Kingston Coal Co. v. Felton Min. Co., Inc.

• Decision Date: 21 February 1997
• Citation: 690 A.2d 284,456 Pa.Super. 270
• Parties: , 136 Oil & Gas Rep. 164 KINGSTON COAL COMPANY, a Corporation, Appellant, v. FELTON MINING COMPANY, INC., a Corporation, Clifford Felton, Kingston Veterans' and Sportsmens' Club, a Corporation, and Robert H. Malloy, Donald M. Johnston, Joseph Yarchak, Richard Lieberman, and Kevin Coleman, Appellees.
• Court: Pennsylvania Superior Court

Page 284

690 A.2d 284

456 Pa.Super. 270, 136 Oil & Gas Rep. 164

KINGSTON COAL COMPANY, a Corporation, Appellant, v. FELTON MINING COMPANY, INC., a Corporation, Clifford Felton Kingston Veterans' and Sportsmens' Club, a Corporation, and Robert H. Malloy, Donald M. Johnston, Joseph Yarchak Richard Lieberman, and Kevin Coleman, Appellees.

Superior Court of Pennsylvania.

Argued Jan. 30, 1997.

Filed Feb. 21, 1997.

Thomas J. Madigan, Pittsburgh, for appellant.

Ronald J. Bergman, Greensburg, for Felton Mining Co., and Clifford Felton, appellees.

James E. Kelley, Jr., Latrobe, for Kingston Veterans and Sportmens' Club, Malloy, Johnston, Yarchak, Lieberman and Coleman, appellees.

Before TAMILIA, SAYLOR and SCHILLER, JJ.

SAYLOR, Judge:

In this action involving the conversion of minerals, Kingston Coal Company (Appellant) has appealed from an order entered on July 16, 1996, in the Westmoreland County Court of Common Pleas granting summary judgment in favor of Felton Mining Company, Inc., Clifford Felton, Kingston Veterans' and Sportsmens' Club, Robert H. Malloy, Donald M. Johnston, Joseph Yarchak, Richard Lieberman, and Kevin Coleman (Appellees). We affirm.

In February of 1979, the Kingston Club and Felton Mining executed an undated lease agreement in which the former granted to the latter the right to "mine, remove and sell all of the coal" underlying certain portions of the Kingston Club's land. The lease provided that Felton Mining would pay the Kingston Club a royalty of $1.25 for each ton of coal it removed. Further, the lease provided that Felton Mining would perform land reclamation activities on some previously mined areas of Kingston Club's property. At the time it entered into the lease, the Kingston Club was unsure as to who owned the coal estate underneath its property.

Thereafter, Felton Mining applied for, and obtained, a coal mining permit from the Pennsylvania Department of Environmental Resources (DER), as required by law. In the application, Felton Mining averred that the coal in question was owned by the Kingston Club. On November 14, 1980, Joseph Yarchak, who was Financial Secretary of the Kingston Club at that time, learned that the coal estate was most likely owned by a local attorney, Harold Stewart. Thereafter, Yarchak notified James Kelley, the Kingston Club's attorney, of this information.

In turn, Kelly advised Felton Mining, in a hand-carried letter, that the Kingston Club was uncertain about the coal's ownership. The letter recommended, but did not demand, that the mining operations at issue cease until the coal's ownership was established. Despite this new information, the mining operation continued on the Kingston Club's land without interruption. Had a title search been performed at this time, Appellees would have learned that the coal was actually owned by Harold Stewart and Inez Doberneck. The DER was never notified of any uncertainty as to the coal's ownership, and Stewart was never contacted regarding the mining operation.

The coal mining activity at issue took place between November 1980 and May 1981, and the land reclamation project was pursued from 1981 to 1986. At the conclusion of the endeavor, Felton Mining had removed over 26,000 tons of coal from the Kingston Club's property and the Kingston Club had received $32,000.00 in royalties from the mined coal, plus the value of its reclaimed land.

In the first half of 1993, the ownership rights to the coal estate underlying the Kingston Club's land were transferred to Appellant, a corporation known as Kingston Coal Company. Later in that year, Kingston Coal learned that its coal had previously been mined by Appellees. On June 17, 1994, Appellant filed a complaint against Clifford Felton, Felton Mining and the Kingston Club, stating claims for conversion and civil conspiracy incidental to the conversion.

On March 31, 1995, Appellant filed an amended complaint against the Kingston Club in which it asserted a conversion claim and an unjust enrichment claim; the complaint also named as defendants various officers of the Kingston Club (Robert H. Malloy, Donald M. Johnston, Joseph Yarchak, and Richard Lieberman) and an employee of the Commercial Equity Management Corporation (Kevin Coleman). Commercial Equity Management Corporation and Penn-Laurel Associates, Inc. were joined as additional defendants by Appellees Felton and Felton Mining, but were never served; both are now presumed to be out of business.

Each of the Appellees moved for summary judgment asserting that Appellant's conversion action was barred by the two-year statute of limitations set forth in 42 Pa.C.S.A. § 5524(3). ¹ The trial court granted summary judgment in Appellees' favor, whereupon, Appellant filed this timely appeal.

On appeal, the issues for our review are as follows:

(1) Whether the trial court erred by holding that the discovery rule exception to the statute of limitations was inapplicable to this case?

(2) Whether the trial court erred by concluding that Appellees' intentional misrepresentation to the Department of Environmental Resources, in applying for a mining permit, was not an independent, affirmative act of concealment sufficient to toll the statute of limitations in this action?

We will address these issues seriatim.

Initially, we note our well-established standard in reviewing the grant of summary judgment, as follows:

On review of an order granting summary judgment, we must determine whether the moving party has established that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. In making this determination, we must examine the record in the light most favorable to the non-moving party, who is entitled to the benefit of all reasonable inferences. All doubts as to the existence of a factual dispute must be resolved in favor of the non-moving party and the entry of summary judgment is appropriate only in the clearest of cases.

Brooks v. Sagovia, 431 Pa.Super. 508, 511, 636 A.2d 1201, 1202 (1994) (citations omitted). "Summary judgment may properly be entered in favor of a defendant when the plaintiff's cause of action is barred by the statute of limitations." Colonna v. Rice, 445 Pa.Super. 1, 4, 664 A.2d 979, 980 (1995), alloc. denied, 544 Pa. 599, 674 A.2d 1065 (1996), quoting Brooks v. Sagovia, supra.

First, Appellant contends that the trial court erred in concluding that this cause of action was barred by the statute of limitations. The time period within which a litigant must file an action for conversion is delineated in 42 Pa.C.S.A. § 5524(3), which provides that "[a]n action for taking, detaining, or injuring personal property, including actions for specific recovery thereof," must be commenced within two years of the taking or injury. There is a strong policy in Pennsylvania courts favoring the strict application of statutes of limitations. E.J.M. v. Archdiocese of Philadelphia, 424 Pa.Super. 449, 458, 622 A.2d 1388, 1393 (1993). Statutes of limitations are designed to effectuate three purposes: (1) preservation of evidence; (2) the right of potential defendants to repose; and (3) administrative efficiency and convenience. See Anthony v. Koppers Co., Inc., 284 Pa.Super. 81, 106-107, 425 A.2d 428, 441 (1980), rev'd on other grounds, 496 Pa. 119, 436 A.2d 181 (1981).

As a matter of general rule, a party asserting a cause of action is under a duty to use all reasonable diligence to be properly informed of the facts and circumstances upon which a potential right of recovery is based and to institute suit within the prescribed statutory period. Thus, the statute of limitations begins to run as soon as the right to institute and maintain suit arises; lack of knowledge, mistake, or misunderstanding do not toll the running of the statute of limitations....

Pocono Intern. Raceway v. Pocono Produce, 503 Pa. 80, 84, 468 A.2d 468, 471 (1983) (citations omitted).

However, there are exceptions to the general rule. One such exception is a plaintiff's complete inability, due to facts and circumstances not within his control, to discover an injury despite the exercise of due diligence. This exception, known as the "discovery rule," was first enunciated by our Supreme Court in a coal conversion action, Lewey v. H.C. Fricke Coke Co., 166 Pa. 536, 31 A. 261 (1895). It has since been applied to many different types of actions. See Anthony v. Koppers Co., Inc., supra., 284 Pa.Super. at 89, 425 A.2d at 436.

In moving for summary judgment, Appellees contended, and the trial court agreed, that the two-year statute of limitations applicable to a conversion action barred Appellant's maintenance of this suit. In defending against the motion, Appellant claimed that the "discovery rule" announced in Lewey tolled the statute from running until the injury was actually discovered.

On appeal, Appellant argues that summary judgment was erroneously granted to Appellees because there exists a genuine issue of material fact as to whether, in the exercise of due diligence, discovery of the conversion was reasonably possible before expiration of the statutory period. The question of due diligence in discovering an injury, as it relates to a statute of limitations defense, is usually one for a jury's consideration. Citsay v. Reich, 380 Pa.Super. 366, 371, 551 A.2d 1096, 1099 (1988). However, where the facts are so clear that reasonable minds cannot differ as to whether the plaintiff should reasonably be aware that he has suffered an injury, the determination as to when the limitations period commences may be made as a matter of law. E.J.M. v. Archdiocese of Philadelphia, supra., 424 Pa.Super. at 455, 622 A.2d at 1391.

As this Court recently noted:

The "discovery rule" provides that where the existence of the injury is not known to the complaining party and such knowledge cannot reasonably be ascertained within the prescribed statutory period, the limitations period does not begin to run...