Opinion
NO. 2018-CA-000434-MR NO. 2018-CA-000526-MR
05-15-2020
M&T LOGGING, INC. APPELLANT/CROSS-APPELLEE v. B&W RESOURCES, INC. APPELLEE/CROSS-APPELLANT
BRIEFS FOR APPELLANT/CROSS-APPELLEE: Michael E. Roper Hazard, Kentucky BRIEFS FOR APPELLEE/CROSS-APPELLANT: Shelby C. Kinkead, Jr. Lexington, Kentucky Randall S. May Hazard, Kentucky
NOT TO BE PUBLISHED APPEAL AND CROSS-APPEAL FROM PERRY CIRCUIT COURT
HONORABLE ALISON C. WELLS, JUDGE
ACTION NO. 11-CI-00618 OPINION
AFFIRMING
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BEFORE: COMBS, GOODWINE, AND TAYLOR, JUDGES. TAYLOR, JUDGE: M&T Logging, Inc. (M&T) appeals from a February 15, 2018, Judgment of the Perry Circuit Court upon a jury verdict in favor of B&W Resources, Inc. (B&W) resulting in dismissal of M&T's complaint. M&T filed this action on November 30, 2011, alleging breach of a coal mining contract by B&W. The complaint asserted claims against B&W for the completion of reclamation work incident to a stream bed as required by a Section 404 permit from the United States Army Corps of Engineers. The sole issue raised by M&T on appeal looks to the alleged ambiguity of Interrogatory No. 1 set out in the trial court's jury instructions. B&W filed a protective cross-appeal. Because M&T failed to object to the final instructions presented by the trial court and further, failed to establish where and how in the record the jury instruction error was preserved for appeal, we must affirm the judgment below.
I. BACKGROUND
On October 8, 2002, M&T and B&W entered into a coal mining contract for B&W to conduct surface mining operations on lands leased to M&T by Roy Campbell in Clay County, Kentucky. The mining contract provided in relevant part that B&W "shall use its best efforts to comply with all applicable laws, rules, regulations, and orders that are currently in force, and which may be promulgated by the United States of America or the Commonwealth of Kentucky[.]" Record on appeal at 12. Soon after mining operations began, B&W determined there was insufficient coal to continue mining the property profitably. Eventually, the parties orally agreed to terminate the agreement if B&W would perform reclamation on the land sufficient to satisfy the release of a Phase 1 permit reclamation bond. B&W performed the necessary reclamation and vacated the property. In May 2003, the Kentucky Natural Resources Cabinet, Department of Surface Mining Reclamation and Enforcement, granted the Phase I release. However, later in 2003, the United States Army Corps of Engineers notified M&T that it had failed to obtain a Clean Water Act Dredging and Discharge Section 404 permit, which required restoration of streambeds disturbed by mining activity. M&T and the landowner, Roy Campbell, obtained the 404 permit in 2007, and M&T completed restoration in 2011.
405 Kentucky Administrative Regulations (KAR) 10:040 §2(4)(a) provides that a Phase I reclamation is complete "when the permittee completes backfilling, regrading, topsoil replacement, and drainage control including soil preparation and initial seeding and mulching in accordance with the approved reclamation plan[.]"
Section 404 of the Clean Water Act is set out in 33 United States Code (U.S.C.) § 1344 and establishes a program to regulate the discharge of dredged or fill material into waters of the United States, including wetlands. Activities in waters of the United States regulated under this program include mining projects.
In 2009, M&T sued Campbell in the Clay Circuit Court, seeking to recover restoration costs under the Section 404 permit. As noted, in 2011, M&T sued B&W in the Perry Circuit Court, also seeking to recover costs incurred for restoration and reclamation under the Section 404 permit. B&W argued that M&T was seeking a double recovery for its damages. M&T settled the Clay Circuit Court action, but the Perry Circuit Court case proceeded to a jury trial on February 5 through February 9, 2018.
At the close of evidence at the trial, the Perry Circuit Court issued instructions to the jury. The instruction at issue in this appeal, Interrogatory No. 1, reads as follows:
Do you believe from the evidence that Wayne Engle, as an authorized representative of M&T Logging, Inc. ("M&T"), agreed to terminate the contract mining agreement between M&T and B&W Resources, Inc. ("B&W") if B&W Resources would reclaim to a Phase I, Grading Release, the surface disturbance that it had created on the M&T Surface Mining Permit?Record on appeal at 1089.
The jury unanimously answered yes, which resulted in a judgment in favor of B&W and dismissal of the complaint. M&T then filed Appeal No. 2018-CA-000434-MR, after which B&W filed protective Cross-Appeal No. 2018-CA-000526-MR. The cross-appeal alleges the trial court's instructions failed to cap M&T's damage claim due to its recovery in the related Clay Circuit Court action.
M&T argues on appeal that Interrogatory No. 1 is ambiguous because it allegedly covered only the Phase I permit, not the Section 404 permit. B&W responds that the jury was presented two choices by the evidence: either the mining contract was orally terminated in 2002, in which case B&W's only obligation was what was required by the terms of the oral agreement (i.e., to take steps necessary to obtain the Phase I permit release), or the mining contract was never terminated, in which case B&W would have been responsible for the costs of performing the restoration work required by the Section 404 permit. In that instance, the only question for the jury would have been the proper measure of damages.
II. STANDARD OF REVIEW
Errors in jury instructions look to questions of law and are reviewed on appeal by this Court de novo. Boland-Maloney Lumber Co. Inc. v. Burnett, 302 S.W.3d 680, 690 (Ky. App. 2009). Kentucky Rules of Civil Procedure (CR) 51 addresses jury instructions in civil trials. Applicable to this case, CR 51(2) and (3) provide as follows:
(2) After considering any tendered instructions and motions to instruct and before the commencement of the argument, the court shall show the parties the written instructions it will give the jury, allowing them an opportunity to make objections out of the hearing of the jury. Thereafter, and before argument to the jury, the written instructions shall be given.
(3) No party may assign as error the giving or the failure to give an instruction unless he has fairly and adequately presented his position by an offered instruction or by motion, or unless he makes objection before the court instructs the jury, stating specifically the matter to which he objects and the ground or grounds of his objection.
Our review proceeds accordingly.
III. ANALYSIS
Both parties tendered multiple sets of proposed jury instructions to the trial court. M&T submitted 5 proposed sets of jury instructions over the period of February 3, 2017, through the trial on February 8, 2018. One of the main issues disputed at trial was whether the coal mining contract had been orally terminated in late 2002, thus precluding B&W's obligation for any liability for the Section 404 permit restoration and abatement expenses, which arose after B&W had vacated the property. B&W conceded at trial that if the coal mining contract was not terminated by the parties, B&W would have liability for the Section 404 permit restoration and abatement expenses.
Interrogatory No. 1 addressed the termination of the coal mining contract. Both parties submitted a proposed instruction regarding the termination of the contract, but the parties disputed at trial the proper language for the instruction to address the issue. On the afternoon of February 8 during the trial, the trial court conducted an extensive jury instruction conference with counsel. Relative to Interrogatory No. 1, the following exchange occurred:
MR. ROPER [counsel for M&T]: My instruction is, first they—they have to establish in and under the contract mining agreement, did B&W Resources have the—the obligation. Then the next instruction, do you believe that the contract mining agreement terminated their obligation? But I think they—which come [sic] first, the horse or the cart? You know, I think that the obligation under the contract mining agreement, they have to establish that. Anything else is going to take them away—the jury from away. [sic] Mr. Kinkead obviously knows that it's going to—they're going to get kablooted [sic] and not even look at the agreement and go straight to this disputed statements [sic] about terminating the contract. I think was there an initial obligation for B&W
to reclaim the surface disturbance that was caused by the mining operations? Now there's a stipulation of that fact, so with that—
THE COURT: I mean, if there's already a stipulation, then why—it seems like you would end up with a verdict that is—well, you could end up with some ambiguity. If there's a stipulation that they had a contract and then you're asking the jury to find if they had a contract, then—
MR. ROPER: Well, basically I'm saying, did they have an obligation to reclaim the disturbance? And that's what I was asking.
THE COURT: I don't think there's a dispute that they had a contract to reclaim the disturbance up to a point. I think that's the issue. I don't think that the defendants have said they have no obligation.
MR. KINKEAD [counsel for B&W]: I think I agree, Your Honor. I think, you know, obviously if this contract wasn't—if the jury concludes that it wasn't modified or terminated or whatever language, then I'd be the first to say, hey, you know, clearly this contract says we've got to reclaim and abide by all the laws. And at that point I agree. I would agree with Mr. Roper that it's just an issue of how much money you're going to get.
MR. ROPER: I could agree—I can live with this: Do you believe from the evidence that Wayne Engle—and get rid of and/or Roy Campbell because there's nothing about Roy Campbell terminating or modifying—as authorized representative of M&T Logging agreed to terminate the mining contract between M&T and B&W Resources if B&W Resources would reclaim to a phase one grading release the surface disturbance that had been created on—on the M&T surface permit? If your answer is yes, the law is for B&W on all matters. If your answer is no, proceed to interrogatory number two. In other
words, I would ask that Roy Campbell be taken out and the words [sic], and you may return to the courtroom. I don't want to give the jury a shortcut to get the heck out of here.
THE COURT: Okay. I get the point about Roy Campbell. I don't think there was testimony that Roy Campbell—unless I'm missing something Mr. Kinkead.
MR. KINKEAD: Well, I think the testimony was that Wayne Engle agreed not to sue if reclamation was done. But I know that David and even Donnie indicated that there were communications during this period of time with Roy Campbell. So I'd kind of like to leave it in there. I mean, Roy really was—he was the money man, and I think he ultimately made decisions impacting M&T. Now I know that's speculation because he's dead, but I think he ought to be included in it.
THE COURT: I'm going to take out and/or Roy Campbell. I don't think there was proof that that happened. So it will just be, do you believe from the evidence that Wayne Engle as an authorized representative. [sic]
MR. KINKEAD: For the record, note my objection.
THE COURT: I do. Now as far as, if yes, return to the courtroom, if no, proceed to interrogatory number two, we've got to give them some just directional [sic]—because we don't want them to go ahead and answer the next question. You have to do that.
MR. MAY [co-counsel for B&W]: Yeah, that's throughout Palmore what you see there.
THE COURT: I don't know that we have to say the law is for B&W. I think we can simply say, if your answer is yes, return to the courtroom.
MR. ROPER: All right. That—B&W Brief, Appendix 3, Trial Transcript at 31-35 (also M&T Reply Brief, Appendix 1, Trial Transcript at 31-35) (emphasis added).
THE COURT: If your answer is no, proceed to interrogatory number two. Mr. Kinkead?
MR. ROPER: I can live with that.
MR. KINKEAD: That's fine, Your Honor. That's fine with me.
THE COURT: Okay. We'll take out, in the second to last line, the law if for B&W on all matters and. [sic] All right; that's interrogatory number one.
The following morning, February 9, 2018, prior to the resumption of trial, the court directed counsel to approach and review the final version of the instructions, which included Interrogatory No. 1. M&T's counsel did not object to the final instructions and instead remarked that the instructions were "fine." B&W Brief, Appendix 4, Trial Transcript at 3-4.
To begin, we note that M&T did not object to the court's final instructions, which included Interrogatory No. 1. CR 51(3) requires such an objection, plus specific grounds to support the objection. Likewise, M&T does not direct this Court to any instructions offered by M&T that were substantially different from Interrogatory No. 1. M&T argues on appeal that Interrogatory No. 1 was ambiguous because it did not address the Section 404 permit. However, M&T and the landowner Roy Campbell did not seek to obtain the permit until after the final agreement to terminate the coal mining contract was entered into and B&W had completed the reclamation on the Phase 1 permit. More importantly, M&T did not raise the ambiguity issue at the jury instruction conference with the trial court, and in fact, the instruction was modified at M&T's request to remove any reference to Roy Campbell from the instruction.
Nonetheless, we have reviewed the five sets of M&T's tendered instructions filed in this case. Each set contains a similar proposed instruction asking the jury to find that M&T did not agree to terminate the coal mining contract and thus relieve B&W from any obligations thereunder. Interrogatory No. 1 presented the issue to the jury of whether the parties orally terminated the contract sufficient to relieve B&W from any further liability. While stated in different wording, the tendered instructions offered by M&T clearly looks to the termination of the contract and does not present a contrary position to that set forth in Interrogatory No. 1. In other words, M&T did not offer an instruction that adequately presented the position that it now takes in this appeal. See CR 51(3). And, we find absolutely no ambiguity in this instruction as argued by M&T. The instruction plainly states that if the parties agreed to terminate the contract, B&W would have no further liability thereunder if it performed the Phase 1 permit reclamation to obtain the permit release. Counsel for M&T agreed with this instruction at trial. By not objecting to the final instructions on February 9 when presented by the trial court, M&T has failed to preserve the issue for appeal. CR 51(3).
Finally, we must also emphasize that under applicable Kentucky appellate rules, an appellant is required by CR 76.12(4)(c)(v) to cite to the record and show how each issue raised on appeal was preserved for our review. Based on our review of the record, M&T failed to cite how the jury instruction issue was preserved for appellate review. See Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990). And, we are mindful that a party may not sit idly by during the jury instruction conference and create the appearance of acquiescence to erroneous instructions. Boland-Maloney Lumber, 302 S.W.3d at 690 (holding that a party failed to preserve for appellate review an alleged error in a jury instruction by merely receiving permission from the trial court to "stand on their instructions as submitted" and failing to specifically object to the language at issue on appeal).
For the foregoing reasons, the Judgment of the Perry Circuit Court is affirmed.
ALL CONCUR. BRIEFS FOR APPELLANT/
CROSS-APPELLEE: Michael E. Roper
Hazard, Kentucky BRIEFS FOR APPELLEE/
CROSS-APPELLANT: Shelby C. Kinkead, Jr.
Lexington, Kentucky Randall S. May
Hazard, Kentucky