McElroy Coal Co. v. Dobbs

• Decision Date: 12 November 2020
• Docket Number: No. 18-0135,No. 18-0134,18-0134
• Parties: MCELROY COAL COMPANY, a Corporation, Terry L. Dobbs and Catherine A. Dobbs, Defendants Below, Petitioners v. Gary R. DOBBS, Plaintiff Below, Respondent Terry L. Dobbs and Catherine A. Dobbs, Defendants Below, Petitioners v. Gary R. Dobbs, Plaintiff Below, Respondent
• Court: West Virginia Supreme Court

853 S.E.2d 620

MCELROY COAL COMPANY, a Corporation, Terry L. Dobbs and Catherine A. Dobbs, Defendants Below, Petitioners

v.Gary R. DOBBS, Plaintiff Below, Respondent

Terry L. Dobbs and Catherine A. Dobbs, Defendants Below, Petitioners

v.Gary R. Dobbs, Plaintiff Below, Respondent

No. 18-0134

No. 18-0135

Supreme Court of Appeals of West Virginia.

Submitted: September 4, 2019

Filed: November 12, 2020

Ancil G. Ramey, Esq., Stacey Richards-Minigh, Esq., Steptoe & Johnson PLLC, Huntington, West Virginia, William D. Wilmoth, Esq., Steptoe & Johnson PLLC, Wheeling, West Virginia, Counsel for Petitioner McElroy Coal Company.

H. Brann Altmeyer, Esq., Phillips, Gardill, Kaiser & Altmeyer PLLC, Wheeling, West Virginia, Counsel for Petitioner McElroy Coal Company.

Eric M. Gordon, Esq., Berry, Kessler, Crutchfield, Taylor & Gordon, Moundsville, West Virginia, Counsel for Petitioners Terry L. Dobbs and Catherine A. Dobbs.

Robert P. Fitzsimmons, Esq., Robert J. Fitzsimmons, Esq., Fitzsimmons Law Firm PLLC, Wheeling, West Virginia, Counsel for Respondent Gary R. Dobbs.

Michael J. Burkey, Esq., Linda Burkey, Esq., Burkey & Burkey, Cameron, West Virginia.

Armstead, Chief Justice:

In 1975, Lyle Dobbs died, and land he owned in Marshall County, West Virginia, passed to his wife and two sons, Petitioner Terry L. Dobbs and Respondent Gary R. Dobbs. The wife and sons conveyed a small parcel to the sons for the site of a slaughterhouse business. The remaining land, a home place and a pasture, was conveyed to one son, Terry Dobbs, and his wife, Petitioner Catherine A. Dobbs. The other son, Gary Dobbs, reserved the right to buy back the pasture land if Terry Dobbs died or if Terry and Catherine Dobbs decided to sell, assign, or otherwise dispose of the pasture land. In time, the brothers had a disagreement, and Gary Dobbs purchased the slaughterhouse property at auction. He later sold the slaughterhouse property.

Decades later, Terry and Catherine Dobbs entered into an option agreement with Petitioner McElroy Coal Company ("McElroy Coal") to either sell the pasture land or provide McElroy Coal a waiver of liability for McElroy Coal's mining operations. McElroy Coal chose a waiver and paid Terry and Catherine Dobbs more than $1.5 million for such waiver. When Gary Dobbs learned of this, he sued McElroy Coal and Terry and Catherine Dobbs in the Circuit Court of Marshall County. After discovery, the circuit court granted partial summary judgment, finding (a) that Gary Dobbs retained his right to purchase the pasture land and (b) that Terry and Catherine Dobbs triggered that right to purchase when they signed the McElroy Coal option agreement. McElroy Coal and Terry and Catherine Dobbs appealed.

Based on the record before us, the arguments of the parties, and the applicable law, we find that the circuit court's rulings were correct; therefore, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

This dispute begins with a 37-acre tract of land in Marshall County, West Virginia. Hannah Gorby acquired this tract in 1905. When her heirs sold it in August 1956, they reserved the minerals and the right to use the surface for mining activities. The heirs sold the mineral rights in 1960, and McElroy Coal eventually acquired some or all of them.

The surface estate (the "Gorby Surface Tract") passed to Lyle Dobbs, father of Terry and Gary Dobbs, in September 1956. In 1971, Lyle Dobbs and his wife sold 1.74 acres and kept the remaining 35.26 acres. Lyle Dobbs also owned an adjacent 60-acre tract where the family home was located (the "Home Place Tract").

Lyle Dobbs died in 1975, and his land passed to his widow, Pauline Dobbs, and his two sons by intestate succession. Pauline Dobbs and the sons disposed of the land in two deeds. The first deed, which was signed¹ in April and May 1976 , conveyed a 1.150-acre portion of the Gorby Surface Tract to Terry and Gary Dobbs. This 1.150-acre tract (the "Slaughterhouse Tract") was separated off so the sons could operate a slaughterhouse business on it, and the deed conveyed an easement for the sons and their "heirs and assigns" to use the remaining 34.11 acres of the Gorby Surface Tract (the "Pasture Tract") for water² and for the disposal of blood and manure.

The second deed, which was signed in June 1976 , conveyed the Home Place Tract and the Pasture Tract to Terry and Catherine Dobbs subject to the water and waste-disposal easements contained in the Slaughterhouse Tract deed. The reported consideration was $11,254.67. On the same day the second deed was signed , Terry and Catherine Dobbs and Gary Dobbs also signed an option agreement (the "1976 Option Agreement"), by which Gary Dobbs reserved the right to buy back the Pasture Tract for $4,000. Each of these instruments was recorded.

The 1976 Option Agreement is at the center of this case. It begins by reciting several matters: first , that Gary Dobbs and his wife, Jan Dobbs, conveyed the Pasture Tract to Terry and Catherine Dobbs; second , that Gary and Terry Dobbs were entering into a slaughterhouse business; and, third , that the Pasture Tract was subject to water and waste-disposal easements for the benefit of the slaughterhouse business. The 1976 Option Agreement further provides as follows:

NOW THEREFORE, in order that there may be continuity in the conduct of said business and that the heretofore described tract or parcel of land [the Pasture Tract] may be available for the use of said business, it being contiguous thereto and said 1.150 acre tract [the Slaughterhouse Tract] having been a part thereof and also in consideration of the sum of One Dollar ($1.00) paid by the said Gary R. Dobbs to the said first parties [Terry and Catherine Dobbs] ... and in the further consideration of the conveyance by the said Gary R. Dobbs of his undivided interest in the aforesaid described tract or parcel of land [the Pasture Tract] to said parties of the first part [Terry and Catherine Dobbs], it is therefore ,

AGREED, that in the event of the death of said Terry L. Dobbs, or in the event the said Terry L. Dobbs and Catherine A. Dobbs[ ] decide to sell, assign or otherwise dispose of the aforesaid described tract or parcel of land [the Pasture Tract], that the said Gary R. Dobbs, his heirs, devisees or assigns shall have the option to purchase said tract or parcel of land, for the full consideration of Four Thousand Dollars ($4,000.00).

(Emphasis added.)

The 1976 Option Agreement goes on to provide for notice in the event of a determination by Terry and Catherine Dobbs "to sell, assign, or otherwise dispose of" the Pasture Tract and to describe how "Gary R. Dobbs, his heirs, devisees, or assigns" must go about exercising the option.

Terry and Gary Dobbs operated the slaughterhouse business as a partnership. Then conflict arose, and Terry and Catherine Dobbs sued Gary and Jan Dobbs in 1979 to wind up the business. The circuit court deemed the Slaughterhouse Tract and various items of personal property to be partnership assets and ordered them to be sold at public auction. As the successful bidder, Gary Dobbs paid $47,500 for them. These proceeds were divided equally between the parties after payment of certain debts and subject to certain deductions as reimbursement between the parties. Gary Dobbs's deed for the Slaughterhouse Tract conveyed the water and waste disposal easements but said nothing about the 1976 Option Agreement. It did, however, recite that it conveyed "all of the interests of Gary R. Dobbs and Terry L. Dobbs ... together with the improvements and appurtenances thereunto belonging[.]"³

Gary Dobbs sold the Slaughterhouse Tract in 1996. The deed conveyed the water and waste disposal easements that benefit the Slaughterhouse Tract but reserved "a right of ingress, egress and regress for the grantor [Gary Dobbs], his heirs and assigns, over the existing gravel road way running from Cameron Ridge Road, in front of the slaughter house structure, to the property, abutting this 1.150 acres, owned by Terry L. Dobbs." The deed said nothing about the 1976 Option Agreement. It did, however, convey "all of their^{[4 ]} right, title and interest in and to" the Slaughterhouse Tract. After that, the Slaughterhouse Tract passed through other owners until McElroy Coal acquired it in 2008.

McElroy Coal also set its sights on Terry Dobbs's property. In August 2007, Terry and Catherine Dobbs signed a 90-day option agreement with McElroy Coal (the "2007 Option Agreement"). This agreement (which was later extended) gave McElroy Coal "the exclusive right or option to purchase" the Home Place Tract and the Pasture Tract. It provided that it would become "a legal and binding contract of purchase and sale" at McElroy Coal's option. It also contained the following language:

DUE DILIGENCE AND CLOSING: ... During the Option period, Optionee [McElroy Coal] shall advise Optionors [Terry and Catherine Dobbs] of any liens, encumbrances or deficiencies that the title examination discloses, which in the opinion of Optionee [McElroy Coal] must be removed, and within sixty (60) days after receipt of notice of such liens, encumbrances or deficiencies, Optionor [Terry and Catherine Dobbs] shall clear said title matters to the satisfaction of Optionee [McElroy Coal] or Optionee [McElroy Coal] may refuse, without liability, to complete the purchase of the optioned premises. In the event of any such title deficiencies, the period for closing shall be extended as necessary to accommodate Optionor's [Terry and Catherine Dobbs's] cure of any title defect. Thereupon Optionor [Terry and Catherine Dobbs] shall convey, or cause to be conveyed, good and marketable title to the Option Property above described or designated [the Home Place Tract and the Pasture Tract], to Optionee [McElroy Coal], or Optionee's [McElroy Coal's] nominees, designated affiliate, successors or assigns, by deed of general warranty, in form acceptable to Optionee [McElroy Coal], in its unlimited discretion; provided, however, that in the event

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