Pocahontas Mining Ltd. Liability Co. v. Jewell Ridge Coal Corp.

PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Koontz, and
Lemons, JJ., and Stephenson, S.J.

POCAHONTAS MINING LIMITED LIABILITY COMPANY

v. Record No. 010110

JEWELL RIDGE COAL CORPORATION
OPINION BY
SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
January 11, 2002

JEWELL RIDGE COAL CORPORATION

v. Record No. 010411

POCAHONTAS MINING LIMITED LIABILITY COMPANY

FROM THE CIRCUIT COURT OF BUCHANAN COUNTY
Keary R. Williams, Judge

In these consolidated appeals from the same judgment, we

determine whether the trial court erred in interpreting a

provision of a lease.

I

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 above-ground or
below-ground and not including any under-ground power
lines, substations, conveyor belts or other moveable
under-ground 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.

II

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 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

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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.

III

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

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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 clear and unambiguous, a court must give them their plain

meaning. American Spirit Insurance Co. v. Owens, 261 Va. 270,

275, 541 S.E.2d 553, 555 (2001); Bridgestone/Firestone v. Prince

William Square, 250 Va. 402, 407, 463 S.E.2d 661, 664 (1995). A

contract is not ambiguous simply because the parties to the

contract disagree about the meaning of its language. Dominion

Savings Bank v. Costello, 257 Va. 413, 416, 512 S.E.2d 564, 566

(1999). Rather, ambiguity arises when its language can be

understood in more than one way or refers to two or more things

at once. Westmoreland-LG&E Partners v. Virginia Power, 254 Va.

1, 11, 486 S.E.2d 289, 294 (1997); Doswell Ltd. Partnership v.

Virginia Power, 251 Va. 215, 222, 468 S.E.2d 84, 88 (1996).

When determining a contract's plain meaning, the words used are

given their usual, ordinary, and popular meaning. D.C. McClain,

Inc. v. Arlington County, 249 Va. 131, 135, 452 S.E.2d 659, 662

(1995).

We think the language in the subject lease provision is

clear and unambiguous. In giving the language its plain

meaning, we conclude that the trial court correctly ruled that

Jewell Ridge was obligated to leave a preparation plant that is

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intact, with all fixed machinery and equipment necessary for its

operation left on the premises. The word "intact" is defined as

"left complete or entire[,] . . . physically and functionally

complete[,] . . . [and] having no relevant component removed or

destroyed." Webster's Third New International Dictionary 1173

(1981). We think the term "necessary for [the plant's]

operation" plainly means that the fixed machinery and equipment

must be functional and capable of being run.

We also agree with the trial court's ruling that, while

Jewell Ridge was obligated to leave a functional plant, nothing

in the provision at issue required Jewell Ridge to upgrade the

plant to meet current health, safety, and environmental laws,

rules, and regulations. A "functional plant" is one that will

perform in a physical sense, but not necessarily in a legal

sense. If Pocahontas had wanted to require Jewell Ridge to

leave a preparation plant that complied with current laws,

rules, and regulations, it could have expressly provided for

such. It did not do so.

Pocahontas contends, however, that such a requirement is

implied because a plant cannot be operated unless it complies

with existing law. It is significant, however, that the lease

did not require Jewell Ridge to operate the plant until the

lease expired. If Jewell Ridge could cease operating the plant

during the lease term, it would be illogical to require it to

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upgrade the plant to meet current law requirements upon final

termination of the lease.

A court must interpret a contract as it is written. It

cannot make a new and different contract. Chawla v.

BurgerBusters, Inc., 255 Va. 616, 620, 499 S.E.2d 829, 831

(1998).

In reaching this conclusion, we reject Pocahontas'

assertion that the ruling by the trial court violates public

policy. The lease provision at issue contains no language

violative of public policy, and the cases cited by Pocahontas do

not support its assertion.

IV

In sum, we hold that the trial court correctly interpreted

the lease provision. Upon termination of the lease on October

31, 2001, Jewell Ridge was obligated to leave intact a

functional preparation plant. It was not required to upgrade

the plant to meet current health, safety, and environmental

laws, rules and regulations. In failing to leave a functional

plant, Jewell Ridge breached the contract.

Therefore, we will affirm the trial court's judgment with

one modification. If Pocahontas institutes an action for breach

of contract against Jewell Ridge, any damages for the breach

shall be determined as of October 31, 2001, the final

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termination date of the lease, and not as of 1979, the date

operation of the plant ceased.

Accordingly, the trial court's judgment will be modified

and affirmed.

Modified and affirmed, as modified.

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