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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