Schoene v. Mcelroy Coal Co.

MICHAEL SCHOENE; PATRICIA SCHOENE, Plaintiffs - Appellees, v. MCELROY COAL COMPANY, Defendant - AppellantandCONSOL ENERGY, INCORPORATED;CONSOL ENERGY COMPANY, Defendants.THE WEST VIRGINIA COAL ASSOCIATION (WVCA), Amicus Curiae.

No. 16-1788

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: May 11, 2017

June 29, 2018

UNPUBLISHED

Appeal from the United States District Court for the Northern District of West Virginia, at Wheeling. John Preston Bailey, District Judge. (5:13-cv-00095-JPB)

Before AGEE, KEENAN, and HARRIS, Circuit Judges.

Reversed in part, vacated in part, and remanded with instructions by unpublished opinion. Judge Agee wrote the opinion, in which Judge Keenan and Judge Harris joined.

ARGUED: Rodger L. Puz, DICKIE, MCCAMEY & CHILCOTE, P.C., Pittsburgh, Pennsylvania, for Appellant. Jeremy Matthew McGraw, BORDAS & BORDAS, PLLC, Moundsville, West Virginia, for Appellees. ON BRIEF: J.R. Hall, DICKIE, MCCAMEY & CHILCOTE, P.C., Pittsburgh, Pennsylvania, for Appellant. James G. Bordas, Jr., BORDAS & BORDAS, PLLC, Wheeling, West Virginia, for Appellees. J. Thomas Lane, Charleston, West Virginia, Carrie J. Lilly, BOWLES RICE LLP, Morgantown, West Virginia, for Amicus Curiae.

Unpublished opinions are not binding precedent in this circuit.

AGEE, Circuit Judge:

McElroy Coal Company ("McElroy") appeals the judgment of the district court in favor of Michael and Patricia Schoene on their common law and statutory claims seeking damages for injury to their land and residence caused by McElroy's mining activities. To assist our resolution of McElroy's appeal, we certified four questions to the Supreme Court of Appeals of West Virginia ("SCAWV"). Schoene v. McElroy Coal Co., 705 F. App'x 145 (4th Cir. 2017). The SCAWV has answered those questions, and its answers require that we reverse the district court's judgment as to the common law claim and vacate and remand the judgment as to the statutory claim. See generally McElroy Coal Co. v. Schoene, 813 S.E.2d 128 (W. Va. 2018).

I.

This case stems from subsidence damage to the surface estate and residence of the Schoenes, which occurred after McElroy engaged in authorized longwall mining of the subsurface estate in 2012. The Schoenes filed a complaint in West Virginia state court alleging a common law claim for loss of support to the surface estate. McElroy removed the case to the United States District Court for the Northern District of West Virginia, where the Schoenes amended their complaint to add a statutory claim¹ under the West Virginia Surface Coal Mining and Reclamation Act, W. Va. Code § 22-3-1 et seq..²

McElroy moved for partial summary judgment, alleging that a waiver clause contained in the 1902 deed to the Schoenes' property precluded relief on the common law claim and that the Act did not authorize all the relief the Schoenes sought as to the statutory claim. The Schoenes conceded the waiver provision barred their common law claim, but they defended their ability to obtain relief on the statutory claim. Notwithstanding the Schoenes' concession, the district court denied McElroy summary judgment on the common law claim, holding that the waiver provision in the deed was unenforceable against a claim of subsidence damage arising from longwall mining activity. See Schoene v. McElroy Coal Co., No. 5:13-CV-00095-JPB, 2016 WL 397636, at *3-5 & n.5 (N.D. W. Va. Jan. 29, 2016). In light of that holding, the district court also rejected McElroy's arguments concerning the scope of relief available to the Schoenes. Id. at *8.

Both claims proceeded to trial, where the parties presented evidence limited to the issue of quantifying the Schoenes' damages from McElroy's mining activities. The jury found that McElroy caused the value of the Schoenes' residence to be diminished from $184,000 to $90,000; that the cost to repair the residence was $350,000; that the cost to repair the land was $172,000; and that the appropriate compensation for the Schoenes'"annoyance, inconvenience, aggravation, and/or loss of use" was $25,000. The district court entered judgment on both claims in the amount of $547,000, which reflected $350,000 to repair the residence, $172,000 to repair the land, and $25,000 in compensatory damages. See Judgment Order 1-3, No. 5:13-CV-00095-JPB (Mar. 16, 2016), ECF No. 102.

McElroy noted a timely appeal, and we have jurisdiction under 28 U.S.C. § 1291.

II.

Where, as here, the Court exercises diversity jurisdiction over state law claims, West Virginia law applies. See K & D Holdings, LLC v. Equitrans, L.P., 812 F.3d 333, 338 (4th Cir. 2015). But the proper interpretations of contracts and statutes are questions of law that the Court reviews de novo. See Hosh v. Lucero, 680 F.3d 375, 378 (4th Cir. 2012) (statutes); Scarborough v. Ridgeway, 726 F.2d 132, 135 (4th Cir. 1984) (contracts).

A. Common Law Claim

West Virginia recognizes a common law claim for subsidence damage caused by coal mining. Winnings v. Wilpen Coal Co., 59 S.E.2d 655, 658 (W. Va. 1950). But West Virginia courts will also enforce an agreement in which parties clearly intend to waive liability for damage from subsidence. Rose v. Oneida Coal Co., 375 S.E.2d 814, 816 (W. Va. 1988).

The 1902 deed for the real property at issue in this case severed the coal rights (now owned by McElroy) from the rest of the estate (now owned by the Schoenes). The deed specifically states that the transferred coal rights include: "the right [to mine theland] without leaving any support for the overlying stratas and without liability for any injury which may result to the surface from the breaking of said strata." J.A. 121.

McElroy asserted in the district court and on appeal that this provision was enforceable under West Virginia law and barred the Schoenes from pursuing their common law claim because it waived their right to "any" surface support. Noting some tension in West Virginia case law concerning the enforcement of older deeds when damage resulted from modern mining techniques, we certified the following question to the SCAWV:

Under West Virginia law, does a deed provision (1902) transferring the right to mine coal "without leaving any support for the overlying stratas and without liability for any injury which may result to the surface from the breaking of said strata," J.A. 121, prohibit a surface estate owner from pursuing a common law claim for loss of support arising from subsidence caused by the extraction of coal from below the surface?

705 F. App'x at 146; see also id. at 149-50.

The SCAWV answered that question in the affirmative. 813 S.E.2d at 135-39. At the outset, the court acknowledged West Virginia's common law claim for subjacent support and a land owner's ability to waive that right. Id. at 135. Then, the court concluded that the waiver provision in the 1902 deed "expressly and unambiguously grants to the coal owner or lessee the right to mine the coal underneath the Schoenes' surface estate without leaving 'any' surface support and without common law liability for 'any' injury caused to the surface as a result of the mining." Id. at 136. Lastly, the SCAWV distinguished the cases the district court relied on to hold that the waiver was unenforceable, explaining that

[t]hose cases reject the notion of implying a right to directly destroy the surface in a manner not contemplated by typical mining methods. In contrast, the issue in this case is the express waiver of damages for loss of surface support, which is a natural incident of any underground mining regardless of the methodology.

Id. at 139.

In view of the SCAWV's answer to our certified question, the district court erred in allowing the Schoenes' common law claim to proceed. The waiver provision in the deed is enforceable under West Virginia law and prohibits the Schoenes from pursuing a common law claim for damages. We therefore reverse the district court and instruct it to enter final judgment on this claim in favor of McElroy.

B. Statutory Claim

Our resolution of the common law claim leaves only the question of the Schoenes' right to relief under the Act. When Congress enacted the Surface Mining Control and Reclamation Act, 30 U.S.C. § 1201 et seq., it endeavored to "strike a balance between the nation's interests in protecting the environment from the adverse effects of surface coal mining and in assuring the coal supply essential to the nation's energy requirements." Bragg v. W. Va. Coal Ass'n, 248 F.3d 275, 288 (4th Cir. 2001). But this federal law operates through cooperative federalism, in which states can enact their own laws consistent with or more strict than federal law. Id. at 297. When a state enacts such laws, the state law becomes the "exclusive" source of surface mining regulation within the state. Id.; see also 30 U.S.C. § 1255. West Virginia has enacted its own provisions regulating mining activity in the Act, which creates a right to relief for injuries to thesurface estate even where a landowner cannot pursue a common law claim against the coal mine operator.³

Three provisions of West Virginia law are relevant to this case—one based in statute and two in derivative regulations.⁴ West Virginia Code § 22-3-25(f) provides that "[a]ny person or property who is injured through the violation by any [coal mine] operator of any rule, order or permit issued pursuant to [the Act] may bring an action for damages, including reasonable attorney and expert witness fees." W. Va. Code § 22-3-25(f). In addition, regulations enacted pursuant to the Act provide that coal mine operators must "[c]orrect any material damage resulting from subsidence caused to surface lands, to the extent technologically and economically feasible, by restoring the land to a condition capable of maintaining the value and reasonably foreseeable uses which it was capable of supporting before subsidence." W. Va. Code R. § 38-2-16.2.c.1. Coal mine operators are also required to "[e]ither correct material damage resulting from subsidence caused to any structures...