Title: Coronado Coal II, LLC v. Blackhawk Land and Resources, LLC

State: delaware

Issuer: Delaware Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
CORONADO COAL II, LLC, 
 
     Plaintiff-Below,  
     Appellant, 
 
v. 
 
BLACKHAWK LAND AND 
RESOURCES, LLC, 
 
     Defendant-Below,  
     Appellee. 
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No.  209, 2022 
 
 
Court Below: Superior Court  
of the State of Delaware 
 
C.A. No. N21C-10-136  
               CCLD 
 
Submitted:  December 7, 2022 
Decided:  March 3, 2023 
 
Before SEITZ, Chief Justice; VALIHURA, and VAUGHN, Justices. 
 
O R D E R 
 
 
On this 3rd day of March 2023, it appears to the Court that: 
 
(1)  The plaintiff-appellant, Coronado Coal II, LLC (“Coronado”) appeals 
from a Superior Court order dismissing its complaint for lack of subject matter 
jurisdiction.  The complaint alleges that defendant-appellee, Blackhawk Land and 
Resources, LLC, (“Blackhawk”) breached a sub-sublease agreement between the 
parties when it would not allow Coronado to conduct retreat coal mining1 in a seam 
 
1 In its complaint, Coronado describes “Retreat mining” as “the part of ‘room and pillar’ method 
of underground coal mining in which remaining pillars of coal are mined, or ‘pulled’ as mining 
operations exit the mining area.”  App. to Opening Br. at A7. 
2 
 
of coal in West Virginia known as the Powellton “A” seam.  The Superior Court 
found that an arbitration clause that was part of the sub-sublease required that 
Coronado’s claim be arbitrated.2  On appeal, Coronado claims that the Superior 
Court misconstrued the arbitration clause.  It also makes a second argument to the 
effect that reversal is required if this court finds that the arbitration clause is 
ambiguous. 
 
(2)  Coronado is a subsidiary of Coronado Global Resources Inc., a company 
that produces metallurgical coal.  Blackhawk holds interests in leases for tracts of 
coal in West Virginia for the purpose of coal mining.  On December 21, 2015, the 
parties entered into a sub-sublease in which Blackhawk, sublessor, subleased to 
Coronado, sublessee, the right to mine coal in the Powellton “A” seam in West 
Virginia.  The original lease between the lessor and lessee was created in 1937 
(“1937 Lease”) and through various assignments and subleases Blackhawk was the 
sublessee of the lease when it entered into its sub-sublease with Coronado.  The sub-
sublease between Blackhawk and Coronado was made subject to the terms and 
conditions contained in the 1937 Lease.  One of those terms, contained in Article 
Twenty, was an arbitration clause, which reads, in pertinent part:  
Should any question arise between the parties hereto as to 
the performance by the Lessee of Articles Six, Seven, 
Eight, Nine, and Ten hereof, or any of them, or of any 
 
2 Coronado Coal II, LLC v. Blackhawk Land and Res. LLC, 2022 WL 1772246, at *5 (Del. Super. 
May 31, 2022). 
3 
 
covenant contained in said Articles, or any of them, every 
such question shall be determined by arbitration in the 
manner provided for in this Article . . . .3 
(3)  Article Six of the 1937 Lease provides that: 
The Lessee shall have the right to mine any merchantable 
seam of coal and covenants that in mining any such seam 
it will mine the same in such a manner as to recover the 
greatest possible amount of coal therefrom and in such 
manner that the mining thereof shall not injure or destroy 
any other vein or seam of coal not mined, or prevent the 
convenient and proper mining thereof.4   
 
(4)  The sub-sublease requires Coronado to submit mining plans to Blackhawk 
for approval, and to conduct mining according to these plans, so as “[t]o protect the 
properties and coal reserves included herein from waste, injury or damage[.]”5  
Without Blackhawk’s approval, Coronado could not begin mining.6 
 
(5)  Between 2016 and 2020, Coronado submitted mining plans reflecting its 
plans for retreat mining to Blackhawk in accordance with the sub-sublease, which 
Blackhawk approved.  However, on December 15, 2020, Blackhawk informed 
Coronado by letter that Blackhawk no longer approved of Coronado’s plans to 
conduct pillar mining underneath Blackhawk’s nearby mining operations at Coal 
Branch mine.  In its letter, Blackhawk asserted that Coronado’s retreat mining plans 
were “problematic for the continued development and safety of the Blackhawk Coal 
 
3 App. to Opening Br. at A134.  
4 Id. at A128. 
5 Id. at A73-74. 
6 Id. at A74. 
4 
 
Branch Mine which is situated above the Powellton mine.”7  As a result of this 
disapproval, Coronado claims that it “left in place at least 100,000 tons of 
metallurgical coal, which is among the most valuable coal in the United States.”8 
 
(6)  Coronado also filed the complaint in this case, in which it asserted claims 
for breach of contract and promissory estoppel.  As to its breach of contract claim, 
Coronado alleged that Blackhawk’s rejection of Coronado’s mining plans in the area 
of the Coal Branch mine “was meritless”9 because “Coronado’s operations in the 
Powellton [“A”] Seam did not present any unusual risk[;]”10 and, therefore, the 
objection violated Coronado’s rights under the sub-sublease.  Coronado cites Article 
Six of the 1937 Lease, which grants Coronado the right to mine the Powellton “A” 
Seam “in such a manner as to recover the greatest possible amount of coal therefrom 
. . . .”11  As to its alternative promissory estoppel claim, Coronado alleged that: (1) 
Blackhawk’s previous approval of Coronado’s mining plans constituted a promise 
by Blackhawk “that Coronado could perform retreat mining in the Powellton [“A”] 
Seam[;]”12 (2) Coronado had been foreseeably induced “to invest considerable time 
and significant resources in implementing”13 its retreat mining plans by Blackhawk’s 
 
7 Id. at A93. 
8 Opening Br. at 9 (citing App. to Opening Br. at A9). 
9 App. to Opening Br. at A20. 
10 Id. 
11 Id. at A19; see id. at A128. 
12 Id. at A20. 
13 Id. 
5 
 
alleged promise; and (3) “Blackhawk’s subsequent objection to Coronado’s mining 
plans”14 caused Coronado to sustain damages for which it was entitled to 
compensation. 
(7)  Blackhawk moved to dismiss Coronado’s complaint for lack of subject 
matter jurisdiction on the ground that the arbitration clause divested the Superior 
Court of the authority to hear Coronado’s claims.  In response, Coronado asserted 
that the arbitration clause did not “directly relate”15 to its claims because the dispute 
arose out of Blackhawk’s actions, namely Blackhawk’s refusal to approve 
Coronado’s retreat mining plan.  Coronado focused on the arbitration clause’s 
phrase, “the performance by the Lessee[,]”16 arguing that that phrase limited the 
scope of the arbitration clause only to  circumstances in which the dispute arises out 
of actions on the part of Coronado, not actions by Blackhawk. 
(8)  In granting the motion to dismiss, the Superior Court found that the 
“unambiguous terms” of the arbitration clause “demonstrate[ed] an agreement to 
arbitrate all claims regarding the Lessee’s performance under Article Six” of the 
1937 Lease; and both Coronado’s breach of contract and promissory estoppel claims 
 
14 Id. at A21. 
15 Id. at A112. 
16 Id. at A106 (emphasis omitted); see id. at A113; see id. at A134. 
6 
 
“directly relate[d] to Coronado’s performance of rights and obligations” under 
Article 6 of the 1937 Lease.17   
 
(9)  Coronado contends on appeal that the Superior Court erred by 
misapplying well-established principles of contract interpretation when it 
determined that the “unambiguous terms” of the arbitration clause “required 
Coronado to arbitrate all claims set forth in the Complaint even though Blackhawk 
prohibited Coronado’s retreat mining and Coronado’s claims arise from the Sub-
Sublease . . . and the 1937 Lease.”18  Coronado contends that the arbitration clause 
governs only claims arising out of an action executed by the lessee.19  “[B]ecause 
Coronado did not actually perform any rights, obligations, or covenants therein that 
underlie its claims[,]” Coronado argues, its claims “do not arise from Coronado’s 
performance of Article Six” and are therefore not arbitrable.20 
 (10)  Coronado further explains its contention as follows.  It argues that the 
articles within the scope of the Arbitration Clause do not address the lessor’s 
conduct, but instead address only the lessee’s conduct.21  It further claims that the 
arbitration clause itself should be read consistently to “make arbitrable” only those 
 
17  Coronado Coal II, LLC v. Blackhawk Land and Res. LLC, 2022 WL 1772246, at *5 (Del. Super. 
May 31, 2022). 
18 Opening Br. at 14, 15. 
19 Id. at 16-17, 20. 
20 Id. at 22 (emphasis omitted). 
21 Id. at 3-4. 
7 
 
“disputes arising from the ‘performance by the Lessee’ of its mining operations.”22  
It further claims that the Superior Court failed to apply the phrase “performance by 
the Lessee” according to its plain meaning.23  Coronado argues that, when the 
dictionary definitions of “performance” as “execution of an action”24 and of 
“execute,” as “to carry [it] out fully: put [it] completely into effect”25 are applied to 
the arbitration clause, only claims that arise because Coronado “fully carried out, or 
put completely into effect, an action under Article Six of the 1937 Lease[,]” are 
arbitrable.26  Coronado’s claims, it argues, are not arbitrable because they arise from 
Blackhawk’s rejection of Coronado’s mining plans and not from any action 
performed fully by Coronado.27 
 
(11)  Whether a court has subject matter jurisdiction is a question of law this 
Court reviews de novo.28  Further, this Court “review[s] questions of contract 
interpretation de novo.”29 
 
22 Id. at 16. 
23 Id. at 4. 
24 Id. at 20-21; see Coronado Coal II, LLC v. Blackhawk Land and Res. LLC, 2022 WL 1772246, 
at *4 n.47 (Del. Super. May 31, 2022) (quoting Performance, https://www.merriam-
webster.com/dictionary/performance (Feb. 22, 2022)). 
25 
Opening 
Br. 
at 
21 
(quoting 
Execute, 
Merriam-Webster, 
https://www.merriam-
webster.com/dictionary/execute (last visited Aug. 5, 2022))  Merriam-Webster defines “execute” 
as “to carry out fully : put completely into effect[.]”  Execute, Merriam-Webster, 
https://www.merriam-webster.com/dictionary/execute (last visited Mar. 1, 2023). 
26 Opening Br. at 21. 
27 Id. at 23. 
28 Imbragulio v. Unemployment Ins. Appeals Bd., 223 A.3d 875, 878 (Del. 2018). 
29 Salamone v. Gorman, 106 A.3d 354, 367 (Del. 2014) (en banc); see also Parfi Holding AB v. 
Mirror Image Internet Inc., 817 A.2d 149, 154 (Del. 2002) (en banc) (“This Court reviews de novo 
the [trial court’s] interpretation of the [agreement] as well as the application of relevant law.”). 
8 
 
(12)  “Delaware courts lack subject matter jurisdiction to resolve disputes that 
litigants have contractually agreed to arbitrate.”30  “A strong presumption exists in 
favor of arbitration, and, accordingly, contractual arbitration clauses are generally 
interpreted broadly by courts.”31  Arbitration is a “mechanism of dispute resolution 
created by contract[,]” and Delaware courts apply “basic principles of contract 
interpretation” to determine the scope of arbitration provisions.32  
 
(13)  We have concluded that the language of the arbitration clause does not 
support the narrow interpretation of “performance by the Lessee” asserted by 
Coronado.  The parties’ dispute directly relates to Coronado’s performance of 
Article Six, specifically, whether Coronado’s proposed retreat mining operations in 
the vicinity of the Coal Branch mine might injure or destroy the Coal Branch mine, 
or prevent the convenient and proper mining thereof, and whether Blackhawk’s 
rejection of Coronado’s plans infringed upon Coronado’s right to perform its 
operations so as to recover the greatest amount of coal from the Powellton “A” seam.  
Blackhawk’s rejection of Coronado’s plans directly involves how Coronado may, or 
may not, perform under Article Six.  “Performance” is broader than an action already 
completed.  A party may propose to perform or assert a right to perform an action in 
the future.  If the original lessor and lessee had intended to give the phrase 
 
30 NAMA Holdings, LLC v. Related World Mkt. Ctr., LLC, 922 A.2d 417, 429 (Del. Ch. 2007). 
31 Id. at 430. 
32 See Parfi Holding AB, 817 A.2d at 156; James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 
76, 78 (2006). 
9 
 
“performance by the Lessee” the narrow scope advocated by Coronado, it was 
incumbent upon them to include language that made that intent clear, and no such 
language was included.  We see no error in the Superior Court’s grant of 
Blackhawk’s motion to dismiss. 
 
(14)  Coronado also makes an argument that reversal is required if this Court 
finds that the arbitration clause is ambiguous.33  We do not find that the clause is 
ambiguous. 
 
NOW, THEREFORE, IT IS THE ORDER of the Court that the judgment of 
the Superior Court is AFFIRMED. 
 
 
 
 
 
 
BY THE COURT: 
 
 
 
 
 
 
 
/s/  James T. Vaughn, Jr. 
  
 
 
 
 
 
Justice 
 
33 Opening Br. at 23.