Daset Min. Corp. v. Industrial Fuels Corp.

• Decision Date: 02 March 1984
• Citation: 326 Pa.Super. 14,473 A.2d 584
• Parties: DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs Contracting Corporation, a Pennsylvania Corporation, Tased Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land Company, Inc., a Pennsylvania Corporation, Seven Sisters Mining Company, Inc., a Pennsylvania Corporation, and Jacobs, Jacobs & Jacobs, a Partnership Composed of Seaborn Jacobs, Terrence Jacobs, and Darryl Jacobs v. INDUSTRIAL FUELS CORPORATION, a Delaware Corporation, Peoples Energy Corporation, a Corporation, and Twin Oaks Coal Company, a Delaware Corporation, Appellants. DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs Contracting Corporation, a Pennsylvania Corporation, Tased Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land Company, Inc., a Pennsylvania Corporation, Seven Sisters Mining Company, Inc., a Pennsylvania Corporation, and Jacobs, Jacobs & Jacobs, a Partnership Composed of Seaborn Jacobs, Terrence Jacobs and Darryl Jacobs, Appellants, v. INDUSTRIAL FUELS CORPORATION, a Delaware Corporation, Peoples Energy Corporation, a Corporation, and Twin Oaks Coal Company, a Delaware Corporation. TWIN OAKS COAL COMPANY, a Delaware Corporation, v. DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs Contracting Corporation, a Pennsylvania Corporation, Tased Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land Company Inc., a Pennsylvania Corporation, Jacobs, Jacobs & Jacobs, a Partnership, Seaborn Jacobs, Terrence S. Jacobs, Darryl M. Jacobs and Martha R. Jacobs, Appellants. TWIN OAKS COAL COMPANY, a Delaware Corporation, Appellant, v. DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs Contracting Corporation, a Pennsylvania Corporation, Tased Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land Company, Inc., a Pennsylvania Corporation, Seven Sisters Mining Company, Inc., a Pennsylvania Corporation, Jacobs, Jacobs & Jacobs, a Partnership, Seaborn Jacobs, Terrence S. Jacobs, Darryl M. Jacobs and Martha R. Jacobs.
• Court: Pennsylvania Superior Court

Page 584

473 A.2d 584

326 Pa.Super. 14

DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs

Contracting Corporation, a Pennsylvania Corporation, Tased

Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land

Company, Inc., a Pennsylvania Corporation, Seven Sisters

Mining Company, Inc., a Pennsylvania Corporation, and

Jacobs, Jacobs & Jacobs, a Partnership Composed of Seaborn

Jacobs, Terrence Jacobs, and Darryl Jacobs v. INDUSTRIAL FUELS CORPORATION, a Delaware Corporation,

Peoples Energy Corporation, a Corporation, and

Twin Oaks Coal Company, a Delaware

Corporation, Appellants.

DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs

Contracting Corporation, a Pennsylvania Corporation, Tased

Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land

Company, Inc., a Pennsylvania Corporation, Seven Sisters

Mining Company, Inc., a Pennsylvania Corporation, and

Jacobs, Jacobs & Jacobs, a Partnership Composed of Seaborn

Jacobs, Terrence Jacobs and Darryl Jacobs, Appellants, v. INDUSTRIAL FUELS CORPORATION, a Delaware Corporation,

Peoples Energy Corporation, a Corporation, and

Twin Oaks Coal Company, a Delaware Corporation.

TWIN OAKS COAL COMPANY, a Delaware Corporation, v. DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs

Contracting Corporation, a Pennsylvania Corporation, Tased

Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land

Company Inc., a Pennsylvania Corporation, Jacobs, Jacobs &

Jacobs, a Partnership, Seaborn Jacobs, Terrence S. Jacobs,

Darryl M. Jacobs and Martha R. Jacobs, Appellants.

TWIN OAKS COAL COMPANY, a Delaware Corporation, Appellant, v. DASET MINING CORPORATION, a Pennsylvania Corporation, Jacobs

Contracting Corporation, a Pennsylvania Corporation, Tased

Coal Sales, Inc., a Pennsylvania Corporation, Armstrong Land

Company, Inc., a Pennsylvania Corporation, Seven Sisters

Mining Company, Inc., a Pennsylvania Corporation, Jacobs,

Jacobs & Jacobs, a Partnership, Seaborn Jacobs, Terrence S.

Jacobs, Darryl M. Jacobs and Martha R. Jacobs.

Superior Court of Pennsylvania.

Argued May 24, 1983.

Filed March 2, 1984.

David B. Fawcett, Jr., Pittsburgh, for Daset, etc., appellants (at Nos. 753 and 754) and appellees (at No. 634 and 648).

Frederick J. Francis, Pittsburgh, for Industrial Fuels, appellant (at No. 634) and appellee (at No. 753) and for Twin Oaks, appellant (at No. 648) and appellee (at No. 754).

Before CAVANAUGH, ROWLEY and CIRILLO, JJ.

CIRILLO, Judge:

This breach of contract case is really two cases, which were consolidated for trial, because they relate to the same factual situation and legal conflicts among the parties. In the Spring of 1980, Twin Oaks Coal Company (hereinafter "Twin Oaks") instituted an action in trespass and assumpsit in the Common Pleas Court of Allegheny County against Daset Mining Corporation, Jacobs Contracting Corporation, Tased Coal Sales, Inc., Armstrong Land Company, Inc., Seven Sisters Mining Company, Inc., Jacobs, Jacobs & Jacobs; a partnership composed of Seaborn Jacobs, Terrence S. Jacobs, Darryl M. Jacobs, and Martha Jacobs (hereinafter all referred to collectively as "Daset"). On June 3, 1980, Daset filed in Westmoreland County, a complaint in Assumpsit and Trespass against Twin Oaks, Industrial Fuels Corporation ("IFC"), and Peoples Energy Company (hereinafter "Peoples"). ¹ The case in Westmoreland County was subsequently transferred to Allegheny County and the two were consolidated. B.H. & H., Inc. was brought in as an additional defendant by Daset.

Greatly simplified, the basic facts underlying the controversy are that Twin Oaks purchased the coal-related assets of Daset, which were mainly a large number of coal leases and some strip mining equipment. The sale was consummated with a lengthy integrated agreement dated April 11, 1979. The contract stipulated that Twin Oaks was to pay Daset $3,405,026.00 and assume some of Daset's outstanding obligations. These included the reclamation of some stripped land, which had not yet been performed by Daset and the remaining payment owed by Daset to B.H. & H. The greater part of the equipment and many of the coal leases had been previously acquired by Daset from B.H. & H. At the time that the agreement was executed, Twin Oaks paid $2,405,026.00, and gave Daset a note for the remaining million, which was payable a year later. ² Shortly before the due date of the note, Twin Oaks refused to pay Daset and B.H. & H. because of a number of legal grievances against Daset. Subsequently, Twin Oaks filed suit on the basis that there was a breach of the important warranty given by Daset in the agreement of April 11, 1979; namely, that the lands assigned to Twin Oaks by Daset, contained not less than four million (4,000,000) tons of recoverable bitminous coal. Daset filed suit for non-payment of the note and took the position that there was no such breach; but brought B.H. & H. into the case on the theory that if there was such a breach, it would be partly the responsibility of the latter because a number of the coal leases had been acquired from it.

At the trial, Twin Oaks did not elect to prosecute any claim against Daset except this important alleged breach of the warranty of four million (4,000,000) tons of coal. In addition, it alleged that this breach created a right to recover for the loss of tonnage and for its great expenditures for reclamation of stripped land. ³

After a lengthy jury trial, the judge submitted interrogatories to the jury. The jury found that the lease-holds sold to Twin Oaks by Daset contained four million (4,000,000) or more tons of recoverable bituminous coal as defined in the agreement. This resulted in verdicts against Twin Oaks and in favor of Daset in the amount of $1,394,892.86, and in favor of B.H. & H. in the amount of $598,701.60. Twin Oaks filed a motion for a new Trial, and Daset filed a limited motion for a new trial on the ground that the court should not have restricted its claim for interest to six percent (6%). B.H. & H. settled and has discontinued. The motions of the parties were denied and both parties appealed. We will address their claims seriatim.

As a foundation for the discussion of the parties' claims, we turn our attention to the contract. This comprehensive agreement, which embodies the rights and obligations of the parties, is a lengthy document, which was thoroughly negotiated prior to its execution on April 11, 1979. However, the controversy now before us revolves around only those certain passages, which deal with the warranty made by Daset, which state as follows:

That on, in and under the lands described in those leases listed in Section 1 of Exhibit I to the Assignment Agreement (Schedule G hereto), and which leases are effectively assigned to Buyer on the date hereof in the title condition required by this Agreement (and not subject to those exceptions or conditions that may be specified on Schedule L attached hereto), there are not less than Four Million (4,000,000) tons of recoverable bituminous coal.

In addition, the definitions section of the agreement defines the term "recoverable bituminous coal" as follows:

Whenever used in this Agreement, the term "recoverable bituminous coal" shall mean bituminous coal that, as of the date hereof, can be mined and removed with the use of modern mining methods considering the generally accepted maximum stripping ratios in the area in which Sellers have conducted their mining operations.

Admission of Evidence.

The appellant, Twin Oaks', initial contention concerns the admission of various documents and other evidence, which it asserts were irrelevant and prejudicial. ⁴ More specifically, Twin Oaks alleges that the admission of any testimony beyond the scope of the issue of whether there were four million (4,000,000) tons of "recoverable bituminous coal", as defined in the agreement, is grounds for reversal because it tended to divert the jury from the issue and confused or misled them.

A trial court may properly exclude evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of issues or misleading the jury. U.S. v. Hively, 547 F.Supp. 318 (M.D.Pa.1982); Belmont Industries, Inc. v. Bethlehem Steel Corp., 62 F.R.D. 697 (1974), affirmed 512 F.2d 434 (3 Cir.1975); Short v. Allegheny Trust Co., 330 Pa. 55, 198 A. 793 (1938); Whistler Sportswear, Inc. v. Rullo, 289 Pa.Super. 230, 433 A.2d 40 (1981). However, "prejudice" for the purposes of this rule, does not mean detrimental to a party's case, but rather, an undue tendency to suggest a decision on an improper basis. Whistler, supra. In Pennsylvania, the trial judge has broad discretion regarding the admission of potentially misleading and confusing evidence. Bowers v. Garfield, 382 F.Supp. 503 (E.D.Pa.1974), affirmed 503 F.2d 1398 (3 Cir.1974).

Appellant alleges error in the admission of three documents. The first document was a memorandum, dated March 27, 1979, from the Treasurer of Peoples to the chairman of the Board of Peoples. A portion of it entitled Reserves stated, "In place reserves of bituminous seam coal are estimated to exceed 6,000,000 tons." A second memorandum, dated February 26, 1979, stated, I concur with their reserve [Daset's] estimate of 5.5 million raw tons in place contained in a total of 4,107 surface acres.... ⁵ The court also admitted another document which showed that the appellant allocated the write off of the mineral rights of the coal leases using a figure of six million two hundred thousand (6,200,000) tons.

Appellant argues that because these documents all mentioned amounts of coal in excess of that warranted, they were highly prejudicial and as such had a tendency to compel an improper decision. Further Twin Oaks asserts that this testimony was irrelevant because neither estimates of coal reserves or in place coal nor "write off figures" are germane to the warranty of the amount of "recoverable bituminous coal", as defined in the...