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Case No. 17-0847 V

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Case No. 17-0847 V DO NOT REMOVE fILE COpy FROM FILE IN THE SUPREME COURT OF APPEALS OF WEST VIRGI THE BRUCE MCDONALD HOLDING COMPANY, DAVID B. MCDONALD LAND COMPANY, OAKLEY, LLC, S. E. MCDONALD, LLC, C B 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, Case No. 17-0847 v. (Appeal from final order of Logan County Circuit Court Business Court Division, 16-C-70) ADDINGTON, INC., THE BRINK'S COMPANY, and PITTSTON COAL COMPANY, Respondents. Petitioners' Brief Brian A. Glasser (WVSB #6597) Sharon F. Iskra (WVSB #6582) Bailey & Glasser LLP 209 Capitol Street Charleston, West Virginia 25301 (304) 345-6555 telephone (304) 324-1110 facsimile [email protected] [email protected] Counsel for Petitioners TABLE OF CONTENTS I. ASSIGNMENTS OF ERROR .............................................................................................. 1 II. STATEMENT OF THE CASE ............................................................................................ 2 A. Preamble .............................................................................................................................. 2 B. Factual Background ............................................................................................................. 3 1. The McDonald Family contracts with the largest metallurgical coal exporter in the United States to mine and sell its coal. .................................................................................... 3 2. The McDonald-Pittston Lease clearly specifies throughout its 38 separately numbered Articles that Pittston is required to actually mine the coal. ..................................................... 5 3. The McDonald Family is forced to bring suit against Pittston in 1984 to prevent Pittston from terminating the Lease ...................................................................................................... 8 4. Pittston, after its failed attempt to terminate the Lease, prepares mine plans, but is not required to implement them due to depressed coal markets .................................................... 9 5. Pittston informs the McDonald Family that it intends to exit the coal business amid a market boom, but then prevents mining from occurring in exchange for millions of dollars from A.T. Massey Coal Company ......................................................................................... 10 6. The McDonald Family continually objects to Pittston's lack of development in correspondence and negotiations, but those efforts fail to produce a resolution ................... 12 C. Procedural History ............................................................................................................. 14 III. SUMMARY OF ARGUMENT .......................................................................................... 18 IV. STATEMENT REGARDING ORAL ARGUMENT AND DECISION ........................... 21 V. STANDARD OF REVIEW ................................................................................................ 21 VI. ARGUMENT ..................................................................................................................... 21 A. The circuit court's summary judgment order ignores nearly 100 years of precedent that a coal lessor has a valid claim for damages against a derelict coal lessee for failure to diligently develop coal reserves ................................................................................................................ 21 B. The applicable standard of care is that of the reasonably prudent operator, and this standard does not impose "partnership status" on the lessor-lessee relationship, as erroneously ruled by the circuit court ........................................................................................................... 25 C. The oil and gas cases cited herein are wholly applicable to this case, since none ofthem involve drainage or the fugacious nature of those minerals ...................................................... 27 D. The minimum royalty provision is not in lieu of the duty to diligently mine. It is expressed in tons instead of dollars as a result of this Court's opinion in Babcock Coal & Coke ........................................................................................................................................... 28 E. The circuit court's waiver decision was, as the court admitted, an improper resolution of a disputed factual issue ................................................................................................................ 31 F. The circuit court applied "practical construction" to an unambiguous Lease, in violation of this Court's precedent, and it resolved disputed facts to do so ................................................. 33 G. Even if the Lease contains no duty to diligently mine enforceable in damages, the the minimum royalty calculation on a going-forward basis cannot be avoided by Pittston's own conduct. ..................................................................................................................................... 34 H. The circuit court's diametrically opposed decisions on res judicata and collateral estoppel are impossible to reconcile, and the correct decision is reflected in the circuit court's first order in the case .................................................................................................................................. 36 1. The circuit court's ruling on tortious interference, which was wholly derivative of its other rulings, should be reversed ........................................................................................................ 39 VII. CONCLUSION .................................................................................................................. 39 T ABLE OF AUTHORITIES Cases Abadir v. Dellinger, 227 W. Va. 388, 709 S.E.2d 743 (2011) ...................................................... 38 Babcock Coal & Coke Co. v. Brackens Creek Coal Land Co., 128 W. Va. 676, 37 S.E.2d 519 (1946) ........................................................................................................................................ 30 Bradford v. Blair, 113 Pa. 83,4 A. 218 (Pa. 1886) ...................................................................... 26 Chertkofv. Southland Corp., 280 Md. 1,371 A.2d 124 (Md. 1977) ............................................ 32 Citibank, NA. v. Perry, 238 W. Va. 662, 797 S.E.2d 803 (2016) ................................................ 32 Coal Res., Inc. v. Gulf & Western Indus., Inc., 865 F.2d 761 (6th Cir. 1989) .............................. 29 Cotiga Dev. Co. v. United Fuel Gas Co., 147 W. Va. 484, 128 S.E.2d 626 (1962) .............. passim Dan Ryan Builders, Inc. v. Crystal Ridge Dev., Inc., 803 S.E.2d 519 (W. Va. 2017) .................. 36 Grass v. Big Creek Dev. Co., 75 W.Va. 719, 84 S.E. 750 (1915) ......................................... passim Hamrickv. Nutter, 93 W. Va. 115, 116 S.E. 75 (1923) ......................................................... passim Hoffman v. Wheeling Sav. & Loan Ass 'n, 133 W. Va. 694, 57 S.E.2d 725 (1950) ...................... 31 Huntington Water Corp. v. City ofHuntington, 115 W.Va. 531, 177 S.E.290 (1935) ................. 23 In re Buffalo Coal Co., Inc., 2011 WL 917717 (N.D.W. Va. Mar. 8,2011) ................................ 32 Jane Doe-J v. Corp. ofPresident of The Church ofJesus Christ ofLatter-day Saints, 239 W. Va. 428,801 S.E.2d 443 (2017) ......................................................................................................... 3 Jennings v. Carbon Co., 73 W. Va. 215, 80 S.E. 368 (1913) ................................................. 25, 26 John D. Stump & Associates, Inc. v. Cunningham Mem'l Park, Inc., 187 W. Va. 438,419 S.E.2d 699 (1992) ................................................................................................................................. 34 Lane v. Williams, 150 W.Va. 96, 144 S.E.2d 234 (1965) ............................................................. 38 McGinnis v. Cayton, 173 W.Va. 102,312 S.E.2d 765 (1984) ...................................................... 23 North Star Co. v. Howard, 341 S.W.2d 251 (Ky. 1960) .............................................................. 29 Pittston Co. v. United States, 199 F.3d 694 (4th Cir. 1999) ......................................................... 36 Potesta v. Us. Fid. & Guar. Co., 202 W. Va. 308, 504 S.E.2d 135 (1998) ................................ 31 Slider v. State Farm Mut. Auto. Ins. Co., 210 W.Va. 476, 557 S.E.2d 883 (2001) ...................... 36 St. Luke's United Methodist Church v. CNG Dev. Co., 222 W. Va. 185,663 S.E.2d 639 (2008) 24 Stanley's Cafeteria, Inc. v. Abramson, 226 Va. 68, 306 S.E.2d 870 (1983) ................................. 32 Waddy v. Riggleman, 216 W. Va. 250, 606 S.E.2d 222 (2004) ........................................ 10,20,35 Watson v. Buckhannon River Coal Co., 95 W.Va. 164, 120 S.E. 390 (1923) .............................. 34 Wellman v. Bobcat Oil & Gas, Inc., 2010 WL 2720748 (S.D.W. Va. July 8,2010) ................... 19 Wood v. Sterling Drilling & Prod. Co., Inc., 188 W. Va. 32,422 S.E.2d 509 (1992) ................. 30 Statutes W. Va. Code § 46-2-723 ............................................................................................................... 35 Other Authorities Bryan A. Gamer, Shall We Abandon Shall?, A.B.A.J., (August 2012) .......................................
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