C.O.P. Coal Development Co. v. C.W. Mining Co.
641 F.3d 1235
| 10th Cir. | 2011Background
- COP and CWM entered the Coal Operating Agreement in March 1997, allowing mining by CWM and royalty payments to COP.
- COP obtained a $24.8 million district court judgment against CWM for breach of contract in 2007; COP notified CWM of default.
- District court issued a Supplemental Order (Dec. 2007) prohibiting asset transfers and termination actions to enforce judgment.
- In January 2008, COP sent three letters proposing termination terms and asserting potential automatic termination absent cure; CWM later filed an involuntary Chapter 11 petition (Jan 8, 2008).
- Case was converted to Chapter 7; a trustee was appointed and sought to assume the Agreement; COP challenged whether the Agreement had terminated and thus could be excluded as estate property.
- Trustee sought to sell the Agreement; sale to Rhino Energy LLC closed August 25, 2010; COP appealed the bankruptcy court’s decision as to estate property and appeal was preserved despite the sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the Agreement terminate automatically after 60 days? | COP contends automatic termination occurred at end of cure period. | Trustee argues termination required COP action after cure period and did not occur automatically. | Agreement did not automatically terminate; termination required COP action post-60 days. |
| Did COP's January letters affect termination or reflect intent to auto-terminate? | January letters show automatic termination if cure not made. | Letters were extrinsic and violate the district court order; cannot alter contract terms. | Extrinsic letters not considered; contract language controls termination. |
| Whether the Agreement remained property of the estate and was subject to assumption under 11 U.S.C. § 365. | If not automatically terminated, the Agreement stays as estate property subject to assumption. | If automatically terminated, it would not be estate property under § 541(b)(2). | Agreement remained estate property; not automatically terminated; could be assumed. |
| Does 11 U.S.C. § 363(m) moot the appeal or impair relief available? | If COP prevails, it may obtain remedies not affecting sale validity; not moot. | Sale to a good-faith purchaser could bar relief affecting sale validity. | § 363(m) does not render the appeal moot because non-sale-impact remedies may exist. |
| Did the automatic stay under § 362 prohibit COP from terminating the Agreement after default? | Stay blocked COP from taking action to terminate without relief from stay. | Stay applies; termination actions must await relief from stay. | Automatic stay prevented COP from terminating post-petition actions; but issue resolved on contract language about termination post-60-day period. |
Key Cases Cited
- In re Osborn, 24 F.3d 1199 (10th Cir. 1994) (protects sale validity under § 363(m) but allows other equitable relief not affecting sale)
- Eastman v. Union Pacific R.R. Co., 493 F.3d 1151 (10th Cir. 2007) (partially abrogated on other grounds; bankruptcy sale considerations)
- In re Paige, 584 F.3d 1327 (10th Cir. 2009) (equitable mootness doctrine applied in Chapter 11 context; discretionary)
- Mid-America Pipeline Co. v. Four-Four, Inc., 216 P.3d 352 (Utah 2009) (extrinsic evidence only if contract language ambiguous)
- Cent. Fla. Invs., Inc. v. Parkwest Assocs., 40 P.3d 599 (Utah 2002) (contract interpretation prioritizes plain meaning)