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The Pennsylvania Superior Court has affirmed a Washington County jury's $1 million award—plus prejudgment interest—to a pair of landowners who argued that Consol Pennsylvania Coal Co. (CPCC) breached the terms of a settlement agreement between the parties in a quiet title action.

In an unpublished Nov. 8 memorandum, a three-judge panel of the appeals court in Carter v. Consol Pennsylvania Coal Co. unanimously affirmed the trial court's ruling that CPCC was not entitled to judgment notwithstanding the verdict. The panel said the jury had sufficient evidence to side with plaintiffs Jon Holbert Carter and Patricia W. Carter on their claim that CPCC had breached their settlement agreement by taking a position on appeal in the quiet title action that contradicted the company's position from earlier in the litigation.

According to Judge John Bender, who wrote for the panel, CPCC had initiated the action against the Carters in 2005 to quiet title to a 1.875 tract of coal. After the parties made their arguments to Washington County Court of Common Pleas Judge Katherine Emery, they reached a settlement in which CPCC agreed to pay the Carters to quit-claim their interest in the tract, plus an addition $1 million if the courts' final decision on ownership of the tract turned out to be in favor of the Carters.

According to Bender, both sides retained their rights to appeal in the quiet-title action and at some point an addendum to the agreement was executed, stating, “'It is understood and agreed that, as of the date of execution of the settlement, the issues as to each ownership … is [sic] before Judge Emery and that the presentation in each case is complete.'”

Emery ultimately decided that CPCC held fee simple title to the tract. The Carters appealed and the Superior Court reversed Emery's ruling, Bender said. However, on appeal to the state Supreme Court, CPCC argued that only it or the heirs of Joseph Carroll, who reserved the rights to the tract of coal in a deed executed in 1840, could be deemed the owner of the tract. Because the Caroll heirs were not parties to the quiet title action, the Supreme Court remanded the case to the trial court with instructions to dismiss the action for failure to join indispensable parties.

However, the Carters took issue with CPCC's argument that the Caroll heirs were indispensable to the case because, at an earlier stage of the litigation, the company had argued the exact opposite point.

In changing its position on appeal from Emery's ruling, the Carters argued, CPCC breached the portion of its settlement agreement that said the presentation of each party's case was complete at the trial level. A jury agreed and awarded the Carters $1 million for breach of settlement.

On appeal from the verdict, CPCC argued that it did not breach the settlement, because its terms actually only prohibited the parties from changing their arguments before Emery but did nothing to limit their ability to do so on appeal.

But Bender, joined by Superior Court Judges Anne Lazarus and John Musmanno, rejected that argument.

“In light of the language in the settlement agreement prohibiting new parties from being added to the action, promising good faith, and having the Carters represent to the [Department of Environmental Protection] that CPCC may now mine the coal in question, the settlement agreement does not accord with allowing CPCC to raise the possibility on appeal, for the first time and counter to its prior position, that the Carroll heirs—or some other person—may own the coal,” Bender said.

But while the panel affirmed the trial judge's ruling on CPCC's JNOV petition, it reversed the trial court's decision not to award the Carters prejudgment interest.

While the trial court had found that the Carters were not entitled to prejudgment interest because a final determination on the tract's ownership was never made and thus the $1 million bonus payment provided for in the parties' settlement agreement was never triggered.

Bender said that “although the Supreme Court did not issue a final decision on ownership, it did not address that question because of the improper arguments made by CPCC.”

“In addition, we reiterate that this court made the last decision on the merits of ownership in favor of the Carters,” Bender said, awarding the Carters prejudgment interest from Jan. 23, 2009, which was 30 days after the breach.

The Carters' attorney, Colin Fitch of Marriner, Jones & Fitch in Washington, said the case took a long time to get before a jury.

“We obviously believe the Superior Court issued the correct decision,” Fitch said.

Consol's attorney, Ira Podheiser of Burns White in Pittsburgh, could not be reached for comment.

(Copies of the 30-page opinion in Carter v. Consol Pennsylvania Coal Co., PICS No. 18-1412, are available at http://at.law.com/PICS.)