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McKenzie v. Cherry River Coal
IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA September 1995 Term _____________ No. 22798 _____________ EUGENE A. MCKENZIE, MARGARET P. MCKENZIE, THOMAS J. MCKENZIE, MARGARET E. MCKENZIE AND BARBARA MCKENZIE, Plaintiffs Below, Appellants v. CHERRY RIVER COAL & COKE COMPANY AND ISLAND CREEK COAL COMPANY, Defendants Below, Appellees __________________________________________________________________ Appeal from the Circuit Court of Greenbrier County Honorable J. Zane Summerfield, Judge Civil Action No. 81-C-2434 AFFIRMED __________________________________________________________________ Submitted: September 19, 1995 Filed: December 13, 1995 John H. Tinney, Esq. Dan O. Callaghan, Esq. Carl L. Fletcher, Esq. Callaghan & Ruckman Spilman, Thomas & Battle Summersville, West Virginia Charleston, West Virginia Jonathan D. Schiller, Esq. Attorneys for the Appellants David O. Bickart, Esq. Kaye, Scholer, Fierman, Hays & Handler Attorneys for the Appellees The Opinion of the Court was delivered PER CURIAM. RETIRED JUSTICE MILLER sitting by temporary assignment. JUSTICE ALBRIGHT did not participate. SYLLABUS BY THE COURT 1. "'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.' Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963). Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d 247 (1992)." Syllabus Point 1, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995). 2. "Summary judgment is appropriate if, from the totality of the evidence presented, the record could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove." Syllabus Point 2, Williams v. Precision

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Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995). 3. "If the moving party makes a properly supported motion for summary judgment and can show by affirmative evidence that there is no genuine issue of a material fact, the burden of production shifts to the nonmoving party who must either (1) rehabilitate the evidence attacked by the moving party, (2) produce additional evidence showing the existence of a genuine issue for trial, or (3) submit an affidavit explaining why further discovery is necessary as provided in Rule 56(f) of the West Virginia Rules of Civil Procedure." Syllabus Point 3, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995). 4. "A broken covenant or condition relied upon for forfeiture must be found not only in the instrument, by clear and definite expression, but also within the forfeiture clause by such expression." Syllabus Point 3, Bethlehem Steel Corp. v. Shonk Land Co., 169 W. Va. 310, 288 S.E.2d 139 (1982). Per Curiam: Eugene A. McKenzie, Margaret P. McKenzie, Thomas J. McKenzie, Margaret E. McKenzie and Barbara McKenzie (hereinafter the McKenzies) appeal a summary judgment order by the Circuit Court of Greenbrier County in favor of Cherry River Coal & Coke Co., and Island Creek Coal Co. (hereinafter the coal companies). On appeal, the McKenzies allege that the circuit court erred in finding that some of their claims were barred by the statute of limitations and in finding that no dispute existed between the parties on their other claims. Based on our de novo review, because we find no error in the circuit court's determinations concerning the statute of limitations and the lack of a dispute, we affirm the circuit court's decision. The case sub judice arises from a April 24, 1962 lease wherein the McKenzies leased certain coal lands to Cherry River for twenty years with similar options to renew (hereinafter the lease). Island Creek, by an agreement dated August 8, 1969 with Cherry River, became the mining agent on the leased property. On August 28, 1981, the McKenzies filed a five-count complaint against the coal companies in the circuit court seeking the possession of the leasehold and monetary damages. On April 24, 1985, the McKenzies added another count alleging that the coal companies violated the lease by underpaying the McKenzies. By orders filed on November 22, 1991, September 15, 1993, August 5, 1994 and September 6, 1994, the circuit court granted summary judgment in favor of the coal companies, and the McKenzies appealed to this Court. I. STANDARD OF REVIEW This appeal's sole issue is the appropriateness of summary judgment. "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). In accord Williams v. Precision Coil, Inc., 194 W. Va. 52, ___, 459 S.E.2d 329, 335, rehearing denied (1995). Our traditional standard for granting summary judgment is stated in Syl. pt. 3, Aetna Casualty & Surety Co. v. Federal Ins. Co. of N.Y., 148 W. Va. 160, 133 S.E.2d 770 (1963): 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. In accord Syl. pt. 1, Williams v. Precision Coil, Inc., supra; Syl. pt. 2, Painter v. Peavy, supra; Syl. pt. 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d 247 (1992). Rule 56 (1978) of the W.Va.R.Civ.P. is "'designed to effect a prompt disposition of controversies on their merits without resort to a lengthy trial,' if there essentially 'is no real dispute as to salient facts' or if it only involves a question of law." Williams v. Precision Coil, Inc., 194 W. Va. at ___, 459 S.E.2d at 335, quoting, Painter v. Peavy, 192 W. Va. at ___ n.5, 451 S.E.2d at 758 n.5, quoting, Oakes v. Monongahela Power Co., 158 W. Va. 18, 22, 207 S.E.2d 191, 194 (1974). Subsection c of Rule 56 states, in pertinent part, that "[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Syl. pt. 2 of Williams v. Precision Coil, Inc., states: Summary judgment is appropriate if, from the totality of the evidence presented, the record could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove. See also Syl. pt. 4, Painter v. Peavy, supra.

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Syl. pt. 3, Williams v. Precision Coil, Inc., states: If the moving party makes a properly supported motion for summary judgment and can show by affirmative evidence that there is no genuine issue of a material fact, the burden of production shifts to the nonmoving party who must either (1) rehabilitate the evidence attacked by the moving party, (2) produce additional evidence showing the existence of a genuine issue for trial, or (3) submit an affidavit explaining why further discovery is necessary as provided in Rule 56(f) of the West Virginia Rules of Civil Procedure. According to Williams v. Precision Coil, Inc. , the function of the circuit court at the summary judgment stage "is not 'to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'" Williams v. Precision Coil, Inc, 194 W. Va. at ___, 459 S.E.2d at 336, quoting, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202, 212 (1986). See Syl. pt. 3, Painter v. Peavy, supra. In addition to drawing any permissible inference from the underlying facts in the light most favorable to the party opposing summary judgment, Williams v. Precision Coil, Inc., id., also stated: In assessing the factual record, we must grant the nonmoving party the benefit of inferences, as "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge[.]" Anderson, 477 U.S. at 255, 106 S.Ct. at 2513, 91 L.Ed.2d at 216. Summary judgment should be denied "even where there is no dispute as to the evidentiary facts in the case but only as to the conclusions to be drawn therefrom." Pierce v. Ford Motor Co., 190 F.2d 910, 915 (4th Cir.), cert. denied, 342 U.S. 887, 72 S.Ct. 178, 96 L.Ed. 666 (1951). With this standard in mind we review the circuit court grant of summary judgment. Although the case sub judice is factually complex, the following are the major issues on which summary judgment was granted: first, when did the statute of limitations begin to run on the various claims; second, was the lease forfeited in 1974, and third, did the coal companies deliberately and knowingly underpaid the McKenzies for the coal mined, processed and sold from the leasehold. II. FACTUAL BACKGROUND Under the lease Cherry River was required to pay the McKenzies a royalty of $0.15 for every long ton of coal mined, with a minimum royalty of $7,200 per year, payable quarterly. The lease allowed a "recapture credit" whereby the lessee was permitted to credit its minimum royalty payments against future payments for coal actually mined and shipped. The parties agree that between 1962 and the end of 1974, the McKenzies received and cashed the minimum royalty payments due. The total amount paid amounting to over $93,000. On May 6, 1968, a mining accident, commonly referred to as the "Hominy Falls Disaster," occurred on the leased property. After several wrongful death actions were brought against the McKenzies in 1969 and in 1970, the McKenzies brought a third-party action seeking indemnification from Cherry River. Ultimately the wrongful death actions were settled in December 1977 with Island Creek, Cherry River's sublessee, paying the settlement.See footnote 1 In 1980, the coal companies, specifically, Island Creek, fully satisfied the McKenzies' indemnity claim. In January 1971, Island Creek advised the McKenzies that it was suspending deep mining activities of the leased property. However, Island Creek continued to pay the minimum royalty required by the lease. On November 6, 1974, the McKenzies sent Cherry River a "Notice of Default" alleging that Cherry River had breached the lease by (1) failing to employ competent engineers, (2) failing to post accurate maps (both of which were allegations in the Hominey Falls Disaster litigation, see note 1), and (3), by refusing to pay the McKenzies' costs of defending the wrongful death litigation. On November 29, 1974, the McKenzies sent Cherry River a "Notice of Termination," which was recorded. On December 10, 1974, Cherry River sent the McKenzies a "Notice of Denial of Cancellation," which was also recorded. The "Notice of Denial of Cancellation" said that the McKenzies "should do nothing to cast any cloud upon [Cherry River's] title." Nothing else occurred about the "Notice of Termination" until the complaint was filed seven years later. Although deep mining of the leased property ceased in 1971, between 1974 and 1982, the coal companies reprocessed "middling coal" from coal waste piles and during 1977 and 1978, a contractor for Island Creek surfacedmined coal.See footnote 2 Throughout the period the coal companies continued to tender the quarterly minimum royalty payments required under the lease. After the McKenzies refused to accept the payments in late 1974, the

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payments were placed into an escrow account and the coal companies continued to make payments during the pendency of this litigation. All such royalty payments have been transferred to the custody of the Clerk of the Circuit Court. On August 26, 1981, the McKenzies filed a complaint against the coal companies.See footnote 3 The complaint, which has been amended, contains six counts. Counts I, II and III allege three separate breaches of the lease, each of which was asserted in the 1974 Notice of Termination: failure to hire a competent mining engineer, failure to post maps, and failure to indemnify the McKenzies against the wrongful death actions. The complaint claims no damages from these alleges breaches, but instead, seeks damages for: (1) "profits plaintiffs lost" beginning in 1974 caused by the coal companies' failure to vacate the leased property; (2) "grief, pain and suffering" resulting from the "refusal to honor" the Notice of Termination; and (3) punitive damages. Counts IV and VI of the complaint charge that after the 1974 Notice of Termination, the coal companies unlawfully remained on the leased property and with trespass. Counts IV and VI seek the same damages as Counts I, II and III of the complaint. Count V alleges three different breaches of the lease based on a failure to pay in full for coal mined: (1) "short weighing" and therefore, inadequate royalties for coal mined between 1962 and 1971; (2) lack of revenue for the "middling coal;" and (3) failure to pay adequately for the 1977-78 surface mining on the leased property. The circuit court entered several partial summary judgment orders until finally, the entire case was dismissed. The first partial summary judgment order, filed on November 22, 1991, dismissed Counts I, II and III as time-barred under W. Va. Code 55-2-6 (1981) because each alleged breach occurred before May 6, 1968, the date of the mine accident, and were discovered by the McKenzies, at latest, in April 1971 during the wrongful death trial. This first summary judgment order did not dismiss Counts IV and VI, the trespass and unlawful hold over counts, and deferred ruling on Count V pending further submissions.See footnote 4 The second partial summary judgment order, filed on September 15, 1993 dismissed Counts IV and VI, finding that because the lease's forfeiture clause was invalid, the coal companies were not trespassing and not holding over. The September 9, 1993 order also granted summary judgment of the "short weight" component of Count V based on the statute of limitations. Finally in 1994, based on a determination that the minimum royalty payments exceeded the total value of the "middling coal" (order filed on August 5, 1994) and the 1977-78 surfaced-mined coal (order filed on September 6, 1994), summary judgment was granted to the coal companies of the remaining portions of the complaint.See footnote 5 On appeal, the McKenzies allege the following assignments of error: (1) The circuit court erred in ruling that any of their claims were barred by the statute of limitations. (2) The circuit court erred in failing to find a forfeiture of the lease; and (3) The circuit court erred in ruling that no genuine issue of material fact existed concerning the surfacedmined and the "middling" coal. III. DISCUSSION A. Statute of Limitations W. Va. Code 55-2-6 (1923) provides a ten-year period in which to bring an action based on a contract. W. Va. Code 55-2-6 (1923) states, pertinent part: Every action to recover money, which is founded upon an award, or on any contract other than a judgment or recognizance, shall be brought within the following number of years next after the right to bring the same shall have accrued, that is to say: . . . if it be upon any other contract in writing under seal, within ten years; if it be upon an award, or upon a contract in writing, signed by the party to be charged thereby, or by his agent, but not under seal, within ten years. . . . (Emphasis added.) Although the parties agree that the ten-year statute of limitations applies, they dispute when this ten-year period began to run. The McKenzies maintain that the statute of limitations began to run in December 1974 when the coal companies refused to recognize the lease's termination and vacate the leased property. The coal companies maintain that the statute of limitations began to run when the McKenzies learned of the alleged contract breaches and not at some later artificial date when the McKenzies sought to terminate the lease. The complaint in Counts I, II and III alleges that the lease was breached by the coal companies' failure, first, "to indemnify" the McKenzies in the wrongful death action, second "to keep employed a competent engineer," and third, "to keep posted correct, accurate and complete maps," respectively. On March 16, 1970, the coal companies refused
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the McKenzies' demand "to indemnify" them in the wrongful death action. Thomas McKenzie testified that he learned of the coal companies' failure to employ a competent engineer during the April 1971 trial of the wrongful death action. Mr. McKenzie stated that he knew no map was posted on the date of the mining accident, May 6, 1968. Thus the McKenzies knew of the breaches related to mining accident in 1970 (indemnify), April 1971 (engineer), and May 1968 (map). Count V of the Complaint seeks damages from a short weighing of the coal mined, an alleged 22.5 percent discrepancy, and resultant a reduced royalty payment for coal mined before 1971. In 1967, Thomas McKenzie sent three letters objecting to the tonnage reports filed by Cherry River; his July 26, 1967 letter ended with a request for "prompt payment."See footnote 6 The McKenzies allege that these claims only "accrued" when Island Creek began "holding over" on December 12, 1974. Thus the McKenzies argue that their complaint is timely because it was filed within ten years of the date on which they allege the lease terminated. In support of their argument, the only authority they cite is Winer v. Edison Bros. Stores Pension Plan, 593 F.2d 307 (8th Cir. 1979), an ERISA case in which the Court of Appeals held that forfeiture of pension rights did not occur upon an employee's misconduct or discharge but occurred when a pension committee declares the forfeiture by denying the employee's pension claim. However, the appeals court's decision was based on an interpretation of the vested pension rights under ERISA

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