Barnwell v. Ark Land, LLC

CourtDistrict Court, W.D. Virginia
DecidedJuly 7, 2021
Docket2:20-cv-00011
StatusUnknown

This text of Barnwell v. Ark Land, LLC (Barnwell v. Ark Land, LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barnwell v. Ark Land, LLC, (W.D. Va. 2021).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA BIG STONE GAP DIVISION

DARRELL BARNWELL, ET AL., ) ) Plaintiffs, ) Case No. 2:20CV00011 ) and ) OPINION AND ORDER ) HARLAN LEE LAND, LLC, ET AL., ) By: James P. Jones ) United States District Judge Plaintiff-Intervenors, ) ) v. ) ) ARK LAND, LLC, ET AL., ) ) Defendants. )

Daniel R. Bieger, DAN BIEGER, PLC, Bristol, Tennessee, and David B. Jordan, DAVE B. JORDAN, P.C., Kingsport, Tennessee, for Plaintiffs; Bryson J. Hunter and Risa S. Katz-Albert, SPILMAN THOMAS & BATTLE, PLLC, Roanoke, Virginia, and Mark E. Heath, SPILMAN THOMAS & BATTLE, PLLC, Charleston, West Virginia, for Plaintiff-Intervenors; Grahmn N. Morgan and August T. Johannsen, DINSMORE & SHOHL LLP, Lexington, Kentucky, for Defendant Ark Land, LLC; James H. Price, LACY, PRICE & WAGNER, P.C., Knoxville, Tennessee, Timothy E. Scott, Kingsport, Tennessee, and Kenneth D. Hale, THE HALE LAW FIRM, Bristol, Tennessee, for Defendants Kopper-Glo Mining LLC and INMET Mining LLC.

In this civil suit invoking the court’s diversity jurisdiction,1 the plaintiffs and plaintiff-intervenors seek recovery of coal wheelage payments under various legal

1 Although it was not clear from the complaints, I am satisfied that the parties are completely diverse based on the supplemental filings submitted at my direction. See ECF Nos. 86–91. “[A] limited liability company is assigned the citizenship of its members.” Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114, 120 (4th Cir. 2004); see also theories. The defendants have moved to dismiss the amended complaints, contending that the claims are barred by res judicata and that the plaintiffs and

plaintiff-intervenors have failed to state viable claims for relief. For the reasons that follow, I agree with defendant Ark Land, LLC that part of the plaintiffs’ claim against it for unpaid wheelage royalties is precluded by my

dismissal with prejudice of a prior related lawsuit. However, I find that the plaintiff- intervenors’ claims are not precluded because the plaintiffs were not their privies with respect to the prior suit and settlement. I further find that the amended complaints plausibly state claims sufficient to survive the motions to dismiss and

that factual issues make dismissal at this stage inappropriate. I. The amended complaints filed by the plaintiffs and plaintiff-intervenors allege

the following facts, which I must accept as true for purposes of deciding the motions to dismiss. A. Plaintiffs’ Amended Complaint. The plaintiffs and plaintiff-intervenors are part owners of an approximately

4,000-acre tract of land located partially in Virginia and partially in Kentucky (“the Property”). They collectively own an undivided 40% interest in the Property. In

Travelers Indem. Co. of Am. v. Portal Healthcare Sols., L.L.C., 644 F. App’x 245, 246 (4th Cir. 2016) (unpublished). 2011, Ark Land Co. (Ark Land)2 and Lone Mountain Processing, Inc. (Lone Mountain) owned a 60% interest in the Property. The Property fully surrounds a

parcel on which a coal processing plant is located. Thus, any coal going to or coming from the processing plant must be transported across the Property. Ark Land and Lone Mountain formerly owned the processing plant. The

plaintiffs and plaintiff-intervenors, as grantors, and Ark Land and Lone Mountain, as grantees, entered into a Wheelage and Easement Agreement effective December 30, 2011 (“the Wheelage Agreement”). The Wheelage Agreement allows Ark Land and Lone Mountain to transport coal from mines in Kentucky on underground belt

lines to the processing plant in exchange for a fee, known as a wheelage royalty. The preparation plant processes more than a million tons of coal per year. In 2017, Ark Land conveyed its interest in the Property to Revelation Energy,

LLC (Revelation) and/or Blackjewel, LLC (Blackjewel). On July 1, 2019, Revelation and Blackjewel filed for Chapter 11 bankruptcy. Revelation and/or Blackjewel sold their 60% interest in the Property to Kopper Glo Mining, LLC (Kopper) and INMET Mining, LLC (INMET) on September 17, 2019. The sale was

approved by the bankruptcy court. Kopper and INMET now own and operate the coal preparation plant as well.

2 The party named as a defendant in this case is Ark Land, LLC rather than Ark Land Co. The parties do not address this discrepancy. To avoid confusion, I will refer to both as Ark Land. From September 17, 2017, until August 28, 2020, more than 1,010,113.92 tons of coal were hauled across the Property. Based on the fee set forth in the

Wheelage Agreement, the plaintiffs and plaintiff-intervenors should have been paid $94,146.05 in wheelage royalties. Revelation and/or Blackjewel had begun transporting coal through the Property in September 2017 without paying any

wheelage royalties. The plaintiffs sued and a settlement was reached with Revelation. Revelation and/or Blackjewel defaulted on the settlement agreement on May 25, 2019, when they failed to pay the April 2019 wheelage royalty. On June 25,

2019, Revelation and/or Blackjewel failed to pay the wheelage royalty for May 2019. When Revelation and Blackjewel filed their bankruptcy petition on July 1, 2019, they had not paid wheelage royalties for April, May, or June 2019.

Between September 2019 and August 28, 2020, Kopper and/or INMET transported at least 177,000 tons of coal across the Property. They have not paid any wheelage royalties and have not reaffirmed the Wheelage Agreement. The Wheelage Agreement requires a defaulting grantee to pay property taxes, mineral

taxes, and attorney’s fees of the grantors. The defendants have not paid these amounts, and the plaintiffs therefore argue that the defendants have breached Articles 2, 6, and 8 of the Wheelage Agreement. On October 10, 2019, the plaintiffs notified Kopper and INMET that they either owed wheelage royalties under the Wheelage Agreement or they were

trespassing. Kopper and/or INMET continued to haul coal across the property without paying wheelage royalties. The plaintiffs allege that on January 30, 2020, “Revelation and or Blackjewel rejected the Wheelage Agreement by failing to

assume and cure as required by the Bankruptcy Code.” Pls.’ Am. Compl. ¶ 23, ECF No. 28. The plaintiffs allege that Kopper and/or INMET have benefitted in the amount of five dollars per ton of coal hauled across the Property, for a total benefit of

$231,130.30 accrued from September 15, 2019, until August 28, 2020. According to the plaintiffs, these defendants have benefitted substantially from [their] continued use of the Property to transfer coal across the Property because [they have] continued to profit from [their] coal preparation plant and related coal sales and [they have] avoided the cost of arranging for an alternative means of transporting the coal or contracting with Plaintiffs for the right to use the Property to transport coal . . . . Id. ¶ 25. The plaintiffs allege that Kopper and INMET are willfully trespassing and disregarding the plaintiffs’ rights of immediate and actual possession of the Property. Count I of the plaintiffs’ Amended Complaint is a breach of contract claim against Ark Land. The plaintiffs assert that Ark Land is liable for the amounts that Revelation and/or Blackjewel owed under the Wheelage Agreement and failed to pay because Ark Land remains liable for the breach of its assignee. Count II is a trespass claim against Kopper, INMET, and Ark Land. The plaintiffs contend that because Kopper and INMET have benefitted from their

willful trespass, they are liable under an implied contract theory for the value of the benefit they have received. Count III is a claim of waste asserted against Kopper and INMET. Here, the

plaintiffs deny that Kopper or INMET have a real estate interest in the Property.

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Barnwell v. Ark Land, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barnwell-v-ark-land-llc-vawd-2021.