Ohio Valley Environmental Coalition, Inc. v. Hobet Mining, LLC

Filing 285

MEMORANDUM OPINION AND ORDER regarding Plaintiffs' 279 MOTION to Join Additional Defendant, Order Status Report, Declare Liability for Stipulated Payments, and Permit Limited Discovery; granting the motion in part as to plaintiffs' reques t to join the Receivership Estate; holding in abeyance the plaintiffs' other requests for relief; directing the Clerk to add the Receivership Estate of ERP Environmental Fund, Inc. as a defendant in this suit. Signed by Judge Robert C. Chambers on 6/25/2020. (cc: counsel of record; any unrepresented parties) (jsa)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
OHIO VALLEY ENVIRONMENTAL
COALITION, INC., WEST VIRGINIA
HIGHLANDS CONSERVANCY, INC.,
and SIERRA CLUB,
Plaintiffs,
v.

CIVIL ACTION NO. 3:09-1167

HOBET MINING, LLC, and
ERP ENVIRONMENTAL FUND, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is the plaintiffs’ Motion to Join Additional Defendant, Order Status Report,
Declare Liability for Stipulated Payments, and Permit Limited Discovery. ECF No. 279. For the
reasons below, the Court GRANTS IN PART the Motion as to the plaintiffs’ request to join the
additional defendant but HOLDS IN ABEYANCE the plaintiffs’ other requests for relief.
I. BACKGROUND
The plaintiffs brought this civil action under the citizen suit provisions of the Clean Water
Act and the Surface Mining Control and Reclamation Act. ECF No. 4 ¶ 1. The Court ultimately
entered an Amended Order in October 2016 in conjunction with a Second Modified Consent
Decree in the companion case Ohio Valley Environmental Coalition, Inc. et al. v. ERP
Environmental Fund, Inc., Civil No. 3:11-0115. ECF No. 262. The plaintiffs claim that defendant
ERP Environmental Fund, Inc. (“ERP”) has since violated its environmental and reporting
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obligations under the Amended Order and Second Modified Consent Decree. ECF No. 279-1, at
1–4. In March 2020, the West Virginia Department of Environmental Protection (“DEP”) sued
ERP in state court to enjoin ERP to comply with environmental laws after it allegedly exhausted
its funds and liquid assets, laid off its employees, and ceased operation. ECF No. 282-2 ¶¶ 1, 5.
The DEP also moved for the appointment of a special receiver to take control of ERP’s assets and
operations to ensure compliance with environmental laws and ERP’s other legal obligations. ECF
No. 282-1. Judge Joanna Tabit of the Circuit Court of Kanawha County granted the DEP’s motion
and created a temporary Receivership Estate managed by Doss Special Receiver, LLC (“Doss”).
ECF No. 279-1, at 155–171. The Receivership Estate is now “under the sole and exclusive control,
supervision, and management” of Doss. Id. at 159.
The plaintiffs now request four types of relief to help enforce the Amended Order and
Second Modified Consent Decree in light of the Receivership Estate’s creation. ECF No. 279.
First, the plaintiffs move to join the Receivership Estate as a defendant and declare that the
Receivership Estate is subject to the Amended Order and Second Modified Consent Decree. Id. at
2. Second, the plaintiffs ask the Court to order the Receivership Estate to submit a status report
within fourteen days detailing its compliance efforts. Id. Third, the plaintiffs request a $1,263,000
judgment against ERP for penalties stipulated in the Second Modified Consent Decree. Id. at 3.
Lastly, the plaintiffs request limited discovery to assess ERP’s and the Receivership Estate’s
noncompliance and likelihood of future compliance. Id.

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II. DISCUSSION
A. The Court joins the Receivership Estate as a defendant and finds the Receivership
Estate is subject to the Amended Order and Second Modified Consent Decree.
Federal Rule of Civil Procedure 25(c) provides that “[i]f an interest is transferred, the action
may be continued by or against the original party unless the court, on motion, orders the transferee
to be substituted in the action or joined with the original party.” Joinder under Rule 25(c) after
judgment is appropriate when necessary to enforce the court’s orders. Greater Potater
Harborplace, Inc. v. Jenkins, No. 90-1462, 1991 WL 89830, at *4 (4th Cir. May 31, 1991) (“[I]t
is well established that under Rule 25(c) a court can substitute parties, even after judgment, where
substitution of a party is necessary for enforcement of the judgment.”); Rodriguez-Miranda v.
Benin, 829 F.3d 29, 41 (1st Cir. 2016) (“Rule 25(c) applies to actions that are ‘pending,’ but this
does not preclude substitution during subsequent proceedings brought to enforce a judgment.”)
(citations omitted). When deciding whether to join an additional party under Rule 25(c), courts
should consider “how the conduct of the lawsuit will be most facilitated.” Fed. Deposit Ins. Corp.
v. Tisch, 89 F.R.D. 446, 448 (E.D.N.Y. 1981) (citing Television Reception Corp. v. Dunbar, 426
F.2d 174 (6th Cir. 1970)); see also Tesseron, Ltd. v. Oce N.V., 110 F. Supp. 3d 1255, 1258 (M.D.
Fla. 2015) (“Joinder under Rule 25 is discretionary and should accommodate efficiency and
economy in case management.”).
Here, Judge Tabit’s Receivership Order transferred all of ERP’s assets and operations to
the Receivership Estate, including the permits that form the basis for this suit. See ECF No. 2791, at 159 ¶¶ 14, 15. The Receivership Order instructs that “[a]ll existing claims, liens, and
encumbrances against [ERP] or its properties or assets shall be deemed to constitute claims, liens,
or encumbrances against [ERP]’s receivership estate.” Id. at 160 ¶ 19. The Receivership Order
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appoints Doss to “(a) assume full operation, management, and control of [ERP]’s assets and
operations, (b) oversee, manage, and direct the acts, conduct, operations, assets, liabilities, and
financial conditions of [ERP], and (c) in consultation with the applicable environmental regulatory
agencies, develop a plan and schedule for compliance with [ERP]’s permits . . . .” Id. at 156 ¶ 6;
see also id. at 162–66 ¶ 26 (detailing the special receiver’s powers). And, the Order provides that
Doss may “defend against any lawsuit, action, claim, petition, filing, litigation, or proceeding
brought against him in its capacity as a Special Receiver or against or pertaining to [ERP].” Id. at
165–66 ¶ 28. However, the Order explains that Doss does not expose itself to liability under
environmental laws based solely on the performance of its enumerated duties as a special receiver.
Id. at 158 ¶ 10. Nor is Doss liable for the payment or discharge of any claims, liens, or
encumbrances against ERP’s Receivership Estate. Id. at 160–61 ¶ 20.
Because ERP no longer controls its assets and operations, joinder of the Receivership
Estate is appropriate to “accommodate efficiency and economy” in bringing these assets and
operations into compliance with the Court’s orders. See Tesseron Ltd., 110 F. Supp. 3d at 1258.
Doss does not dispute that the Receivership Estate is bound by the Amended Order and Second
Modified Consent Decree. Indeed, the decree anticipates this type of successorship by providing
that its provisions “apply to and are binding upon . . . [ERP] and any of its respective successors
and/or assigns; and upon other persons or entities otherwise bound by the law.” Civil No. 3:110115, ECF No. 105; see also id. ¶ 25 (“[A]ll transferees, subsequent owners, and operators shall
be bound by the terms of this Second Modified Consent Decree, consistent with applicable law.”).
Doss’s sole argument against joining the Receivership Estate as a party is not based in law but in
prudence. It argues the estate is temporary and the Court should only join it if and when it becomes
“more permanent.” ECF No. 282, at 10–11. However, the estate is better characterized as indefinite
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than temporary, and the Court sees no practical reason to wait for further action from the state
court before joining the estate to better facilitate compliance with this Court’s orders.
The Court therefore ORDERS the Receivership Estate of ERP Environmental Fund, Inc.
be added as an additional defendant to this suit. Because the future of the receivership is uncertain
at this point, the Court will continue to maintain ERP as a defendant. To be clear, the obligations
of the Receivership Estate as a defendant in this case do not extend beyond the role defined in
Judge Tabit’s Receivership Order. See ECF No. 279-1, at 155–171. This Order in no way expands
the liability of the Receivership Estate beyond what the Receivership Order defines. See id. at 158,
160–61 ¶¶ 10, 20.
B. The Court holds in abeyance the plaintiffs’ other requests for relief.
Upon consideration of the parties’ briefing, the Court finds a hearing is necessary to
determine what money judgment the plaintiffs may be entitled to, what additional reporting from
Doss is appropriate, and whether the Court should permit discovery as to Doss. The Court therefore
HOLDS IN ABEYANCE these requests for relief and ORDERS the parties to meet and confer
regarding these subjects within twenty-one days. After meeting, the parties must file a joint report
or separate reports with the Court explaining any outstanding disputes. The Court will then
schedule further proceedings.
III. CONCLUSION
Under the foregoing conditions, the Court GRANTS IN PART the plaintiffs’ Motion, ECF
No. 279, as to plaintiffs’ request to join the Receivership Estate and HOLDS IN ABEYANCE
the plaintiffs’ other requests for relief. The Court DIRECTS the Clerk to add the Receivership
Estate of ERP Environmental Fund, Inc. as a defendant in this suit and to send a copy of this
Memorandum Opinion and Order to counsel of record and any unrepresented parties.
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ENTER:

June 25, 2020

ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE

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