Cumberland Valley v. Bell County

• Decision Date: 25 January 2007
• Docket Number: No. 2000-SC-000951-DG.,No. 2004-SC-001121-DG.,2000-SC-000951-DG.,2004-SC-001121-DG.
• Citation: 238 S.W.3d 644
• Parties: CUMBERLAND VALLEY CONTRACTORS, INC. and DEL RIO, INC., Appellants/Cross-Appellees, v. BELL COUNTY COAL CORPORATION and Darrell Huff, Appellees/Cross-Appellants.
• Court: United States State Supreme Court — District of Kentucky

238 S.W.3d 644

CUMBERLAND VALLEY CONTRACTORS, INC. and DEL RIO, INC., Appellants/Cross-Appellees, v. BELL COUNTY COAL CORPORATION and Darrell Huff, Appellees/Cross-Appellants.

No. 2000-SC-000951-DG.

No. 2004-SC-001121-DG.

Supreme Court of Kentucky.

January 25, 2007.

Rehearing Denied December 20, 2007.

Jacob P. Cline, III, Middlesboro, Elizabeth Ullmer Mendel, Woodward, Hobson & Fulton, L.L.P., Louisville, Counsel for Appellants/Cross-Appellees Cumberland Valley Contractors, Inc. and Del Rio, Inc.

Perry M. Bentley, J. Peter Cassidy, Jr., Todd S. Page, Palmer G. Vance, II, Stoll, Keenon & Ogden, PLLC, Lexington, Counsel for Appellees/Cross-Appellants Bell County Coal Corporation and Darrell Huff.

MINTON, Justice.

I. INTRODUCTION.

As a general rule, a party cannot contract away liability for damages caused by that party's failure to comply with a duty imposed by a safety statute. This case presents the question of whether this general rule applies to void a liability-shifting clause in a contract between parties to a coal mining agreement where one side claims economic damages resulting from the other's failure to comply with statutory mine-mapping duties presumably imposed to further mine safety. We find that the clause was clearly written as part of an arm's-length transaction between two sophisticated parties who actually shared the statutory mapping duties. Since there was no apparent gross imbalance of bargaining power, we see no reason to invalidate the exculpatory clause, which clearly bars the claims of Cumberland Valley Contractors, Inc., and its assignee, Del Rio, Inc.

This case also presents a procedural issue in which we hold that the Court of Appeals properly declined to dismiss Bell County Coal Corporation's initial appeal.

II. FACTUAL BACKGROUND.

In 1989, Bell County Coal Corporation held the mineral rights to the No. 5 underground mine in Bell County, Kentucky, under a mining lease with the landowner, J.M. Huber Corporation. Bell County Coal contracted, in writing, with Cumberland Valley Contractors, Inc., to operate the mine. According to the contract, Bell County Coal and its Chief Engineer were responsible for mine engineering and mine planning. These duties included preparing all mining maps, including mine projection maps, which established the course and direction of mining in No. 5 Mine. Paragraph 30 of the contract contained an exculpatory clause related to the performance of these duties. Darrell Huff became Bell County Coal's Chief Engineer in January 1991.

A series of flooding incidents inside the mine resulted in equipment loss to Cumberland Valley and its assignee, Del Rio, Inc. They also claimed that the flooding prevented them from reaching coal they had planned to mine. The flooding incidents occurred when Cumberland Valley and Del Rio encountered unmapped core holes, sediment ponds, and portions of old mine works. Cumberland Valley and Del Rio assert that these areas were unmapped or inaccurately mapped on the maps provided to them by Bell County Coal despite Bell County Coal's having accurate maps on hand showing the location of core holes, sediment ponds, and old mine works.

Cumberland Valley and Del Rio sued Bell County Coal, Huff, and Huber in the circuit court alleging misrepresentation, negligence, gross negligence, and breach of contract. Bell County Coal moved for summary judgment claiming that among other matters, the suit was barred by Paragraph 30 of the Contract Mining Agreement. The trial court denied the motion, and the case proceeded to a jury trial. The jury found for Cumberland Valley and Del Rio awarding them $795,000.00 for lost equipment and $5,057,106.00 for lost profits. The trial court entered judgment against Bell County Coal in accordance with the jury's verdict.

A panel of the Court of Appeals affirmed the trial court's refusal to enforce the exculpatory clause holding that the exculpatory clause was void as against public policy. The panel then upheld the $795,000.00 award for lost equipment but vacated the award of lost profits stating that these were not proven with sufficient certainty. We granted discretionary review and now reverse the Court of Appeals because we have reached the opposite conclusion concerning the validity of the exculpatory clause. Further facts are set forth as needed in our discussion of specific issues.

III. ANALYSIS.

A. The Standard of Review.

This is a contract case. And the interpretation and legal effect of a contract is a matter of law.¹ So we review the trial court's and the Court of Appeals's determination of whether a contractual provision is void against public policy or otherwise invalid under a de novo standard, especially since findings of fact are not at issue.² The trial court's and Court of Appeals's construction of statutes is also entitled to no deference on appeal because statutory construction is a matter of law subject to a de novo standard of review.³

B. Bell County Coal Made a Timely Appeal to the Court of Appeals.

Cumberland Valley and Del Rio contend that Bell County Coal did not file their appeal to the Court of Appeals in a timely manner; and, therefore, the appeal should have been dismissed. They insist that the trial court's judgment should be fully reinstated.

The trial court entered its judgment following the jury verdict on February 24, 1998, stating "[t]his is a final and appealable judgment, and there is no just reason for delay." On March 5, 1998, Bell County Coal and Huff timely filed a Kentucky Rules of Civil Procedure (CR) 59.05 motion to alter, amend, or vacate the judgment. After hearing oral argument, the trial court entered an Amended Judgment on April 13, 1998, which denied the CR 59.05 motion and also stated, "[t]he original Judgment is adopted but made interlocutory in all respects except as herein amended."

On April 21, 1998, Bell County Coal and Huff filed a CR 59.05 motion to alter, amend, or vacate the amended judgment of April 13, 1998, stating that the amended judgment failed to "adjudicate a sum certain in damages for each of the plaintiffs" and failed to adjudicate Bell County Coal's counterclaim against Del Rio, as well as arguing the appropriate amount of the supersedeas bond. On June 18, 1998, the trial court entered an order ruling on all pending motions, which "overruled all [m]otions." On June 22, 1998, Bell County Coal and Huff filed their notice of appeal. Cumberland Valley and Del Rio filed a motion to dismiss the appeal as untimely, which the Court of Appeals denied in its modified opinion of September 22, 2000.

Cumberland Valley and Del Rio now argue that the trial court's initial judgment, rendered February 24, 1998, recited that it was a final judgment and that there was "no just cause for delay." They argue that Bell County Coal's failure to file a notice of appeal within thirty (30) days of that "final judgment" barred their appeal under CR 73.02(1).

We disagree because the trial court expressly revoked the "finality" of the February 24 judgment when it entered its amended judgment of April 13, 1998, following Bell County Coal's filing of a CR 59.05 motion to alter, amend, or vacate. "In Kentucky, a court speaks through the language of its orders and judgments."⁴ Furthermore, as our predecessor-court stated,

we know of no rule of law that denies to a court the right to revoke an order and substitute in lieu thereof a new and different one, provided that court has not lost jurisdiction over the case involved.⁵

Since Bell County Coal's initial motion to alter, amend, or vacate was filed within ten days of judgment, it was timely filed under CR 59.05. So the trial court retained its jurisdiction and, therefore, was free to revoke its original order, including its statement of finality.

Bell County Coal's separate CR 59 motion to alter, amend, or vacate the amended judgment, entered April 13, 1998, was not an impermissible successive CR 59 motion. While "Kentucky law does not recognize an appeal from an order refusing to reconsider an order denying a new trial[,]"⁶ the trial court's order of April 13 did not deny the CR 59 motion entirely but amended the substance of its earlier judgment by resolving issues concerning punitive damages, the claim against Huber, the counterclaim against Del Rio, and explicitly revoked the finality of the initial judgment.

As stated by the federal courts, when a trial court makes substantive changes — as opposed to merely correcting clerical errors — in entering an amended judgment, the time for filing an appeal starts from the entering of the amended judgment rather than the original judgment.⁷ Since the trial court changed the substance of its judgment by entering the Amended Judgment on April 13, Bell County Coal's timely CR 59 motion regarding the amended judgment was, thus, a CR 59 motion regarding a new judgment, not an impermissible successive CR 59 motion regarding the same judgment challenged by the first CR 59 motion. So the running of the time for appeal stopped until the second CR 59 motion was resolved by the trial court's order of June 18. Bell County Coal's appeal, filed on June 22, 1998, was timely as the Court of Appeals correctly determined.

C. The Exculpatory Clause Is Valid and Bars Cumberland Valley's and Del Rio's Claims.

As Bell County Coal contends on its cross-appeal, we find as a matter of law that all of Cumberland Valley's and Del Rio's claims are barred by Paragraph 30 of the Contract Mining agreement,⁸ which provides:

30. Condition of Premises. Contractor accepts the Premises hereinabove described in their existing condition and acknowledges that Contractor has made an investigation to determine existing conditions, limitation of the areas involved, equipment necessary to conduct and complete operations, laws affecting performance hereunder, Owner's knowledge of prior mining, location of old works and latent dangers and dangerous conditions. OWNER MAKES NO IMPLIED OR EXPRESS...