Pocahontas Mining Co. v. JEWELL RIDGE COAL
| Decision Date | 11 January 2002 |
| Docket Number | Record No. 010411.,Record No. 010110 |
| Citation | 263 Va. 169,556 S.E.2d 769 |
| Court | Virginia Supreme Court |
| Parties | POCAHONTAS MINING LIMITED LIABILITY COMPANY v. JEWELL RIDGE COAL CORPORATION. Jewell Ridge Coal Corporation v. Pocahontas Mining Limited Liability Company. |
Elsey A. Harris, III (Chad S. Dotson; Mullins, Harris & Jessee on briefs), Norton, for appellant (Record No. 010110).
Stephen M. Hodges (Wade W. Massie; Penn, Stuart & Eskridge, on briefs), Bristol, for appellee (Record No. 010110).
Stephen M. Hodges (Wade W. Massie; Penn, Stuart & Eskridge, on briefs), Bristol, for appellant (Record No. 010411).
Elsey A. Harris, III (Chad S. Dotson; Mullins, Harris & Jessee on briefs), Norton, for appellee (Record No. 010411).
Present: CARRICO, C.J., LACY, HASSELL, KEENAN, KOONTZ, and LEMONS, JJ., and STEPHENSON, S.J.
Opinion by Senior Justice ROSCOE B. STEPHENSON, JR.
In these consolidated appeals from the same judgment, we determine whether the trial court erred in interpreting a provision of a lease.
Pocahontas Mining Limited Liability Company, formerly Pocahontas Mining Company Limited Partnership, L.L.P. (Pocahontas), filed a declaratory judgment proceeding against its lessee, Jewell Ridge Coal Corporation (Jewell Ridge), seeking to have the trial court declare the meaning of the following lease provision:
Upon final termination of this lease, whether on October 31, 2001, prior exhaustion of mineable and merchantable coal, or upon termination of any extensions which Lessee may have made as above provided, the premises shall revert to Lessor and there shall remain intact upon the premises the preparation plant with all fixed machinery and fixed equipment necessary for its operation including, without limitation, all outside tracks, power lines, conveyor belts and equipment, and tipples, but not including any moveable equipment aboveground or below-ground and not including any under-ground power lines, substations, conveyor belts or other moveable underground equipment and machinery.
Pocahontas alleged that this provision required Jewell Ridge to provide it with an intact and operational preparation plant upon termination of the lease. In its grounds of defense, Jewell Ridge contended that the provision did not require it to leave an operational plant and that Pocahontas "does not actually want" the plant. Following a bench trial, the court ruled that Jewell Ridge was obligated to restore "to functional capabilities and operational standards" all fixed machinery and fixed equipment at the preparation plant "at a level consistent with health, safety, and environmental laws, rules, and regulations ... in effect on the last date [Jewell Ridge] commercially operated the preparation plant." The court expressly ruled that the lease provision did not require the preparation plant and its fixed equipment to be "upgraded to current health, safety and environmental laws, rules and regulations."
Pocahontas and Jewell Ridge filed separate appeals. We awarded both appeals.
On November 1, 1941, the parties entered into a lease for the mining of coal on several thousand acres of land (the 1941 Lease). The initial term of the 1941 Lease was 30 years, and Jewell Ridge was given the right to renew the lease for an additional 30-year term.
In 1969, the parties agreed to amend and extend the lease for another 30 years (the 1969 Amendment), At the time of the 1969 Amendment, there existed on the property a preparation plant, known as Jewell 11. The plant was used to prepare coal for market by separating it from rock and other materials gathered during mining operations. As stated previously, the 1969 Amendment provided that, upon termination of the lease, "the premises shall revert to [Pocahontas] and there shall remain intact upon the premises the preparation plant with all fixed machinery and fixed equipment necessary for its operation."
In 1979, Jewell Ridge closed the Jewell 11 plant because the plant had become obsolete and uneconomical to operate. When the plant last operated, it was capable of processing coal from only one seam, known as the Raven seam. It was incapable of processing coal from other seams available in the area, and almost all of the Raven coal in the vicinity of the plant had been mined. Environmental problems, including water and air pollution from the plant's operation, also contributed to its closure.
When Jewell Ridge closed the plant in 1979, it drained the pumps and disconnected the power. Thereafter, the physical condition of the plant deteriorated, and various parts and pieces of equipment were removed or vandalized. The plant is no longer mechanically operational. Jewell Ridge did not terminate the lease; therefore, the lease expired on October 31, 2001.
Jewell Ridge, in its appeal, contends that the lease provision at issue only precluded it from removing the preparation plant and certain of its fixed equipment from the premises at the expiration of the lease. According to Jewell Ridge, the provision did not require it to operate, maintain, or repair the plant, or to leave an operational plant on the premises.
Pocahontas contends, on the other hand, that, by giving the language of the provision its plain meaning, Jewell Ridge was required to leave "an operational plant complete with equipment necessary for its operation." Further, in its appeal, Pocahontas contends that the trial court erred in ruling that the provision did not require that the plant be maintained and upgraded to current health, safety, and environmental laws, rules, and regulations. Pocahontas asserts that this ruling violates public policy and argues that a plant cannot be operated unless it complies with current laws, rules, and regulations.
It is well established that, when the terms of a contract are...
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