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Date: 05-23-2020

Case Style:

OXFORD MINING COMPANY, LLC v. OHIO GATHERING COMPANY, LLC

Case Number: 19 BE 0016

Judge: Carol Ann Robb

Court: IN THE COURT OF APPEALS OF OHIO SEVENTH APPELLATE DISTRICT BELMONT COUNTY

Plaintiff's Attorney:

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After Oxford Mining recorded these coal rights, Ohio Gathering bought
pipeline easements through the same parcels from the following landowners: (1) Eagle
Creek Farm (parcel A), executed April 9, 2014, recorded May 12, 2014; (2) K & S Shugert
Farms (parcels B through D), executed April 8, 2014, recorded May 12, 2014; and (3)
Robert Shugert (parcels E through H), executed March 25, 2014, recorded May 29, 2014.
The easements also granted Ohio Gathering the right to change the location of an
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Case No. 19 BE 0016
installed pipeline “arising from any condition or event beyond its control, such as mining
activities.”
{¶9} Before purchasing these pipeline easements, Ohio Gathering was informed
by Oxford Mining that various proposed routes for the pipeline (named “Coal Run III”)
would negatively affect its mining operations (as evidenced by emails exchanged in 2012
and 2013). Pipeline construction began on the subject property in July 2014. When
Oxford Mining’s president saw the pipeline location, he unsuccessfully asked Ohio
Gathering to discontinue construction. The pipeline was placed into service in August
2014.
{¶10} In 2017, Oxford Mining recorded a memorandum of lease from Robert
Shugert pertaining to parcels E through H which specified that the lease granted the right
to remove all coal “by the strip mining method” among other methods. An affidavit
attested that this lease was not necessary to mine the coal as Oxford Mining already had
rights, including strip mining rights, for these parcels (through instruments from Seaway
to Consolidated, Consolidated to Marietta, Marietta to Oxford, and Consolidated to
Oxford). Oxford Mining then applied for a mining permit in 2017 which was approved in
2018.
{¶11} On December 14, 2017, Oxford Mining filed a complaint against Ohio
Gathering, which was amended on March 14, 2018. The complaint sought a declaratory
judgment on the competing property interests, arguing the pipeline deprived Oxford
Mining of its right to mine significant areas of the property which “sterilized” the coal and
damaged Oxford Mining. The complaint also set forth claims for trespass and nuisance.
Both sides filed summary judgment motions.
{¶12} Oxford Mining filed a motion for partial summary judgment asking for a
declaratory judgment that its property rights were superior to the rights of Ohio Gathering
and a finding of liability on the trespass claim. Arguments were presented on first-in-time
recording and Ohio Gathering’s knowledge of Oxford Mining’s rights. (The motion also
requested an order on how to measure damages.)
{¶13} Ohio Gathering’s motion for summary judgment argued there was no
trespass as the pipeline was constructed pursuant to valid easements and claimed this
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Case No. 19 BE 0016
was prior to Oxford Mining’s perfection of its complete interest and/or receipt of a mining
permit.
{¶14} The trial court granted partial summary judgment in favor of Oxford Mining.
(1/4/19 J.E.); (1/8/19 J.E.). The court found Oxford Mining was entitled to a declaratory
judgment that it had superior rights and there was a trespass on Oxford Mining’s coal
rights. (The court denied summary judgment on the measure of damages). As to Ohio
Gathering’s summary judgment motion, the court granted summary judgment against
Oxford Mining on its nuisance claim and denied the remainder of the motion. Ohio
Gathering’s January 7, 2019 motion for reconsideration was denied the next day. (Tr.
17).
{¶15} A four-day jury trial on damages commenced on January 8, 2019. The court
granted Ohio Gathering’s motion for directed verdict on punitive damages and refused
Oxford Mining’s request to instruct the jury on punitive damages. (Tr. 812, 820-821). The
court also rejected Ohio Gathering’s proposed jury instruction on mitigation of damages.
{¶16} The jury returned a verdict for Oxford Mining in the amount of
$5,506,717.87. The court entered judgment on the verdict on January 14, 2019
(amended 2/5/19 nunc pro tunc to change “subject to further order” to “Case Closed”).
{¶17} On February 11, 2019, Ohio Gathering filed a motion for judgment
notwithstanding the verdict or new trial. The motion was timely filed within 28 days (using
the date of either judgment). See Civ.R. 50(B). In pertinent part, the motion (as related
to the verdict) contested the refusal to provide a jury instruction on mitigation of damages.
The motion also contained a request for judgment as a matter of law, contesting the prior
summary judgment.
{¶18} The court overruled Ohio Gathering’s post-judgment motion. (4/4/19 J.E.);
(4/11/19 J.E.). Ohio Gathering filed a timely notice of appeal on May 1, 2019, and Oxford
Mining filed a timely notice of cross-appeal on May 9, 2019.
SUMMARY JUDGMENT ASSIGNMENTS
{¶19} Ohio Gathering sets forth three assignments of error on whether Oxford
Mining was entitled to summary judgment on property rights and trespass. The general
argument on summary judgment is contained in the first assignment of error which
provides:
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Case No. 19 BE 0016
“The Trial Court Erred in Its January 4, 2019 and January 8, 2019 Judgment
Entries by Granting Partial Summary Judgment in Favor of Plaintiff-Appellee, Oxford
Mining Company, LLC.”
{¶20} The second assignment of error says the court erred by overruling the
motion to reconsider the summary judgment motion, and the fourth assignment of error
says the court erred in failing to grant the post-judgment motion seeking judgment as a
matter of law. Although listed as separate assignments of error (corresponding to the
judgment entry denying each motion), Ohio Gathering does not argue the assignments
of error separately but combines the arguments with those falling under the first
assignment of error.
{¶21} Ohio Gathering focuses on the declaratory judgment on superior property
rights. As for the trespass claim, Ohio Gathering’s brief states its liability depends on the
arguments sets forth on the declaration of property rights because without a superior
property interest, Oxford Mining could not prove trespass. For instance, it is said the
trespass claim “depended entirely upon a finding of Oxford’s superior surface interest” so
that if Oxford Mining was not entitled to summary judgment on the declaratory judgment,
then it was not entitled to judgment on trespass and the “trespass claims hinges on its
claim of superior surface mining rights * * * which is a question of title that turns on a
determination of record title.” (Apt. Br 18, 23).
{¶22} Initially, Ohio Gathering’s brief acknowledges that a coal owner with the
right to strip mine has rights superior to a person who thereafter acquires a surface
easement (from the landowner) with notice of the coal rights. (Apt. Br. 13-14). Ohio
Gathering states the trial court erred in ruling Oxford Mining had superior rights because
no recorded instrument expressly stated that Oxford Mining had strip mining or surface
rights before Ohio Gathering recorded its pipeline easements and there was no evidence
Ohio Gathering had actual notice of Oxford Mining’s right to surface mine.
{¶23} In sum, Ohio Gathering states it had no actual or constructive/record notice
of a superior property interest before it paid value to the landowners for the pipeline
easement, citing Fox v. Walton, 3rd Dist. Wyandot No. 16-88-8 (Dec. 5, 1989) (“Notice of
a superior interest in land, to be operative, must be given before the grantee has paid
value for the property”). Oxford Mining counters that the purpose of the memorandum of
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Case No. 19 BE 0016
coal lease is to provide constructive notice of the existence of the encumbrance, not to
provide specific details of it and the recorded disclosure of the existence of the coal lease
invoked a duty to inquire into the contents of the lease before purchasing the easement
in order to claim bona fide purchaser status.
{¶24} Pursuant to R.C. 5301.25(A), all instruments for the conveyance or
encumbrance of lands shall be recorded in the office of the county recorder. “Until so
recorded or filed for record, they are fraudulent insofar as they relate to a subsequent
bona fide purchaser having, at the time of purchase, no knowledge of the existence of
that former deed, land contract, or instrument.” R.C. 5301.25(A). In general, where an
encumbrance has been recorded, a subsequent purchaser is charged with constructive
notice. See Tiller v. Hinton, 19 Ohio St.3d 66, 68, 482 N.E.2d 946 (1985). A bona fide
purchaser is defined as a person who pays valuable consideration for legal title to real
estate in good faith and without knowledge or notice of another person’s equitable interest
in the property. Ford v. Baska, 2017-Ohio-4424, 93 N.E.3d 195, ¶ 11 (7th Dist.).
The principal purpose of the recording statute is to protect a bona fide
purchaser, who does not have actual notice at the time of his purchase,
against legal claims under unrecorded conveyances and encumbrances.
Constructive notice is in legal effect the equivalent of actual notice. Under
the recording laws, all persons dealing with the land in question are
chargeable with constructive notice of properly recorded instruments in the
chain of title. Statements and references contained in instruments in his
chain of title bind the owner and he is charged with knowledge he would
have obtained from reasonable inquiry. Knowledge sufficient to put a person
on inquiry which would disclose unrecorded facts is sometimes called
constructive notice but is treated as actual notice. Actual notice may be
inferred from the fact that means of knowledge is available.
Id. at ¶ 13 (omitting internal citations), quoting Ferguson v. Zimmerman, 2d Dist.
Montgomery No. 9426 (Jan. 16, 1986) (finding purchaser could have inquired into will
after discovering caption in recorded certificate of transfer), citing Arnoff v. Williams, 94
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Case No. 19 BE 0016
Ohio St. 145, 149, 113 N.E. 661 (1916) (deed’s reference to agreements put the grantees
upon inquiry and charged them with knowledge of the provisions in the agreements).
{¶25} Before proceeding, we address Oxford Mining’s waiver argument. Oxford
Mining contends Ohio Gathering waived the notice argument by failing to plead the
affirmative defense of bona fide purchaser in its answer. See Civ.R. 8(C) (affirmative
defense must be set forth affirmatively in the answer). Ohio Gathering replies by stating
Oxford Mining waived the claim of waiver by failing to raise below the precise way Ohio
Gathering allegedly waived the notice argument. That is, Oxford Mining asked the trial
court to find waiver due to Ohio Gathering’s failure to specify the issue in the summary
judgment proceedings, without mentioning a failure to sufficiently raise it in the answer.
{¶26} Ohio Gathering notes that it raised the argument about the lack of record
notice of strip mining rights in: an opposition to a preliminary injunction; at oral argument
on summary judgment; in a motion for reconsideration of summary judgment; and in the
post-judgment motion. We note that these are not the proceedings for meeting a
summary judgment burden. See Civ.R. 56 (C) (discussing service of the responsive
arguments in opposition to a summary judgment request), (E) (“the party's response * * *
must set forth specific facts showing that there is a genuine issue for trial”). See also
Vahila v. Hall, 77 Ohio St.3d 421, 429-430, 674 N.E.2d 1164 (1997), citing Dresher v.
Burt, 75 Ohio St.3d 280, 295, 662 N.E.2d 264 (1996) (discussing the movant’s burden
and the non-movant’s reciprocal burden). The evidence used to satisfy the summary
judgment burdens is discussed below.
{¶27} As for the contents of the answer, although it did not specifically use the
phrase “bona fide purchaser,” Ohio Gathering denied knowledge of Oxford Mining’s coal
rights when it obtained its property rights and set forth as an affirmative defense that it
acted under a valid pipeline right-of way. Thereafter, Oxford Mining raised the issue of
notice in its own summary judgment motion while explaining how it had superior property
rights and pointing out that an instrument evidencing an encumbrance must be recorded
or it is fraudulent against any subsequent bona fide purchaser without notice of the
existence of the encumbrance.
{¶28} An unpled affirmative defense can be “tried” with consent in the course of
the summary judgment motion practice. See, e.g., Church at Warren v. Warzala, 11th
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Case No. 19 BE 0016
Dist. Trumbull No. 2016-T-0073, 2017-Ohio-6947, ¶ 19. “When issues not raised by the
pleadings are tried by express or implied consent of the parties, they shall be treated in
all respects as if they had been raised in the pleadings.”). Civ.R. 15(B). “Implied consent
is established where it appears ‘the parties understood the evidence was aimed at the
unpleaded issue.’” Church at Warren, 11th Dist. No. 2016-T-0073 at ¶ 19, quoting State
ex rel. Evans v. Bainbridge Twp. Trustees, 5 Ohio St.3d 41, 448 N.E.2d 1159 (1983),
paragraph two of the syllabus.
{¶29} Oxford Mining’s complaint said the parties had competing interests, alleged
Ohio Gathering knew of Oxford Mining’s coal rights when it obtained its property rights,
and asked for a declaratory judgment establishing the parties’ respective rights to the land
and obligations to each other. Oxford Mining thereafter invited the trial court to consider
whether Ohio Gathering had constructive notice through the recorded lease memoranda
and proceeded as if this was the issue for the court in considering its own summary
judgment motion. Along these lines, even if bona fide purchaser is an affirmative defense,
a plaintiff’s case involving an unrecorded instrument may require the plaintiff to prove
statutory elements to show its instrument is not fraudulent under R.C. 5301.25. As Ohio
Gathering points out, if there was no record notice, the plaintiff seeking to enforce an
unrecorded restriction was required to “provide clear and convincing evidence that [the
purchaser] had actual knowledge at the time of purchase that the restrictions applied to
its land.” Emrick v. Multicon Builders, Inc., 57 Ohio St.3d 107, 110, 566 N.E.2d 1189
(1991). For the foregoing reasons, we do not find the appellate arguments on notice are
barred by waiver.
Record Notice
{¶30} As for record notice providing constructive notice, Ohio Gathering argues
that regardless of the fact that the unrecorded leases allowed strip mining, no
memorandum of lease recorded by Oxford Mining specifically mentioned surface mining.
Ohio Gathering urges that record notice deals only with recorded instruments and
encompasses no duty to ask to see unrecorded instruments. Oxford Mining suggests the
reference in a memorandum of lease to active mining purposes and reclamation gave
notice of surface rights and the potential for strip mining. Ohio Gathering notes that
language on active mining and reclamation is not specific to strip mining. See, e.g., Ohio
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Case No. 19 BE 0016
Adm.Code 1501:13-9-13 (C) (“For underground mining, reclamation efforts, including, but
not limited to, backfilling, grading, topsoil replacement and revegetation of all areas
affected by surface operations * * *).
{¶31} To negate the effect of the recorded memoranda that do not mention strip
mining, Ohio Gathering relies on R.C. 5301.251. This statute allows a memorandum of
lease to be recorded in lieu of recording the lease if it is executed and acknowledged in
accordance with R.C. 5301.01, and the memorandum must contain certain elements1
which are uncontested here. The statute’s second paragraph provides: “A memorandum
of lease that is entitled to be so recorded also may set forth any other provisions contained
in the lease, or the substance of those provisions, and shall be constructive notice of only
that information contained in the memorandum.” (Emphasis added). R.C. 5301.251.
{¶32} First, as to parcels E through H, Oxford Mining’s ownership of the coal was
recorded in 2013. For a specific statement in the chain of title allowing strip mining,
Oxford Mining points to the 1974 recorded memorandum of lease from Seaway Coal to
Consolidated Coal, which specifically refers to strip mining. Ohio Gathering claims this
recorded memorandum did not provide record notice of Oxford Mining’s right to strip mine
because Oxford Mining obtained its right to strip mine through a 2011 sublease and the
recorded memorandum of sublease recorded did not specifically mention strip mining (as
did the actual unrecorded sublease). Ohio Gathering notes a sublease may not
necessarily pass along all rights (as it can be used to grant less coal rights than owned
or grant a shorter time).
{¶33} Regardless, the Seaway Coal to Consolidated Coal recorded instrument
specifically granted strip mining rights, was in the chain of title for these parcels, and
provided record notice that the property was encumbered by strip mining rights. These
expressly recorded rights included coal mining “by the process of stripping” and
reclamation (leaving the lessor the right to auger the listed cover). An exhibit attached to

1 See R.C. 5301.251 (the name and address of the lessor and lessee; a reference to the lease with the date
of execution; a description of the legal premises with such certainty as to identify the property; the date of
commencement; the term of the lease; and renewal or extension rights), citing R.C. 5301.011 (“a recorded
lease of any interest in real property shall contain a reference by volume and page to the record of the deed
or other recorded instrument under which the grantor claims title, but the omission of such reference shall
not affect the validity of the same”).
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Case No. 19 BE 0016
the recorded memorandum granted as to the relevant tracts: “all the coal of the #9 vein
or seam to a modified 105’ cover line in, upon and underlying the premises * * * together
with the right to mine the #8 and #9 coal by the strip mining method.” Furthermore, the
exhibit to the recorded memorandum disclosed that the lessor explicitly waived any right
to damages or compensation from the mining. The conveyance was subject to existing
rights of occupancy as to any dwelling or structure. (The lessee also received the right
to use any part of the premises for other reasonably necessary purposes; this was
specified to be an enlargement, not a limitation, on the lessee’s incidental rights.)
{¶34} This Seaway lease was discovered and reported by Ohio Gathering’s agent
in March 2014 upon conducting the limited title work (ownership reports) ordered by Ohio
Gathering before it purchased a right-of-way through these parcels. The title examiner
did not trace this chain of title, noted no research was conducted with regards to the state
of the coal, and opined the coal was “likely owned by a major coal company.”
Constructive notice of some right to strip mine the properties subject to the 1974 lease
existed due to the recorded instruments.
{¶35} Record notice of strip mining rights is not eliminated because a right to strip
some elevations on a parcel remained with the surface owner. See Wayne Bldg. & Loan
Co. of Wooster v. Yarborough, 11 Ohio St.2d 195, 203, 228 N.E.2d 841 (1967) (notice of
a prior interest does not require “knowledge or notice of * * * the extent of the interest, but
merely that there is such an interest.”). Nor is record notice of conveyed strip mining
rights eliminated by a claim that a later recorded memorandum does not conclusively
establish on its face that this particular plaintiff received all the outstanding rights. See
id. (“For notice of an outstanding equitable interest to exist, it is not necessary that a
person have knowledge or notice of the identity of its owner * * * but merely that there is
such an interest”).
{¶36} As to the other parcels (A through D), Oxford Mining points to coal leases
the current landowners granted to Oxford Mining in 2012. These leases specifically
granted the right to strip mine the properties, but they were unrecorded. Ohio Gathering
purchased the right-of-way from and was in privity with the landowners who were parties
to those coal leases. Since the recorded memorandum of lease for each parcel does not
refer to the surface or mention strip mining, Ohio Gathering states the recordation cannot
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Case No. 19 BE 0016
provide constructive notice of the right to strip mine under the plain language of R.C.
5301.251 (“memorandum of lease * * * shall be constructive notice of only that information
contained in the memorandum”).
{¶37} Ohio Gathering cites a case where the Eighth District applied this provision
and held a buyer was a bona fide purchaser and had no notice of a right of first refusal in
a lease, where a short-form memorandum of lease was recorded which did not mention
the right and where the buyer obtained an unexecuted copy of the lease from the seller
prior to the sale but this copy of the lease did not contain the right of first refusal clause
that was in the executed copy. Hawley v. Ritley, 8th Dist. Cuyahoga No. 42273 (Sep. 3,
1981). The appellate court said that to allow constructive notice of the lease contents by
mere “incorporation by reference would effectively nullify the second full paragraph of
R.C. § 5301.251 and destroy the legislature's restriction on constructive notice embodied
in the statute.” Id. The court also observed the purchaser “did all that was reasonably
expected of him to learn whether any defects existed” and “took sufficient steps to
determine what was in the lease both by reviewing the short form memorandum and by
obtaining a copy of what was warranted by plaintiff to be the existing lease” (but was the
wrong copy). Id.
{¶38} In response, Oxford Mining points to the holding: “even if a lease is
unrecorded, a grantee need not know its specific terms in order ‘to be bound thereby so
long as he knows of its existence.’” Four Howards Ltd. v. J & F Wenz Rd. Invest. LLC,
179 Ohio App.3d 399, 2008-Ohio-6174, 902 N.E.2d 63, ¶ 62 (6th Dist.) (buyer knew there
was a lease but did not ask to see it and was therefore unaware of a first right of refusal),
quoting Schwieterman v. Feltz, 2d Dist. Montgomery No. 9964 (Dec. 22, 1986) (lease
mentioned in deed gave notice of existence of lease, and buyer had opportunity to ask to
see lease), citing Riley v. Rochester, 105 Ohio St. 258, 136 N.E. 919 (1922) (to be entitled
to bona fide purchaser protection, the party with newly recorded lease must have “no
knowledge of the existence” of the unrecorded lease regardless of whether they knew it
was still valid or binding). This group of cases did not involve a memorandum of lease or
address the disputed paragraph in R.C. 5301.251.
{¶39} In arguing that record notice of coal rights is insufficient to give record notice
of strip mining rights, Ohio Gathering relies on the Supreme Court’s Skivolocki case for
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Case No. 19 BE 0016
the assertion that a coal owner does not have an implied right to strip mine. For instance:
“A deed which severs a mineral estate from a surface estate, and which grants or reserves
the right to use the surface incident to mining coal, in language peculiarly applicable to
deep-mining techniques, whether drafted before or after the advent of strip mining, does
not grant or reserve to the mineral owner the right to remove coal by strip-mining
methods.” Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 667 N.E.2d 949 (1996),
syllabus, expanding and clarifying Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 313
N.E.2d 374 (1974). It was further stated, “the right to strip-mine for coal is not implicit in
the ownership of a severed mineral estate, and that a deed severing the estates,
conveying the right to use the surface incident to coal mining, using language peculiarly
applicable to deep mining, does not grant the right to strip-mine.” Graham, 76 Ohio St.3d
at 315, citing Skivolocki, 38 Ohio St.2d 244 at syllabus (a mineral owner has the right to
use the surface, but this does not include strip mining in a 1901 deed where strip mining
was unknown and the deed had deep mining language).
{¶40} However, as Oxford Mining points out, the Court has retreated from these
holdings where there is no language peculiar to deep mining in the instrument, especially
where strip mining was known in the area at the time of the instrument. Snyder v. Ohio
Dept. of Nat. Resources, 140 Ohio St.3d 322, 2014-Ohio-3942, 18 N.E.3d 416, ¶ 19. And,
even the prior cases acknowledged that a mineral estate carries with it the right to use as
much of the surface as may be reasonably necessary to reach and remove the minerals.
Skivolocki, 38 Ohio St.2d at 249, fn. 1. Here, the leases were recent, long after strip
mining became a common occurrence and long after the Supreme Court cases reviewed
supra on the topic.
{¶41} We find the record notice was sufficient notice of certain surface rights due
to the specific notice of coal rights. The landowners had recently granted Oxford Mining
coal leases which specifically granted surface mining rights. In 2004, the Supreme Court
found the language (in a 1944 deed reservation of mineral rights in neighboring Jefferson
County) providing “reasonable surface right privileges” included the right to strip mine
(limited to a reasonable amount of stripping). Even before and without such language,
coal rights included the right to reasonable use of the surface to reach the coal. The right
to strip mine here was not limited. The leases granted in and after 2011 were recent
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Case No. 19 BE 0016
(relative to the 2014 right-of-ways), were not expired, and were entered long after strip
mining became common and long after the Supreme Court cases reviewed supra on the
topic.
{¶42} A memorandum of coal lease was recorded as to each lease before Ohio
Gathering acquired its pipeline easements. Through these recorded memoranda of
leases, Ohio Gathering had record notice that the landowner had recently granted Oxford
Mining the right to actively mine coal and engage in surface reclamation on the subject
properties. The situation (where the recorded memorandum of coal lease does not
specify the right to strip mine but the unrecorded lease does so specify) is not akin to a
case where an unrecorded lease specified a right of first refusal for a future sale (which
is more an additional contract than a lease term).
{¶43} Even if there was not record notice of the right to strip mine for some
parcels, record notice of the existence of the recent coal leases provided constructive
notice to a subsequent purchaser of a surface easement that a future pipeline may
interfere with the coal company’s rights to obtain its coal. Ohio Gathering had record
notice of pre-existing coal rights that could be affected if a pipeline was located over or
near a seam. Record notice of the existing encumbrance was enough to make Oxford
Mining’s surface interest superior to a later-acquired pipeline right-of-way.
{¶44} Alternatively, even if the record notice must specifically refer to strip mining
due to R.C. 5301.251 and the record notice here was insufficient for some parcels, we
alternatively conclude there was actual notice.
Actual Notice
{¶45} Ohio Gathering recognizes that one cannot claim to be a bona fide
purchaser if he had actual notice of the rights in the unrecorded instrument before
purchasing the pipeline easements. Initially, we dispose of Ohio Gathering’s argument
that Oxford Mining did not raise actual notice as an alternative to record notice. To the
contrary, Oxford Mining’s summary judgment motion set forth the law and facts on the
topic; it recited that an unrecorded instrument is not fraudulent against a subsequent bona
fide purchaser who had notice and cited case law and quotations from the attached
exhibits establishing the many forms of notice Oxford Mining provided to Ohio Gathering
prior to the pipeline easement purchases. The topic was clearly at issue below.
– 15 –
Case No. 19 BE 0016
{¶46} Ohio Gathering admits it had actual notice that Oxford Mining had coal
rights under the proposed pipeline routes but claims it did not have actual notice that
these rights included strip mining until July 2014 (after it acquired the easements and
began construction of the pipeline on the property at issue), when a July communication
from Oxford Mining said the line posed a “major reserve block for one of our high wall
miners.” Assuming arguendo that notice of strip mining rights (rather than merely general
coal and mining rights) was required, Oxford Mining states a reasonable person could
only find that Ohio Gathering gained actual notice of its strip mining rights before the May
2014 recording of the pipeline easements, pointing to the following evidence:
{¶47} -In September 2012, Oxford Mining provided a map to Ohio Gathering to
disclose the properties covered by its current mining leases, which showed the Eagle
Creek Farm and K & S Shugert properties as “Oxford Controlled Areas.”
{¶48} -In June 2013, Ohio Gathering’s agent sent a map of a pipeline route stating
he “marked with red marker the route around your mining operations. Please let me know
if our route will work?” Oxford Mining replied, “We have problems with the location of the
line as shown. We are currently permitting a major operation on this reserve that runs
essentially from US Route 40 on the south end, to the north side of Buttermilk Road on
the north end.”
{¶49} -In October 2013, Ohio Gathering asked Oxford Mining to review a route “to
make sure it’s doable for you.” Oxford Mining responded, “the blue line is going to be a
significant issue” and later added, “We do have problems here. This cuts across coal we
will be mining on our Shugert North area.” Oxford Mining asked to meet to discuss a new
route to minimize the cost to Ohio Gathering.
{¶50} -In November 2013, Ohio Gathering sent a new route (now going through
the Tribett/R.Shugert parcels). Oxford Mining responded, “This location poses a major
threat to our mining operation in that area. Oxford has the rights to the #8 seam and
mining rights via Marietta and Consolidated coal” and asked to meet to discuss alternative
routes.
{¶51} -Another map was sent by Ohio Gathering, and Oxford Mining responded,
“The proposed line location(s) will encumber our coal holdings. * * * We have major
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Case No. 19 BE 0016
operations planned in this area and encumbering our reserve holdings will result in
significant financial impacts to Oxford.”
{¶52} -When Ohio Gathering opined the route was out of the mining area, Oxford
responded that its anticipated permit boundary changed (since the first map) due to
additional leases (e.g., the Consolidated Coal lease was recorded September 2013).
{¶53} -A landowner who signed a pipeline easement on March 25, 2013 (recorded
May 29, 2014) testified at deposition that he informed Ohio Gathering’s land agent
“through the whole process, that there was a lease on this for mining to Oxford.”
(R.Shugert Depo. at 48).
{¶54} -The records of Ohio Gathering’s agent showed meetings occurred before
Ohio Gathering had the pipeline easements for the purpose of finding a pipeline route to
avoid Oxford Mining’s coal interests. Oxford Mining’s president confirmed a meeting
where they discussed the area where they were planning to mine coal.
{¶55} -The senior land manager for Ohio Gathering testified at deposition that
Oxford Mining was not a surface owner, but he did not distinguish between surface mining
rights and other coal mining leases but was more concerned with mining permits. He
acknowledged Ohio Gathering was informed that Oxford Mining had an issue with the
pipeline route before the easements were purchased.
{¶56} -After the pipeline construction began, Oxford Mining sent an email
explaining the impediment the pipeline posed for high wall mining with a map estimating
“Strip tons lost” and “HWM lost.” Ohio Gathering did not express surprise and later stated
its understanding that it could move the pipeline to reclaimed land as the mining
progressed.
{¶57} Ohio Gathering does not dispute that it had actual notice that Oxford
Mining’s coal mining rights would be impacted by the pipeline; this was established by
direct evidence. All coal mining affects the surface in some way. Ohio Gathering
emphasizes the lack of language regarding strip mining in the emails. However, the coal
company need not write the explicit type of mining in an email for the pipeline company
to have actual notice that the coal rights included the right to surface mine.
{¶58} Ohio Gathering emphasizes the Supreme Court’s holding: “A ‘should have
known’ or ‘could have known’ test is not an appropriate consideration under an actual
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notice standard.” Emrick, 57 Ohio St.3d at 111. However, that case involved the duty to
inquire about an unrecorded restriction based on prior knowledge (gained a nearly
decade before) of a restriction in a different county, which is distinguishable from the
situation of verbal notices and recorded lease memoranda. See id. (the discovery of
recorded restrictions in one county is not clear and convincing evidence of actual
knowledge of an unrecorded restriction in a different county ten years later). Moreover,
the Court recognized that actual notice can be inferred and remanded for application of
the actual notice test (after finding a lack of record or constructive notice). Id. at 110.
{¶59} Subsequently, in discussing the burden of inquiry in a real estate purchase,
the Supreme Court adopted the following position on actual notice not proved by direct
evidence but inferred from circumstances:
if the party obtains knowledge or information of facts tending to show the
existence of a prior right in conflict with the interest which he is seeking to
obtain, and which are sufficient to put a reasonably prudent man upon
inquiry, then it may be a legitimate, and perhaps even necessary, inference
that he acquired the further information which constitutes actual notice. ***
Finally, if it appears that the party has knowledge or information of facts
sufficient to put a prudent man upon inquiry, and that he wholly neglects to
make an inquiry, or having begun it fails to prosecute it in a reasonable
manner, then, also, the inference of actual notice is necessary and absolute.
G/GM Real Estate Corp. v. Susse Chalet Motor Lodge of Ohio, Inc., 61 Ohio St.3d 375,
380, 575 N.E.2d 141 (1991), quoting Cambridge Production Credit Assn. v. Patrick, 140
Ohio St. 521, 532-533, 45 N.E.2d 751 (1942), quoting 2 Pomeroy's Equity Jurisprudence,
Section 597, 619 (5th Ed.).
{¶60} Accordingly, a purchaser cannot refuse to inquire when the reasonableness
of making inquiry is naturally suggested by known circumstances. G/GM Real Estate, 61
Ohio St.3d at 380 (refusing to allow purchaser to rescind based on recorded
memorandum of lease, which was missing statutory elements, where purchaser failed to
view the lease); Cambridge Production Credit, 140 Ohio St. at 532-533 (finding actual
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Case No. 19 BE 0016
notice as a matter of law where there was knowledge of the existence of a mortgage but
no inquiry was made into its specifics).
{¶61} This is in line with the cases, mentioned earlier, explaining that notice of the
existence of an encumbrance can bind a subsequent purchaser even if he does not know
the specific terms. See Riley v. Rochester, 105 Ohio St. 258, 136 N.E. 919 (1922) (to be
entitled to bona fide purchaser protection, the party with newly recorded lease must have
“no knowledge of the existence” of the unrecorded lease regardless of whether they knew
it was still valid or binding); Four Howards Ltd. v. J & F Wenz Rd. Invest. LLC, 179 Ohio
App.3d 399, 2008-Ohio-6174, 902 N.E.2d 63, ¶ 62 (6th Dist.) (even if a lease is
unrecorded, a grantee need not know its specific terms in order to be bound by it if he
knows of its existence; buyer knew there was a lease but did not ask to see it and was
therefore unaware of a first right of refusal); Schwieterman v. Feltz, 2d Dist. Montgomery
No. 9964 (Dec. 22, 1986) (the deed gave notice of the existence of the lease, and the
buyer had the opportunity to ask to see the lease). See also Hawley v. Ritley, 8th Dist.
Cuyahoga No. 42273 (Sep. 3, 1981) (finding the purchaser “did all that was reasonably
expected of him to learn whether any defects existed” and “took sufficient steps to
determine what was in the lease both by reviewing the short form memorandum and by
obtaining a copy of” what was believed to be the existing lease but was not).
{¶62} As to the parcels with some strip or auger rights remaining in the surface
owner, Ohio Gathering’s title agent reported the existence of the coal lease on these
parcels for which the recorded memorandum of lease specifically allowed strip mining.
The identity of the owner was not essential, and Oxford Mining informed Ohio Gathering
it acquired rights and was drawing up the permit for the mining operations. “For notice of
an outstanding equitable interest to exist, it is not necessary that a person have
knowledge or notice of the identity of its owner * * * but merely that there is such an
interest.” Wayne Bldg. & Loan Co. of Wooster v. Yarborough, 11 Ohio St.2d 195, 203,
228 N.E.2d 841 (1967)
{¶63} As for the rights not acquired until 2017, this subsequent acquisition by
Oxford Mining involved elevated spots of land on the parcels where the cover about the
specified seam was 105 feet or more. They already had the general surface mining rights
up to those elevated spots. Notice of a property’s geological features and the depth of
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Case No. 19 BE 0016
seams is not required to have notice that a coal company has strip mining rights in coal
(with no restrictions where the cover clause is inapplicable). Importantly, a lack of
information on the extent of coal sterilization that could be caused does not eliminate
knowledge of pre-existing coal rights which included strip mining. “For notice of an
outstanding equitable interest to exist, it is not necessary that a person have knowledge
or notice of * * * the extent of the interest, but merely that there is such an interest.” Wayne
Bldg. & Loan, 11 Ohio St.2d at 203. See also Riley v. Rochester, 105 Ohio St. 258, 136
N.E. 919 (1922) (if purchaser had “knowledge of the existence” of the unrecorded lease,
it is irrelevant whether they knew if it was still valid or binding).
{¶64} As to all parcels, the coal company warned that the proposed pipeline would
significantly impact its mining operation and encumber its coal reserves, explaining that
the mining plan changed once it acquired additional rights to parcels E through H from
Consolidated Coal in 2013. Ohio Gathering specifically voiced its attempts to route and
re-route around the mining operation as a whole, indicating awareness that the plan
involved strip mining. Ohio Gathering does not point to evidence it offered claiming its
employees and agents thought Oxford Mining was only speaking of a right to deep mine.
Their representative testified that he did not distinguish between types of coal mining
when deciding whether to compensate for coal loss. He disbelieved Oxford Mining had
a bona fide intent to mine the property even though a mining permit had not yet been filed
with ODNR. Suspecting Oxford Mining lacked an imminent intent to mine does not mean
Ohio Gathering lacked actual notice of surface rights.
{¶65} Considering the specific content within the many warnings provided by
Oxford Mining outlined above, Ohio Gathering’s responses and repeated re-rerouting, the
recorded coal lease memoranda and the prior chain of title for some parcels, the notations
by title workers, the lack of summary judgment evidence rebutting the inference of
knowledge, and the totality of the circumstances in this case, we conclude: a reasonable
person could not find Ohio Gathering lacked actual notice that Oxford possessed some
pre-existing strip mining rights in the property affected by the pipeline. The arguments
specified in Appellant’s brief on summary judgment are hereby overruled.
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Case No. 19 BE 0016
Reply Brief
{¶66} In the reply brief, Ohio Gathering adds an argument that was not made in
its initial brief. The reply quotes from the Supreme Court’s Snyder case:
neither the owner of the surface interest nor the owner of the mineral
interest has full ownership. Each has rights that are subject to the rights of
the other. Thus, the owner of the surface cannot reasonably claim that no
minerals can be mined, just as the owner of the mineral interest cannot
reasonably expect to have unfettered access to the minerals. * * * Tension
between the owner of the surface interest, who seeks to maximum the value
of the surface, and the owner of the mineral interest, who seeks to maximize
the value of the minerals, is inevitable. “The broad principle by which these
tensions are to be resolved is that each owner must have due regard for the
rights of the other in making use of the estate in question.”
Snyder, 140 Ohio St.3d 322 at ¶ 13-14.2
{¶67} Relying on these observations, Ohio Gathering’s reply brief sets forth an
abbreviated contention that there is no superior property right for the declaratory judgment
and a gas company’s use of a surface easement is not trespass on a first-in-time coal
lease regardless of whether there was notice of the coal company’s right to strip mine.
Ohio Gathering compares itself to a surface owner and says a surface owner would have
the right to use the surface even where the coal company has the right to surface mine
and therefore a company to whom the surface owner later grants a surface easement

2 The Snyder case was a mere footnote in the appellant’s brief to say the Skivolocki case, which the brief
heavily reviewed, was still good law. In Skivolocki, the Supreme Court found a gas company’s “right-ofway unlawfully impinges upon [the coal owner’s] rights, as described in the 1901 deed, to use the surface
incident to deep mining operations” and allowed the recovery of damages by the coal owner who sued the
gas company for taking its coal by limiting its ability to mine due to construction of a pipeline on an easement
granted by the surface owner after the coal severance. Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244,
252, 313 N.E.2d 374 (1974). Even though that coal severance deed did not allow strip mining as it
contained language peculiar to deep mining and was executed before strip mining was locally common, the
Court still allowed damages for the pipeline’s interference with the type of mining permitted under the deed.
Id. The Pennsylvania Supreme Court held that blocking surface access to coal by building a dam and
reservoir was trespass for deprivation of surface access. Cochran Coal Co. v. Municipal Mgt. Co., 380 Pa.
397, 110 A.2d 345 (1955) (trespass also from water leaks; also specifically found it was not a takings case).

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should have the right to construct a commercial structure without fear of a coal sterilization
claim. (9/17/19 Reply Brief at 1-2).
{¶68} In Snyder, the Supreme Court was interpreting what constituted
“reasonable surface right privileges” as such language was used in a mineral reservation.
As a reasonable amount of strip mining was permitted by that deed and the case was
remanded to determine reasonableness under the circumstances, there would be a
correlating implication that an unreasonable amount of surface use so as to cause
massive coal sterilization would be unreasonable and subject to damage recovery.3
Here, the coal company had a specific right to strip mine.
{¶69} The right to strip mine certain elevations of coal from parcels E-H was
granted in the 1974 coal lease (and the right to strip mine was specified in the
memorandum recorded in lieu of the lease). The surface owners of parcels A-D, in return
for a royalty, granted the following via 2013 leases: the coal owner had the right to mine
all the coal by strip, auger, highwall, or any method together with surface use without
additional charge; the surface owners had the right to receive six months’ notice before
the stripping so they could remove timber or crops within the mining permit boundary,
which items could be removed by the coal company if the surface owner failed to do so;
the surface owner waived the 50 foot property line barrier (if an adjacent landowner signed
a waiver or either party owned adjacent land) with damages to be paid to adjacent
landowners; and the coal owner promised to complete reclamation with due diligence.
The right to strip mine was not limited to a reasonable use of the surface.
{¶70} However, it would be inappropriate to delve into the argument raised in the
reply brief that was not briefed in the appellant’s brief. The initial brief filed by Ohio
Gathering argued summary judgment should not have been granted as it had no notice
(record or actual) of Oxford’s Mining surface mining rights. The mention of trespass was

3 The trial court denied the coal company’s request for an injunction after the pipeline company argued
damages would be sufficient. There was reference to a local decision on pipeline construction over a coal
seam which found the coal company had the pre-existing and priority right to mine without supporting the
surface, the pipeline unlawfully interfered with the right to mine, and the coal company was not liable to the
gas company who must protect its lines during mining. The Ohio Valley Coal Co. v. The East Ohio Gas
Co., Belmont C.P. No. 91-CIV-210 (Feb. 12, 1992). Also, this district upheld the enjoining of landfill
construction which would sterilize underlying coal. Consolidated Land Co. v. Capstone Holding Co., 7th
Dist. Belmont No. 02-BA-22, 2002-Ohio-7378 (limiting liability for surface damage to land with deed
prohibiting surface access to coal and requiring surface use compensation).

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Case No. 19 BE 0016
in connection with and conditioned upon these arguments on notice. There was no
contention that even if it had constructive and/or actual notice, there could be no trespass,
declaratory judgment, or damages for coal sterilization.
{¶71} Ohio Gathering concluded that Oxford Mining did not have a superior
interest due to the lack of record or actual notice and claimed it was the party with a
superior property interest due to said lack of notice (with no mention of coexisting rights).
See 7/3/19 Brief at 1 (“This claim of superior rights, in turn, is premised upon Oxford’s
claim that it obtained rights to surface mine coal from the Property before Ohio Gathering
acquired its Pipeline Easements and that Ohio Gathering had constructive and/or actual
notice of Oxford’s rights”); 18 (discussing trespass elements in the section claiming there
was no constructive notice from the recorded memorandum of lease), 23 (stating the
trespass claims hinges on Oxford’s claim of superior surface mining rights “which is a
question of title that turns on a determination of record title”), 32-33 (where the conclusion
section summarized the arguments by saying the judgment was reversible due to the
issues with record and actual notice). Throughout the initial brief, Ohio Gathering
structured its contentions about who had a superior surface interest entirely around
whether there was record or actual notice of the content of the leases.
{¶72} The appellant’s brief shall include “an argument containing the contentions
of the appellant with respect to each assignment of error presented for review and the
reasons in support of the contentions, with citations to the authorities, statutes, and parts
of the record on which appellant relies. App.R. 16(A)(7). A reply brief is permitted in
order to reply to arguments set forth in the appellee’s brief.4 App.R. 16(C). A reply brief
is not the proper place for raising substantive arguments not raised in the appellant's brief.
Shutway v. Chesapeake Expl. LLC, 7th Dist. Belmont No. 18 BE 0030, 2019-Ohio-1233,
¶ 77.
{¶73} “[W]e do not permit reply briefs to rectify omissions in an appellate brief; this
is especially so in a civil case.” Wells Fargo Bank, N.A. v. Jarvis, 7th Dist. Columbiana

4 We note: the filing containing the reply brief also contains the response to Oxford Mining’s cross-appeal;
Ohio Gathering set forth the reply portion of its brief in a separate section from the response portion;
Oxford’s cross-appeal only raised punitive damages; and Ohio Gathering’s response said there are no
punitive damages if there is no trespass and then referred to the initial brief.
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Case No. 19 BE 0016
No. 08 CO 30, 2009-Ohio-3055, ¶ 36. See also State v. Clark, 38 Ohio St.3d 252, 258,
527 N.E.2d 844 (1988) (even in a criminal case, the Supreme Court found the appellate
court did not err in refusing to address an issue raised only in the reply brief which claimed
to clarify an assignment of error but actually raised an entirely new assignment of error).
And, we do not root out and address contentions raised in the summary judgment
proceedings if those contentions are not maintained as arguments in the appellant’s initial
brief. See Jarvis, 7th Dist. No. 08 CO 30 at ¶ 34-35 (if appellate courts were to address
errors and substantive arguments first raised in the appellant’s reply, then the appellee
would be better off not filing a brief at all and would be punished for pointing out that
certain topics are no longer at issue due to the appellant’s failure to raise them on appeal).
As a reply brief is not the proper place for assigning a new error or raising a new reason
for reversing a judgment, we cannot address the reply brief argument that a coal company
with strip mining rights does not have a superior right over a later pipeline easement
holder who had record or actual notice of the coal mining rights before purchasing the
easement.
REFUSAL OF MITIGATION INSTRUCTION
{¶74} Moving from the summary judgment to the trial on damages, Ohio
Gathering’s third assignment of error provides:
“The Trial Court Erred in Its January 14, 2019 Judgment Entered Upon the Jury’s
Verdict, Amended on February 5, 2019 Nunc Pro Tunc.”
{¶75} The argument under this assignment of error deals with Ohio Gathering’s
request for a jury instruction on mitigation of damages, which the court refused over
objection. (Tr. 1101-1102, 1107-1108). The court also denied Ohio Gathering’s post-trial
motion contesting the refusal to give the requested instruction. (4/4/19 JE); (4/11/19 J.E.).
(The denial of the post-judgment motion is generally encompassed in the fourth
assignment of error, which is not argued separately.) The following jury instruction was
proposed by Ohio Gathering:
Ohio Gathering claims Oxford failed to mitigate its damages. If Ohio
Gathering proves by the greater weight of the evidence that Oxford did not
use reasonable diligence or make reasonable efforts under the facts and
circumstances in evidence to avoid potential coal loss or lessen its damages
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Case No. 19 BE 0016
caused by Ohio Gathering’s pipeline, you should not allow damages that
could have been avoided by reasonable efforts to avoid loss. Oxford
however, is not required to take measures that would involve undue risk,
burden, or humiliation.
Proposed Jury Instructions at 6 (1/7/19), citing Ohio Jury Instructions, CV 207.25.
{¶76} “The general rule is that an injured party has a duty to mitigate and may not
recover for damages that could reasonably have been avoided.” Chicago Title Ins. Co.
v. Huntington Natl. Bank, 87 Ohio St.3d 270, 276, 719 N.E.2d 955 (1999). Failure to
mitigate damages can be an affirmative defense in various types of civil cases, and the
burden is on the defendant to prove the other party did not use reasonable efforts to
mitigate his damages. State ex rel. Stacy v. Batavia Local School Dist. Bd. of Edn., 105
Ohio St.3d 476, 2005-Ohio-2974, 829 N.E.2d 298, ¶ 46 (contract case); Frenchtown
Square Partnership v. Lemstone Inc., 99 Ohio St.3d 254, 2003-Ohio-3648, 791 N.E.2d
417, ¶ 9-11, 21 (commercial lease case; noting mitigation was historically inapplicable in
property law but finding leases have a dual nature); Johnson v. University Hosps. of
Cleveland, 44 Ohio St.3d 49, 57, 540 N.E.2d 1370 (1989) (tort case).
{¶77} A determination as to which jury instructions are proper is a matter left to
the sound discretion of the trial court, and thus, the trial court's formulation of instructions
is upheld absent an abuse of discretion. State v. Wolons, 44 Ohio St.3d 64, 68, 541
N.E.2d 443 (1989); State v. Guster, 66 Ohio St.2d 266, 271, 421 N.E.2d 157 (1981). In
evaluating whether the court acted unreasonably, unconscionably, or arbitrarily as
required in an abuse of discretion review, we consider the jury instructions as a whole.
State v. Jalowiec, 91 Ohio St.3d 220, 231, 744 N.E.2d 163 (2001). “A jury instruction
should clearly and concisely state the principles of law necessary to enable the jury to
evaluate the case.” (Emphasis original). B & B Contractors & Developers Inc. v. Olsavsky
Jaminet Architects Inc., 2012-Ohio-5981, 984 N.E.2d 419, ¶ 102 (7th Dist.), citing
Cleveland Electric Illuminating Co. v. Astorhurst Land Co., 18 Ohio St.3d 268, 272, 480
N.E.2d 794 (1985).



{¶78} Ohio Gathering states, “Oxford had several opportunities to take reasonable
steps to reduce its alleged damages, including the ability to remove coal around and
underneath the Pipeline.” Ohio Gathering points to testimony expressing a “belief that
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Case No. 19 BE 0016
you can highwall mine under the pipeline if given the opportunity.” (Tr. 310). Ohio
Gathering complains the lack of a mitigation instruction was especially prejudicial due to
Oxford’s “unrealistic” claim on costs; there was testimony that selling the coal at $37.95
a ton Oxford Mining’s costs would have been $17.29 per ton leaving a profit of $20.66 per
ton. (Tr. 605).
{¶79} As for any suggestion that the desired mining area should have been
relocated, Oxford Mining responds that it would be wholly unreasonable to find a duty to
mitigate requires the changing of a mining plan to accommodate the pipeline after it was
laid so as to acquiesce to leaving some coal in place and mining elsewhere. This was
the whole theory of damages. “[T]he obligation to mitigate does not require the party to
incur extraordinary expense and risk.” Chicago Title, 87 Ohio St.3d at 276. Nor does it
require a party to forgo a right to the very item at issue in the suit.
{¶80} On a similar note, Oxford Mining states Ohio Gathering’s mitigation
argument on the ability to mine coal near the pipeline was actually an argument about the
extent of inaccessible coal (i.e., the extent of damages), which amount each party tried
to prove through offering expert testimony on mining near the pipeline. Oxford Mining
presented testimony explaining why mining could not occur on the subject property under
parts of the pipeline: stripping occurs first to expose the side of a hill for highwall mining;
the land was previously mined; and the slopes of uncompacted mine spoils would be
dangerous to strip and approach near the pipeline. (Tr. 220, 241-243, 666). The weight
of the testimony on costs or the amount of unmineable coal were credibility issues.
{¶81} Oxford Mining also emphasizes that to the extent the proposed mitigation
instruction related to the amount of mineable coal affected, the instruction would have
been redundant to other instructions the court provided to the jury. It is within the sound
discretion of a trial court to refuse proposed jury instructions which are redundant or
immaterial to the case. Bostic v. Connor, 37 Ohio St.3d 144, 148, 524 N.E.2d 881 (1988).
Furthermore, the appellant must demonstrate prejudice ensued as a result of a refusal to
provide a jury instruction. B & B Contractors, 2012-Ohio-5981 at ¶ 103. The court
instructed the jury: they were to decide if Oxford Mining was entitled to damages to
compensate it for the lost value of coal it cannot mine due to the location of the pipeline;
they should award the amount of revenue Oxford Mining would have received from the
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Case No. 19 BE 0016
sale of the coal it cannot mine due to the pipeline minus the costs it would have incurred
in connection with the mining and the sale of the coal; and for the revenue figure, they
should calculate the amount of money Oxford Mining would have received from the sale
of coal it cannot mine. (Jury Instructions at 5).
{¶82} This necessarily entails the bestowing upon the jury the right to make a
decision on how much coal could not be mined. If the jury found Oxford Mining could
reasonably mine closer to the pipeline, it could reduce the amount of coal lost in the
calculation. Oxford Mining asked for over $10.8 million in damages, and the jury returned
a verdict for $5.5 million. (Tr. 1123, 1174). The failure to give a proposed instruction is
not reversible where it has not “impaired the theory of the case of the party requesting it.”
R.T. v. Knobeloch, 2018-Ohio-1596, 111 N.E.3d 588, ¶ 32 (10th Dist.) (the court did not
err in refraining from instructing on mitigation). Contrary to Ohio Gathering’s suggestion,
it was not deprived of the jury’s consideration of the theory that Oxford Mining could mine
closer to or under the pipeline.
{¶83} Ohio Gathering also contends the trial abused its discretion in refusing the
proposed mitigation instruction because the evidence at trial supported a finding that
“Oxford knew or reasonably should have known that a pipeline was going to be
constructed but took no action to reduce its own damages.” Ohio Gathering notes it
provided proposed routes to Oxford Mining who rejected the routes by generally claiming
interference with coal mining but without providing a specific mine plan, cooperating, or
having complete strip mining rights (of certain elevations) from one of the surface owners.
Oxford Mining responds by pointing out that a plaintiff has no duty to mitigate before the
harm is suffered. Oxford Mining also notes it contacted Ohio Gathering immediately upon
seeing the pipeline being laid in an unanticipated location.
{¶84} “[O]ne injured by the tort of another is not entitled to recover damages for
any harm that he could have avoided by the use of reasonable effort or expenditure after
the commission of the tort.” (Emphasis added.) Johnson, 44 Ohio St.3d at 57. See also
Home Sav. & Loan Co. of Youngstown v. Evergreen Land Dev., 7th Dist. Mahoning No.
12 MA 215, 2016-Ohio-1248, ¶ 76 (“one injured in his person or property by a wrongful
act or wrongful omission to act, whether as a result of a tort or a breach of contract, must
use reasonable care to avoid loss or to minimize the damages resulting”). This law
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Case No. 19 BE 0016
speaks of one already injured and limits damages which could have been avoided after
the event. See id. See also Black’s Law Dictionary, (11thEd.2019) (“The principle
inducing a plaintiff, after an injury or breach of contract, to make reasonable efforts to
alleviate the effects of the injury or breach.”).
{¶85} Mitigation of damages constitutes a “post-liability issue.” (Emphases
original.) Batavia Local School, 97 Ohio St.3d 269 at ¶ 25. See also Boyd v. Cogan,
4th Dist. Scioto No. 11CA3424, 2012-Ohio-1604, ¶ 11 (in finding mitigation moot where
there was no breach, the court explained, “a party must actually be injured before the law
imposes a duty to mitigate”). In accordance, the duty to mitigate damages arises after
“the injured party has knowledge that damages have been sustained.” (Emphasis
added.) Lake v. Love, 2017-Ohio-2714, 90 N.E.3d 36, ¶ 27 (12th Dist.). For instance in
a contract context, we have stated: “[I]t is illogical that a duty to mitigate can occur before
a default, as there are no damages to mitigate at that point.” Evergreen, 7th Dist. No. 12
MA 215 at ¶ 78.
{¶86} Considering the theories put forth on appeal regarding mitigation of
damages, we conclude the trial court did not abuse its discretion in refusing the proposed
jury instruction on the duty to mitigate damages. In accordance, the assignments of error
encompassing the lack of a mitigation instruction are overruled.
CROSS-APPEAL: PUNITIVE DAMAGES
{¶87} Oxford Mining sets forth the following assignment of error in its crossappeal:
“The Trial Court Erred In Directing A Verdict Against Oxford On Its Claim For
Punitive Damages Where Oxford Presented Ample Evidence of Ohio Gathering’s Actual
Malice.”
{¶88} Punitive damages are not recoverable from a defendant in a tort action
unless “[t]he actions or omissions of that defendant demonstrate malice” (or aggravated
or egregious fraud). R.C. 2315.21(C)(1),(2) (and only when compensatory damages are
recoverable). The tort plaintiff’s burden of proof for punitive damages is clear and
convincing evidence. R.C. 2315.21(D)(4).5 Actual malice has been defined as: (1) a

5 When evaluating case law on punitive damages, we note that the burden was previously preponderance
of the evidence until it was heightened legislatively, effective January 5, 1988.
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Case No. 19 BE 0016
state of mind under by which a person's conduct is characterized by hatred, ill will or a
spirit of revenge, or (2) a conscious disregard for the rights and safety of another that has
a great probability of causing substantial harm. Preston v. Murty, 32 Ohio St.3d 334, 512
N.E.2d 1174 (1987), syllabus. Oxford Mining proceeds under the second definition.
{¶89} Conscious disregard “requires the party to possess knowledge of the harm
that might be caused by his behavior.” Id. at 335. More than mere negligence is required.
Id. In fact, “it is evident that a reckless actor, who only has knowledge of the mere
possibility that his or her actions may result in substantial harm, is not behaving
maliciously.” Motorists Mut. Ins. Co. v. Said, 63 Ohio St.3d 690, 698, 590 N.E.2d 1228
(1992). The requirement of “great probability” of harm means that a possibility or even
probability is not enough. Preston, 32 Ohio St.3d at 335–336. These elements entail
conduct that gives rise to a sense of “outrage” or invokes a need to punish “a mental state
so callous in its disregard for the rights and safety of others that society deems it
intolerable.” Id.; Calmes v. Goodyear Tire & Rubber Co., 61 Ohio St.3d 470, 473, 575
N.E.2d 416 (1991).
{¶90} Where conscious disregard is alleged and the other party contests the issue
as a matter of law, the trial court is guided by the following law:
before submitting the issue of punitive damages to the jury, a trial court must
review the evidence to determine if reasonable minds can differ as to
whether the party was aware his or her act had a great probability of causing
substantial harm [and] determine that sufficient evidence is presented
revealing that the party consciously disregarded the injured party's rights or
safety. If submitted to the jury, the trial court should give an instruction in
accordance with the law [on punitive damages].
Preston, 32 Ohio St.3d at 336.
{¶91} Ohio Gathering sought a directed verdict on punitive damages at the close
of the plaintiff’s case. (Tr. 812). In the same context, they discussed whether the court
would instruct the jury on punitive damages. The court suggested its decision would be
the same under either label. (Tr. 819). The trial court then labeled its refusal to instruct
the jury on punitive damages as a directed verdict and found reasonable minds could only
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Case No. 19 BE 0016
come to a conclusion adverse to the plaintiff on punitive damages. (Tr. 820-821). Oxford
Mining objected to the refusal to instruct the jury on punitive damages. (Tr. 1107).6
{¶92} In contesting this decision on appeal, Oxford Mining cites directed verdict
law. “When a motion for a directed verdict has been properly made, and the trial court,
after construing the evidence most strongly in favor of the party against whom the motion
is directed, finds that upon any determinative issue reasonable minds could come to but
one conclusion upon the evidence submitted and that conclusion is adverse to such party,
the court shall sustain the motion and direct a verdict for the moving party as to that issue.”
Civ.R. 50(A)(4). Although it is necessary to review and consider the evidence, a motion
for directed verdict presents a question of law and is reviewed de novo. Id. at ¶ 4.
{¶93} Oxford Mining asks whether there was “any evidence of substantive
probative value that favors the position of the nonmoving party.” White v. Leimbach, 131
Ohio St.3d 21, 2011-Ohio-6238, 959 N.E.2d 1033, ¶ 22. In doing so, Oxford Mining says
that although clear and convincing is the burden for an award of punitive damages, it is
not relevant to a directed verdict inquiry.
{¶94} Initially, it must be pointed out that a directed verdict motion deals with the
sufficiency of the evidence, and such concept takes into account the burden applicable
to the claim at issue. See, e.g., Estate of Cowling v. Estate of Cowling, 109 Ohio St.3d
276, 2006-Ohio-2418, 847 N.E.2d 405, ¶ 32-33 (2006). For instance, in reviewing
whether a party presented sufficient evidence on a constructive trust element to survive
a directed verdict motion, the Supreme Court construed the evidence most strongly in
favor of that party and found “reasonable minds could only conclude that inequity had
been proven by clear and convincing evidence.” Id. The burden of proof is incorporated
into the preliminary legal test in other contexts as well. See Jackson v. Columbus, 117
Ohio St.3d 328, 2008-Ohio-1041, 883 N.E.2d 1060, ¶ 11-12 (in the summary judgment

6 Oxford Mining also asked for “mouth of the mine damages” so certain mining costs would not be deducted
from the coal value. Citing Brady v. Stafford, 115 Ohio St. 67, 152 N.E. 188 (1926), syllabus (“Where coal
is taken from under the land of another, willfully, wrongfully, and intentionally, and without right, the measure
of damages to the owner of such coal is the market value of the same at the mouth of the mine, without
any deduction for the cost of labor and other expenses incurred in severing and transporting such coal to
the mouth of the mine” as distinguished from where coal is taken under a bona fide belief it belonged to the
taker). See also Pan Coal Co. v. Garland Pocahontas Coal Co., 97 W.Va. 368, 125 S.E. 226 (1924)
(distinguishing the conversion of coal by mining from the sterilization of coal by rendering it unmineable).
Oxford Mining does not raise this damages theory on appeal.
– 30 –
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context, we view the evidence and reasonable inferences in the light most favorable to
the plaintiff to determine whether a reasonable juror could find actual malice “with
convincing clarity,” the heightened standard applicable to privilege in a defamation suit);
State v. Williams, 74 Ohio St.3d 569, 660 N.E.2d 724 (1996) (in the criminal context, a
motion for a directed verdict of acquittal views the evidence in a light favorable to the state
to see if any rational trier of fact could find the essential elements “proven beyond a
reasonable doubt”).
{¶95} Next, we discuss the relationship of a request for punitive damages to the
topic jury instructions. As stated in the prior assignment of error, an appellate court
reviews a trial court's refusal to give a requested jury instruction for abuse of discretion.
State v. Adams, 144 Ohio St.3d 429, 2015-Ohio-3954, 45 N.E.3d 127, ¶ 240. “Requested
jury instructions should ordinarily be given if they are correct statements of law, if they are
applicable to the facts in the case, and if reasonable minds might reach the conclusion
sought by the requested instruction.” Id., citing Murphy v. Carrollton Mfg. Co., 61 Ohio
St.3d 585, 591, 575 N.E.2d 828 (1991) (when reviewing the record to determine if there
was “sufficient evidence” to support an instruction, the appellate court asks if the record
contains evidence from which “reasonable minds” might reach the conclusion sought by
the instruction).
{¶96} Reviewing a refusal to give a certain jury instruction also involves an
analysis of “reasonable minds” and “sufficient evidence” while applying an abuse of
discretion standard. See Preston, 32 Ohio St.3d at 336 (explaining how a trial court is to
determine if a jury instruction on punitive damages is warranted). See also State v.
Wolons, 44 Ohio St.3d 64, 68, 541 N.E.2d 443 (1989) (“It is within the sound discretion
of the trial court to determine whether the evidence presented at trial is sufficient to require
a jury instruction on intoxication” to negate a criminal element, and the appellate court
review this decision for an abuse of discretion). An abuse of discretion refers to “more
than an error of law or judgment; it implies that the court's attitude is unreasonable,
arbitrary or unconscionable.” Wolons, 44 Ohio St.3d at 68.
{¶97} After the Preston decision, the Supreme Court addressed a case where:
the defendant moved for a directed verdict on punitive damages at the close of the
plaintiff’s case; the trial court granted the directed verdict motion, and the appellate court
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Case No. 19 BE 0016
“rejected appellants' contention that the trial court erred in directing a verdict in favor of
appellee on the issue of punitive damages” (due to Supreme Court precedent on alcohol
consumption as related to malice). Cabe v. Lunich, 70 Ohio St.3d 598, 600, 640 N.E.2d
159 (1994). After overruling its prior alcohol holding, the Supreme Court held in pertinent
part: “a trial court abuses its discretion in failing, upon the plaintiff's motion, to instruct the
jury that it may find an award of punitive damages to be appropriate if it finds that the
driver acted with actual malice in driving subsequent to having consumed alcohol” (where
there was evidence on test refusal after an accident). (Emphasis added.) Id. at 603. The
Court did not subject the decision to de novo review or mention the directed verdict
granted on punitive damages. Applying Cabe, the decision on whether to submit punitive
damages to the jury was subject to the trial court’s sound discretion.
{¶98} Oxford Mining argues Ohio Gathering knew Oxford had property rights on
the subject parcels and knew there was a great probability a pipeline would cause Oxford
Mining substantial financial harm but consciously disregarded these facts. Oxford Mining
points to the following: Ohio Gathering’s land manager acknowledged Oxford Mining’s
2013 communications on its coal rights and intent to mine; the title work showed Oxford’s
coal rights; it was a standard business practice to disregard coal rights; they constructed
the pipeline without viewing the title documents; Oxford attempted to have Ohio Gathering
stop once they noticed pipe being placed; and landowners informed Ohio Gathering’s
agent that the pipeline may interfere with the planned coal mining. Oxford Mining asks
this court to remand for a trial on punitive damages (which would also allow a path for
recovering attorney’s fees).
{¶99} Ohio Gathering responds that the test is not what a reasonable person
should have done. They point to the evidence: the land manager had no experience in
title work or coal; there was a backlog of title reports which were not all reviewed before
construction began; an answer to a hypothetical question was not relevant to actual
malice; Oxford Mining rejected a proposed route based on a property over which it did
not yet have full rights; and the intent of Ohio Gathering was based on skepticism of the
claim that the pipeline would affect a mining plan due to the lack of a permit and their past
dealings with Oxford Mining.
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Case No. 19 BE 0016
{¶100} Ohio Gathering’s representative testified: “the situation with coal and all
of these counties is that it’s everywhere”; “virtually every inch of land is covered by a coal
lease”; “we don’t have the resources to go through and dig through all these hundredyear-old leases or new leases and try to determine if they’ve already mined through there
or if they’re going to mine through another seam * * *.” (Tr. 746-747). In discussing their
past history with Oxford Mining, he said Oxford Mining rejected multiple proposals.
{¶101} The first proposal had the pipeline running along a road. Oxford Mining
hoped it could mine through the road, but this was never approved by officials. (Tr. 258,
302, 304). Oxford Mining did not provide a copy of the preliminary mine plan because
the mining areas “were changing probably monthly at this point” as they were still drilling
core samples and identifying the best locations. (Tr. 258-259). In November 2013, when
another proposed route was disclosed by Ohio Gathering, Oxford Mining told Ohio
Gathering the planned mine “boundary has since changed.” (Tr. 285-286). Oxford Mining
rejected some routes that included property owned by people from whom they hoped to
acquire rights (property not at issue here). (Tr. 288-290, 639-640). At the time, Oxford
Mining was internally inquiring whether it had both the coal and the surface rights to
certain properties even though Ohio Gathering was instructed that a pipeline could not
proceed in those locations. (Tr. 321-322).
{¶102} As to prior dealings on another project, Ohio Gathering said it paid Oxford
Mining over a million dollars for coal loss, changed a planned route, and then learned that
Sunoco built a pipeline at the same location supposedly overlying Oxford Mining’s best
coal. (Tr. 790). The land manager at Ohio Gathering said this confirmed suspicions that
Oxford Mining had no intent to mine the pertinent holdings near the pipeline but was trying
to generate income. Management at Ohio Gathering believed accommodations and
payments were dependent on actual intent to mine, and they believed a plan to move the
pipeline as mining approached it (instead of pre-paying) would ensure this intent existed.
(Tr. 806-807).
{¶103} Notably, after seeing the pipeline construction, Oxford Mining was able to
immediately generate a map estimating the coal that would no longer be mineable due to
the pipeline’s location, but Oxford Mining would not provide such a map earlier when it
repeatedly rejected proposed routes. (Tr. 552-553, 555); (Pl.Ex. 100-101). Continuing
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Case No. 19 BE 0016
to lay the pipeline after being asked to stop in the middle of construction on the subject
property showed no more disregard than beginning to construct on the route Oxford
Mining already rejected. The parties thereafter discussed moving the pipeline as the coal
mining approached its location but then apparently disagreed on the logistics of the midmining reclamation Ohio Gathering anticipated Oxford Mining would perform. (Tr. 561-
563, 795-796).
{¶104} Upon viewing the plaintiff’s evidence, the trial court rationally found that a
reasonable mind would not find Ohio Gathering consciously disregarded the injured
party's rights or safety or was aware the pipeline location had a great probability of
causing substantial harm to Oxford Mining. Holding the belief that Oxford Mining must
have a bona fide intent to mine the coal in order to recover (and the belief that Oxford
Mining did not have such intent) did not evince malice, even assuming certain suspicions
were unfounded or irrelevant. Prior pipelines were constructed by Ohio Gathering over
Oxford Mining’s coal with payment for coal loss even after a route was changed to
accommodate claims of affecting their best coal. Future pipeline relocation was initially
considered a viable substitute for pre-construction payment for coal loss. No coal was
extracted or touched by the easement holder. There was no evidence Ohio Gathering
knew mining could not occur under the pipeline, and there was no indication Ohio
Gathering would reject a waiver of the distance regulation.
{¶105} This is not a case of a pipeline being constructed by a stranger to the land.
The landowners granted a company rights-of way for a pipeline to transport gas from
wells drilled by others. One of the landowners was insisting to Oxford Mining that it had
no right to strip mine his key property under the relevant deed. Ohio Gathering moved its
proposed route multiple times to attempt to satisfy Oxford Mining, who was reluctant to
provide a copy of maps showing the location of the intended mining or the coal. The
construction at the location at issue was not extreme and an alternative, non-harmful
location was not said to be available through the pertinent properties.
{¶106} Under the totality of the evidence put forth by the plaintiff in this case, the
construction of the pipeline does not invoke a sense of outrage to a reasonable member
of society, and this particular episode was not “so callous in its disregard for the rights
and safety of others that society deems it intolerable.” Preston, 32 Ohio St.3d at 335-
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336; Calmes, 61 Ohio St.3d at 473. Accordingly, the trial court reasonably found the
requested punitive damages instruction was not warranted. As the trial court did not err
in refusing to instruct on punitive damages, the assignment of error presented in Oxford
Mining’s cross-appeal is overruled.

Outcome: For the foregoing reasons, the trial court’s judgment is affirmed.

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