Triple 7 Commodities, Inc. v. High Country Mining, Inc.

857 S.E.2d 403

TRIPLE 7 COMMODITIES, INC., Defendant/Counterclaim Plaintiff Below, Petitioner

v.HIGH COUNTRY MINING, INC., Woodrow W. Church, and Darren J. Spencer, Plaintiffs/Counterclaim Defendants Below, Respondents

No. 20-0155

Supreme Court of Appeals of West Virginia.

Submitted: March 2, 2021

Filed: April 16, 2021

Nicholas S. Preservati, Esq., Nicholas P. Mooney, Esq., Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Counsel for Petitioner.

William H. Sanders, III, Esq., Sanders & Austin, Princeton, West Virginia, Counsel for Respondents.

WOOTON, J.:

This is an appeal from an order of the Circuit Court of Mercer County appointing a special commissioner to execute a reformation deed in consummation of the parties’ Confidential Settlement Agreement and Mutual Release (the "Agreement") and dismissing the action in its entirety. The circuit court found that the failure of respondents High Country Mining, Woodrow W. Church, and Darren J. Spencer (collectively "High Country") to timely release the notice of lis pendens pertaining to the action, as required under the Agreement, did not constitute a material "first breach" of the Agreement, and that High Country did not waive its right to enforcement of the Agreement's terms. The court further found that the Agreement and its subsequent extensions were neither procedurally nor substantively unconscionable.

After careful review of the briefs of the parties, their oral arguments, the appendix record and the applicable law, we find that the circuit court committed no error in enforcing the Agreement and subsequent extensions by appointing a special commissioner to execute a reformation deed pursuant to the Agreement's terms and dismissing the action in its entirety. We therefore affirm the circuit court's October 2, 2019 order.

I. FACTS AND PROCEDURAL HISTORY

In 2016, petitioner Triple 7 Commodities, Inc. ("Triple 7") entered into a joint venture agreement with High Country for the purpose of taking over Wellston Coal's mining operations; the joint venture agreement provided that its purpose was to "perform[ ] and complet[e] the purchase of Wellston Coal property and sales of contracts to end buyers[.]" The agreement further provided for the parties to share profits on a 51/49 basis in favor of Triple 7. Subsequent to execution of this agreement, Triple 7 acquired a deed from Wellston for its mining properties and mineral interests, but the deed did not make High Country a co-grantee as allegedly contemplated under the joint venture agreement.

High Country filed the instant action seeking reformation of the deed making it a co-grantee and therefore co-owner of the Wellston minerals and permits. Triple 7 filed a counterclaim alleging breach of fiduciary, contractual, and statutory obligations. The case was litigated for two and a half years at which time the parties agreed to a settlement, which was memorialized in a Confidential Settlement Agreement and Mutual Release dated December 1, 2018.

THE SETTLEMENT AGREEMENT

Paragraph 3.1 of the Agreement provided that Triple 7 was to pay High Country $600,000 within sixty days of the date of the Agreement in "full and final settlement of all Claims[.]" Paragraph 3.3 of the Agreement specifically provided that if Triple 7 timely paid the agreed settlement proceeds,

the Parties agree that there will not be a reformation of the Deed to include High Country ... as a co-grantee ... to the Deed for any reason[ ] ... [and that] Triple 7 will continue to own one hundred percent (100%) of the rights conveyed to Triple 7, its successors and assigns, in the Deed[ ] ... [and] all mining-related permits for the mineral rights, which are the subject of, and defined in the Deed[.]

If, however, Triple 7 failed to make timely payment of the settlement proceeds, Paragraph 3.2 contained a default provision, which provided for reformation of the deed in lieu of payment of the settlement proceeds:

3.2 Non-Payment of Settlement Payment. If the Settlement Payment is not made within sixty (60) calendar days of the Effective Date of this Agreement, Triple 7 agrees to a reformation of the Deed to include High Country [ ] as a co-grantee of forty-nine percent (49%) of the rights that were conveyed, sold, and granted to Triple 7 as part of the Deed between Triple 7 and Wellston Coal, LLC ... [and] to cooperate and assist High Country with its attempt(s) to be added as a co-grantee of forty-nine percent (49%) to any mining-related permits[.]

(hereinafter the "default reformation provision"). Pertinent to the issues herein, the Agreement further specifically required High Country to release a notice of lis pendens filed pertaining to the action:

5. Discharge and Release of Liens/Lis Pendens. Within fifteen (15) calendar days of the Effective Date of this Agreement , High Country ... agree[s] to release and discharge any and all liens or claims of title filed against the Deed, the mining-related permits or the mineral rights which are the subject of, and defined in, the Deed including, without limitation, the Notice of Lis Pendens, dated July 28, 2017 (filed July 31, 2017), and filed in the office of the Clerk of McDowell County, West Virginia in the Lis Pendens Book 0002, page 0292.

(emphasis added).

The Agreement also contained multiple release provisions. Paragraph 9.1 entitled "Mutual Releases of the Parties," provided that "[e]ffective upon receipt of Triple 7's Settlement Payment, " the parties "mutually, fully and forever, release one another ... from any and all Claims[.]" (Emphasis added).

Paragraph 9.2, entitled "High Country Releases," provided, however, that

[u]pon execution of this Agreement by all Parties , High Country ... "forever discharge[s], relinquish[es], disclaim[s] and/or release[s] any current or future claim or Claims to be a co-grantee or joint owner of the Deed; and any claim or Claims of ownership or title of the mining-related permits, the mineral rights ... or any other rights conveyed ... through the Deed.

(emphasis added). The Agreement further provided that the parties agreed to dismiss the case with prejudice within five calendar days of "payment of the Settlement Payment[.]" Other pertinent provisions included 1) a stipulation that the parties’ "relationships and agreements" were to be "governed by this Agreement on a going forward basis as of the Effective Date"; 2) that the Agreement was "bargained for and entered into in good faith and as a result of arms-length negotiations"; 3) that the settlement amount "constitutes a fair and reasonable settlement" of the claims "based on [the parties’] respective individual and independent assessments, with the assistance and advice of counsel,¹ of the probability of success, the complexity, the delay in obtaining relief, and the expense of litigation"; and 4) that the Agreement "was made freely and was not made under duress or coercion." (Footnote added).

THE EXTENSIONS

Triple 7 did not pay the settlement amount by the original deadline. As a result, the parties negotiated three subsequent "extensions" to the Agreement, each of which increased the gross settlement proceeds and provided additional time for Triple 7 to tender the settlement proceeds. Each extension was accompanied by an "extension fee," an increase to the settlement amount, and a written "Extension[s] to Confidential Settlement Agreement and Mutual Release," incorporating the new terms and providing that all other terms remained as stated in the original Agreement. Although the parties’ briefs and the circuit court's order all differ slightly and/or are unclear as to the precise breakdown of extension fees and settlement proceeds as characterized in each extension, the parties appear essentially to agree that the initial settlement amount of $600,000 escalated to $3.6 million by way of additional settlement amounts and extension fees, only $900,000 of which was paid during the extension period.²

As indicated, each agreed extension was reduced to writing and signed by the parties, setting forth in detail the payments missed, the additional sums agreed upon, and the new deadlines. Each reiterated—in roughly equivalent language³ —that the settlement proceeds continued to be for the purpose of "resolv[ing] the claims" in the "Complaint and Counter-Complaint" and that if the new sums were not timely paid, High Country would "have all of the rights and remedies provided under paragraphs 3.1 and 3.2 of the original Settlement Agreement[,]" i.e. the default reformation provision.⁴ The extensions further stated that "all other terms and conditions of that Confidential Settlement Agreement and Mutual Release entered into between the Parties on December 1, 2018, shall remain in full force and effect."

The third extension included one critical change to the default reformation provision. Under this extension, in the event Triple 7 did not make timely payment of the settlement proceeds, High Country would be entitled to a reformation deed containing a 51/49 split of ownership in favor of High Country :

[I]n the event of any such default by Triple 7, High Country [ ] shall be entitled to have a Quitclaim Deed issued to them by William H. Sanders, III, acting as Special Commissioner ... with High Country [ ] being granted ownership of 51% of all mineral rights, permits and any and all rights and duties conveyed by said Deed from Wellston Coal ... and with Triple 7 being granted a forty-nine percent (49%) ownership share[.]

Triple 7 ultimately failed to make timely payment under the third extension and this litigation ensued.⁵

THE LIS PENDENS

As indicated above, the Agreement contained a provision requiring High Country to release its notice of lis pendens within fifteen days of the effective date of the Agreement. However, High Country failed to timely release its notice of lis pendens, which failure went unnoticed until Triple 7 was in the process of obtaining financing for one of the third extension's payments, at which time the...