PRESENT: Hassell, C.J., Keenan, Koontz, Lemons, Goodwyn, JJ.,
and Carrico and Russell, S.JJ.
POCAHONTAS MINING LIMITED LIABILITY COMPANY
v. Record No. 071608
CNX GAS COMPANY, LLC
OPINION BY
JUSTICE BARBARA MILANO KEENAN
September 12, 2008
GEOMET OPERATING COMPANY, INC.
v. Record No. 071609
CNX GAS COMPANY, LLC
FROM THE CIRCUIT COURT OF BUCHANAN COUNTY
Nicholas E. Persin, Judge Designate
In this appeal, we consider whether the provisions in a
lease granting to a lessee exclusive rights in coalseam gas on
the lessor’s property also granted to the lessee the exclusive
right to construct and maintain pipelines and structures to
transport any gas over the lessor’s property.
Pocahontas Mining Limited Liability Company (Pocahontas)
is the owner of a tract of land consisting of over 20,000
acres (the property) located partially in Buchanan and
Tazewell Counties, and partially in West Virginia. In 1998,
Pocahontas 1 entered into a lease (the 1998 lease) with
Pocahontas Gas Partnership (PGP) granting to PGP rights in the
1
The entity named in the lease was Pocahontas Mining
Company Limited Partnership, L.L.P., which later became
Pocahontas Mining Limited Liability Company.
coalseam gas located beneath the surface of the property. The
relevant granting provisions of the lease (the granting
clause) provided that:
Lessor grants, leases and lets exclusively unto Lessee
any and all rights it has to all of the coalseam gas,
including, but not limited to, coalbed methane gas,
coalbed gas, methane gas, gob gas, occluded natural gas
in any formation or other naturally occurring gases
contained in or associated with any coalseam lying below
the base of the Tiller seam and all zones in
communication therewith and all associated natural gas
and other hydrocarbons contained therein and all gas
originating or produced from coalseam to coalseam
(hereinafter collectively referred to as “coalseam gas”
or “coalbed methane”), underlying [the property] together
with any and all rights necessary or convenient to
develop, produce, market and sell said coalseam gas
including, but not limited to, the exclusive rights of
exploring, drilling, producing, gathering, transporting,
and selling the coalseam gas, the rights to construct and
maintain all pipelines, tanks, structures, and utility
lines that Lessee may deem necessary and convenient for
the production and/or transportation of coalseam gas or
other gas, whether or not owned, leased, or produced by
Lessee, from this and other lands, whether or not owned
or leased by Lessee . . . .
Further, the 1998 lease had a clause addressing Pocahontas’
reservation of certain rights that provided:
Except as granted and leased herein, there is excepted
and reserved to Lessor the entire ownership and control
of the lands included herein and the oil, gas, coal,
stone, sand, water, timber, and other minerals and
products therein and thereon, with the right to use and
dispose of the same for all purposes other than those for
which this Lease is made except as such ownership and
control may be leased to other parties by other
instruments.
In 2006, Pocahontas and GeoMet Operating Co., Inc.
(GeoMet) entered into a right of way agreement (the right of
2
way agreement), in which Pocahontas granted to GeoMet the
exclusive right to construct, operate, and maintain a pipeline
to transport natural gas across, through, upon, over, and
under a portion of the property. In accordance with the right
of way agreement, GeoMet began to construct a pipeline to
transport natural gas. Shortly thereafter, agents of CNX Gas
Company, L.L.C. (CNX), PGP’s successor in interest under the
1998 lease, installed gates and prevented representatives of
GeoMet or Pocahontas from obtaining access to the property. 2
GeoMet and Pocahontas filed a complaint in the Circuit
Court of Buchanan County (the circuit court) seeking a
declaratory judgment interpreting the respective rights of
GeoMet, Pocahontas, and CNX under the 1998 lease and the right
of way agreement. GeoMet and Pocahontas also sought an
injunction to prevent CNX from blocking access to the
property. CNX filed a counterclaim seeking a declaratory
judgment of the parties’ rights under the 1998 lease and the
right of way agreement. 3
The parties filed cross motions for summary judgment. In
May 2007, the circuit court entered an order (the May order)
2
Although CNX was not a party to the 1998 lease, CNX is
the successor in interest to PGP, the named lessee. For
purposes of this opinion, we will refer to the rights granted
under the 1998 lease as rights granted to CNX.
3
Additionally, CNX sought adjudication of its rights
under a deed of easement it entered into with Pocahontas in
1998.
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granting CNX’s motion for summary judgment. In that order,
the circuit court held that the 1998 lease was unambiguous and
that all the rights CNX possessed under the lease were
exclusive, including the rights to construct and maintain all
pipelines and all structures on the property and to transport
coalseam gas or other gas on, over, under, or through the
property. The circuit court ordered GeoMet to remove its
pipeline from the property and to cease its transportation of
coalseam gas or other gas on, over, under, or through the
property.
GeoMet and Pocahontas appealed the injunctive provisions
of the May order to this Court under Code § 8.01-626.
Concluding that the May order contained injunctive relief that
CNX did not request, this Court vacated the portion of the
order granting injunctive relief and remanded the case to the
circuit court. The circuit court later certified the
remaining provisions of the May order to this Court for review
under the interlocutory appeal procedures of Code § 8.01-
670.1. In accordance with the circuit court’s certification,
GeoMet and Pocahontas seek review in this Court of those
remaining provisions in the circuit court’s award of summary
judgment.
GeoMet and Pocahontas (collectively, GeoMet) argue that
the terms of the 1998 lease are unambiguous. GeoMet asserts
4
that under a plain reading of the lease, the term
“exclusively” in the phrase “Lessor grants, leases and lets
exclusively unto Lessee” refers only to the rights to the
coalseam gas estate. Thus, GeoMet contends that in the 1998
lease, Pocahontas granted to CNX exclusive rights to the
coalseam gas, “together with” non-exclusive “rights necessary
or convenient to develop, produce, market and sell said
coalseam gas.”
GeoMet cites additional language in the 1998 lease in
support of its position that some of the rights granted in the
lease are exclusive, while other rights granted are non-
exclusive. GeoMet points to the language granting “the
exclusive rights of exploring, drilling, producing, gathering,
transporting, and selling the coalseam gas, the rights to
construct and maintain all pipelines, tanks, structures, and
utility lines. . . .” (emphasis added). GeoMet contends that
the omission of the term “exclusive” with respect to the
rights to construct and maintain pipelines, tanks, structures,
and utility lines indicates that those rights granted to CNX
are not exclusive rights.
In response, CNX agrees that the 1998 lease is
unambiguous, but contends that under a plain reading of the
lease, all the rights granted in the lease are exclusive to
CNX. In support of its argument, CNX cites to the lease
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language that “[l]essor grants, leases and lets exclusively
unto [l]essee,” and argues that the term “exclusively” governs
all the rights granted to CNX in the lease. CNX further
contends that its interpretation of the term “exclusively”
does not conflict with other terms of the lease because the
sole purpose of the lease was to grant to CNX exclusive
rights, including the exclusive right to transport gas from
any source.
Alternatively, CNX argues that if the lease terms do not
unambiguously grant to CNX such exclusive rights, then the
disputed lease language must be considered ambiguous and the
case must be remanded to the circuit court for the receipt of
parol evidence concerning the parties’ intent when the lease
was executed. We disagree with CNX’s arguments.
In our analysis of the lease terms, we rely on
established principles of contract interpretation. The
question whether a contract is ambiguous presents an issue of
law. Virginia Elec. & Power Co. v. Northern Virginia Reg’l
Park Auth., 270 Va. 309, 315, 618 S.E.2d 323, 326 (2005);
Video Zone, Inc. v. KF&F Props. L.C., 267 Va. 621, 625, 594
S.E.2d 921, 923 (2004); Utsch v. Utsch, 266 Va. 124, 129, 581
S.E.2d 507, 509 (2003); Eure v. Norfolk Shipbuilding & Drydock
Corp., 263 Va. 624, 631, 561 S.E.2d 663, 667 (2002).
Accordingly, on appeal, we review the circuit court’s
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interpretation of the disputed lease provisions de novo.
Virginia Elec. & Power Co., 270 Va. at 315, 618 S.E.2d at 326;
Video Zone, Inc., 267 Va. at 625, 594 S.E.2d at 923; Utsch,
266 Va. at 129, 581 S.E.2d at 509; Eure, 263 Va. at 631, 561
S.E.2d at 667. We do not accord any deference to the circuit
court’s resolution of this question of law because we are
afforded the same opportunity as the circuit court to
interpret the terms of the parties’ contract. Video Zone,
Inc., 267 Va. at 625, 594 S.E.2d at 923; Pyramid Dev., L.L.C.
v. D&J Assocs., 262 Va. 750, 754, 553 S.E.2d 725, 727 (2001).
A court’s primary focus in considering disputed
contractual language is to determine the parties’ intention,
which should be ascertained, whenever possible, from the
language the parties employed in their agreement. Flippo v.
CSC Assocs. III, L.L.C., 262 Va. 48, 64, 547 S.E.2d 216, 226
(2001); Langman v. Alumni Ass’n of the Univ. of Va., 247 Va.
491, 498-99, 442 S.E.2d 669, 674 (1994); Camp v. Camp, 220 Va.
595, 597, 260 S.E.2d 243, 245 (1979). An ambiguity exists
when the contract’s language is of doubtful import, is
susceptible of being understood in more than one way or of
having more than one meaning, or refers to two or more things
at the same time. Video Zone, Inc., 267 Va. at 625, 594
S.E.2d at 923; Tuomala v. Regent Univ., 252 Va. 368, 374, 477
S.E.2d 501, 505 (1996); Galloway Corp. v. S.B. Ballard
7
Constr., 250 Va. 493, 502, 464 S.E.2d 349, 355 (1995). The
mere fact that the parties disagree about the meaning of the
contract’s terms is not evidence that the contract language is
ambiguous. Pocahontas Mining Ltd. Liab. Co. v. Jewell Ridge
Coal Corp., 263 Va. 169, 173, 556 S.E.2d 796, 771 (2002);
Galloway, 250 Va. at 502, 464 S.E.2d at 354; Wilson v.
Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984).
In determining whether disputed contractual terms are
ambiguous, we consider the words employed by the parties in
accordance with their usual, ordinary, and popular meaning.
Video Zone, Inc., 267 Va. at 626, 594 S.E.2d at 924; Haisfield
v. Lape, 264 Va. 632, 637, 570 S.E.2d 794, 796 (2002);
Pocahontas Mining Ltd. Liab. Co., 263 Va. at 173, 556 S.E.2d
at 772. No word or phrase employed in a contract will be
treated as meaningless if a reasonable meaning can be assigned
to it, and there is a presumption that the contracting parties
have not used words needlessly. City of Chesapeake v. States
Self-Insurers Risk Retention Group, Inc., 271 Va. 574, 578,
628 S.E.2d 539, 541 (2006); Westmoreland-LG&E Partners v.
Virginia Elec. & Power Co., 254 Va. 1, 11, 486 S.E.2d 289, 294
(1997). Further, the omission of a particular term from a
contract is evidence that the parties intended to exclude that
term. Bentley Funding Group, L.L.C. v. SK&R Group, L.L.C.,
269 Va. 315, 330, 609 S.E.2d 49, 56 (2005); First Nat’l Bank
8
v. Roy N. Ford Co., 219 Va. 942, 946, 252 S.E.2d 354, 357
(1979).
In ascertaining the parties’ intention regarding specific
contract provisions, we consider the document as a whole.
American Spirit Ins. Co. v. Owens, 261 Va. 270, 275, 541
S.E.2d 553, 555 (2001); Lansdowne Development Co. v. Xerox
Realty Corp., 257 Va. 392, 401, 514 S.E.2d 157, 161 (1999);
Westmoreland-LG&E Partners, 254 Va. at 11, 486 S.E.2d at 294;
Langman, 247 Va. at 498-99, 442 S.E.2d at 675. When the
writing, considered as a whole, is clear, unambiguous, and
explicit, a court asked to interpret such a document should
look no further than the four corners of the instrument.
Virginia Elec. & Power Co., 270 Va. at 316, 618 S.E.2d at 326;
Langman, 247 Va. at 498, 442 S.E.2d at 675; Trailsend Land Co.
v. Virginia Holding Corp., 228 Va. 319, 325, 321 S.E.2d 667,
670 (1984).
Applying these principles, we conclude that the disputed
lease provisions are unambiguous. By selectively identifying
certain rights as “exclusive,” while omitting any reference to
the term “exclusive” in describing other rights, the lease
language signifies the parties’ clear intention that only
some, rather than all, the stated rights are exclusively
granted to CNX. The lease gives CNX exclusive rights to the
coalseam gas estate, including the exclusive rights of
9
exploration, drilling, production, gathering, transportation,
and sale of the coalseam gas. The lease also grants to CNX
non-exclusive rights, including the right to construct and
maintain pipelines and other facilities necessary and
convenient for the production and transportation of the
coalseam gas, and of other gas from whatever source.
Notably, the language in the lease granting to CNX rights
to construct and maintain pipelines does not limit Pocahontas’
right to use the property for those purposes, except to
require that Pocahontas permit CNX to construct and maintain
“all pipelines, tanks, structures, and utility lines that
[CNX] may deem necessary and convenient” for the production
and transportation of the coalseam gas or other gas. The
language at issue merely details CNX’s right to erect
pipelines and other facilities and to use those pipelines and
facilities for the purposes described in the lease.
The lease language is not rendered ambiguous by the
parties’ use of the term “exclusively,” which appears at the
beginning of the disputed language. The parties’ inclusion of
this term merely clarified that Pocahontas granted exclusively
to CNX all the rights to the coalseam gas underlying the
property. CNX’s more expansive interpretation of the term
“exclusively” is unavailing, because acceptance of CNX’s
position would impermissibly require us to treat as
10
meaningless and redundant the lease’s later designation of
particular rights as “exclusive.” See States Self-Insurers,
271 Va. at 578, 628 S.E.2d at 541; Westmoreland-LG&E Partners,
254 Va. at 11, 486 S.E.2d at 294.
Viewed in this context, the absence of a term denoting
exclusivity in the description of CNX’s “rights to construct
and maintain all pipelines” is significant. Plainly, by
omitting any reference to an exclusive right in addressing the
subject of pipelines on the leased property, the parties
expressed their intent that such rights of CNX would not be
exclusive. 4 See Bentley Funding Group, 269 Va. at 330, 609
S.E.2d at 57; First Nat’l Bank, 219 Va. at 946, 252 S.E.2d at
357.
The opposite conclusion urged by CNX is additionally
unpersuasive because that conclusion would render inoperative
Pocahontas’ reservation of rights to the property for such
purposes as the development of oil and non-coalseam gas, which
would have to be transported from the property through
pipelines. Further, under CNX’s view of the lease language,
Pocahontas would be precluded from engaging in any activity
4
CNX also argues that in determining the parties’ intent,
we should consider a memorandum of lease that was executed
contemporaneously with the 1998 lease. However, because we
determine that the 1998 lease was unambiguous, we limit our
consideration to the four corners of that document. See
Virginia Elec. & Power Co., 270 Va. at 316, 618 S.E.2d at 326;
Langman, 247 Va. at 498, 442 S.E.2d at 674.
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that was “necessary or convenient” for CNX’s utilization of
its interest in the leasehold property, irrespective whether
Pocahontas’ activities actually caused CNX to suffer any
inconvenience or other difficulty. Such a construction would
effect a sweeping evisceration of Pocahontas’ other production
rights in the property, in contravention of Pocahontas’
express reservation of rights in the lease.
In sum, the clear purpose of the lease was to allow CNX
to produce, transport, and sell the coalseam gas obtained from
the property, and to transport “other gas” from whatever
source over Pocahontas’ property. The disputed lease
provisions protect CNX’s rights to take such actions as are
necessary and convenient to conduct these activities, but do
not permit CNX to prevent other uses of the land that do not
affect CNX’s exercise of its stated lease rights.
For these reasons, we will reverse the circuit court’s
order declaring the parties’ rights under the 1998 lease and
remand the case for such further action as may be required
consistent with the principles expressed in this opinion.
Reversed and remanded.
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