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CDS Family Trust v. Martin

United States District Court, D. Maryland

February 22, 2019

CDS FAMILY TRUST, et al, Plaintiff,
ERNEST R. MARTIN, et al, Defendants.


          J. Mark Coulson United States Magistrate Judge.

         At its core, this case involves an allegation that Defendants wrongfully mined coal from an area where they did not own the necessary mineral rights. The case is before me for all proceedings by the consent of the parties pursuant to 28 U.S.C. § 636(c). Now pending before this Court are five motions for summary judgment (ECF Nos. 125, 157, 158, 129, and 130) by various plaintiffs and defendants. This memorandum only concerns ECF No. 130 as it relates to Defendants' Corsa Coal Corp. (“Corsa Coal”) and Wilson Creek Energy, LLC (“Wilson Creek”) (who, together with Defendant PBS Coals, Inc. (“PBSC”) are sometimes collectively referred to as the “Coal Defendants”). The Court has also reviewed Plaintiffs' opposition and the Coal Defendants' reply. (ECF Nos. 156 and 164). No. hearing is necessary for the Court to dispose of the portion addressed below. For the following reasons, ECF No. 130, is GRANTED in part as to Corsa Coal (all counts) and Wilson Creek (those counts based on successor or corporate affiliation imputed liability only, but not those based on direct liability). The Court reserves judgment on the remainder of the motion for after the March 18, 2019 hearing.

         I. BACKGROUND

         Over one hundred years of conveyances now culminate in this dispute to determine who ultimately owns the mining rights to a disputed parcel in Garrett County, Maryland. (See ECF No. 80).[1] Plaintiffs allege that they own all rights to the parcel except for a 939/1365 interest in the Kittanning seam or vein of coal. (Id. at ¶¶ 12-13). The Defendants Mr. and Mrs. Martin, (“the Martins”), assert ownership over all mineral rights in the disputed parcel, and leased those rights to Defendant WPO, Inc. (“WPO”) for extracting coal and other minerals. (Id. at ¶ 19). In January 2011, PBSC entered into an agreement to purchase WPO's rights under the lease. (Id. at ¶ 23). From 2011 to 2013, PBSC and WPO mined coal from the parcel. (Id. at ¶¶ 25-26). In 2013, PBSC assigned the lease rights back to WPO and placed an order to purchase approximately 30, 000 tons of coal mined by WPO. (Id. at ¶ 28). In 2014, Corsa Coal purchased PBSC, which continues to exist as a wholly-owned subsidiary of Corsa Coal. (Id. at ¶ 29). Plaintiffs filed this instant suit seeking damages and other relief based on the coal mined from the disputed parcel during the relevant period.

         Plaintiffs' Second Amended Complaint includes counts for: (1) declaratory judgment as to ownership interests within the disputed parcel; (2) trespass against the Martins, WPO, Jeffrey Rose and Debbie Rose as operators and agents of WPO (“the Roses”), and PBSC for allegedly entering the Plaintiffs' property and wrongfully removing coal; (3) unjust enrichment against all Defendants for profits alleged to have resulted from the mining; (4) conversion against all Defendants for extracting coal that Plaintiffs' claim ownership over; (5) accounting of Defendants' expenses, costs, and profits from the alleged conduct; (6) aiding and abetting against the Coal Defendants' for assisting in WPO's alleged trespass and against the Roses for filing mining permit applications for WPO and PBSC despite Plaintiffs' purported ownership; and (7) a claim for past due payments arising from a prior trespass by Mr. Rose.[2] (Id.).

         In addition to the five pending motions for summary judgment, there have been several other substantive motions filed, many with overlapping or interconnected legal issues. (See ECF Nos. 136, 139 and 150). The Court initially asked the parties to determine the most efficient schedule to consider all outstanding issues within this case. No. consensus was reached. (See ECF Nos. 182-84). Therefore, the Court has attempted to address the outstanding legal issues in a manner that maximizes efficiency for the parties and the Court. As such, the Court now addresses Plaintiffs' theories of recovery against Defendants Corsa Coal and Wilson Creek.


         Federal Rule of Civil Procedure 56(a) requires the Court to “grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party can do so by demonstrating the absence of any genuine dispute of material fact or by showing an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). A dispute as to a material fact “is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” J.E. Dunn Const. Co. v. S.R.P. Dev. Ltd. P'ship, 115 F.Supp.35 593, 600 (D. Md. 2015) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

         A nonmoving party “opposing a properly supported motion for summary judgment ‘may not rest upon the mere allegations or denials of [his] pleadings,' but rather must ‘set forth specific facts showing that there is a genuine issue for trial.'” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (citations omitted). The court is “required to view the facts and draw reasonable inferences in the light most favorable to” the nonmoving party. Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008) (citing Scott v. Harris, 550 U.S. 372, 377 (2007)). However, the Court must also “abide by the ‘affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial.'” Heckman v. Ryder Truck Rental, Inc., 962 F.Supp.2d 792, 799-800 (D. Md. 2013) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993)). Consequently, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transp., Inc., 152 F.3d 326, 330-31 (4th Cir. 1998).


         Corsa Coal and Wilson Creek argue that summary judgment is appropriate because Plaintiffs cannot substantiate any of the counts against them, based either on successor/corporate affiliation imputed liability for the actions of PBSC or direct liability for Corsa Coal's and Wilson Creek's own actions. (ECF No. 131-1 at 22). As discussed more fully below, as to Corsa Coal, the Court agrees. As to Wilson Creek, the Court agrees that it has no successor/corporate affiliation imputed liability, but, pending the results of the upcoming hearing, denies Wilson Creek's motion for theories based on any direct liability for its own actions at this time.

         A. Successor in Interest/Corporate Affiliation Liability

         Plaintiffs advance a theories of imputed liability against both Corsa Coal and Wilson Creek for the actions of PBSC based on them being successors in interest and/or corporate affiliates. A corporation that “acquires the assets of another corporation does not take the liabilities” unless: “(1) the successor expressly or impliedly agrees to assume the liabilities of the predecessor; (2) the transaction may be considered a de facto merger; (3) the successor may be considered a mere continuation of the predecessor; or (4) the transaction is fraudulent.” United States v. Carolina Transformer Co., 978 F.2d 832, 838 (4th Cir. 1992) (internal quotations omitted). The “mere continuation” exception applies when there is a transfer of assets between multiple corporations that essentially results in one remaining successor corporation. Id. The doctrine exists “to prevent a situation whereby the specific purpose of acquiring assets is to place those assets out of reach of the predecessor's creditors.” Baltimore Luggage Co. v. Holtzman, 80 Md.App. 282, 297 (1989). In short, it prevents a corporation from escaping liability if it “goes through a mere change in form without a significant change in substance[.]” Id.

         The Coal Defendants argue that successor in interest liability is inapplicable in that Corsa Coal never acquired PBSC's assets. Furthermore, Defendants stress that Plaintiffs' basis stems from an incorrect belief that the entities merged. (ECF No. 130-26 at ¶ 5). The Coal Defendants also point to the facts that: (1) PBSC entered into the Coal Purchase Agreement with WPO in March of 2013 (ECF No. 130-3 at ¶ 29); (2) Corsa Coal acquired the issued and outstanding capital stock of PBSC under a Share Purchase Agreement executed in July of 2014 (Id. at ¶ 22); and (3) since July 2014, PBSC has continued to operate as a separate and distinct corporation. (Id. at 24). PBSC's independence is further supported through corporate minutes, public filings, the testimony of Corsa Coals' ...

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