A federal judge ruled that a landowner who leased mineral rights to a coal company is due US$2 million in royalty payments under the terms of the contract governing the agreement.
US District Judge Irene Berger of the Southern District of West Virginia found that Thomas K. Lampert was owed the royalty money immediately since Tams Management Inc., failed to secure permits to mine the leased coal in the 90-day period spelled out by the contract.
In 2013, Lampert and Tams signed a contract transferring Lampert’s interest in the Three Marie mine in Raleigh County, West Virginia, in exchange for an overriding royalty. Southern Coal, also a defendant in this lawsuit, agreed to “irrevocably and unconditionally guarantee” Tams’ performance in the contract.
The contract included an acceleration provision: if Tams did not obtain the necessary mining permits within 90 days, the company would immediately pay the first US$2 million in royalties to Lampert.
Tams did not obtain the permits within 90 days. Bailey & Glasser attorneys representing Lampert filed a complaint in May 2015, then moved for a summary judgment. The defendants countered with their own motion for summary judgment.
Judge Berger, in her order granting summary judgment for Lampert and denying defendants’ motion for summary judgment, found the law was on Lampert’s side. Despite defense arguments to the contrary, the judge found no ambiguity in the contract and no West Virginia law or precedent that would bar enforcement of the contract.
“Here, the parties negotiated a straightforward royalty provision as part of a mining contract,” Judge Berger wrote, “and Tams agreed that if it was unable to obtain certain essential permits within 90 days of the execution of the agreement, it would be immediately liable to the Plaintiff for a significant percentage of the total royalty amount: $2,000,000. Southern Coal agreed to guarantee Tams’ adherence to these provisions. Tams breached this obligation by failing to obtain the permits within 90 days.”
Edited from press release by Harleigh Hobbs