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CDS Family Trust v. Martin

United States District Court, D. Maryland

September 5, 2019

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



         This case at its core involves a dispute between Plaintiffs and Defendants over coal that was allegedly wrongfully mined by Defendants from land (and associated mineral rights) purportedly owned by Plaintiffs. Within this larger dispute there are also sub-disputes between the parties. One such sub-dispute gave rise to a counterclaim by Defendants WPO, Inc., Jeffrey Rose and Debbie Rose (collectively, the “WPO Defendants”) against Plaintiffs that includes claims for breach of contract, unjust enrichment, promissory estoppel, negligent interference with contractual relationship, fraudulent misrepresentation and fraud. (ECF No. 29). As to that counterclaim, Plaintiffs have moved for summary judgment. (ECF No. 127).

         The parties consented to proceed before a magistrate judge pursuant to 28 U.S.C. § 636(c) and Local Rule 301.4. (ECF Nos. 174, 178, 179, 180, and 181). The Court has now considered Plaintiffs' motion, along with the WPO Defendants' Opposition. (ECF No. 158). Additionally, the Court heard limited oral argument on May 21, 2019 and additional oral argument on August 21, 2019. (ECF Nos. 210 and 241). Last, the WPO Defendants made an additional production of documents to which Plaintiffs replied. (ECF Nos. 242 and 244). For the reasons set forth more fully below, Plaintiffs' Motion for Summary Judgment as to Defendants Counterclaim, (ECF No.127), is GRANTED.

         I. BACKGROUND

         At some point prior to the filing of the instant lawsuit, Plaintiffs and the WPO Defendants had a dispute about other coal allegedly wrongfully mined by the WPO Defendants from land owned by Plaintiffs (the so-called “Callie Mine”). The parties resolved that dispute privately, with the WPO Defendants agreeing to pay Plaintiffs a royalty for the disputed coal.[1] As explained by counsel at the recent oral argument, as a follow-up to that dispute, Plaintiffs and the WPO Defendants discussed a possible agreement whereby the WPO Defendants would be permitted to mine additional coal from the Plaintiffs' Callie Mine, paying royalties to Plaintiffs for any coal mined. The caveat, according to the WPO Defendants, was that mining the Callie Mine was not economically efficient due to the amount of “cover” over the coal, and the less than ideal quality of the coal. (ECF No. 158-3 at p. 2). Therefore, the WPO Defendants also sought an agreement to mine from two other of Plaintiffs' properties-the “Bosley” and “Bakerstown” mines. These two sites had less cover over the coal, making them more economically attractive to mine. Id. According to the WPO Defendants, “Plaintiffs verbally agreed to allow WPO, Inc. to mine the Bosley and Bakerstown sites if WPO, Inc. mined the Callie Mine.” Id.

         Originally, the WPO Defendants argued that to memorialize these agreements, the parties executed certain deeds, deeds of trust, and promissory notes granting certain mining rights to them on or about September 9, 2010. (Id. at 3). The WPO Defendants also contended that the recorded versions of those documents were somehow fraudulently altered so that Plaintiffs retained those rights. (Id.). At the recent oral argument however, the WPO Defendants clarified that these September 9, 2010 documents did not directly concern mining rights to the Bosley and Bakerstown sites. Rather, they acknowledged that these documents relate to another transaction involving a different piece of property for which the WPO Defendants sought (and were granted) surface rights so that they would have a separate place for the “spoil” removed from the mines during mining operations.

         As for the documentation of the Callie-Bosley-Bakerstown agreements described above, at oral argument, counsel for the WPO Defendants acknowledged that based on his experience he would expect there to be a: (1) surface lease; (2) mineral rights lease; and, (3) royalty agreement spelling out the rights and responsibilities of the parties including such things as the length of the agreement, the royalty amount, and the conditions under which either party could terminate the agreement . None of those documents have been located during the extensive discovery that has taken place in this case Instead, the WPO Defendants contend that they have sufficient circumstantial evidence of the agreements to prove their existence. First, the WPO Defendants allege that they applied for and were granted a mining permit for the Bosley site by the Maryland Department of the Environment. The WPO Defendants argue not only that a permit would not have been pursued in the absence of an agreement, but also that the State of Maryland would not have issued a permit in the absence of a valid mineral rights lease in favor of the WPO Defendants.[2]Additionally, counsel proffered that the WPO Defendants did some sampling on the sites in anticipation of mining operations. Finally, the WPO Defendants argue that they would not have purchased a parcel for the “spoil” (as described in the September 9, 2010 documents) if they did not fully anticipate commencing mining pursuant to the agreements.

         The WPO Defendants alleged that “[b]eginning in 2012 and continuing to the present, the Plaintiffs have refused to allow WPO, Inc. to permit and mine said coal.” (ECF No. 158-3 at p. 3). They further allege that “Plaintiffs have communicated with the Maryland Department of the Environment and [it] refused to allow WPO, Inc. to mine coal on the new property.” Id. As a result, the WPO Defendants claim “compensatory, reliance and expectancy damages” in the form of lost revenues and profits from the coal they expected to mine, expense in removing equipment from the sites, and (having been deprived of those revenues and profits) loss of various mining equipment to repossession. (ECF No. 29 at p. 18; ECF No. 158-3 at p. 3.)

         Plaintiffs argue that any purported agreements to mine (including associated grants of mineral rights) are subject to the statute of frauds which, in the absence of any writing memorializing the agreements, is not satisfied here. Further, Plaintiffs argue that because the breach occurred “beginning in 2012, ” the applicable three-year statute of limitations ran prior to the filing of the WPO Defendants' counterclaim in December of 2015.

         In response to these arguments, the WPO Defendants were asked to muster and file any additional supporting documentation. Specifically, the Court requested the Permit to the Maryland Department of the Environment which purportedly shows the existence of an agreement between WPO and Plaintiffs, and any documentation concerning Plaintiffs' alleged revocation of the agreement. In response, the WPO Defendants have produced three additional documents: (1) a 104-page resubmission of a permit application to mine on the Bosley tract dated December 12, 2014; (2) a coal reserve estimate of the Bosley tract dated November 18, 2013; and (3) ten emails exchanged in 2013 and 2014 between Jeffery Rose and Carmen Del Signore, a representative of Plaintiffs. (ECF No. 242). While the additional documents narrowly defeat Plaintiffs' statute of limitations argument, the WPO Defendants fail to prevent summary judgment based on the statute of frauds and an overall fatal lack of proof concerning both breach and damages.


         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.3d 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) (quoting Fed.R.Civ.P. 56(e)). 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. ...

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