court of McDowell County's April 25, 2018, order that granted Respondents Terry W. Moore and Cedar Branch Mining, LLC's, motion to enforce the terms of a settlement agreement. Respondents, by counsel H. Truman Chafin, Letitia Chafin, and Howard M. Persinger, III, filed a response. Petitioners submitted a reply.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the order of the circuit court is appropriate under Rule 21 of the Rules of Appellate Procedure.

         The Parties

         Petitioners Iaeger Energy Development, LLC ("Iaeger"), and Marco Land Co., Inc. ("Marco") were solely owned by C.O. Davis, Jr., and his wife, Myrtle L. Davis, both of whom are now deceased. Mr. and Mrs. Davis also created and controlled several purported shell entities, including Red Bird Pocahontas Land Company, LLC ("Red Bird"); New Red Ash Poca Land Company, LLC ("New Red Ash"); and Davis Whaley, LLC. Petitioner Vivian L. Watkins is Mrs. Davis's sister and the administratrix of her estate. (In 2013, Mr. Davis predeceased his wife and, in his will, left her all of his assets. Mrs. Davis died in 2016, during the pendency of this litigation, and Petitioner Watkins was substituted as a party in her stead). Respondent Terry W. Moore is the principal and co-manager of Respondent Cedar Branch Mining, LLC.

         Factual and Procedural History

         On January 23, 2008, C.O. Davis, Jr., on behalf of Petitioners Iaeger and Marco, as lessors, and Respondent Moore, as lessee, entered into two leases of certain coal property located in the Johnnycake area of Huff Creek District, Wyoming County, and the adjacent Sandy River District of McDowell County, West Virginia. The leases were recorded at Deed Book 518, page 472, and Deed Book 518, page 483, respectively. Under these leases, Iaeger and Marco purported to lease to Respondent Moore all the coal located in all seams above the Gilbert Seam situated on certain tracts of the property. The leases gave respondents general warranties of title.

         By leases dated September 26, 2012, and November 21, 2012, portions of the same property previously leased to Respondent Moore were purportedly leased to Emmaus Partners, LLC ("Emmaus"), a defendant below. The September 26, 2012, lease was by and between Red Bird and Mr. Davis, as lessors, and Emmaus, as lessee. It was recorded at Deed Book 563, page 37. The November 21, 2012, lease was a so-called "top lease" that was effective subject to several other leases, including the September 26, 2012, lease. This lease was by and between Mr. Davis, Mrs. Davis, Red Bird, Marco, New Red Ash, and Davis Whaley, as lessors, and Emmaus, as lessee. It was recorded at Deed Book 563, page 57.

         The September 26, 2012, and November 21, 2012, leases with Emmaus directly conflicted with the grants made in the 2008 leases with respondents. According to respondents, they became aware of the 2012 leases as Emmaus, in 2014, began the process of attempting to secure mining permits for the property.

         Respondents filed a complaint in the Circuit Court of McDowell County against petitioners, Emmaus, and others in February 2015, [1] alleging claims, relevant to this appeal, that Petitioners Iaeger and Marco breached the general warranties of title contained in the 2008 leases. Respondents also alleged that both Iaeger and Marco "were organized, incorporated, controlled and dominated by, and were the 'alter egos' of'" Mr. and Mrs. Davis, and, as such, the Davises were personally liable for the actions of Iaeger and Marco.[2]

         On November 30, 2017, a pre-trial and settlement conference ("settlement conference") was held before the circuit court. During the course of the settlement conference, the court granted respondents' motion for summary judgment on their "veil piercing" claims against the Estate of Mrs. Davis. The court determined that, based upon the deposition testimony of the Davises' longtime bookkeeper, Don Morgan, Petitioners Iaeger and Marco were alter-egos of C.O. and Myrtle Davis, thereby subjecting Mrs. Davis's estate to liability in this action.

         Also during the November 30, 2017, settlement conference, settlements between respondents and petitioners and respondents and Emmaus were reached. Thereafter, in a three-page comprehensive e-mail to counsel for Petitioner Watkins and Emmaus, counsel for respondents set out the terms of the settlement. The December 7, 2017, e-mail stated that, as between Emmaus and respondents, (1) Emmaus would forego all of its lease rights to seams located above the Gilbert Seam; (2) respondents would forego all of their lease rights to the Gilbert Seam and below; and (3) in order to effectuate the foregoing, Emmaus would partially assign to respondents its rights as lessee under the September 26, 2012, and November 21, 2012, leases, by executing an assignment to be drafted by respondents' counsel. Emmaus also agreed, with regard to a certain tract (Tract 18), to pay an overriding royalty to respondents in the amount of $1.00 per ton, up to $350, 000, with a $15, 000 annual minimum.

         As between petitioners and respondents, the December 7th e-mail set forth the following terms: (1) petitioners will make a $60, 000 one-time cash payment to respondents; (2) petitioners will provide royalty credits in the amount of $80, 000 to respondents on royalties for coal mined by respondents under the partially assigned 2008 leases as well as under a lease that was negotiated with the other defendants; (3) petitioners will convey certain leased property directly to respondents by quitclaim deed; (4) petitioners will execute a written consent for the partial assignment of the leases by Emmaus to respondents; and (5) petitioners will execute an amendment of the leases assigned by Emmaus to respondents reflecting (a) a tonnage royalty of 5%; (b) no minimum annual royalty payable by respondents to petitioners; and (c) a twenty-five year lease term.

         On December 18, 2017, having received no objection to the terms outlined in the December 7th e-mail, respondents' counsel forwarded settlement documents to counsel for petitioners and Emmaus that included (1) a draft settlement agreement and general release, (2) a draft partial assignment, assumption and restatement of leases, lease amendment, consent to assign, release and overriding ...


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