Michael Schoene v. McElroy Coal Company

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1788
MICHAEL SCHOENE; PATRICIA SCHOENE,
Plaintiffs – Appellees,
v.
MCELROY COAL COMPANY,
Defendant – Appellant,
and
CONSOL ENERGY, INCORPORATED; CONSOL ENERGY COMPANY,
Defendants.
---------------------------------------
THE WEST VIRGINIA COAL ASSOCIATION (WVCA),
Amicus Curiae.
Appeal from the United States District Court for the Northern District of West Virginia,
at Wheeling. John Preston Bailey, District Judge. (5:13-cv-00095-JPB)
Argued: May 11, 2017 Decided: July 18, 2017
Before AGEE, KEENAN, and HARRIS, Circuit Judges.
Questions certified to the Supreme Court of Appeals of West Virginia by unpublished
order. Judge Agee prepared the order in which Judge Keenan and Judge Harris join.
ARGUED: Rodger L. Puz, DICKIE, MCCAMEY & CHILCOTE, P.C., Pittsburgh,
Pennsylvania, for Appellant. Jeremy Matthew McGraw, BORDAS & BORDAS, PLLC,
Moundsville, West Virginia, for Appellees. ON BRIEF: J.R. Hall, DICKIE,
MCCAMEY & CHILCOTE, P.C., Pittsburgh, Pennsylvania, for Appellant. James G.
Bordas, Jr., BORDAS & BORDAS, PLLC, Wheeling, West Virginia, for Appellees. J.
Thomas Lane, Charleston, West Virginia, Carrie J. Lilly, BOWLES RICE LLP,
Morgantown, West Virginia, for Amicus Curiae.
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________________
ORDER OF CERTIFICATION TO THE
SUPREME COURT OF APPEALS OF WEST VIRGINIA
________________
AGEE, Circuit Judge:
Pursuant to West Virginia’s Uniform Certification of Questions of Law Act, W.
Va. Code § 51-1A-1 et seq., we hereby respectfully request that the Supreme Court of
Appeals of West Virginia exercise its discretion to answer the following question:
(1) Under West Virginia law, does a deed provision (1902) transferring the
right to mine coal “without leaving any support for the overlying
stratas and without liability for any injury which may result to the
surface from the breaking of said strata,” J.A. 21, prohibit a surface
estate owner from pursuing a common law claim for loss of support
arising from subsidence caused by the extraction of coal from below
the surface?
If the Supreme Court of Appeals of West Virginia answers the above question in
the affirmative, then we respectfully ask that the court also answer the following
questions:
(2) Assuming the surface lands and residence of a landowner have been
materially damaged from subsidence, does the West Virginia Surface
Coal Mining and Reclamation Act, W. Va. Code § 22-3-1 et seq., (the
“Act”) authorize an action against the coal mine operator for the
damage so arising; or, are landowners only permitted to seek injunctive
relief compelling compliance with the Act’s provisions? Compare W.
Va. Code § 22-3-25(a), with id. § 22-3-25(f);
(3) (a) If the Act permits a suit for damages, what is the proper measure of
damages? Specifically, is a landowner permitted to recover only the
diminution in value to the property arising from the subsidence, or can
the property owner alternatively recover damages in an amount equal
to the cost to repair the property?;
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(b) Additionally, if the Act permits a suit for damages, can those damages
include compensation for “annoyance, inconvenience, aggravation
and/or loss of use”?; and
(4) Lastly, the regulations issued under the Act provide that when a coal
mine operator causes subsidence damage to the “structures or
facilities,” the operator must either correct it or “compensate the owner
. . . in the full amount of the diminution in value” as a result of the
mining. See W. Va. Code R. § 38-2-16.2.c.2; see also id. § 38-2-
16.2.c.1. The regulations, however, do not designate which party gets
to make this election between remedies if the parties fail to reach an
agreement. Between the landowner and the coal mine operator, who
elects the appropriate remedy and what standards govern that decision?
The answers to these questions of state law will likely be determinative of the
issues in the case pending before us. No controlling West Virginia appellate decision,
constitutional provision, or statute answers these queries. In support of this request, we
briefly set out the relevant facts and legal issues in this case.
I. Relevant Facts & Proceedings
This case stems from subsidence damage to the surface estate and residence of
Michael and Patricia Schoene (the “Schoenes”), which occurred after McElroy Coal
Company (“McElroy) engaged in authorized longwall mining of the subsurface estate.
The dispute concerns what relief, if any, to which the Schoenes are entitled under West
Virginia common law and statute.
The 1902 deed for the real property at issue severed the coal rights (now owned by
McElroy) from the rest of the estate (now owned by the Schoenes). The deed states that
the transferred coal rights include:
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the right [to mine the land] without leaving any support for the overlying
stratas and without liability for any injury which may result to the surface
from the breaking of said strata.
J.A. 121. This “waiver” provision is similar or identical to language contained in other
West Virginia deeds from the same time period.
In 2012, McElroy mined coal on the property using the longwall mining method.
This activity caused subsidence to the Schoenes’ surface estate, including damage to their
residence.
The Schoenes filed a complaint in West Virginia state court alleging a common
law claim seeking damages for loss of support to the surface estate. McElroy later
removed the case to the United States District Court for the Northern District of West
Virginia, where the Schoenes amended their complaint to add statutory claims under the
federal Surface Mining Control and Reclamation Act, 30 U.S.C. § 1201 et seq., and the
Act. 1 These statutory claims alleged that the subsidence arising from McElroy’s mining
activities had caused material damage to the Schoenes’ surface estate and residence, and
that McElroy had not corrected or paid for that damage. In addition to seeking to recover
for that damage, the Schoenes sought damages for their inconvenience, “significant
emotional and mental anguish, stress and anxiety.” J.A. 21.
McElroy moved for partial summary judgment, alleging that the waiver clause
contained in the 1902 deed precluded relief on the Schoenes’ common law claim and that
1
These statutory claims merge, with the state statutory requirements governing the
Schoenes’ claims. See 30 U.S.C. § 1255; see also Bragg v. W. Va. Coal Ass’n, 248 F.3d 275,
288–98 (4th Cir. 2001).
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the Act did not authorize all the relief the Schoenes sought in their statutory claims. The
Schoenes conceded the waiver issue, but nonetheless argued they were entitled to obtain
relief on their statutory claim.
Notwithstanding the Schoenes’ concession on their common law claim, the district
court denied McElroy summary judgment. Schoene v. McElroy Coal Co., No. 5:13-CV-
95, 2016 WL 397636, at *3 & n.5 (N.D. W. Va. Jan. 29, 2016). The court first observed
that the parties could not “stipulate to legal principles which the Court believe[d] to be
erroneous,” such as whether the waiver provision was valid. Id. at *3 n.5. It then
recognized that although West Virginia law allows parties to waive the right to support,
state law also indicated that the language must demonstrate the “clear intent[] by the
surface owner to waive such support.” Id. at *4. Distilling these broader contract
principles, the district court held that a waiver of support is not enforceable unless the
party invoking it shows “that the mining [that causes damage] takes place by mining
methods that were contemplated by the parties at the time of the severance.” Id. at *5. It
then cited various industry and related authorities discussing longwall mining techniques
and concluded that this modern form of mining—which “provides almost a certainty of
significant subsidence and the loss of all natural water sources”—“could not have
possibly been contemplated by the parties to the 1902 deed at issue.” Id. at *6. In so
doing, the court distinguished or deemed not convincing several cases applying West
Virginia law, each of which had found similar turn-of-the-century waiver provisions to be
enforceable and thus to bar common law claims for support. The district court noted that
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those cases failed to address the principles—or pre-dated the cases—upon which it relied.
Id. at *7–8.
Based on this holding, the common law and statutory claims proceeded to trial. 2
The jury found that McElroy caused the value of the Schoenes’ residence to be
diminished from $184,000 to $90,000; the cost to repair the residence to be $350,000; the
cost to repair the land to be $172,000; and the appropriate compensation for the
Schoenes’ “annoyance, inconvenience, aggravation and loss of use” to be $25,000.
Following trial, the district court entered judgment in the combined amount of
$547,000 (the same amount being awarded for both the common law and statutory
claims), reflecting the $350,000 to repair the residence, $172,000 to repair the real
property, and $25,000 for other compensatory damages. See Judgment Order, at *3,
Schoene v. McElroy Coal Co., No. 5:13-CV-95 (Mar. 16, 2016), ECF No. 102. In so
doing, the district court rejected two additional arguments by McElroy. First, the court
held that it could award damages for the statutory claim and was not limited to awarding
injunctive relief. Id. at *2–3. Second, it observed that section 38-2-16.2.c.2 of West
Virginia’s Code of State Rules was silent as to which party makes the election of
remedies (damages equal to the diminution in value to the residence or damages equal to
the amount of repair), and it concluded that leaving the decision to the coal mine operator
was contrary to the purpose of the Act. Id. at *3. The district court noted that McElroy’s
2
The specific evidence of damages adduced at trial is not pertinent to the legal questions
challenged on appeal.
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position would “allow the operator to pick the option which is the cheaper to the
company and thus the more unfair to the surface owner,” insomuch as the regulation is
entitled “Surface Owner Protection.” Id.; accord Schoene v. McElroy Coal Co., No.
5:13-CV-95, 2016 WL 6788391, at *2 (N.D. W. Va. June 9, 2016) (denying defendants’
motion to alter or amend). The court then “interpret[ed] this section as providing for the
repair of the damage to the extent that it is reasonable and feasible with the diminution in
value award to the extent that the damage cannot reasonably be repaired.” Schoene, 2016
WL 6788391, at *2.
In a motion to alter or amend the judgment, McElroy made one additional
argument pertinent to the appeal: that the damages for annoyance, inconvenience,
aggravation, or loss of use were not authorized on the Schoenes’ statutory claim. In
ruling against McElroy, the district court observed that “[d]amages under W. Va. Code §
22-3-25 are not limited in any respect,” and that this type of damages was appropriate “to
ensure that [the Schoenes were] fully compensated for their loss.” Id. at *3–4.
McElroy noted a timely appeal.
II. Parties’ Contentions
A.
On appeal, McElroy continues to assert that the terms of the 1902 deed should bar
the Schoenes’ common law claim, while the Schoenes urge us to apply the district court’s
rationale. Because there are no recent authoritative cases directly on point, the arguments
of both parties may have some merit. As McElroy contends, several Supreme Court of
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Appeals of West Virginia decisions tend to support the validity of the waiver given its
language contemplating the transfer of all rights to the coal “without liability for any
support” to the surface estate. J.A. 121 (emphasis added.); see, e.g., Rose v. Oneida Coal
Co., 375 S.E.2d 814 (W. Va. 1988); Cont’l Coal Co. v. Connellsville By-Product Coal
Co., 138 S.E. 737 (W. Va. 1927); Griffin v. Fairmont Coal Co., 53 S.E. 24 (W. Va.
1905). Relying on these cases, numerous state and federal courts have enforced these
provisions, contrary to the district court’s solitary decision. See, e.g., Schultz v.
Consolidation Coal Co., 475 S.E.2d 467, 475–76 (W. Va. 1996); Smerdell v.
Consolidation Coal Co., 806 F. Supp. 1278, 1282 (N.D. W. Va. 1992); Sendro v.
Consolidation Coal Co., Civ. A. No. 89-0009-W(S), 1991 WL 757723, at *4 (N.D. W.
Va. Mar. 27, 1991).
Conversely, the Schoenes point us to—and the district court relied on—decisions
of the Supreme Court of Appeals of West Virginia that require courts to interpret
contractual language with a view to the intent of the parties at the time the agreement was
made. Where subsequent changes—whether they arise in the form of statutory rights or
the scope of damages resulting from mining—could not have been contemplated by the
parties at the time of the original agreement, West Virginia courts have refused to enforce
certain contractual provisions as broadly as their plain language would appear to suggest.
See, e.g., Cogar v. Sommerville, 379 S.E.2d 764, 768–69 (W. Va. 1989) (denying
enforcement of waiver provision contained in deed where it was inconsistent with newly-
enacted statutory right); Brown v. Crozer Coal & Land Co., 107 S.E.2d 777 (W. Va.
1959) (holding invalid a waiver executed before the advent of the “auger method”;
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reasoning that damage caused by the auger method of mining was not within the
reasonable contemplation of the parties at the time they executed the waiver); W. Va.-
Pittsburgh Coal Co. v. Strong, 42 S.E.2d 46, 49 (W. Va. 1947) (same with respect to strip
mining). This line of cases may call into question the continued validity of a broad
waiver of rights clause. That said, these cases could be distinguishable from the issue
raised in this case, which implicates not just the continued validity of older case law, but
also involves a circumstance that—while perhaps more likely to occur under longwall
mining techniques than other techniques—could nonetheless still have been within the
parties’ contemplation at the time the agreement was made.
Given that this issue presents both a novel question concerning how West Virginia
would reconcile these principles and an interpretation that could influence the future
rights of other parties under similar deeds, we believe it appropriate and best that the
issue be decided by the Supreme Court of Appeals of West Virginia.
B.
If the deed waiver does not bar the Schoenes’ common law claim, that
determination resolves the case: the district court awarded the same damages for both the
common law and statutory claims. Moreover, McElroy does not dispute the nature or
scope of the common law damages award directly, only the viability of the Schoenes’
common law claim. If, however, the waiver provision in the deed bars the Schoenes’
common law claim, then they would be entitled to recovery only insofar as that recovery
is authorized by the Act.
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McElroy makes three basic arguments regarding the appropriate relief available
under the Act. First, it contends that the Schoenes were only entitled to compel
compliance with McElroy’s obligations under the Act and, thus, were limited to
injunctive relief. This is so, McElroy asserts, because the Act does not allow citizen suits
for damages unless there is a violation of the statute, and it is not a violation of the statute
to cause subsidence. Second, McElroy maintains that even if damages are available to
the Schoenes under the Act, those damages are limited to the diminution in value of the
property, not the cost of repair and remediation. McElroy contends the district court
should not have awarded damages in the amount of what it would cost to repair the
property, nor should it have awarded $25,000 in damages for inconvenience, annoyance,
loss of use, and the like because the statute does not contemplate such relief. Third,
McElroy contends that the district court erred in rejecting its argument that the coal mine
operator has the right to make the election between the two remedies for subsidence
damage to surface lands set out in the applicable West Virginia regulations. Those
regulations require a coal mine operator who causes subsidence to surface lands to
“[e]ither correct material damage . . . or compensate the owner of such structures or
facilities in the full amount of the diminution in value resulting from the subsidence.” W.
Va. Code R. § 38-2-16.2.c.2. The regulations are silent, however, on who gets to elect
the remedy. McElroy maintains that this silence, coupled with interpretive guidance of
similar federal regulations, reflect that it, as the coal mine operator, is the party entitled to
make the election. See W. Va. Code R. § 38-2-16.2.c.1 & c.2.
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The Schoenes’ arguments track the district court’s rationale. They observe that
the Act permits injured persons to bring “an action for damages,” and assert that their
claim qualifies because they have been injured as a result of McElroy’s coal mining
operations. Further, the Schoenes contend that the Act does not limit what type of
damages can be recovered in such an action, so all the damages the district court awarded
were proper under the Act. Lastly, they contend the district court appropriately resolved
an ambiguity arising from the regulation’s silence as to which party makes the election
between the available forms of relief when the parties disagree regarding the means of
settlement.
There is no controlling appellate decision or other guidance to answer these
questions of state statutory and regulatory interpretation. Moreover, McElroy raises
issues that are not clearly answered in the text of the relevant provisions. Accordingly,
we believe the questions are appropriate for certification and best decided by the
Supreme Court of Appeals of West Virginia as issues solely of West Virginia law.
III. Conclusion & Certification Information
Resolving the issues on appeal would require us to speculate how the Supreme
Court of Appeals of West Virginia would apply competing principles of case law and
how it would interpret West Virginia statutory and regulatory provisions that are silent on
the disputed issues in this case. We respectfully believe these matters are best resolved
by the state court.
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Pursuant to West Virginia Code § 51-1A-6(a)(3), we acknowledge that the
Supreme Court of Appeals of West Virginia may reformulate the questions of law
proposed in this order. See W. Va. Code § 51-1A-6(a)(3).
The names and addresses of the counsel of record are:
For the Defendant-Appellant: For Plaintiffs-Appellees:
Rodger L. Puz James G. Bordas, Jr.
J.R. Hall Jeremy M. McGraw
Dickie, McCamey & Chilcote, P.C. Bordas & Bordas, PLLC
Two PPG Place, Suite 400 1358 National Road
Pittsburg, PA 15222 Wheeling, WV 26003
Pursuant to the applicable provisions of West Virginia law, we ORDER: that the
questions of law set out in this order be certified to the Supreme Court of Appeals of
West Virginia for answer. We DIRECT the Clerk of Court to transmit to the Supreme
Court of Appeals of West Virginia, under the official seal of this Court, a copy of this
Order of Certification. And we further DIRECT the Clerk of Court to forward the
original or copies of the record before this Court, either in whole or in part, as requested
by the Supreme Court of Appeals of West Virginia. Any and all such requests shall be
effective upon notification by ordinary means from the Clerk of the Supreme Court of
Appeals of West Virginia.
This order of certification is entered with the concurrences of Judge Keenan and
Judge Harris.
QUESTIONS CERTIFIED
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