NAT. IND. COAL OPERATORS v. Old Republic Ins. Co., Civ. A. No. 81-0094-A.

• Decision Date: 27 July 1982
• Docket Number: Civ. A. No. 81-0094-A.
• Citation: 544 F. Supp. 520
• Parties: NATIONAL INDEPENDENT COAL OPERATORS ASSOCIATION, INC., Clint Eagle Mining Company, Inc., Pigeon Branch Coal Co., Inc., Broyles and Dotson Coal Co., AKP Coal Company, Asher Coal Corporation, Everidge and Nease Coal Co., Inc., Pine Coal Corporation, and Clarence Maggard Coal Company, Incorporated, Plaintiffs, v. OLD REPUBLIC INSURANCE COMPANY and Bituminous Casualty Corporation, Defendants.
• Court: U.S. District Court — Western District of Virginia

544 F. Supp. 520

NATIONAL INDEPENDENT COAL OPERATORS ASSOCIATION, INC., Clint Eagle Mining Company, Inc., Pigeon Branch Coal Co., Inc., Broyles and Dotson Coal Co., AKP Coal Company, Asher Coal Corporation, Everidge and Nease Coal Co., Inc., Pine Coal Corporation, and Clarence Maggard Coal Company, Incorporated, Plaintiffs, v. OLD REPUBLIC INSURANCE COMPANY and Bituminous Casualty Corporation, Defendants.

Civ. A. No. 81-0094-A.

United States District Court, W. D. Virginia, Abingdon Division.

July 27, 1982.

John W. Palmore, Nave, Williams & Palmore, Lexington, Ky., Kenneth P. Asbury, Wise, Va., Earl M. Cornett, Hindman, Ky., for plaintiffs.

E. Olen Culler, Press, Fenderson, Culler, Jones & Waechter, Richmond, Va., Frank Cummings, Washington, D. C., for defendants.

MEMORANDUM OPINION

GLEN M. WILLIAMS, District Judge.

The plaintiffs bring this action for a Declaratory Judgment pursuant to 28 U.S.C. § 2201. The plaintiff, National Independent Coal Operators Association, Inc., is a non-stock, non-profit corporation organized and existing under the laws of the Commonwealth of Kentucky and authorized to conduct its business in the Commonwealth of Virginia, having as its members numerous coal mine operators engaged in the production and sale of bituminous coal and other related associations and business entities, with its headquarters in Washington, District of Columbia, and its executive offices in Richlands, Virginia. The plaintiffs, Clint Eagle Mining Company, Inc., and Pigeon Branch Coal Co., Inc., are Virginia corporations engaged in the business of coal mining within Virginia and insured for workmen's compensation liability by the defendant, Old Republic Insurance Company. The plaintiff, Broyles and Dotson Coal Co., is a sole proprietorship domiciled in Virginia, engaging in the business of coal mining within Virginia and insured for workmen's compensation liability by the defendant, Old Republic Insurance Company. The plaintiff, AKP Coal Company, is a West Virginia Corporation authorized to do business in Kentucky, engaged in the business of coal mining within Kentucky and insured for workmen's compensation liability by the defendant, Old Republic Insurance Company. The plaintiff, Asher Coal Corporation, is a Kentucky corporation engaged in the business of coal mining within Kentucky and insured for workmen's compensation liability by both the defendants Old Republic Insurance Company and Bituminous Casualty Company. The remaining plaintiffs, Everidge and Nease Coal Co., Inc., Pine Coal Corporation and Clarence Maggard Coal Company, Incorporated, are Kentucky corporations engaged in the business of coal mining within Kentucky and insured for workmen's compensation liability by the defendant Old Republic Insurance Company.

The defendant, Old Republic Insurance Company, a Pennsylvania corporation, is engaged in the business of insurance and is licensed to do business within Virginia and Kentucky. The defendant, Bituminous Casualty Corporation, an Illinois corporation, is engaged in the business of insurance and is licensed to do business within Virginia and Kentucky.

This court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because the plaintiffs are Virginia, Kentucky and West Virginia corporations or citizens, for diversity purposes, the defendants are Pennsylvania and Illinois corporations, and the amount in controversy exceeds ten thousand dollars. However, this court does not have jurisdiction on the basis of a federal question.

In order to have federal question jurisdiction, federal law must create the cause of action such that the federal question is an essential element of the plaintiff's complaint, or the construction and effect of a federal law must be in dispute. City National Bank v. Edmisten, 681 F.2d 942 at 945 (4th Cir. 1982). In the case at bar, while it is necessary to look to the Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. § 901 et seq. and its subsequent amendments to understand the liabilities for black lung benefits placed on the plaintiffs by Congress, the effects of those statutes are not in dispute. The main question in this case is whether the defendants insured the plaintiffs for the increased liability imposed on them by the Black Lung Benefits Reform Act of 1977, Pub.L. 95-239, 92 Stat. 95, and its resolution revolves around the interpretation of an endorsement contained in the contracts between the plaintiffs and the defendants. Thus, this case involves a contract dispute between the parties, not a federal question, and jurisdiction of this court is based solely on diversity of citizenship, 28 U.S.C. § 1332.

The plaintiffs have moved for summary judgment and the defendants have moved for partial summary judgment, alleging that part of the claims are either moot or not ripe for judicial determination. The motions were argued orally before the court on March 19, 1982.

In order to understand the dispute involved in this case and to narrow the issues to be resolved, it is necessary for the court to discuss the Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. § 901, et seq. (hereinafter 1969 Act) and its amendments.

Title IV of the 1969 Act was directed toward providing benefits to coal miners who were totally disabled due to pneumoconiosis which is commonly known as black lung disease. 30 U.S.C.A. § 901 (1971, Main Vol.) (amended 1972, 1978 and 1981). Under the 1969 Act, a miner or his surviving dependents could file a claim for benefits prior to December 31, 1972, and such a claim was to be paid by the Federal Government by the Secretary for the Department of Health, Education and Welfare and administered by the Social Security Administration, 30 U.S.C.A. §§ 921-923 (1971 Main Vol.) (amended 1972, 1978 and 1981). Claims filed on or before December 31, 1972 were called "Part B claims" and were to be paid from Federal revenues. 30 U.S.C.A. § 924(b). (1971, Main Vol.) (amended 1972 and 1978). Beginning January 1, 1973, all claims were to be filed pursuant to applicable state workmen's compensation law, and the responsibility for the payment of such benefits was to be borne by the last responsible coal operator-employer for whom the miner worked at least one year. 30 U.S. C.A. §§ 931-933 (1971, Main Vol.) (amended 1972, 1978, 1981). Claims filed after January 1, 1973, are called "Part C claims" regardless of when the injurious exposure occurred, and the administration of "Part C claims" was delegated to the Secretary of Labor. 30 U.S.C.A. § 931 (1971, Main Vol.) (amended 1972 and 1978). In the event a state workmen's compensation law did not provide adequate benefits, the Secretary of Labor was authorized to process and adjudicate claims and to assess liability against the appropriate coal mine operators pursuant to regulations adopted by the Department of Labor. No benefits were payable by an operator on account of death or total disability on account of pneumoconiosis, which did not arise, at least in part, out of employment in a mine when it was operated by such operator. 30 U.S.C.A. § 932(c) (1971 Main Vol.) (amended 1972, 1978 and 1981).

The 1969 Act contained three basic presumptions which favored claimants in establishing disability as a result of pneumoconiosis. The presumptions in substance are as follows:

(1) If a miner who is suffering or has suffered from pneumoconiosis was employed for ten (10) years or more in one (1) or more coal mines, there shall be a rebuttable presumption that his pneumoconiosis arose out of such employment;

(2) If a deceased miner was employed for ten (10) years or more in one or more coal mines and died from a respirable disease, there shall be a rebuttable presumption that his death was due to pneumoconiosis;

(3) If a miner suffered from a chronic dust disease of the lungs which is diagnosed as complicated pneumoconiosis, there is an irrebuttable presumption of total disability or death due to pneumoconiosis. 30 U.S.C. § 921(c) (1971 Main Vol.) (amended 1972, 1978 and 1981).

In 1972, Congress amended the 1969 Act by passage of the Black Lung Benefits Act of 1972, Pub.L. 92-303, 86 Stat. 150 (hereinafter 1972 Amendments). The 1972 Amendments extended the time to file a "Part B Claim" until June 30, 1973 for a miner and until December 31, 1973 for the survivors of deceased miners. 30 U.S.C. § 924 (1976) (amended 1978). Beginning January 1, 1974, the coal operators were to bear the liability for the payment of benefits resulting from claims filed after July 30, 1973, regardless of the date of injurious exposure. 30 U.S.C. §§ 931-933 (1976) (amended 1978 and 1981).

The 1972 Amendments redefined the term "total disability" to include the concept of "comparable employment" such that if the miner's pneumoconiosis "prevents him from engaging in gainful employment requiring the skills and abilities comparable to those of any employment in a mine or mines in which he previously engaged with some regularity and over a substantial period of time" then the miner is totally disabled and entitled to benefits under the Act. 30 U.S.C. § 902(f) (1976) (amended 1978 and 1981). The 1972 Amendments also made further provisions for establishing pneumoconiosis by relevant evidence which demonstrated the existence of a totally disabling pulmonary respiratory impairment even though an x-ray examination was inconclusive. 30 U.S.C. § 921(c)(4) (1976) (amended 1978 and 1981).

In view of the 1972 Amendments, the Department of Labor developed regulations concerning the type and scope of liability insurance coal operators were required to purchase in order to satisfy the statutory requirements. 20 C.F.R. §§ 726.201-726.213 (1981). An operator was also free to self-insure, and the regulations for self-insurers are found at 20 C.F.R. §§ 726.10-726.115 (1981).

If the coal operator chose to procure liability insurance rather than self-insure, regulation 20 C.F.R. § 726.203 (1981) required the following endorsement be attached...