CDS Family Trust, et al. v. Ernest R. Martin, et al.

Filing 236

MEMORANDUM OPINION AND ORDER granting 216 MOTION for Leave to File Third Amended Complaint by CDS Family Trust, The Carl Delsignore Family Trust, LLC. Signed by Magistrate Judge J. Mark Coulson on 7/24/2019. (ol, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CDS FAMILY TRUST, et al,

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Plaintiffs,

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v.

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ERNEST R. MARTIN, et al,

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Defendants.
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Civil Case No. 1:15–cv–02584–JMC

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MEMORANDUM OPINION AND ORDER
At its core, this case involves an allegation that Defendants wrongfully mined 1 coal from
an area where they did not own the necessary mineral rights. The case is before me for all
proceedings by the consent of the parties pursuant to 28 U.S.C. § 636(c). Since referral on
Defendants’ Corsa Coal Corp. (“Corsa Coal”), Wilson Creek Energy, LLC (“Wilson Creek”), and
PBS Coals, Inc. (“PBSC”) (collectively, the “Coal Defendants”) Motions to Preclude Expert
Testimony, (ECF Nos. 136 & 139), were denied without prejudice. Coal Defendants’ Rule 72(a)
Objection, (ECF No. 150), was granted in part, as to historical observations and calculation
changes, and denied in part, as to the disputed area specifically. The Parties confirmed subject
matter jurisdiction. (ECF Nos. 195 and 196). Plaintiffs’ Motions for Summary Judgment as to
Counts 1, 2, 3, 4, and 6 against WPO, Inc, (“WPO”) (ECF No. 129), and as to Count 7 against
Jeffrey Rose, (ECF No. 126), were denied.
Coal Defendants’ Motion for Summary Judgment, (ECF No. 130), was also granted in part
as to Corsa Coal in total, and Wilson Creek as to counts based on successor-in-interest liability.

Not all of the Defendants performed actual mining but were instead involved as lessors or purchasers in the “chain”
of mining operations.
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After a hearing on May 21, 2019, this Court granted in part another portion of the Coal Defendants’
Motion for Summary Judgment, (ECF No. 130), finding that Plaintiffs held no ownership or
mineral rights within the 29.7-acre parcel at the center of this dispute during the relevant time
period. (ECF No. 217). The recent denial of Plaintiffs’ motion for reconsideration, (ECF No.
234), leaves only a few issues outstanding.
Pending a hearing now scheduled for August 21, 2019, this Court will not yet rule on
Plaintiffs’ Motion for Summary Judgment Against WPO, Jeffery Rose and Debbie Rose as to
Counterclaim, (ECF No. 127). This memorandum does, however, address Plaintiffs’ also pending
Motion for Leave to File Third Amended Complaint. (ECF No. 216). The issue is opposed by the
Coal Defendants, (ECF Nos. 223, 224, 230), and no hearing is necessary. See Loc. R. 105.6 (D.
Md. 2018). For the reasons below, Plaintiffs’ motion is GRANTED.
STANDARD OF REVIEW
Rule 15(a) of the Federal Rules of Civil Procedure provides the general rules for amending
pleadings. Specifically, Rule 15(a) requires that, after a responsive pleading is served, a plaintiff
may amend his complaint “by leave of court or by written consent of the adverse party.” In general,
leave to amend a complaint pursuant to Rule 15(a) shall be “freely” granted “when justice so
requires.” Fed. R. Civ. P. 15(a)(2); see Foman v. Davis, 371 U.S. 178, 182 (1962); Lance v. Prince
George’s County, Md., 199 F. Supp. 2d 297, 300-01 (D. Md. 2002). The matter, however, is
committed to the discretion of the district court, and the district judge may deny leave to amend
“when the amendment would be prejudicial to the opposing party, the moving party has acted in
bad faith, or the amendment would be futile.” Equal Rights Center v. Niles Bolton Assocs., 602
F.3d 597, 603 (4th Cir. 2010); see also Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d
754, 769 (4th Cir. 2011).

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DISCUSSION
During the hearing on the Coal Defendants’ Motion for Summary Judgment, this Court
expressed concern over how the area of disputed mining has evolved. Where it once appeared that
the suit strictly concerned mining within a 29.7-acre parcel (the “Martin Parcel”), it ultimately
morphed through Plaintiffs’ expert’s rebuttal report of February 28, 2018 arguably to include an
area beyond the Martin Parcel. This culminated in Plaintiffs’ assertion that the disputed mining
took place on 3.36 total acres. Of that area, 1.1 acres fell within the Martin Parcel at issue in the
hearing, and the remaining 2.25 acres fell outside on other property allegedly owned by the
Plaintiffs. As expressed during the May 21, 2019 hearing, this refocusing concerned the Court
over whether the complaint still accurately reflected the dispute. (ECF No. 215 at 92:18-93:21).
After the Court articulated these concerns, Plaintiffs announced an intention to file the now
pending Motion for Leave to File Third Amended Complaint. In the interim, this Court ruled that
the Plaintiffs did not have an ownership interest in the Martin Parcel and that, as presently worded,
Plaintiffs had not adequately pled that the area of disputed mining extended beyond the Martin
Parcel. (ECF No. 216). Accordingly, Plaintiffs’ only hope of recovery lies with its ability to again
amend its complaint to include the 2.25 acres beyond the Martin Parcel.

(Id. at 8 n. 9).

Plaintiffs’ motion argues that the circumstances are proper for leave. First, Plaintiffs argue
that while clarity in pleadings is important, the Defendants have been aware of the additional 2.25
acres outside of the Martin Parcel. (ECF No. 216-1 at 8). Second, Plaintiffs argue that Maryland
is a notice pleading state and as such the Complaint’s allegations of wrongful mining in Mount
Cynthia (a 907-acre area which includes both the Martin Parcel and the additional 2.25 acres) gave
sufficient notice. Third, Plaintiffs argue that amendment would not cause prejudice, there is no bad
faith or delay, and amendment would not be futile.

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Coal Defendants counter that the requested amendment would be futile and unduly
prejudicial. (ECF No. 224-1). As for futility, Coal Defendants argue that Plaintiffs cannot muster
sufficient evidence to support its claims nor can Plaintiffs present evidence of allocation as
between the coal removed from the Martin Parcel on the one hand (where the Court has ruled
Plaintiffs possessed no ownership interest in the coal), and the coal removed from additional 2.25
acres outside the Martin Parcel. As for burden, the Coal Defendants argue that the only means of
correcting the futility is to permit the undue burdens of additional discovery and motions practice.
While some of Defendants arguments resonate with the Court, it will nevertheless exercise its
discretion and permit amendment preliminarily, subject to certain conditions specified below.
First, although not sufficiently described in Plaintiffs’ Complaint (or First or Second
Amended Complaints), the Court finds it more likely than not that the Defendants were nonetheless
on notice of the additional 2.25-acre area during discovery. At a minimum, Defendants were put
on notice of this theory by Plaintiffs’ expert, Mr. Larry McDowell’s, revised report dated February
28, 2018.2 (ECF No. 136-6). This was before the discovery deadline, (ECF No. 105), prompted
a vigorous deposition in September 2018, and even led to some motions practice. (ECF Nos. 136,
154, 161). Therefore, this Court is not convinced that amendment would cause prejudice based on
lack of notice.3 Neither does the Court feel that the need for amendment was caused by bad faith
or purposeful delay.
The Court does, however, have serious misgivings as to how this case will proceed should
amendment be permitted and whether it has reached a point of futility. The June 12, 2019

Although not clearly delineated, review of the exhibits attached to Mr. McDowell’s first report in April of 2017 also
shows that the purportedly mined area likely extended beyond the 29.7-acre parcel. (Compare ECF No. 136-5 at 13
with 136-5 at 53).
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The Court is not persuaded by Plaintiffs’ arguments that simple citation to Mount Cynthia, a 907-acre parcel, and
area deeds sufficiently gave notice of 2.25 acres of disputed coal.
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Memorandum and Order requested that the parties “address any record evidence establishing
ownership of the mineral rights for additional acreage[]” and to address issues that arise from
Plaintiff’s “representation at oral argument that they have no present evidence of allocation of coal
as between the two areas . . . .” (ECF No. 217 at 18). Plaintiffs included no such record evidence
within their motion or reply and have previously announced an inability to allocate at all. (ECF
No. 215 at 12:23-13:10). Plaintiffs contend that Mr. McDowell will present such evidence of
allocation, although none has been produced to date. (ECF No. 230 at 5).
Nevertheless, the Court is not prepared to find amendment futile. Rather, Plaintiffs’ motion
is granted on a preliminary basis subject to specific evidentiary showings. First, Plaintiffs must
produce to Defendants and file with the Court documentary evidence together with any additional
argument that reasonably supports their claim of an ownership interest in the coal from the 2.25acre parcel at the time of the allegedly wrongful mining. This would at a minimum include a copy
of any conveyances or other documents that Plaintiffs contend establishes such an interest. This
must be filed by August 15, 2019. In so doing, the Plaintiffs should keep in mind this Court’s
previous rulings regarding, inter alia, the insufficiency of the probate-related documents previously
relied upon to establish such an interest with regard to the Martin Parcel. Second, Plaintiffs must
file a supplemental expert report disclosing their expert’s specific allocation of the coal as between
the Martin Parcel and the 2.25-acre parcel, including all bases supporting such allocation, along
with any supporting documents. This must be filed by August 30, 2019.
Once produced, the Court may exercise its discretion in revisiting this memorandum and
its accompanying order. See Fed. R. Civ. P. 54(b). Furthermore, this decision is made without
prejudice towards Defendants’ ability to file an additional dispositive motion after reviewing
Plaintiffs’ productions.

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For the foregoing reasons, Plaintiff’s Motion for Leave to File Third Amended Complaint,
(ECF No. 216), is GRANTED and Plaintiff is ORDERED to make evidentiary showings as
detailed within.

Dated: July 24, 2019

/s/
J. Mark Coulson
United States Magistrate Judge

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