Covol Fuels No. 4 LLC v. Pinnacle Mining Co. LLC (Lawyers Weekly No. 001-036-15, 29 pp.) (King, J.) No. 14-1395, March 3, 2015; USDC at Beckley, W.Va. (Berger, J.) 4th Cir.
Holding: In this lawsuit over plaintiff’s contract allowing it to conduct coal fines recovery operations, the 4th Circuit vacates summary judgment for defendant mining company on the contract claims, as there were factual disputes over whether the contract requires defendant to adjust the water level in a man-made pond that was part of the operation to recover fine coal; however, summary judgment for defendant on plaintiff’s tort claims is affirmed under the “gist of the action doctrine.”
From 2008 to 2011, Covol Fuels No. 4 LLC and Pinnacle Mining Company LLC were parties to a business agreement under which Covol conducted coal fines recovery operations at Pinnacle’s mines in West Virginia. After it became economically unfeasible for Covol to continue those recovery operations, it initiated this civil action in West Virginia federal court, alleging claims for breach of contract, tort and unjust enrichment. The district court awarded summary judgment to Pinncale on all claims. Covol appealed on the contract and tort claims. There are genuine issues of material fact as to the contract claims. However, we agree with the district court that Covol’s tort claims are barred by the “gist of the action doctrine.”
Covol asserts that Pinnacle breached their Agreement by failing to lower the water level of a 10-acre, man-made impoundment pond, thereby interfering with Covol’s ability to access the coal fines contained therein. Pinnacle, meanwhile, disputes that it was under any obligation to adjust the water level. Covol maintains that such a duty was created by both the express terms of the Agreement and by the implied covenant of good faith and fair dealing.
Covol characterizes section 18(ii) as requiring Pinnacle to provide a right of way within the impoundment itself, such that Pinnacle must adjust the water level in order for Covol to retrieve the refuse material. Because section 18(ii) is ambiguous, extrinsic evidence may be considered in order to resolve the factual question of what the parties intended. We conclude Covol has established a genuine dispute of material fact as to whether the parties intended for the right of way in section 18(ii) to require Pinnacle to adjust the water level so that Covol could access the refuse material located in the impoundment. We must remand because the proper interpretation of the Agreement can only be resolved by the trier of fact.
Covol also contends Pinnacle was obliged to adjust the water level of the impoundment based on the provisions of the mine plans. The Agreement does not clearly reference the mine plans, nor does the contract language expressly indicate that the parties intended for the terms of the mine plans to govern their relationship. Therefore, the Agreement is the sole document memorializing the parties’ agreements.
Whether section 7 of the Agreement obliged Pinnacle to adhere to the terms of the mine plans, and whether Pinnacle breached any such obligation, would raise factual issues that a jury must decide. In light of our determination that Pinnacle is not entitled to summary judgment with respect to Covol’s theory that Pinnacle breached the Agreement, we are satisfied that summary judgment should not have been granted as to Covol’s allegation that Pinnacle breached the implied covenant of good faith and fair dealing.
Covol also disputes the district court’s award of summary judgment as to its tort claims for negligent misrepresentation and fraudulent concealment. As to both of these claims, Covol relies on alleged misstatements and concealments by Pinnacle with respect to Pinnacle’s intention to adjust the water level of the impoundment and its intention to upgrade its wash plant.
We are satisfied, as was the district court, that Covol’s tort claims are barred by the gist of the action doctrine, which is meant to prevent the recasting of a contract claim as a tort claim.
We affirm summary judgment as to the tort claims, vacate summary judgment as to the contract claims, and remand.
Dissent & Concurrence
Floyd, J.: In my view, nothing in the Agreement’s plain language requires Pinnacle to pump water to facilitate Covol’s coal operations. In holding otherwise, I believe the majority conjures an ambiguity where there is none, erring in two fundamental respects. Except in regard to affirming summary judgment on the tort claims, I respectfully dissent.
