The Bruce McDonald Holding Company v. Addington Inc

No. 17-0847 — 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 v. Addington, Inc.,
The Brink’s Company, and Pittston Coal Company
FILED
April 22, 2019
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Jenkins, Justice, dissenting:
This case involves a coal lease, executed in 1978 and pertaining to high-
quality, high-volatile metallurgical coal, that has never resulted in the production of any
coal whatsoever for more than forty years. The majority opinion has affirmed an order of
the Circuit Court of Logan County, Business Court Division, which granted summary
judgment in favor of respondents (collectively referred to as “Addington”), who are lessees
of coal owned by the Petitioners (collectively referred to as “McDonald Companies”),
thereby foreclosing the McDonald Companies’ attempts to have their 3,300 acres of coal
lands mined. Because I believe there are material questions of fact in this case sufficient
to overcome summary judgment, and because I further believe that, under the lease at issue,
the McDonald Companies are entitled to have their coal actually and diligently mined,
which is an issue that has not been previously decided and, thus, is not barred by collateral
estoppel, I respectfully dissent.
The majority based its decision in this case upon two grounds. First, the
majority relied on the doctrine of waiver and found that the McDonald Companies had
waived their claim that Addington had a duty under the lease to diligently mine coal. In
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addition, the majority concluded that the McDonald Companies’ claim is barred by
collateral estoppel. I disagree with both conclusions.
The McDonald Companies have presented sufficient evidence to show that
they have not waived their claim that Addington had a duty under the lease to diligently
mine coal. Therefore, summary judgment was not proper, and the lower court should have
been reversed. As the majority itself acknowledges, “waiver is ordinarily a question of
fact.” Bruce McDonald Holding Co. v. Addington, Inc., No. 17-0847, 2019 WL 1319859,
at *8 n.21 (W. Va. Mar. 20, 2019) (quotations and citation omitted). Waiver becomes a
question of law only when there is merely “one reasonable inference [that] can be drawn
from the evidence[.]” Id. Such is not the case in this matter.
As outlined by the majority, the doctrine of wavier consists of three elements,
all three of which must be present in order for the doctrine to be applied: “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.” Syl. pt. 4, id. (emphasis added). The use of the conjunction “and” in this holding
necessitates the presence of all three elements of waiver. See Bowden v. Monroe Cty.
Comm’n, 239 W. Va. 214, 221, 800 S.E.2d 252, 259 (2017) (explaining “[t]he three
factors . . . are joined with the conjunctive ‘and,’ meaning they all must be present. . . .”
(quotations and citation omitted) (footnote omitted)); Ooten v. Faerber, 181 W. Va. 592,
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597, 383 S.E.2d 774, 779 (1989) (observing that “the use of ‘and’ . . . clearly makes [all
listed] conditions necessary” and stating that “‘[a]nd’ is a conjunction connecting words or
phrases, expressing the idea that the latter is to be added to or taken along with the first”).
In this case, there was sufficient evidence to create a genuine issue of material fact and
overcome a motion for summary judgment as to the required element of intentional
relinquishment of a known right. See Syl. pt. 3, Aetna Cas. & Surety Co. v. Fed. Ins. Co.
of N.Y., 148 W. Va. 160, 133 S.E.2d 770 (1963) (holding 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”
(emphasis added)).
To show that they did not intentionally relinquish their right to have their
coal mined, the McDonald Companies presented evidence that they repeatedly objected to
Addington’s failure to commence mining and production of its extensive coal reserves.
For example, the record contains repeated communications from the McDonald Companies
to Addington in 2008 and 2009 objecting to the lack of mining and requesting assurances
that mining operations would be promptly commenced. In response, Addington assured
the McDonald Companies that it or its contractors would implement a plan for mining the
coal. The record also reflects that, between 2012 and 2014, the McDonald Companies and
Addington participated in a series of meetings during which the McDonald Companies
again pursued their goal of getting Addington to fulfill its obligation under the lease to
actually mine coal. The record additionally contains evidence of deposition testimony by
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various witnesses adverse to the McDonald Companies who nevertheless agreed that the
McDonald Companies continually voiced objections to the lack of mining. All of this
evidence was sufficient to establish a genuine issue of material fact such that summary
judgment was not proper.
Furthermore, under the plain language of the lease, Addington had a duty to
diligently mine coal notwithstanding its payment of royalties. Even though the lease
allowed for minimum production royalties, it also contained various provisions expressing
the parties’ intention to diligently mine the subject coal. For instance, the lease expressly
states that
it is the mutual intent of all parties hereto that the Lessee shall
properly prospect and engineer such property, and that the
Lessee herein shall systematically mine such property by multi-
level deep, strip and auger mining in such manner as to ensure
that all the merchantable and mineable coal in all of the seams
hereby leased as provided in Article X of this Lease, is mined
and that all such coal so mined will be prepared, marketed,
and sold by such means and methods as will ensure the highest
available sales prices therefor.
(Emphasis added). The lease further provides that the lessee “will diligently prosecute its
operations on the premises hereby leased so that all the merchantable and mineable coal
herein provided to be mined shall be mined[.]” (Emphasis added). Yet another provision
of the lease required Addington to “conduct sufficient coal prospecting and preliminary
engineering to enable Lessee to proficiently plan multi-level deep, strip and auger mining
operations upon the demised premises in such manner as to mine and remove all the
merchantable and mineable coal hereby leased.” (Emphasis added). All of these
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provisions clearly express the intent of the contracting parties that the coal be actually and
diligently mined, and these provisions cannot be ignored.
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.
Syl. pt. 3, Moore v. Johnson Serv. Co., 158 W. Va. 808, 219 S.E.2d 315 (1975). Because
the lease in question contained both a minimum royalty provision and a covenant to
diligently mine, both provisions should have been enforced. See N. Star Co. v. Howard,
341 S.W.2d 251, 254 (Ky. 1960) (“The lease contains not only a provision for the payment
of minimum royalty but also a covenant requiring Star to diligently mine the Howards’
coal. The parties to the lease obviously did not intend the minimum royalty provision as a
limitation on the specific covenant requiring Star to mine diligently. Any other
interpretation would render the requirement of diligence meaningless.”).
Furthermore, contrary to the conclusion reached in the majority opinion, the
McDonald Companies’ claims are not barred by collateral estoppel. One of the required
elements for collateral estopped is that “[t]he issue previously decided is identical to the
one presented in the action in question.” Syl. pt. 1, in part, State v. Miller, 194 W. Va. 3,
459 S.E.2d 114 (1995). It is undisputed that the McDonald Companies did not assert their
diligent mining claim in the prior litigation between the parties. In fact, in its brief,
Addington states that “the McDonald Companies brought this action in 2016 contending—
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for the first time . . . —that Addington is obligated to mine more than the 250,000 tons a
year required under article XIII. . . . The McDonald Companies call this their ‘diligent
mining’ claim.” (Emphasis added). Clearly, then, the McDonald Companies’ diligent
mining claim is not identical to an issue previously decided and, therefore, is not barred by
collateral estoppel.
For the reasons explained above, I respectfully dissent.
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