After that opinion was filed, two of the elected Justices recused themselves
from further consideration of the case. A motion to rehear the case was granted by this
Court on the unanimous vote of the remaining three Justices and two circuit judges, Judge
Cookman and Judge Fox, appointed by acting Chief Justice Benjamin. Now, the
reconstituted Court has again reversed the lower court by a vote of three (Davis, J.;
Benjamin, J., and Fox, J.) to two (Albright, J. and Cookman, J.)
Today's “new” opinion of the Court rests on the same indefensible legal
grounds as the original opinion _ supplemented by even more extended discussion of some
of the points _ but, strangely, omitting the clearly correct assertion in the original majority
opinion that “Massey's conduct warranted the type of judgment rendered [below] in
this case.” Id. This time the majority stands silent regarding any disdain of Massey's
conduct. Once again it bends the law to deny Plaintiffs the proper “result that clearly
appears to be justified.” Id.
For the record, we wholeheartedly embrace the determination of this Court
in the original, now withdrawn, opinion that “Massey's conduct warranted the type of
judgment rendered [below] in this case.” Id. Likewise, we do not shrink from saying
without reservation that this Court should now affirm the judgment against the Massey
Defendants for the reasons outlined in this dissent. Moreover, the failure of the Court now
to even acknowledge the justice of Plaintiffs' case below, as it had in the previous opinion,
underlines the result-driven nature of the current majority opinion. Id.
In terms of the law, the errors of the majority opinion are not complex or
difficult to explain. They are few in number.
First, under our law as it existed before the majority decision in this case, the
proper inquiry regarding the enforceability of a forum selection clause in a contract was
whether, with careful analysis, its enforcement was reasonable and just in the circumstances
of the case. In this case it was not.
Second, under the law of Virginia as it existed at all times relevant to the case
before us, res judicata applied when, under the facts of the case, all of the issues fairly
arising under the facts pled, or which could have been pled, could have been proved with
the same evidence. In the case before us, several occurrences and transactions between the
parties to this case, which were not involved in the original Virginia contract action, required
substantial amounts of evidence which would not have been relevant in the Virginia contract
action.
Finally, under West Virginia law as it existed before the majority opinion was
filed in this case, the decision of a lower court on the venue questions raised by a plea of res
judicata were to be reviewed under an abuse of discretion standard, evaluating the lower
court's application of the law to the facts, not de novo, as the majority has now ruled.
The more narrow and focused legal arguments and supporting facts of the
rehearing process make it all the more clear that (1) Massey's conduct was outside the
bounds of human decency and respectable business practices, and (2) the law poses no
barrier to upholding the Boone County jury verdict finding such behavior repugnant and
deserving of redress. As opposed to simply deciding the case on the facts and law as they
existed at the time the events complained of occurred, the majority kneads the facts so that
they better fit the new law the majority finds necessary to create not only for West Virginia
but also for Virginia. As we explain in detail below, neither res judicata principles nor the
presence of a forum selection clause serve as an impediment to upholding the lower court's
actions and jury verdict. Instead, the majority decision now ignores the admitted injustice
done to Plaintiffs. It fashions no less than nine new points of law to achieve the result
desired by the majority. To accomplish this goal, the majority:
1. Broadly endorses forum selection clauses, makes them applicable to
persons not party to the contracts containing such clauses, removes any hint of the cautious,
limited approval of such clauses in our jurisprudence, extends their effect to causes of action
in which the related contract is but one of several factors justifying recovery, and charges
those who would resist their application with the obligation of proving them unreasonable
_ even when the time for adducing evidence to meet that new requirement has irretrievably
passed _ making it impossible for Plaintiffs to defend their $50 million judgment.
2. With respect to the principle of res judicata _ whether a prior suit
adjudicated or could have adjudicated the issues raised in a suit filed later _ the majority now
makes the lower court's decisions reviewable de novo, that is, removing any requirement
that this Court give any deference to the lower court's consideration of the proper
application of the law to the facts of a particular case. In that regard, the majority opinion
now opens the door to this Court systematically reviewing all such decisions of lower courts
without regard to the reasonable discretion of the trial courts and their view of the applicable
facts.
3. Lastly, this Court imperially found in the majority opinion that the law of
Virginia on the issue of res judicata has been clearly settled from 1998 through 2002. Any
fair review of the cases in Virginia and the course of development of Virginia law
demonstrates beyond doubt that Virginia law in that time frame would not deprive the
Circuit Court of Boone County of venue in the cause before us to hear and determine and
grant the relief “ Massey's conduct warranted . . . .” Caperton, 2007 WL 415960, Slip Op.
at 13 (No. 33350, filed November 21, 2007), withdrawn.
In its order, the Circuit Court of Boone County said “[T]he weight of the evidence at trial fairly established and was clearly sufficient for the Jury” to conclude that:
Massey chose to acquire [United Coal Company] in order to
eliminate a competitor and to gain more access to LTV
[Steel Corporation], . . . [while] fully cognizant of Harman's
long-term coal supply agreement with Wellmore and LTV's
preference for the UCC/Harman blend.
In paragraph 4 of that order, the trial court further said that the weight of the
evidence at trial fairly established and was clearly sufficient for the jury to further conclude
that: (See footnote 1)
[a] The Corporate Plaintiffs (collectively “Harman”) formerly were in the
business of mining and selling high quality metallurgical coal produced from the Harman
Mine. The Defendants (collectively “Massey”) are also in the business of mining and/or
selling metallurgical coal. Harman and Massey were competitors.
[b] Massey desired, among other things, to gain LTV Steel Corporation
(“LTV”) as a new customer.
[c] For years, LTV had purchased substantial amounts of metallurgical coal
from United Coal Company (“UCC”). The coal that LTV preferred and purchased from
UCC was a premium blend of Harman coal and other, lesser quality coals (the
“UCC/Harman blend”) Coal from the Harman Mine is metallurgical coal with very favorable
cooking characteristics prized by steelmakers like LTV.
[d] For many years, Harman sold all of its coal to one of UCC's subsidiaries,
Wellmore Coal Corporation (“Wellmore”), which was, in turn, supplied to LTV as part of
the UCC/Harman Blend. During the relevant time period, Harman had a long-term coal
supply agreement with Wellmore. Harman was almost exclusively reliant on that contract.
Wellmore's management had always encouraged Harman to mine and sell to it as much coal
as it possibly could. Harman had been supplying Wellmore with its high quality
metallurgical coal on a continuous basis for many years.
[e] For years, Massey wanted the LTV business and tried to increase sales of
coals from its production sources (“Massey Mines”) to LTV, but with little success. So
Massey chose to acquire UCC in order to eliminate a competitor and to gain more access to
LTV, but fully cognizant of Harman's long-term coal supply agreement with Wellmore and
LTV's preference for the UCC/Harman blend. In a document written prior to Massey's
purchase of UCC, Massey characterized the situation as follows:
In layman's terms, the UCC metallurgical coal quality is
equivalent to Massey's premium Marfork coal, but is further
enhanced by having a higher inerts level and a lower sulfur
content. UCC had achieved a particularly enviable supplier
relationship with LTV Steel Corporation (“LTV”) that has now
been in place for over 10 years. Surprisingly, the LTV
relationship is not secured by a long-term contract, but rather by
annual purchase orders that are consistently renewed at
favorable pricing levels because of LTV's high regard for the
UCC coal quality.
A. Actions Against Plaintiff Caperton Personally
The trial court identified, by way of example, specific actions which the jury
could find were directed by Defendants against Plaintiff Caperton in his personal capacity,
as follows:
[i] Massey's conduct in “negotiating” directly with Caperton
and under the February 9, 1998 letter agreement: Massey
submitted a letter agreement to Mr. Caperton as President of
Sovereign and Harman in which Massey and Wellmore
expressly agreed to “pursue good faith negotiations toward
concluding the described transactions.” The transaction
described in the agreement was intended to settle all issues
relating to 1997 Coal Supply Agreement between the parties
and permit Massey to acquire Caperton's interest in the
Corporate Plaintiffs.
[ii] Massey's conduct in negotiating a letter of intent with
Grundy: In the letter of intent, Massey agreed to purchase the
note held by Grundy. Massey entered into the letter of intent
with Grundy with full knowledge of Caperton's personal
guarantee on the Grundy note.
[iii] Massey's conduct affecting Caperton's Terra obligations:
Knowing Caperton's personal responsibilities for reclamation
obligations to Terra, Massey agreed to replace the Terra
reclamation bond with a Massey bond. During negotiations,
Massey internal documents reflect that Caperton's personal
guarantees were discussed and, as a consideration for the
transaction, the parties specifically negotiated the release of “his
personal guarantee obligations.” Recognizing Caperton's
personal interest in the negotiations, Massey required Caperton
to be a signatory to the closing documents, sought a far-
reaching release from Caperton personally, and agreed to give
Caperton a personal release in return.
[iv] Massey's duty to mitigate based upon knowledge of
Caperton's actions taken in detrimental reliance: Massey knew
through confidential information exchanged during the
December 1997 and January 1998 discussions with Caperton,
about Caperton's plans to shut down Harman as a result of
Massey's wrongfully declaration of “force majeure”. Massey
further knew that, in reliance upon an agreement in principle
reached concerning the key terms and a proposed closing date
of January 31, 1998, Caperton intended to shut down Harman's
operations on January 19, 1998. Massey was also aware of the
impact Massey's failure to close as planned would have on
Caperton personally (based on his personal guarantees, likely
AVS violator listing, etc.). Unknown to Caperton, Massey
made an internal decision not to close the transaction by the
agreed-to date of January 31, 1998, but chose instead to let
Caperton move forward with his plans based upon his mistaken
belief concerning the closing date.
B. Additional Facts
In paragraph 6 of its order, the trial court took note of Massey's assertion that
it had no “intent to interfere with Harman or to purposely cause financial distress for the
Plaintiffs so that Massey would benefit in the long run . . . .” The lower court simply noted
that “numerous pieces of documentary evidence authored by Massey belied that testimony
. . . .”
In paragraphs 9 through 11 of the order, the lower court undertook a thorough
review of the evidence supporting each of three causes of action upon which the case was
tried and upon which the jury rendered its verdict: tortious interference, fraudulent
misrepresentation and fraudulent concealment. The lower court identified the essential
elements for each cause of action and analyzed the evidence adduced with respect to each
such cause of action, finding a prima facia case established on each count. (See footnote 2) In some
respects, the evidence supporting an element in one count was the same evidence supporting
an element of another count, findings which we will endeavor not to repeat except where
the context requires it. However, the facts the lower court found to be supported by the
evidence paint in further detail a dastardly course of action by Defendants which will now
go unredressed.
In paragraph 9, the trial court found prima facia proof that:
The evidence was clearly sufficient for the Jury to conclude that Defendants
tortiously interfered with the Harman Plaintiffs' advantageous relationships with, among
others, the United Mine Workers of America, with Penn Virginia Coal Company, with Terra
Industries, Inc., with Grundy National Bank, and with Wellmore Coal Corporation. As for
Plaintiff Caperton, the evidence was clearly sufficient for the Jury to conclude that
Defendants tortiously interfered with, among others, his personal guaranty relationships with
Grundy National Bank, his personal liability under the Terra reclamation bonds (and
resulting listing on the Applicant Violator System, or “AVS”), and his personal relationship
with United Bank. Further, the evidence was clearly sufficient for the Jury to conclude that
Defendants engaged in this intentional interference for the specific purpose of financially
destroying Plaintiffs, both corporately and personally.
(a) For example, Massey tried to persuade LTV to buy its coals in place of
Harman coal, used “force majeure” and other threats, and otherwise interfered with
Harman's contractual relations for the purpose of placing the Plaintiffs, corporately and
personally, in great financial distress in order to have Harman, not Massey, bear the cost of
Massey's failed marketing strategy with LTV.
(b) For example, Massey directed Wellmore to declare “force majeure” as a
result of Massey losing LTV's business due to Massey's failed marketing attempts.
(c) For example, after directing the declaration of “force majeure”, the
Defendants participated in settlement negotiations with Plaintiffs and with Penn Virginia
Coal Company, the Lessor of Plaintiffs' reserves, not with the intention of settling disputes,
but for the purpose of placing the Plaintiffs, corporately and personally, in greater financial
distress.
(d) For example, after directing the declaration of “force majeure”, the
Defendants dealt directly with Grundy National Bank pursuant to notes held by Grundy, for
which Plaintiff Caperton had given his personal guaranty;
(e) For example, the Defendants obtained confidential information at their
meeting with Plaintiff Caperton in November, 1997, and thereafter on the purported promise
to purchase Caperton's interest in the Harman assets, the Defendants used that confidential
information to acquire adjoining reserves, which the Defendants' own internal documents
acknowledged would help to insure that Harman would only be valuable to the Defendants;
(f) For example, the Defendants intentionally acted in utter disregard of
Plaintiffs' rights and ultimately destroyed Plaintiffs' businesses and caused Plaintiff
Caperton's resultant AVS listing because, after conducting cost-benefit analyses, the
Defendants concluded that it was in the Defendants' financial interest to do so[.]
In its order under discussion here, the trial court next commented on the
evidence from which the jury might properly find that Defendants failed to establish their
defense of “business justification” under section 767 of the Restatement (Second) of Torts and our case of C.W. Development Inc. v. Structures, Inc. of West Virginia, 185 W.Va. 462,
465, 408 S.E.2d 41, 44 (1991), finding that the evidence was clearly sufficient for the jury
to conclude that:
[i] Defendants developed a plan to interfere with Plaintiffs'
existing and prospective relations with Wellmore before A.T.
Massey Coal Company acquired Wellmore.
[ii] Massey acquired UCC with the purpose of gaining access
to LTV and to have the ability to interfere with the supply of
Harman to LTV.
[iii] The Defendants' Chief Executive Officer (CEO), without
ever reading the applicable long term Coal Supply Agreement,
directed that Wellmore Coal Corporation (“Wellmore”) threaten
Plaintiffs with the declaration of “force majuere;”
[iv] At a meeting held in November, 1997 in West Virginia, the
Defendants' CEO threatened the Corporate Plaintiffs and Mr.
Caperton with long and protracted litigation in the event the
Corporate Plaintiffs did not agree to give up the rights to their
reserves;
[v] At the November, 1997 meeting the Defendants obtained
confidential information and, thereafter, on the purported
promise to purchase Caperton's interest in the assets of the
Corporate Plaintiffs, instead used that confidential information
to acquire adjoining reserves which the Defendants' own
internal documents acknowledged would help to insure that the
Plaintiffs' reserves would only be valuable to the Defendants;
[vi] Massey engaged in a cost-benefit analysis to determine
whether it should direct Wellmore to declare “force majeure”;
[vii] On December 1, 1997, at the Defendants' direction and
contrary to the recommendations of its management, Wellmore
declared the occurrence of a “force majeure” event under the
Coal Supply Agreement, which reduced Wellmore's
commitment to purchase coal from Plaintiffs by over 60%
beginning on January 1, 1998, with full knowledge that the 60%
loss would be financially devastating to Plaintiffs;
[viii] After directing the declaration of “force majeure”, the
Defendants participated in settlement negotiations with
Plaintiffs and the Lessor of Plaintiffs' reserves, not with the
intention of settling disputes, but for the purpose of placing the
Plaintiffs, corporately and personally, in greater financial
distress;
[ix] The Defendants misrepresented their intention to settle any
disputes between the parties through an offered purchase and
sale of Harman assets, and instead delayed the transaction and
then reneged on their stated intention to purchase the Harman
assets by collapsing the deal after the Harman operations were
shut down in anticipation of the sale;
[x] The defendants intentionally acted in utter disregard of
Plaintiffs' rights and ultimately destroyed Plaintiffs' businesses
because, after conducting cost-benefit analyses, the Defendants
concluded that it was in their financial interest to do so; and
[xi] The Defendants consistently attempted to use the disparity
of resources and bargaining power between the Defendants and
the Plaintiffs to its advantage, with little or no regard to the
outcome of the Plaintiffs, either corporately or personally.
Returning to the evidence supporting the essential elements of the three counts,
the trial court recited:
(k) That Defendants' negotiations with Plaintiff Caperton in the time period
from November 1997 through March 1998 were conducted directly by Defendants' Chief
Executive Office, Donald Blankenship, and not by Wellmore or any of its corporate officers;
(l) That Defendants, not Wellmore or any of its corporate officers, interfered
with Plaintiff Caperton's management of the bankruptcy of the Corporate Plaintiffs by
purchasing claims to obtain standing in the Bankruptcy Court and to have Caperton removed
as the debtor-in-possession;
(m) That Defendants took numerous specific steps pursuant to its plan to
wrongfully interfere with Plaintiffs' existing contractual relations with Wellmore before,
during and after the short time that Defendant A.T. Massey Coal Company owned
Wellmore.
The trial court further observed that any legitimate justification or privilege
to interfere in the contractual relations of subsidiaries may be lost by wrongful conduct and
further observed that the preceding recital established the evidence was sufficient to allow
the jury to so conclude in this case, and then found further:
(p) That additional, substantial evidence of improper motive presented to the
Jury included that, on August 1, 1997, one day after the acquisition of United Coal (the
parent company of Wellmore), Wellmore's management recommended the purchase of
Harman's entire production for the following year, but that Defendants' CEO, Donald
Blankenship, overruled this recommendation and directed Wellmore to refuse to purchase
more than the minimum tonnages because of a purported “force majeure”, that four days
later, after having enacted Blankenship's directive, Blankenship put Wellmore up for sale
in September of 1997[.]
In paragraph 10 of its order, the trial court found that: “The evidence was
clearly sufficient for the Jury to conclude that Defendants fraudulently misrepresented
material information, that Plaintiffs, both personally and corporately, justifiably relied upon
Defendants' fraudulent misrepresentations, and that Plaintiffs, both personally and
corporately, were damaged because of that justifiable reliance.” The order specifically noted
eight examples of this sufficiency, five previously cited and the following three:
[i] While marketing their West Virginia coals to LTV, the
Defendants intentionally created the false impression to
Plaintiffs that they were actually trying to sell Harman coal to
LTV;
[ii] In declaring “force majeure”, Wellmore was directed by the
Defendants' senior management to claim that the supposed
event of “force majeure” was unforeseen, when Massey was
well aware of and had in fact foreseen the event at least seven
months before it occurred;
[iii] In declaring “force majeure”, Wellmore was directed by
Defendants' senior management to claim that a coke facility had
shut down, when Defendants knew it had not[.]
With respect to the tort of fraudulent concealment, the trial court concluded
that: “The evidence was clearly sufficient for the Jury to conclude that Defendants
fraudulently concealed material information which they were under a duty to disclose, that
Defendants were motivated to conceal material information and prevent the Plaintiffs, both
personally and corporately, from discovering the information, and that Plaintiffs, both
personally and corporately, were damaged because of Defendants' concealment.” The lower
court then gave thirteen examples, including these nine:
[i] While marketing their West Virginia coals to LTV, the
Defendants intentionally created the false impression to
Plaintiffs that they were actually trying to sell Harman coal to
LTV;
[ii] During the months that the Defendants were trying to
persuade LTV to buy coal blends containing exclusively
Massey coals mined by the West Virginia Defendants in place
of Harman coal, the Defendants concealed this fact from
Plaintiffs;
[iii] The Defendants concealed the fact that it made numerous
firm offers to sell the Defendants' West Virginia coals to LTV,
but did not make firm price offers to sell Harman coal to LTV;
[iv] The Defendants purposely omitted to disclose the fact that
it lost the LTV business, which it lost not because of any “force
majeure” but because of Defendants' marketing strategy and
dealings with LTV, particularly its insistence that LTV fill all
of its coal requirements through Defendants' West Virginia
operations via a sole supplier, long-term contract, and through
its decision not to allow LTV to purchase Harman coal, LTV's
preferred choice;
[v] Rather than tell Plaintiffs of its efforts to sell the
Defendants' coals and its lack of effort in selling Harman coals,
the Defendants' Representatives waited until shortly before
year-end, when it is nearly impossible to make new coal supply
arrangements for the following year, and then directed
Wellmore to declare “force majeure” and effectively destroy the
Plaintiffs' businesses.
[i] Corporate Plaintiffs introduced testimony through a number
of witnesses and introduced evidence through a number of
exhibits, including the expert testimony of Alan Stagg who
opined to a reasonable degree of professional certainty
regarding the business plan put into place when Caperton took
over the business in 1993 and who provided a valuation of the
Harman coal reserves, and of Mark Gleason who opined to a
reasonable degree of accounting certainty that the Corporate
Plaintiffs suffered damages exceeding $29 million as a result of
the destruction of their business, in response to which the jury
could reasonably determine that there was sufficient evidence
to show that the Corporate Plaintiffs' damages were caused by
Defendants' tortious misconduct;
[ii] That Plaintiff Caperton introduced evidence through
testimony on his own behalf, through his expert Daniel Selby,
who opined to a reasonable degree of accounting certainty,
through the testimony of Bobby Reece, an executive at Grundy
National Bank, and through the introduction of exhibits all
establishing his individual injuries, including injury to his
personal and professional reputation resulting in the loss of
income, benefits and business opportunities, personal injury by
way of lost earnings and employment opportunities by way of
his listing on the AVS, and personal injury by way of
Defendants' tortious interference with his personal guaranty
obligations in response to which the jury could reasonably
determine that there was sufficient evidence to show that the
Plaintiff Caperton's damages were caused by Defendants'
tortious misconduct. Such evidence included, but was not
limited to:
[iii] The Plaintiff Caperton was a business leader with whom
his lenders and vendors were willing to do business before
Defendants' tortious conduct;
[iv] The vendors and lenders with whom Plaintiff Caperton had
previously done business now refuse to do business with him
due to Defendants' tortious conduct;
[v] Due to the Defendants' tortious conduct, Plaintiff Caperton
became a defendant in several lawsuits brought against him
personally by the lenders and vendors with whom he had
previously enjoyed a beneficial relationship;
[vi] Due to the Defendants' tortious conduct, Plaintiff
Caperton has had judgments and tax liens entered against him
personally throughout the State of West Virginia;
[vii] Due to the Defendants' tortious conduct, Plaintiff
Caperton's personal credit rating and creditworthiness have
been destroyed;
[viii] Due to the Defendant's tortious conduct, Plaintiff
Caperton was and is precluded from obtaining a mining permit
and engaging in his livelihood as a result of his AVS listing;
[ix] The Plaintiff Caperton's AVS listing, according to
testimony at trial by those in the mining industry, constitutes a
“blackball”;
[x] Due to Defendants' tortious interference, Plaintiff
Caperton's personal annual income went from in excess of $1.3
million to $60,000.00;
[xi] The Defendants' invaded Plaintiff Caperton's personal
privacy, including the unwarranted trespass on his personal real
estate to photograph his personal residence, and due to
Defendants' tortious conduct, Plaintiff Caperton has suffered
mental anguish and sleepless nights.
Lastly, in paragraph 13 of its order, the lower court took note of the arguments
regarding choice of law, and in its analysis noted the following:
Under either the principle of lex loci delecti (the law of the place where the tort
occurred governs) or under the principle of “most significant relationship” test set forth in
the Restatement (Second) of Conflicts of Law, West Virginia law should govern because: (1)
the Defendants are all citizens or residents of, or have substantial contacts, with West
Virginia; (2) the Corporate Plaintiffs are either citizens or residents of, or have substantial
contacts with West Virginia; (3) the Plaintiff Caperton is a citizen of West Virginia; (4)
much of the correspondence and documents submitted as evidence either was sent from, or
sent into, West Virginia; (5) the November, 1997, meeting in which many of Defendants'
threats and misrepresentations were made occurred in West Virginia. On this issue as well
it should be noted that:
(a) That Defendants' misconduct occurred in substantial part in the State of
West Virginia, was for the purpose of benefiting Defendants' West Virginia operations, and
substantially injured residents of the State of West Virginia;
(b) That, while the Coal Supply Agreement between Plaintiff Sovereign Coal
Sales and Wellmore required Sovereign to pursue its breach of contact claims against
Wellmore in the State of Virginia, the Defendant in that action (Wellmore) was a different
entity than the Defendants here, that it was litigated and that jury awarded a verdict based
upon a breach of contract only, and that the Virginia defendant's appeal was processed in
the State of Virginia only;
(c) That, as the record to this case illustrates in great depth, the Plaintiffs
alleged and proved to the jury's satisfaction that the torts occurred in the State of West
Virginia[.]
Similarly, it cannot be legitimately argued that the entire course of dealings by
Massey with Plaintiffs that established tortious interference by Massey with the Harman
companies and Plaintiff Caperton was related to the coal supply agreement or involved facts
to be properly asserted and proved in connection with the Virginia contract action on the
coal supply agreement.
Moreover, while Massey's involvement in the declaration of force majeure under the coal supply agreement is related substantially to the tort of fraudulent
misrepresentation found by the jury, it is inaccurate to say that the evidence necessary to
prove that tort was in all respects the same as that necessary to show a valid contract claim
in the Virginia contract action.
It is likewise clear from the trial court's recital that the coal supply agreement
and the Virginia contract action were only tangentially involved in proving the fraud case
and that the evidence necessary to the proof of the fraud claim in tort was in very large part
quite different from any evidence properly necessary to the contract claim.
With this startling and deeply disturbing evidence in mind, from which the
West Virginia jury drew its conclusion that the Massey Defendants were liable for
compensatory and punitive damages, we move on to a discussion of the reasons why the
majority opinion in this case is just plain wrong and is a complete denial of justice.
A. Forum Selection Clause
The majority approached the forum selection clause issue in this appeal with
the single-minded purpose of nullifying the work of the Boone County Circuit Court. In so
doing, the majority unnecessarily formulated the law of this state regarding forum selection
clauses in a variety of ways. The new law was created to achieve the ultimate result desired
in the case before us and by so doing falls short of advancing justice in this case and no
doubt in others to come.
1. Standard of Review
At the outset, the majority furthered its cause by needlessly changing this
state's law governing the standard of review applied to forum selection clauses. As related
in the majority opinion, Appellants attempted to enforce the forum selection clause before
the lower court by motion to dismiss based on venue. The majority correctly noted that this
Court employs an abuse of discretion standard when reviewing motions to dismiss based on
venue. Syl. Pt. 1, United Bank, Inc. v. Blosser, 218 W. Va. 378, 624 S.E.2d 815 (2005).
With the ink hardly dry on the 2005 opinion announcing this standard, the majority
proclaims _ without expressing any reason for trumping the rule of stare decisis _ that
“review of the applicability and enforceability of a forum selection clause is de novo.” Syl.
Pt. 2, Caperton v. Massey, W.Va. , S.E.2d (No. 33350, filed April , 2008).
For some inexplicable reason, the majority has decided that the deference this Court
normally affords lower court decisions regarding application of the law to the facts is
suspended when the matter under consideration involves “applicability and enforceability
of a forum selection clause.” Id.
2. Prior West Virginia Law Governing Forum Selection Clauses
We are equally perplexed with the majority's position that this Court has
generally approved forum selection clauses. While this Court in General Electric Company
v. Keyser, 166 W. Va. 456, 275 S.E.2d 289 (1981), acknowledged in a footnote (See footnote 3) that such
clauses are not per se invalid, it was further recognized in that footnote that even though
“our law on this point is skeletal, it does indicate that [forum selection] contract clauses
which affect such matters as jurisdiction and the like should be carefully analyzed.” Id. at
461-62 n. 2, 275 S.E.2d at 292-93 n. 2. While omitting this portion of the footnote from its
quotation (See footnote 4) the majority did include the paragraph noting:
As the Federal court observed, West Virginia appears not to subscribe to the rule that choice of forum clauses are void per se. 'Rather the rule of most jurisdictions and the rule that this Court believes that West Virginia should and would adopt is that such clauses will be enforced only when found to be reasonable and just'. Leasewell, Ltd. v. Jake Shelton Ford Inc., 423 F.Supp. 1011, 1015 (S.D.W.Va.1976). See also, Kolendo v. Jarell, Inc., 489 F.Supp. 983 (S.D.W.Va.1980).
See Slip Op. at 16. By selectively quoting from Keyser, the majority reaches the sweeping conclusion that the law of this state favors enforcing forum selection clauses. An objective reading of the entire footnote hardly supports such a conclusion. Moreover, there are no subsequent cases in our jurisprudence suggesting a move in that direction in this area of our law. The extensions of forum selection clause law in this case to cover and govern the tort claims brought in the West Virginia suit before us ignores the very spirit of a “reasonable and just” outcome contemplated by the Court in Keyser.
The majority likewise ignores the express caution in Keyser that forum
selection clauses affecting “jurisdiction and the like” _ e.g., venue _ should be “carefully
analyzed.” 166 W.Va. at 461 n. 2, 275 S.E.2d at 292 n. 2. As a result of the majority's
reliance on selective portions of a footnote, Mr. Caperton's individual right to due process
and a fair and just determination of his claims has been foreclosed. (See footnote 5) Mr. Caperton as an
individual was not a party to the coal supply agreement (hereinafter also referred to as
“CSA”) and did not have standing in his individual capacity to enforce the CSA. The
majority has left him without remedy or a place where one could be sought.
The long and the short of it is that the majority simply pushed right past the
cautious and judicious language of Keyser to construct and apply sweeping new law clearly
fashioned to unequivocally deprive Plaintiffs, both corporate and individual, of the relief to
which they are entitled.
3. Scope of New Law Governing Forum Selection Clauses
Not only did the majority institute new law regarding forum selection clauses
on doubtful precedent, it also applied the new law by consistently turning a blind eye toward
the actual facts of this case. The majority continuously repeats its assertion that the forum
selection clause in the 1997 CSA is the basis for the conflicts giving rise to this lawsuit, (See footnote 6) yet
the majority fails to explain how Massey's conduct, conduct subsequent to Wellmore's
declaration of force majeure, is related to the CSA. (See footnote 7) Moreover, the trial court specifically
found that Massey's actions were not connected with the 1997 CSA, a factual finding that
is entitled to deference by this Court. As determined by the trial court, some of Massey's
unsavory conduct was performed prior to Massey's acquisition of United, Wellmore's parent
company. It was also proven that even more of Massey's unsavory conduct was performed
after Massey had sold Wellmore. Despite these proven facts, the majority says that all of
Massey's conduct is somehow related to the CSA. The majority improperly substitutes its
own judgment without acknowledging the relevant findings of the lower court or declaring
the findings of the trial court to be clearly erroneous. The majority says that “[i]n the
absence of the declaration of force majeure, the Harman Companies would not have been
forced into bankruptcy and their prospective contractual relationships would not have been
impeded by Massey.” Caperton, ___ W.Va. at ___, ___ S.E.2d at ___, Slip Op. at 33. Not
only is this argument circular _ that is, in the absence of Massey's deceitful plan, Wellmore
would have never declared force majeure and the Harman companies would not have been
impeded by Massey _ but it also does not reconcile with the facts of the case. Summarizing
the findings of the circuit court, the majority noted that subsequent to Wellmore's
declaration of force majeure, Massey continued in negotiations with the Harman companies
and Mr. Caperton for Massey's purchase of the Harman Mine, and the parties agreed to
close the transaction on January 31, 1998. However, Massey delayed and, as the circuit
court found, “ultimately collapsed the transaction in such a manner so as to increase [the
Harman companies'] financial distress.” In addition, Massey utilized the confidential
information it had obtained from the Harman companies to take further actions, such as
purchasing a narrow band of the Pittston coal reserves surrounding the Harman Mine, in
order to make the Harman Mine unattractive to others and thereby decrease its value.
During the negotiations for the sale of the Harman Mine to Massey, Massey had also learned
that Mr. Caperton had personally guaranteed a number of the Harman companies'
obligations. Subsequently, the Harman companies filed for bankruptcy.
The majority provides no explanation whatsoever as to how these acts
committed by Massey are related to Wellmore's declaration of force majeure, and the failure
to do so is because they bear no relationship to Wellmore's declaration of force majeure.
Using the majority's line of reasoning, had Massey not entered into “sham” negotiations
with the Harman companies and Mr. Caperton for Massey's purchase of the Harman Mine,
the Harman companies may not have been forced into bankruptcy. Or had Massey not
purposefully collapsed the transaction, after multiple delays, the Harman companies may not
have been forced into bankruptcy. Or had Massey not improperly used Mr. Caperton and
the Harman companies' confidential information for Massey's personal benefit, the Harman
companies may not have been forced into bankruptcy.
To say that Massey's deceitful conduct “flowed from” Wellmore's declaration
of force majeure is utterly unjustifiable. Wellmore's declaration may have made the Harman
companies more vulnerable to this attack by Massey. However, it was Massey's subsequent actions that were the proximate cause of the Harman companies destruction.
With respect to the Harman companies' claim of tortious interference with
existing business relationships, the majority says
“Count I” of the amended complaint alleges tortious
interference with existing contractual relations, and specifically
identifies existing contracts with Wellmore (the 1997 CSA),
Penn Virginia (the lease of the Harman Coal reserves), and the
UMWA (a labor contract). Certainly a claim of interference
with the 1997 CSA itself is related to that contract. With
respect to the Penn Virginia and UMWA contracts, it was
Wellmore's declaration of force majeure that placed the
Harman Companies and Mr. Caperton in the position of being
unable to fulfill their contractual obligations.
Caperton, ___ W.Va. at ___, ___ S.E.2d at ___, Slip Op. at 32-33.
Contrary to this assertion by the majority, the trial court specifically found that
it was Massey's conduct subsequent to the force majeure declaration that affected the lease
of the Harman Coal reserves and the labor contract. Had Massey not engaged in its
deceptive conduct _ pretending to carry on purchase negotiations in order to gain
confidential information for use against the Harman companies and Mr. Caperton _ who
knows what the outcome may have been. Not surprisingly, that was the question presented
to the Boone County jury: had Massey not engaged its deceptive actions, what position
would Mr. Caperton and the Harman companies have been in? Stated another way, what
injuries did Massey inflict on Mr. Caperton and the Harman companies by engaging in its
deceptive actions?
Although unsupported by the evidence, the majority sweepingly states that
“insofar as the claims asserted in this action all flow from the allegedly wrongful declaration
of force majeure, they would require interpretation of the contract to determine whether the
declaration was indeed wrongful.” Caperton, ___ W.Va. at ___, ___ S.E.2d at ___, Slip Op.
at 34 n. 24. The majority inaccurately indicates that a wrongful declaration of force
majeure is necessary to the claims presented in this case. According to the majority, had
Wellmore rightfully declared force majeure, the Harman companies and Mr. Caperton would
not have a claim against Massey. The majority's new formulation of the law now permits
companies to enter into “sham” negotiations and thereby acquire confidential information,
only to use that information to drive their competitors out of business.
4. Due Process
The manner in which the majority applied its newly announced four-part test
for determining whether a forum selection clause should be enforced violates the due
process rights of not only Mr. Caperton, but the corporate appellees as well. As the majority
points out by reference to multiple pages of authority, retroactive application by courts of
a newly announced law is not a per se violation of due process. However, when a new
burden is placed on a party as part of that new law and the party charged with carrying the
burden is not permitted an opportunity to go forward with evidence to meet the burden,
procedural due process guarantees are violated. “[A] State may not deprive a person of all
existing remedies for the enforcement of a right, which the State has no power to destroy,
unless there is, or was, afforded to him some real opportunity to protect it.” Brinkerhoff-
Faris Trust & Sav. Co. v. Hill, 281 U.S. 673, 682 (1930); see also Harper v. Virginia Dept.
of Taxn., 509 U.S. 86, 101 (1993). There is absolutely no way that the corporate appellees
or Mr. Caperton could have heretofore attempted to meet the burden the new standard
imposes in order to overcome the presumption of enforceability. The majority affords no
opportunity after announcing the new standard for the affected parties to meet the newly
established burden. Obviously, Appellees' rights to due process have been abridged.
5. Contractual Rights of Third-parties
To attain its objective in this case, the majority has also ignored one of the
most basic principles of contract law, that being “the primary purpose and function of the
court in interpreting a contract is to ascertain the parties' intention so as to give effect to that
intention.” 11 Williston on Contracts § 32:2 at 397 (4th ed. 1999); see also Restatement
(Second) of Contracts § 201. Courts are obligated to interpret and give effect to the mutual
intention of the parties at the time of contracting. Parties to a contract may create rights in
third parties by manifesting an intention to do so within the contract or by the circumstances
surrounding the making of the contract. “However, in order to be entitled to relief as a third-
party beneficiary, the protection afforded must have been in the contemplation of the parties
at the time of the execution of the contract.” 17B C.J.S. Contracts § 621 (1999); see also W.Va. Code § 55-8-12 (1923) (Repl. Vol. 2000). It is inconceivable that any of the parties
to the CSA could have or should have foreseen or expected at the time of contracting that
Massey would unlawfully undertake to do irreversible harm to the Harman mining operation,
and to Mr. Caperton as an individual, since he was not a party to the contract in his
individual capacity. Even though the contract played a role in different facets of the case
brought in West Virginia, Appellees' tort claims against Massey embraced more than the
obligations and duties arising out of the CSA or conduct undertaken pursuant to the CSA.
In syllabus point eleven, the majority announces a new rule, that “[a] defendant
who is a non-signatory to a contract containing a forum-selection clause may enforce that
clause when it is shown that the claims against him or her are closely related to the contract.”
In the first case cited by the majority in support of this rule, Hellenic Inv. Fund, Inc. v. Det
Norske Veritas, 464 F.3d 514, (5th Cir. 2006), the reviewing court enforced a forum selection
clause against a non-signatory to the contract on the basis that the non-signatory benefitted
from performance of the contract. The same cannot be said for the instant case where
Massey benefitted from the destruction of the 1997 CSA.
The trial court found that Harman Development and Wellmore had formed a
strong coal supply relationship with LTV Steel _ a relationship that Massey desperately
wanted, and apparently would stop at nothing to get. Massey developed and executed a very
risky plan to obtain LTV's business (See footnote 8) , and when that plan failed, Massey refused to accept
responsibility for it actions. Massey admits that it did a “cost-benefit” analysis and
determined that it was in its best interest to declare force majeure. However, it does not
seem the declaration was in Wellmore's best interest, as the trial court found that Wellmore
sold and shipped nearly two-thirds of the coal purchased from the Harman companies to
LTV Steel. The majority's casting of the Wellmore-Massey relationship as being closely
connected in interest is simply not correct according to the facts. Even though Massey
owned Wellmore for a brief period of time _ less than eight months _ Massey did not further
the interests of Wellmore by destroying Wellmore's relationship with LTV Steel and then
with the Harman companies.
The majority emphasizes that Mr. Caperton or the Harman companies could
reasonably foresee that they would be bound by the forum selection clause. However, could
Mr. Caperton or the Harman companies reasonably foresee that Massey would acquire
Wellmore's parent company of United Coal for a brief eight-month period, by which Massey
would be able to enforce the forum selection clause? Could Mr. Caperton or
the Harman companies reasonably foresee the actions Massey took after it had
sold Wellmore _ which
removed any type of contractual relationship whatsoever between the parties _ would still
fall within the forum selection clause in the 1997 CSA? Apparently the majority believes
Mr. Caperton and the Harman companies should have anticipated all of the peculiarities
arising in this case. Ultimately, by placing such unrealistic requirements as to foreseeability
on contracting parties, the majority makes West Virginia a truly vulnerable place to do
business.
Another basic tenet of contract law is that the parties approach the contracting
process act with good faith and the intent to deal fairly. As summarized by one authority,
there is an implied covenant of good faith and fair dealing in
every contract, whereby neither party shall do anything which
will have the effect of destroying or injuring the right of the
other party to receive the fruits of the contract . . . .
The scope of conduct prohibited by the covenant of good faith
is circumscribed by the purposes and express terms of the
contract.
17A Am. Jur. 2d Contracts § 370. Initially, Harman had included in its Virginia suit a claim
sounding in contract for breach of the duty of good faith and fair dealing, (See footnote 9) but withdrew the
claim before the trial in that case. Withdrawal of the claim is fully understandable because
only Wellmore, as a party to the CSA, could be bound by the contractual duty of good faith
and fair dealing. As the lower court herein concluded from the evidence before it,
manipulation of the CSA and its forum selection clause was just one of many tools Massey
used both before, during and after its ownership of Wellmore. The aim of Massey's plan
was either to directly cause the demise of the Harman corporations and the financial ruin of
Mr. Caperton as an individual, or at least use the Harman coal operation and Mr. Caperton
as pawns to force United to accept the lower grade Massey coal for the premium coal
produced from the Harman mine. There was no indication that Wellmore was aware of
Massey's plan to eliminate the Harman mining operation or could have foreseen the
implementation of such a plan when it entered and renewed the CSA with the corporate
appellees. Essentially, the majority, by extending the right to enforce a forum selection
clause under the circumstances of this case to Massey as a non-signatory to the CSA, has
created a loophole whereby a non-party to a contract may gain the benefit of enforcing a
forum selection clause without having the burden of accountability for acting in good faith
and dealing fairly. Massey and others like Massey can simply ride the coattails of good
business citizens in order to accomplish covert, questionable and reprehensible acts. We
hardly find this conducive to promoting trust in the contracting process or otherwise
furthering commerce and business interests _ nor does it foster trust in the judicial process.
6. Weaknesses of the Announced Forum Selection Clause Test
Even if one acknowledges the suitability _ in the abstract _ of the test made
applicable to forum selection clauses by the majority opinion, two very serious problems are
readily apparent with the application to the case sub judice of the new test announced by the
majority in syllabus point six. First, as mentioned earlier, retroactive application of this test
does not allow parties the opportunity to overcome the newfound presumption of
enforceability, thereby depriving the parties opposing enforcement of the clause their due
process rights. Our second concern rests with the new test not giving trial courts, charged
with weighing the evidence regarding forum selection clause issues, the freedom to decide
that the presumption of enforceability has been rebutted purely on the circumstances as
revealed in the record before them. This flexibility, placed in the hands of our capable trial
court judges, would serve to eliminate unnecessary expenditure of time and resources in
appropriate cases.
We fear that the readily apparent flaws in the new standards embraced by the
majority as governing enforcement of forum selection clauses in this state represent only the
tip of the iceberg of problems which will surface upon pragmatic application of the
standards in the courtrooms of this state. All lawyers know that the law can be read and
written to accommodate the needs of a situation, and that the law has to be malleable in
order to address a variety of ever-evolving circumstances. Consequently, good, enduring
and meaningful law must be written in such a manner as to promote the noble cause of the
larger good and not merely support the agenda of a few. Unfortunately, the new law
governing forum selection clause issues which the majority has designed in this case reaches
unreasonable and unjust results not only for the affected parties, but also for the judge and
jury who heard this case and all businesses and individuals who will be impacted by
anticipated as well as unexpected results.
B. Res Judicata
Dismissal on res judicata grounds was unnecessary and again exemplifies the
majority's results-driven approach to this appeal.
Because the law of Virginia controls the application of res judicata in this case,
a close examination of the decisions of the Supreme Court of Virginia governing the
relevant time period (See footnote 10) is essential. This study, however, must be undertaken with the
understanding that the pertinent cases were decided at a time when common law and equity
pleading were not merged in Virginia. (See footnote 11) Such recognition is necessary because the
separation of law and equity often affected whether one or more of the four elements
necessary to invoke application of the doctrine of res judicata (See footnote 12) was present under the facts
of a given case. For example, some remedies were only available in actions brought in the
chancery side of the courts while others were only obtainable on the law side of the courts. (See footnote 13) Moreover, the discussion in the cases does not always address the law-equity distinction
when examining the presence or absence of the elements substantiating application of res
judicata, and sometimes reasoning based on the distinction is applied in cases where the
basis of the two suits is not split between common law and equity. As a result, the status of
the applicable law involving res judicata in Virginia simply was not as clear as the majority
opinion leads one to believe. This is particularly true in Virginia's Supreme Court cases
involving the meaning of the element of “identity of cause of action.” A review of these
cases, all decided no later than the time that the final judgment was entered in the Virginia
suit, does not support the majority's conclusion that Virginia would have applied the
transactional approach to the res judicata cause of action element. Instead, such review
discloses that this area of Virginia's jurisprudence was in a state of flux at the time the final
judgment order was entered against Wellmore in the breach of contract suit brought in
Virginia.
More than one test has been employed over the years in Virginia to determine
whether the element of “identity of cause of action” has been satisfied. One approach most
commonly applied involves an analysis of the evidence. The extended vitality of this
approach was attested to in the 1988 case of Flora, Flora & Montague, Inc. v. Saunders, 367
S.E.2d 493 (Va. 1988), in which it was stated that for res judicata purposes,
[t]he principal test to determine whether claims are a part of the
same cause of action is whether the same evidence will support
both claims. Brown v. Haley, 233 Va. 210, 216, 355 S.E.2d
563, 567 (1987)[(“The test to determine whether claims are part
of a single cause of action is whether same evidence is
necessary to prove each claim.”)]; Jones [v. Morris Plan Bank],
168 Va. [284] at 290-91, 191 SE [608] at 609-610 [(1937)
[(“One of the principal tests in determining whether a demand
is single and entire, or whether it is several, so as to give rise to
more than one cause of action, is the identity of facts necessary
to maintain the action. If the same evidence will support both
actions, there is but one cause of action.”)]; see also Wright v.
Castles, 232 Va. 218, 223-24, 349 S.E.2d 125, 129 (1986)
[(relying on Jones v. Morris Plan Bank to apply the same
evidence test)]; Bates [v. Devers], 214 Va. [667] at 672, 202
S.E.2d [917] at 922 [(1974) (applying same evidence test)].
Saunders at 495-96. Some additional older cases in which the “same evidence test” was
employed to determine whether claims were part of a single cause of action are Kelly v.
Board of Public Works, 25 Gratt. 755, 763, 1875 WL 5640, *4 (Va.1875) (“The two claims
. . . are distinct divisible claims, depending on separate contracts, made at different times and upon different principles; and the evidence to support one is not necessary to support the other, but much of it that would be material to sustain the one would be irrelevant to the other.”), Cohen v. Power, 32 S.E.2d 64, 65 (Va. 1944) (“The test generally applied in the application of the doctrine of res adjudicata is to determine whether the facts essential to the maintenance of the two actions are the same. If the same facts or evidence would sustain both actions . . . subsequent action based upon the same facts [is barred].”), and Feldman v. Rucker, 109 S.E.2d. 379, 384 (Va. 1959) (second suit found to be a different cause of action because its outcome “was dependent upon different proof and principles of law.”) Since the same evidence test did not always serve justice, other factors were also considered by the high court of Virginia when deciding the presence or absence of similarity between causes of action. In Smith v. Ware, 421 S.E.2d 444 (Va. 1992), the Virginia Supreme Court found that different causes of action existed because different rights were asserted in each suit, one based in equity and the other based in law. In another case in which one suit was filed in the chancery court and the other was filed in the law court, the examination of the cause of action element turned on whether the purposes and issues in both suits were the same. Worrie v. Boze, 95 S.E.2d 192, 197 (1956). Yet another approach used in Virginia to vary the result achieved by strict application of the same evidence rule was to look at the transaction from which the suits arose.
It was in the 1974 case of Bates v. Devers _ a case earlier noted as applying the same evidence test _ that the Virginia Supreme Court first referred in a footnote to the term “transaction” in relation to the res judicata element of cause of action. The footnote from Bates was elevated to the body of the discussion in Allstar Towing, Inc. v. City of Alexandria, 344 S.E.2d 903 (Va. 1986), in the following manner:
For the purposes of res judicata, a 'cause of action' may be
defined broadly 'as an assertion of particular legal rights which
have arisen of a definable factual transaction.' Bates v. Devers,
214 Va. 667, 672 n. 8, 202 S.E.2d 917, 921 n. 8 (1974).
Allstar at 905-06. Since the same evidence test was thereafter touted in the 1988 case of Saunders as the principal test in this regard, a fair reading of Allstar is that the result the
high court of Virginia believed would serve justice could not be attained by strict application
of the same evidence test. Although the two suits which were the subject of the res judicata
inquiry in Allstar would have relied upon the same evidence, the spin the Virginia Supreme
Court placed on the same evidence test in Allstar allowed the high court to reach the
conclusion that the second suit should proceed because some of the relevant events had not
occurred until after the first suit was decided. The Allstar court did not approach the matter
before it using the transactional analysis method in order to find that the facts supported an
inseparable amalgam constituting but one cause of action. Rather, the Court in Allstar relied
upon the term “definable factual transactions” to separate the interrelated facts before it and
find two identifiable causes of action. Id. Furthermore, there was no indication in the body
of the Allstar opinion that prior decisions were overruled, superseded or should be read in
light of the adoption of a new standard for determinations of causes of action for res judicata
purposes. Thus the principal insight Allstar provides is that the Supreme Court of Virginia
would not strictly adhere to a test for cause of action which would serve to eliminate a
party's right to a full and fair hearing on matters which had not previously been adjudicated.
Although decided outside of the relevant time period of the case sub judice,
the later case of Davis v. Marshall Homes, Inc., 576 S.E.2d 504 (Va. 2003), supports this
reading of Allstar while serving as further testament that the law in this area remained
unsettled in Virginia until the Supreme Court of Virginia adopted Rule 1:6 of the Rules of
the Supreme Court of Virginia in 2006. The majority and dissenting opinions filed in the Davis case nicely summarize the differing viewpoints on the proper test to apply in this
regard.
The majority simply ignores the unsettled status of this area of law in Virginia
in 2001 when the Virginia suit was concluded and instead looks to what the Virginia
Supreme Court eventually did to resolve the dilemma. It also ignores the Virginia high
court's overarching concern with achieving justice when faced with a decision of what
constituted an identity of cause of action for res judicata purposes. The only Virginia cases
within the relevant time period upon which the majority squarely relies are Allstar and the
unpublished circuit court case of Cherokee Corporation v. Richardson, 1996 WL 1065553
(Va. Cir. Ct. 1996). This reliance could have only been used to substantiate the Virginia
Supreme Court's later adoption in 2006 of a transactional analysis rule. (See footnote 14) It is noteworthy
for due process purposes that the Supreme Court of Virginia prospectively applied the new
rule only to those cases brought on or after the effective date of July 1, 2006. To say that
the parties knew, should have or even could have known that the high court of Virginia
would _ some five years after the final judgment was entered in the Virginia contract case
_ adopt a transactional analysis approach as the sole means to define cause of action for res
judicata purposes is to assume that the parties had access to a crystal ball or possessed
prescient abilities.
Significantly, the majority could not have followed the precedential law of
Virginia and applied the same evidence test in any form since the entire record of the
Virginia proceeding was not admitted into the record of this appeal, making a comparison
of evidence between the Virginia suit and the West Virginia suit impossible. This serves to
further demonstrate the majority's dogged pursuit of a course which would produce the
results it desired in whatever available manner.
Even if the transactional analysis test was the controlling law of Virginia in 2001, the matters raised in the West Virginia suit went beyond what the majority found to be central to the transaction: the CSA. (See footnote 15) The evidence introduced in the Boone County suit proved that Massey developed its plans to undermine the Harman Mine operations and to place Mr. Caperton's individual interests in jeopardy before the first CSA was signed, that is before Massey had any ownership interest in Wellmore, and carried that effort forward long after Massey sold Wellmore. Furthermore, the purposes of the transactional analysis approach have been frustrated by the way that the majority undertook to apply it in the instant case. It is recognized in the federal courts which have adopted the transactional analysis test that “[n]o simple test exists to determine whether causes of action are identical for claim preclusion purposes, and each case must be determined separately within the conceptual framework of the doctrine.” Pittston Co. v. U.S., 199 F.3d 694, 704 (4th Cir. 1999); see also Charles Alan Wright, Arthur R. Miller, Edward H. Cooper, 18 Fed. Prac. & Proc. Juris. 2d § 4407 nn. 53-54 (2002) (citing cases finding either no definition possible or no definition desirable). It is further recognized that the utility of the transactional analysis test is that it affords flexibility in examining cases which are more complex, and has been used to justify separating claims in such circumstances even though the claims arise from a common background. As summarized by one authority commenting on how the federal courts have applied the transactional analysis test in complex cases:
One of the most general reasons for separating claims is
that a broad course of completed unlawful conduct has included
a clearly separable event that gave rise to distinctive injury.
Thus the victim of a long conspiracy to destroy a business was
permitted to follow an action for libel with an antitrust action in
which the libel was merely one piece of evidence to prove the
overall conspiracy. In like fashion, a trustee in bankruptcy was
permitted both to recover a judgment against the controlling
stockholder for breach of fiduciary responsibilities in a specific
transaction, and later to subordinate the stockholder's rights to
the rights of other stockholders on the basis of continuing
breach of its responsibilities throughout the entire period of
ownership. Despite the relationship among the facts of these
separate actions in origin and motivation, these decisions seem
to respond well to pragmatic considerations of trial efficiency
and do not pose any substantial threat to interests of repose.
Wright, Miller, Cooper, 18 Fed. Prac.& Proc. Juris. 2d § 4408, 195-196 (footnotes omitted).
The majority failed to closely examine whether there were clearly separable
events and distinctive injuries arising in the instant case, and did not consider the pragmatic
implications of joining all claims into one trial. Regrettably, it appears the majority was
more committed to the aim of reaching a desired conclusion rather than arriving at a just
result _ which the transactional analysis approach would clearly support under the facts
presented in this case.
[ A]t the outset, we wish to make perfectly clear that the
facts of this case demonstrate that Massey's conduct
warranted the type of judgment rendered in this case.
Caperton v. A.T. Massey Coal Co., Inc., 2007 WL 4150960, Slip Op. at 13 (No. 33350, filed
November 21, 2007), withdrawn.
As amply demonstrated by the preceding analysis, the majority could have
readily allowed the work of the Boone County Circuit Court to stand. Instead, the majority
consciously chose to decide this case in such a way as to allow wrongdoers to skirt the
consequences of their actions. In pursuit of its desired outcome, the majority did not apply
the controlling law of Virginia and instead rigidly applied a test unknown to the parties at
the time the litigation was pending in Virginia, and did so without regard to the inherent
flexibility of the rule. The new test was applied in such a way as to ignore the complexities
of the transaction and with gross disregard for the due process rights of the litigants. Not
only is the majority opinion unsupported by the facts and existing case law, but it is also
fundamentally unfair. Sadly, justice was neither honored nor served by the majority. (See footnote 16)
While it gives us no pleasure to write this dissent, we recognize a duty to do
so in the name of justice. Indeed, embodied in our constitution is the clear statement that
“[f]ree government and the blessings of liberty can be preserved to any people only by a firm
adherence to justice, moderation, temperance, frugality and virtue, and by a frequent
recurrence to fundamental principles.” W. Va. Const. Art. 3, §20. Regrettably, the majority
has radically strayed from the fundamental principles of fairness and justice in maintaining
its course of setting aside the Boone County decision in this case, a course to which we
wholeheartedly and fervently dissent.