Allegheny Energy Supply Co. v. Wolf Run Mining Co.
53 A.3d 53
| Pa. Super. Ct. | 2012Background
- Allegheny Energy entered a 2005 Coal Sales Agreement with Wolf Run (Anker West Virginia Mining) to purchase all coal from Sycamore No. 2 Mine, with Anker Coal guaranteeing performance.
- The Sycamore No. 2 Mine reserve was estimated at no less than 20 million tons at signing; delivery schedule shifted from 500,000 tons in 2005–2006 to 150,000 tons monthly from Oct 2006 and 1.8 million tons annually thereafter until exhaustion, subject to force majeure.
- In summer 2006 the mine was idled due to a breached gas well, regulatory changes, and a collapsing roof; Wolf Run issued a force majeure notice Aug 25, 2006, and Allegheny Energy purchased cover coal from third parties.
- Allegheny filed a breach action on Dec 18, 2006; Wolf Run counterclaimed; summary judgment granted in 2010 in favor of ICG and in favor of Allegheny on Wolf Run’s counterclaim.
- A non-jury trial in Jan–Feb 2011 resulted in a May 3, 2011 Memorandum and Verdict finding Wolf Run breached the Agreement, denying force majeure as a defense, and awarding $104,103,893 in damages; judgment finalized Aug 25, 2011 at $106,071,884.40 against Wolf Run; this Court affirms summary judgment as to ICG, affirms rulings on force majeure, affirms past damages of $11,304,332, affirms prejudgment interest related to Sycamore No. 1 Mine, but vacates and remands future damages calculation based on when Allegheny learned of Wolf Run’s repudiation (August 2006).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Force majeure applies to nonperformance? | Allegheny argues force majeure does not excuse Wolf Run’s breach. | Wolf Run contends force majeure covers foreseeability and its actions were reasonable amid gas-well issues. | Force majeure did not excuse nonperformance. |
| Alter ego/veil piercing against ICG? | Allegheny asserts ICG violated corporate formalities or is the alter ego of Wolf Run/Hunter Ridge. | ICG contends there is no piercing-warranting evidence of control for liability. | Summary judgment for ICG affirmed; no genuine issue to pierce veil. |
| Past damages calculation validity | Allegheny claims cover-coal costs total about $84.2 million; past damages should reflect full cover-costs. | Court rejected aggressive pricing methods; relied on Cardwell scenario demonstrating $11,304,332 past damages. | Past damages affirmed at $11,304,332. |
| Future damages and repudiation timing | Allegheny seeks future damages measured at contract price; repudiation timing supports trial-date measure. | Wolf Run argues repudiation occurred in 2006; damages should be based on August 2006 market price, not trial date. | Future damages vacated and remanded to recalc using August 2006 repudiation timing. |
| Prejudgment interest on Sycamore No. 1 damages | Interest should accrue on Section 1.3 damages from due date. | Interest contested due to tabled issues; but trial record supports award. | Prejudgment interest upheld. |
Key Cases Cited
- Omicron Sys., Inc. v. Weiner, 860 A.2d 554 (Pa.Super.2004) (damages estimation and review standards on appeal)
- Cooley v. Jefferson Bank, 355 Pa. Super. 1, 512 A.2d 713 (Pa.Super.1986) (damages awards review and deference to fact-finder)
- Oak Ridge Constr. Co. v. Tolley, 351 Pa. Super. 82, 504 A.2d 1343 (Pa.Super.1985) (repudiation and damages measurement under U.C.C. principles)
- Kaiser v. Old Republic Ins. Co., 741 A.2d 748 (Pa.Super.1999) (abuse-of-discretion standard for prejudgment interest)
- Wyatt Inc. v. Citizens Bank of Pa., 976 A.2d 557 (Pa.Super.2009) (standard of review for findings of fact from nonjury trials)