United States v. Ohio

• Decision Date: 21 May 2015
• Docket Number: No. 13–4362.,13–4362.
• Citation: 787 F.3d 350
• Parties: UNITED STATES of America, Plaintiff–Appellant, v. State of OHIO; Buckingham Coal Company, Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

787 F.3d 350

UNITED STATES of America, Plaintiff–Appellant

v.State of OHIO; Buckingham Coal Company, Defendants–Appellees.

No. 13–4362.

United States Court of Appeals, Sixth Circuit.

Argued: Oct. 1, 2014.

Decided and Filed: May 21, 2015.

Amended: July 28, 2015.

ARGUED:John L. Smeltzer, United States Department of Justice, Washington, D.C., for Appellant. Daniel J. Martin, Office of the Ohio Attorney General, Columbus, OH, for Appellee State of Ohio. John J. Kulewicz, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, for Appellee Buckingham Coal. ON BRIEF:John L. Smeltzer, John S. Most, United States Department of Justice, Washington, D.C., for Appellant. Daniel J. Martin, Brian A. Ball, Office of the Ohio Attorney General, Columbus, OH, for Appellee State of Ohio. John J. Kulewicz, Michael G. Long, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, for Appellee Buckingham Coal.

Before: GUY, CLAY, and WHITE, Circuit Judges.

AMENDED OPINION

WHITE, Circuit Judge.

The United States appeals from the district court's denial of its motion for summary judgment and grant of the State of Ohio's and Buckingham Coal Company's (“Buckingham”) motions for summary judgment in this action challenging Ohio's right to lease Buckingham the right to mine coal lying beneath land acquired for a flood-control project. We REVERSE.

I.

In 1948, the United States and Ohio entered into a cost-sharing agreement to construct and maintain the Tom Jenkins Dam and Burr Oak Reservoir (“Project”) to control flooding in southeast Ohio's Hocking River Basin. The Project was designed and constructed by the United States Army Corps of Engineers (“Corps”), which determined that the Project required the acquisition of certain property interests under and surrounding the dam, including subsurface mineral rights. The property interests were acquired, the dam was built, and the Project operated within the parties' joint understandings until the instant disagreement.

In 2010, Ohio entered into two subsurface mineral leases with Buckingham, a coal company that owned and mined land surrounding the Project. The leases granted Buckingham rights to conduct mining activities within Project lands, specifically, to construct a corridor beneath Project lands to connect two non-Project parcels of land Buckingham already owned.¹ Buckingham was also granted the right to sell any coal extracted in the process.

When the Corps discovered that Ohio entered into the leases with Buckingham, it asked Ohio to cease all mining activities within Project lands until it could determine whether mining would place the Project at risk. The Corps took the position that Ohio was required to obtain the Corps' approval for any mining activity involving Project lands. Ohio and Buckingham initially complied with the Corps' request, but after Buckingham altered its mining plans and secured the final license it needed to commence mining, Ohio and Buckingham advised the Corps that Buckingham would no longer cease mining activity and that they did not believe that the cost-sharing agreement precluded the lease to Buckingham.

This prompted the United States to seek a temporary restraining order to prevent Ohio from permitting subsurface mining activities within Project lands. After a hearing, the district court denied the United States' motion for a temporary restraining order, finding that the United States had failed to show a likelihood of success on the merits. Also, relying on a defense expert's testimony, the district court determined that the Project would not be placed at risk by the leases.

The United States filed this action against Ohio and Buckingham seeking, among other things, a declaratory judgment that the terms of the cost-sharing agreement preclude Ohio (or any third party authorized by Ohio) from conducting mining activity in Project lands without prior approval of the Corps. After discovery, all parties moved for summary judgment; the district court determined that “none of the acts, agreements, reports, or plans that form the legal basis for the [Project] clearly and explicitly prohibit Ohio from leasing coal interests in project lands owned by the state.” Accordingly, it denied the United States' motion for summary judgment and granted both Ohio's and Buckingham's motions for summary judgment. The United States now appeals.

II.

We review the grant or denial of summary judgment de novo. Yellowbook Inc. v. Brandeberry, 708 F.3d 837, 843 (6th Cir.2013). We apply Ohio law to this contract dispute.² Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In Ohio, contract interpretation is a matter of law subject to de novo review on appeal. City of St. Marys v. Auglaize Cnty. Bd. of Comm'rs., 115 Ohio St.3d 387, 392, 875 N.E.2d 561, 568 (2007). “When confronted with an issue of contract interpretation, our role is to give effect to the intent of the parties.” Sunoco, Inc. v. Toledo Edison Co., 129 Ohio St.3d 397, 404, 953 N.E.2d 285, 292 (2011). “When the language of a written contract is clear, a court may look no further than the writing itself to find the intent of the parties,” and we may “presume that the intent of the parties is reflected in the language of the contract.” Id.; Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132, 509 N.E.2d 411, 413 (1987) (“The intent of the parties to a contract is presumed to reside in the language they chose to employ in the agreement.”).

In Ohio, a contract is “unambiguous” if a reviewing court “can give a definite legal meaning” to the contract's terms. Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 219, 797 N.E.2d 1256, 1261 (2003). “Common, undefined words appearing in a contract will be given their ordinary meaning unless manifest absurdity results, or unless some other meaning is clearly evidenced from the face or overall contents of the agreement.” Sunoco, 953 N.E.2d at 292–93 (citations omitted). If a term is ambiguous, parol evidence is admissible to interpret, but not to contradict, the express language of the contract. Ohio Historical Soc. v. Gen. Maint. & Eng. Co., 65 Ohio App.3d 139, 146, 583 N.E.2d 340, 344 (Ct.App. 10th Dist.1989) (citations omitted). “[I]f such an ambiguity is alleged, it must arise from the language of the contract itself and, therefore, courts will not admit parol testimony to construe an ambiguity forced into the contract to strain the apparent meaning of the language.” Fireman's Fund Ins. Co. v. Mitchell–Peterson, Inc., 63 Ohio App.3d 319, 328, 578 N.E.2d 851, 856 (Ct.App. 12th Dist.1989). Documents created after a contract's execution, however, are not subject to the parol-evidence rule. Am. Gen. Fin. v. Beemer, 73 Ohio App.3d 684, 687, 598 N.E.2d 144, 146 (Ct.App. 3d Dist.1991).

III.

The United States argues that the original cost-sharing agreement it entered into with Ohio, coupled with a Real Estate Planning Report created by the Corps, prohibit Ohio's lease of the coal rights to Buckingham. Specifically, the United States argues that a plain reading of documents memorializing Ohio's responsibilities relating to the Project shows that Ohio has an obligation to “retain” all Project lands—including subsurface coal interests—until the Project is decommissioned or the Corps gives “prior approval.” The United States also rejects Ohio's argument that a subsequent quitclaim deed it granted to Ohio relieved Ohio of its “duty to retain the coal.” To obtain relief, the United States must prevail on both issues.

A.

On September 22, 1947, pursuant to congressional authorization, Pub.L. No. 78–533, 58 Stat. 887, 898 (1944), the Corps prepared and submitted a Definite Project Report (“Project Report”), which set out a general framework for the Project.³ Although many details needed to be finalized, the Project's purpose was made clear: “Flood alleviation in Sunday Creek and other downstream valleys, and water conservation for water supply and recreational purposes.” According to the Project Report, “[t]he dominant factor in all considerations regarding the regulation of the reservoir is flood control.”

The Project Report acknowledged that mineable coal was present under Project lands and stated that operation of the Project would prevent mining: “Since operation of the reservoir will prevent mining of the underlying coal, it will be necessary to acquire all coal rights in the lands below elevation 740 feet, plus a horizontal barrier averaging 50 feet in width beyond this elevation for protection of adjacent coal measures from seepage.” Accordingly, the Project Report anticipated Ohio acquiring “all coal rights” below elevation 740 feet, and stated that doing so was “necessary” to effectuate the Project as envisioned by the Corps. To be sure, this necessity may have been premised at least in part on the fact that operation of the reservoir would impair the ability of the holder of the mineral rights to access the coal, but the Project Report clearly anticipated that there would be no coal mining on Project lands.

B.

In 1948, Ohio and the United States executed Articles of Agreement (“Agreement”), which expressly referenced and expanded on the Project Report. The Agreement set out each party's obligations for constructing and maintaining the Project, including cost allocation and division of long-term responsibilities. As the district court observed, the Agreement itself does not prohibit Ohio from leasing out coal rights. Indeed, the Agreement does not specifically address subsurface mineral rights at all. The United States argues that the Agreement requires Ohio to “retain” all “necessary” lands, which includes subsurface mineral rights, because Ohio was required to “acquire” lands “necessary” for the Project and Ohio's obligation to “acquire” the lands is useless without a corresponding obligation to also “retain” them. The Agreement echoes this understanding, expressly granting the United States the right to “enter upon [Project] lands to be retained by Ohio” and “to flood [Project] lands and/or...