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CDS Family Trust v. Martin

United States District Court, D. Maryland

June 12, 2019

CDS FAMILY TRUST, et al, Plaintiffs,
v.
ERNEST R. MARTIN, et al, Defendants.

          MEMORANDUM OPINION ADDRESSING THE REMAINDER OF DEFENDANTS CORSA COAL CORP.'S AND WILSON CREEK ENERGY, LLC'S MOTION FOR SUMMARY JUDGMENT

          J. Mark Coulson United States Magistrate Judge

         At its core, this case involves an allegation that Defendants wrongfully mined[1] 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). Since referral on December 28, 2018, the Court has addressed those issues it could without a hearing. Defendants' Corsa Coal Corp. (“Corsa Coal”), Wilson Creek Energy, LLC (“Wilson Creek”), and PBS Coals, Inc. (“PBSC”) (collectively, the “Coal Defendants”) Motions to Preclude Expert Testimony, (ECF Nos. 136 & 139), were denied without prejudice. Coal Defendants' Rule 72(a) Objection, (ECF No. 150), was granted in part, as to historical observations and calculation changes, and denied in part, as to the disputed area specifically. The Parties confirmed subject matter jurisdiction. (ECF Nos. 195 and 196). And Plaintiffs' Motions for Summary Judgment as to Counts 1, 2, 3, 4, and 6 against WPO, Inc, (“WPO”) (ECF No. 129), and as to Count 7 against Jeffrey Rose, (ECF No. 126), were denied.

         Coal Defendants' Motion for Summary Judgment, (ECF No. 130), was also granted in part as to Corsa Coal in total, and Wilson Creek as to counts based on successor-in-interest liability. In doing so, the Court reserved judgment on the remaining issues presented by the motion pending a formal hearing, most critically the issue of mineral rights ownership. The hearing was held on May 21, 2019.[2]

         After careful consideration of the briefing and oral arguments, the motion is GRANTED in part and DENIED in part. It is denied as to arguments concerning release and the statute of limitations, but granted as to the ownership/lack of ownership of the mineral rights within the 29.7-acre parcel currently[3] at issue in the case.

         I. BACKGROUND

         Over one hundred years of conveyances now culminate in this dispute to determine who ultimately owns the mineral rights to a disputed 29.7-acre parcel in Garrett County, Maryland. (See ECF No. 80). Plaintiffs allege that they own all mineral rights to the parcel for the coal at issue.[4] (Id. at ¶¶ 12-13). Defendants Ernest and Patricia Martin (“the Martins”) assert that they own the rights, and legally leased those rights to Defendant 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, some of which was then re- sold to Defendant Wilson Creek. (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.[5]

         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. (Id.).

         II. STANDARD OF REVIEW

         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).

         III. DISCUSSION

         In their pleadings and at oral argument, the parties[6] agree that ownership of the mineral interests should be ruled upon by the Court as a matter of law based on the language of the conveying instrument(s), without resorting to extrinsic evidence. (ECF No. 215 at 7:3-13). Additionally, the Coal Defendants assert other defenses to the Plaintiffs' claims based on a prior release in other litigation and based on the statute of limitations. As fully discussed below, this Court does not agree that Plaintiffs' claims are barred by the prior release or by the statute of limitations. However, the Court does hold that Plaintiffs were not the owners of any of the mineral rights within the 29.7-acre parcel at issue and therefore cannot maintain any of their claims relating to that parcel.

         A. The Pittsburgh Action Release

         The Coal Defendants argue that all of Plaintiffs' claims are barred by the doctrine of release, based on a settlement agreement between some of the parties that occurred in earlier litigation in the Western District of Pennsylvania (the “Pittsburgh Action”).[7] Plaintiffs counter that the earlier litigation concerned issues unrelated to the present case. At oral argument, Coal Defendant PBSC confirmed that the Pittsburgh Action concerned different parcels than those involved in the current dispute, [8] for mining activities that took place at an earlier time than those involved in the current dispute. Though the Coal Defendants acknowledge this, they nonetheless contend that the Pittsburgh Action was settled prior to robust discovery, and that Plaintiffs had taken some initial steps that, but for the settlement, may have further expanded the scope of that case had it not resolved when it did. Further, the Coal Defendants argue that because some of the alleged tortious activity in the present case would have already been underway at the time of the settlement of the Pittsburgh Action, the release executed to resolve the Pittsburgh Action should bar this case as well.

         A settlement agreement is a contract and should be construed as such based on its language. See Mazella v. Koken, 559 Pa. 216, 739 A.2d 531, 536 (1999); Taylor v. Solberg, 566 Pa. 150, 778 A.3d 664, 667 (2001). In the recitals to the Settlement Agreement in the Pittsburgh Action, the parties defined “the property” at issue to be “approximately 20 acres in Garrett County, Maryland as more particularly described in the complaint filed in the [Pittsburgh] Action.” (ECF No. 130-9). The Settlement Agreement's mutual release language, though broad in many respects, was limited to matters “arising from the [Pittsburgh] Action.” Certainly, the parties could have drafted a settlement agreement broad enough to incorporate not only those parcels and activities involved in - i.e., “arising from” - the Pittsburgh Action, but other disputes brewing in other areas. Such language, however, is lacking. Similarly, it may well be that, but for the settlement, the earlier lawsuit would have grown to include the parcels and activities at issue in the instant case. However, there was a settlement that took place at a specific moment of time, and undergoing such speculation is not only unjustified, but contradicts the Court's duty to limit itself to the factual record before it and to construe that record in the light most favorable to the nonmoving party. Accordingly, the Court will deny summary judgment on the theory of release.

         B. Statute of Limitations

          The Coal Defendants also move for summary judgment based on a running of the statute of limitations. Specifically, the statute of limitations for each of Plaintiffs' causes of action against PBSC, (i.e., trespass, unjust enrichment, conversion, and aiding and abetting trespass) is three years. Md. Code Ann., Cts. & Jud. Proc. § 5-101. Although somewhat of a moving target, the Court's interpretation of the various pleadings before it is that the allegedly tortious activity took place beginning March 26, 2013 and continued through some point in 2015. The original Complaint was filed on September 1, 2015, (ECF No. 1), and PBSC was not added as a Defendant until the Second Amended Complaint, filed May 16, 2017. (ECF No. 80). Thus, based on the original Complaint, the earliest tortious activity not potentially barred by limitations would be September 1, 2012. While the latest, based on the Second Amended Complaint, would be no earlier than May 16, 2014.

         Under either interpretation, some tortious activity survives PBSC's statute of limitations argument, precluding summary judgment in full. Which theories survive and for what period of time, however, depend on whether the Second Amended Complaint “relates back” to the original Complaint's filing date for statute of limitations purposes. The Court finds that it does for the reasons discussed below.

         The filing of the Second Amended Complaint was not without controversy. Defendant PBSC challenged it arguing that Plaintiffs did not meet the requirements of Federal Rule of Civil Procedure 16(b)(4) dealing with modification of a scheduling order due to lack of good cause and diligence, and Rule 15(a)(2) dealing with amendments to pleadings due to futility based on these same statute of limitations arguments. (ECF No. 65). In rejecting these arguments, Judge Bennett of this Court found that the two rules were satisfied in that there was good cause to justify the amendment, there was no lack of diligence on Plaintiffs' part, and there was no prejudice to Defendant PBSC, especially given the inclusion of its corporate siblings in the original Complaint. (ECF No. 78). Further, Judge Bennett found that at the very least, some of the claims would survive a limitations challenge, stating, “[w]hile it remains to be seen whether certain claims against PBSC may be barred by the relevant statute of limitations, this Court cannot at this point conclude that all of plaintiffs' claims against PBSC are time-barred so as to render amendment futile.” (ECF No. 78 at 7-8).

         Admittedly, Judge Bennett did not directly deal with the issue of relation back. However, his finding that Rule 16(b)(4)'s “good cause” requirement was satisfied necessarily involved consideration of “danger of prejudice to the non-moving party, the length of delay and its potential impact on judicial proceedings, the reason for the delay, and whether the movant acted in good faith.” Tawwaab v. Virginia Linen Service, Inc., 729 F.Supp.2d 757, 768-69 (D. Md. 2010). For its part, Rule 15(c)(1)(C) allows relation back to the original date of filing when a new party is added when, inter alia, the allegations against the new party “arose out of the same transaction, conduct or occurrence set out in the original pleading, ” and would not prejudice the newly-added party due to a lack of notice. Id. Construing the facts most favorably to Plaintiffs, the conduct alleged against Defendant PBSC arises out of the same circumstances alleged in the Complaint against its corporate affiliates. This, combined with Judge Bennett's previous findings on lack of prejudice, satisfies Rule 15(c)(4)'s relation back standard.

         C. Ownership of Mineral Rights

         1. The 939/1365ths Interest in the Mineral Rights for ...


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