Apex Coal Corp. v. ALA. SURFACE MIN. COM'N

• Decision Date: 06 April 2001
• Citation: 843 So.2d 170
• Parties: APEX COAL CORPORATION, Van American Insurance Company, and Clarendon National Insurance Company v. ALABAMA SURFACE MINING COMMISSION and Gulf States Paper Corporation.
• Court: Alabama Court of Civil Appeals

843 So.2d 170

APEX COAL CORPORATION, Van American Insurance Company, and Clarendon National Insurance Company v. ALABAMA SURFACE MINING COMMISSION and Gulf States Paper Corporation.

2945.

Court of Civil Appeals of Alabama.

April 6, 2001.

Dissenting Opinion on Overruling of Rehearing July 13, 2001.

Alton B. Parker, Jr., and Peter M. Wright of Spain & Gillon, L.L.C., Birmingham, for appellants.

G. Milton McCarthy, asst. atty. gen., Jasper, for appellee Alabama Surface Mining Commission.

H. Thomas Wells, Jr., Jeffrey A. Lee, and Stuart D. Roberts of Maynard, Cooper & Gale, P.C., Birmingham, for appellee Gulf States Paper Corporation.

CRAWLEY, Judge.

Apex Coal Corporation and Warco, Inc., entered into a mining-services contract in September 1985. The agreement provided that Apex would extract coal on land owned by Warco. Warco was the predecessor corporation of Gulf States Paper Corporation, which in October 1985 assumed Warco's rights and liabilities created by the contract. From April 1992 to December 1992, Van American Insurance Company and Clarendon National Insurance Company (the "sureties") posted 14 performance bonds for the mining operations performed by Apex, pursuant to the Alabama Surface Mining Control and Reclamation Act ("ASMCRA"), Ala.Code 1975, §§ 9-16-70 to -107. The Alabama Surface Mining Commission issued three mining permits to Apex for surface mining on land owned or leased by Gulf States. Each permit related to several individual mining areas, called "increments." Apex had a total of 14 increments; hence, 14 bonds were required.

Apex was initially financially successful, but later it experienced financial difficulties. Apex eventually filed for Chapter 11 bankruptcy protection. Apex continued to mine and to comply with the Commission's reclamation requirements. Apex converted the Chapter 11 proceeding to a Chapter 7 liquidation and ceased its mining operations. The Commission issued several citations to Apex, citing it for not complying with the reclamation requirements.

Eventually, the Commission issued a "show cause" order to Apex and to the sureties, requesting them to show cause why the bonds should not be forfeited as to two of the three permits. Apex and the sureties filed a response and requested a hearing before the Commission's division of hearings and appeals. Apex and the sureties also filed a motion, requesting that the Commission issue a "show cause" order to Gulf States. Apex and the sureties argued before the Commission that Gulf States was also liable for the reclamation of the lands. Apex and the sureties argued that § 9-16-95 provided them a cause of action against Gulf States. The Commission's hearings division denied this request and ordered that the bonds be forfeited.

The Commission issued a "show cause" order as to the third permit. Apex and the sureties made no response, and the Commission's hearing division entered a default and ordered the forfeiture of the bonds related to the third permit.

Apex and the sureties appealed the Commission's two orders of forfeiture, to the circuit court; that court consolidated the cases for discovery purposes. The Commission and Gulf States each filed a summary-judgment motion as to both orders of forfeiture and as to the standing of Apex and the sureties to sue Gulf States, pursuant to § 9-16-95. The circuit court granted all of the summary-judgment motions. Apex and the sureties appealed to the supreme court, which transferred the appeals to this court, pursuant to Ala.Code 1975, § 12-2-7(6).

We review a summary judgment de novo; we apply the same standard as was applied in the circuit court. A motion for a summary judgment is to be granted when no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. A party moving for a summary judgment must make a prima facie showing "that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Rule 56(c); see Lee v. City of Gadsden, 592 So.2d 1036, 1038 (Ala.1992). If the movant meets this burden, "the burden then shifts to the nonmovant to rebut the movant's prima facie showing by `substantial evidence.'" Lee, 592 So.2d at 1038. "Substantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989); see Ala.Code 1975, § 12-21-12(d). See West, 547 So.2d at 871, and Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala.1989), for a further discussion of the application of the summary-judgment standard.

Apex and the sureties do not dispute that Apex failed to reclaim the land as required by the ASMCRA. They argue that the Commission should have found that Gulf States violated the Act and should have held it jointly liable, along with Apex, for violating the Act. They argue that Apex was acting as an agent of Gulf States and that Gulf States, as Apex's principal, is liable for Apex's noncompliance with the Act. Gulf States and the Commission contend that whether Gulf States committed any violation of the ASMCRA is irrelevant to the question whether the sureties are liable. They argue that the sureties are unconditionally liable for Apex's noncompliance with the Act and, because it is undisputed that Apex did not comply with the Act, that the Commission properly ordered the forfeiture of the bonds.

The Commission issued the surface-mining permits to Apex, pursuant to the Alabama Surface Mining Regulations, Ala. Admin. Code § 880-X-8B-.01 et seq. The Commission never issued a permit to Gulf States; therefore, Gulf States is not a "permittee," as that term is defined by § 880-X-2A-.06(116). The sureties entered into surety contracts by which they assumed responsibility for Apex's compliance with the ASMCRA. The sureties had no such contracts with Gulf States.

We agree with Gulf States and the Commission that the relationship between Gulf States and Apex is irrelevant to a question of the sureties' liability. It is well settled that a surety's liability is a primary liability, not contingent on any event other than its principal's liability and not contingent upon the principal's relationship with third parties, such as Apex's relationship with Gulf States. See Ex parte Water Works Bd. of Gulf Shores, 508 So.2d 242 (Ala.1987); Rowe v. Bank of New Brockton, 207 Ala. 384, 92 So. 643 (1922); Averyt Drug Co. v. Ely-Robertson-Barlow Drug Co., 194 Ala. 507, 69 So. 931 (1915); and Dampskibsaktieselskabet Habil v. United States Fid. & Guar. Co., 142 Ala. 363, 39 So. 54 (1905). Here, the sureties are the sureties for Apex's compliance with the ASMCRA. It is undisputed that Apex ceased to comply with the ASMCRA; therefore, the circuit court properly concluded that, as a matter of law, the sureties are liable for Apex's noncompliance.

Apex and the sureties also argue that the Commission erred and the circuit court erred by ordering the forfeiture of the bonds without first giving them the opportunity to perform the reclamation requirements. Section 9-16-93(d) sets out the procedure once the Commission finds that a holder of a surface-mining permit, such as Apex, is violating the Act:

"When, on the basis of an inspection, the regulatory authority or its authorized representative determines that a pattern of violations of any requirements of this article or any permit conditions exists or has existed, and if the regulatory authority or its authorized representative also find that such violations are caused by the unwarranted failure of the permittee to comply with any requirements of this article or any permit conditions, or that such violations are willfully caused by the permittee, the regulatory authority or its authorized representative shall forthwith issue an order to show cause as to why the permit should not be suspended or revoked and shall provide opportunity for a public hearing before a hearing officer pursuant to sections 9-16-78 and 9-16-79 of this article. If a hearing is requested, the hearing officer shall inform all interested parties of the time and place of the hearing. Upon the permittee's failure to show cause as to why the permit should not be suspended or revoked, the hearing officer shall forthwith suspend or revoke the permit. If the hearing officer revokes the permit, the permittee shall immediately cease surface coal mining operations on the permit area and shall complete reclamation within a period specified by the hearing officer or the hearing officer shall declare as forfeited the performance bonds for the operation."

As stated above, the Commission first sent Apex and the sureties notice of Apex's violations. Then, the Commission issued "show cause" orders that required Apex and the sureties to show cause why the permits should not be revoked and to provide a reclamation plan. Apex and the sureties responded to the first "show cause" orders as to two of the permits by arguing that Gulf States was liable for the reclamation. As to the "show cause" order related to the third permit, Apex and the sureties made no response.

In his special writing, Judge Murdock points out that the show cause orders gave Apex and the sureties a choice of paying the bonds to the Commission within 30 days or submitting a reclamation plan. Apex and the sureties did not comply with the show cause orders. The Commission then entered an order declaring the bonds forfeited or requiring Apex and the sureties to submit a reclamation plan subject to its approval by the Commission. Apex and the sureties then appealed to the circuit court. We conclude that because Apex and the sureties never submitted a reclamation plan for the Commission's approval, it waived its right to submit a plan once it appealed the Commission's order. Section 9-16-93(d)...