IN THE UNITED STATES DISTRICT COURT FOR
                     THE SOUTHERN DISTRICT OF WEST VIRGINIA
                               HUNTINGTON DIVISION





ENERGY  CORPORATION  OF  AMERICA
a  West  Virginia  corporation,

                         Plaintiff,
                                              CIVIL  ACTION  NO.  3:01-1317
v.

MACKAY  SHIELDS  LLC,  a  Delaware
limited  liability  company,  et  al.,

                         Defendants.



                                      ORDER

     Pending  before  the  Court  are  Plaintiff's  Motion  for  Partial Summary
Judgment  and  Defendants' Motion to Dismiss.  For the reasons which follow, the
Court  GRANTS  Plaintiff's  Motion  and  DENIES  Defendants'  Motion.

     Plaintiff  Energy  Corporation  of  America  (ECA) brought this Declaratory
Judgment  action  seeking  a  declaration  of  its  rights and obligations under
certain  provisions  of  an  indenture dated May 23, 1997. ECA is the issuer the
indenture,  and  Defendants  are  the  holders  of  approximately  70%  of  the
outstanding  notes  issued.  The  controversy  arose  after  ECA sold one of its
subsidiaries,  Mountaineer  Gas  Co.  (Mountaineer), for which ECA received more
than  $220  million  in  November  2000.  The  indenture  restricts ECA's use of
proceeds  from  the  sale  of  assets

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by  defining  "net  proceeds"  and  requiring  they be expended only for certain
enumerated  purposes.1  Defendants  insisted  ECA  treat  a  portion of the sale
proceeds  as  "excess  proceeds"  which  must  be used to repay the holders. ECA
declined  to  do  so,  and  Defendants  then  served  notice  of  default.

     The dispute arises from the definition of "net proceeds." The precise issue
before  the  Court is the effect of the parenthetical phrase "(after taking into
account  any  available  tax  credits  or  deductions  and  any  tax  sharing
arrangements)"  which  follows  "taxes  paid  or payable as a result thereof[.]"
Plaintiff  contends  that  the phrase refers only to any credits, deductions, or
sharing  arrangements  resulting  from  the  asset  sale.  Defendants  claim the
parenthetical phrase refers to all credits, deductions, or arrangements to which
the  company is entitled even if unrelated to the asset sale. Under this view of
the  phrase, "net proceeds" would increase substantially.  ECA would be required
to  reduce  the  "taxes  paid  or  payable"  from  the  asset  sale
_______________________
     1  "Net  proceeds"  is  defined  as:
the  aggregate  cash  proceeds  received by the Company of any of its Restricted
Subsidiaries  in  respect  of any Asset Sale (including, without limitation, any
cash  received  upon the sale or other disposition of any non-cash consideration
received  in  any Asset Sale, but excluding cash amounts placed in escrow, until
such  amounts  are released to the company), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
relocation  expenses  incurred  as  a result thereof, taxes paid or payable as a
result  thereof  (after  taking  into  account  any  available  tax  credits  or
deductions  and any tax sharing arrangements), amounts required to be applied to
the  repayment  of  Indebtedness  (other  than  Indebtedness  under  any  Credit
Facility) secured by a Lien on the asset or assets that were the subject of such
Asset  Sale  and any reserve for adjustment in respect of the sale price of such
asset  or assets established in accordance with GAAP and any reserve established
for  future  liabilities.

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by applying any credits or deductions ECA may have, whether related to the asset
sale  or  some  other  activities  of  the  company.

     The  parties  filed  cross  motions  under an expedited schedule. Plaintiff
seeks  a  partial  summary  judgment  declaring  the  parenthetical phrase to be
limited  to  credits,  deductions, or arrangements resulting from the asset sale
itself. Defendants counter with a motion to dismiss pursuant to Federal Rules of
Civil  Procedure  12(b)(6),  contending the unambiguous language could only mean
what  Defendants  claim  it means. Each side submitted responses to the opposing
motions,  and  the  Court  heard  oral argument, ably presented by counsel. Both
sides  argue  that the plain wording and most reasonable business meaning of the
disputed  language support their positions.  Each side posits the reasonableness
of  the  result  it  seeks  as  a  basis for the Court to rule in its favor.  An
interpretation  favorable  to  Plaintiff  allows  the  company  to  retain  its
independent  judgment  to  decide  how  and when to spend the disputed proceeds.
Plaintiff  points  to  practical  difficulties  and  uncertainties  which  make
Defendants'  construction unworkable. On the other hand, Defendants point to the
intent  of the parties to restrict Plaintiff's business decisions in a number of
ways  to  protect  the company's financial ability to repay the indentured debt.
Defendants  argue  that  the  parenthetical's  use  of the words "any available"
credits or deductions requires a literal application to all of ECA' s credits or
deductions.

     The  Court  first  examines  the wording and sentence structure of the "net
proceeds"  definition.  In  essence,  net proceeds are the cash received from an
asset  sale  reduced  by  five  items:  direct costs relating to the asset sale;

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relocation expenses incurred as a result of the sale; taxes paid or payable as a
result  of the sale; amounts applied to repayment of debts secured by the asset;
and  any  reserve  established  for  future  liabilities.  Three of these items,
including  the  tax provision in dispute here, have a parenthetical phrase which
explains or modifies the item with which it is associated.  Parentheses are used
to  set off explanatory, qualifying, or amplifying remarks. Parentheses are used
for  nonessential material and their use tends to de-emphasize the material. See
Webster's  II  New  College  Dictionary  798  (1995);  Merriam-Webster's  Online
Collegiate  Dictionary,  available  at  http://www.m-w.com;  Oxford  English
Dictionary  Online, available at http://dictionary .oed.com; Purdue Univ. Online
Writing  Lab,  available at http://owl.english.purdue.edu. Some authorities note
that parentheticals are used to provide examples, explanations, or supplementary
material  that  do  not  alter  the  meaning  of the sentence. Merriam-Webster's
Collegiate Dictionary (10th ed. 1999). Guides to punctuation usage indicate that
parentheses  enclose incidental matters, helpful but not essential in clarifying
text  nor necessary to understanding the subject. See Pancoast, S., The Business
Grammar Handbook (M. Evans and Company 1986); J. Janis, Business Writing (2d ed.
Harper  Perennial  1972).  These  references  and  others  reviewed by the Court
uniformly  treat  parentheses  as  enclosing  incidental  material.

     The "direct costs" item includes a parenthetical phrase which merely offers
examples  of obvious, well-recognized expenses typically incurred in the sale of
a significant asset. The presence of the parenthetical phrase does not alter the
plain  meaning  of  the  words  it  explains  nor  would its absence change that
meaning.  This  use  of  parentheses  is  consistent  with  the authorities, and
suggests  similar  construction  of the disputed parenthetical. Each of the five
items  listed  is  unambiguously,  expressly  connected  to  the  asset  sale

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transaction;  each  item arises exclusively from the asset sale transaction. The
parentheticals  do not alter the meanings of the items listed by going beyond or
outside the asset sale. The parenthetical phrase "(after taking into account any
available  tax  credits or deductions and any tax sharing arrangements)" must be
read  to  provide  merely  explanatory  or nonessential material relating to the
subject,  "taxes  paid  or  payable as a result" of the asset sale. The focus of
this  language  is  the  tax liability caused by the sale, not ECA's bottom-line
taxes  as  determined  by  activities  extraneous  to  the  sale.

     The  Court  finds this construction most consistent with the purpose of the
asset  sale  provisions to which the "net proceeds" definition applies. "Section
4.9.  Asset  Sales"  places  substantial  conditions on the company's sale of an
      ------------
asset  during  the life of the indenture. This provision requires the company to
use  the  "net  proceeds"  for one or more specified purposes only.  If the "net
proceeds"  are  not  so  used  within 360 days from their receipt after an asset
sale,  they  become  "excess proceeds" which, if they exceed a threshold amount,
the company must use to buy back the bonds. The permitted uses of "net proceeds"
are  broad  and leave much to the company's discretion and judgment. In addition
to paying down certain categories of debt, the company may use net proceeds from
an  asset  sale  to  buy  other energy businesses, make capital expenditures, or
purchase  long-term  assets.  The  operation of this section implicitly requires
that  "net proceeds" must be calculable at the time the company receives payment
for  the asset sale. If the Court adopted Defendant's position, the net proceeds
could  not  be  ascertained until the end of the company's tax year; when all of
its  transactions  and  tax  credits  and  deductions  are  known.  Plaintiff's
construction preserves a more reasonable and workable operation of this section.
An  asset  sale  generally  results in a taxable event, creating a gain or loss,
which  may  be  one  of  many  activities  affecting  the company's year-end tax
liability.  The  taxes  paid  or  payable  as  a  result  of  asset sale must be

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determined  at  the  time  the  proceeds  are  received,  and  only the credits,
deductions or tax sharing arrangements relating to the asset sale would be known
then. The literal meaning of the words "any available tax credits or deductions"
cannot  be  taken out of their context. The Court finds the plain meaning of the
words  in the parentheses to refer only to credits, deductions, and arrangements
resulting  from  the  asset  sale. 2

     The amount of money at issue underscores the dramatic effect of Defendant's
construction  and  reveals the weakness of Defendants' position. Subtracting the
tax  liability caused by the asset sale from the gross proceeds received for the
asset  is  clearly  and  logically part of the equation. To require that the tax
consequences  must  then be recalculated, perhaps many months later when the tax
year  ends,  based  on  the company's other activities unrelated to the asset or
asset  sale,  is  unworkable.  Attaching  substantial significance to the phrase
"any  available tax credits or deductions" would require the Court to ignore the
parentheses and other contextual factors used by parties in writing this part of
the  indenture. Simply put, if the parties intended to fix taxes paid or payable
as  a result of the asset sale by incorporating tax credits or deductions having
no  relationship  to the asset sale, that provision should not be placed in this
parenthetical phrase, de-emphasized in a definition which in every other respect
involves matters exclusively related to or resulting from the asset sale itself.

______________________
     2  Defendants  also  argue  that  Plaintiff's  construction  treats  the
parenthetical  as  mere  surplusage,  that asset sales do not generate credit or
deductions  affecting  the  taxable  gain  resulting  from  the  sale.  However,
Defendants  provide  one  example  of  a deduction resulting from the asset sale
which  the  company  applied to its taxable gain from that sale--the federal tax
deduction  for  its  state  taxes  on  the  asset  sale.

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     For  these  reasons,  Plaintiff's  Motion  for  Partial Summary Judgment is
GRANTED,  and  Defendants' Motion to Dismiss is DENIED. The Clerk is directed to
forward a copy of this Order to counsel of record and any unrepresented parties.

                                           ENTER:     January  25,  2002

                                                 /s/  Robert  C.  Chambers
                                                -------------------------
                                                ROBERT  C.  CHAMBERS
                                                UNITED  STATES  DISTRICT  JUDGE


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