Opinion ID: 764146
Heading Depth: 2
Heading Rank: 4

Heading: Contract for Reimbursement

Text: 72 In granting Consol's motion for judgment on the pleadings on Count Two the district court relied upon contract and statutory interpretation in holding that Consol is not liable to reimburse Anker for payments made to the Combined Fund for the eligible retirees who worked for King Knob pursuant to its mining contracts with Consol. First, the court held that the language in the settlement agreement 6 was clear and unambiguous. Anker I at 22. Next, the court determined that inasmuch as the contract provides for reimbursement attributable to either the tonnage of coal produced or the hours miners worked for King Knob under the contracts with Consol, King Knob was entitled to reimbursement only if the premiums Anker paid to the Combined Fund were attributable to either factor. Id. Because the Coal Act funds health benefits, according to the district court, by the imposition of what is, in essence, a tax, it held that Consol was not obligated to reimburse Anker for its payments. Id. at 23. The court also held that even if Consol was contractually responsible for reimbursing Anker, Anker still could not maintain its action against Consol because the Coal Act abrogated pre-act contracts reallocating mining companies' obligations to preAct benefit plans. Id. at 24 n. 17. We will reverse the district court's order granting judgment on the pleadings in favor of Consol on Count Two for reimbursement because we reject the district court's conclusions with respect to the count.
73 Anker urges us to reverse based upon the district court's refusal to consider extrinsic evidence in light of its holding the contractual language clear and unambiguous. Appellants' Brief at 28. Under Pennsylvania law, which is applicable here, a court can consider parol evidence only if the contractual language is ambiguous. See Allegheny Int'l, Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1427-28 (3d Cir.1994); Langer v. Monarch Life Ins. Co., 879 F.2d 75, 81 n. 8 (3d Cir.1989). 74 We hold that the district court erred in deciding that paragraph 4(b) of the settlement agreement is clear and unambiguous. The provision states that Consol will reimburse King Knob for all subsequent payments due to the then-current UMWA Fund or any successor fund. These payments must be attributable to either tonnage of coal or hours worked under the contracts. Inasmuch as the Coal Act does not assign liability based upon the amount of coal mined or hours worked by miners, the court granted Consol's motion for judgment on the pleadings. 75 In so doing, the court failed to acknowledge that tonnage of coal and hours worked were the methods used to determine an employer's premiums for the 1950 and 1974 Funds. By placing this language in the agreement, the parties could have been agreeing, as Anker contends, that Consol would be responsible for any payments owed to these Funds or any successor fund arising from the work performed pursuant to the mining contracts. The district court, then, failed to read the mention of tonnage of coal and hours worked consistently with industry usage. 76 In fact, reading the provision to bind Consol to reimburse King Knob for any future benefit payments related to the work completed under the contracts would be consistent with the parties' inclusion of the term successor fund in the agreement. As Anker pointed out in its brief, inasmuch as there was no successor fund to the UMWA Fund at the time of the settlement agreement, inclusion of this term signifies that the parties were contemplating possible responsibility for payment of future benefits to a future fund. Appellants' Brief at 33. Otherwise, inclusion of this language in the contract makes no sense. 77 The district court also incorrectly interpreted the contract to bar reimbursement because the Coal Act does not assess premiums based upon the tonnage of coal and hours worked. While the Coal Act does not determine specifically the premiums due based upon coal tonnage and hours worked, the Act is concerned with operators who had contributed to the 1950 and 1974 Plans which were funded based on coal tonnage and hours worked. The Combined Fund, by its very terms, is a successor plan, born on February 1, 1993, when the Act mandated that the settlors of the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan shall cause such plans to be merged into the Combined Fund.... 26 U.S.C. § 9702(a)(2). By concentrating on the method of funding and ignoring the industry significance of coal tonnage and hours worked, the district court incorrectly held that, as a matter of law, Consol was not liable to Anker for payments made for King Knob's employees under its contracts with Consol. While we do not take a position as to Anker's ultimate success in proving that Consol is in fact liable to it for the premiums for the miners assigned to it under the Act, we conclude that the district court's disposing of the issue on the pleadings was premature, and that further proceedings with respect to it are necessary. 7
78 The district court followed the decision of a divided panel of the Court of Appeals for the Fourth Circuit in Carbon Fuel Co. v. USX Corp., 100 F.3d 1124 (4th Cir.1996), when it held that the Coal Act abrogates private contracts for indemnification or reimbursement. Anker I at 24 n. 17. However, considering the Supreme Court's statements in Eastern Enterprises concerning the language of the Act, we will not follow Carbon Fuel. Instead, we hold that the Coal Act does not prohibit indemnification or reimbursement pursuant to previous contractual arrangements. 79 The Eastern Enterprises plurality stated that the Act preserves Eastern's right to pursue indemnification, although it does not grant any new rights, including a right to reimbursement. 524 U.S. at ----, 118 S.Ct. at 2150. The Court was referring to 26 U.S.C. § 9706(f)(6) which states: Nothing in this section shall preclude the right of any person to bring a separate civil action against another person for responsibility for assigned premiums, notwithstanding any prior decision by the Commissioner. 80 In so stating, the Supreme Court (implicitly) disagreed with Carbon Fuel, 100 F.3d 1124, where the court of appeals interpreted the Act to prohibit suits for indemnification or reimbursement based upon prior private contracts. Id. at 1133. The court of appeals relied on section 9708, which states that [a]ll liability for contributions to the Combined Fund that arises on or after February 1, 1993, shall be determined exclusively under this chapter.... The court also found persuasive excerpts from the legislative history stating that Congress expressly intended to 'reach back' and impose obligations on signatories to the NBCWAs notwithstanding that many companies had 'bargained out of their funding obligations.'  Carbon Fuel, 100 F.3d at 1129 (quoting 138 Cong. Rec. S17566-01, S17603). Despite the fact that no language in the Act limits the scope of section 9706(f)(6), the court of appeals interpreted its preservation of private actions to apply only to post-Act private agreements and contracts. Id. at 1134. 81 We cannot accept this reasoning. As the concurrence in Carbon Fuel pointed out, section 9708's statement that all liability will be determined under the Act does not abrogate a private party's liability to another private party for indemnification. Id. at 1140 (Williams, J., concurring in judgment). Instead, this provision provides that [a]n operator assigned Coal Act liability by the Commissioner is primarily liable and must pay into the Combined Fund, regardless of the operator's private, pre-Act contractual rights. Id. Section 9706(f)(6), then, does not provide for the reassignment of primary liability for a signatory operator, but instead preserves the right of private civil action for determining responsibility for assigned premiums as between contracting parties. Id. at 1141. 82 We agree with this reading of the Act. 8 Section 9706(f)(6) explicitly preserves a person's right to bring a separate civil action against another person for responsibility for assigned premiums.... This provision does not limit itself to postAct contracts, and without an explicit congressional statement otherwise, we will not construe the Act to contravene the seemingly unambiguous Congressional desire to allow for private actions between parties for reimbursement or indemnification. 83 Moreover, we believe that our reading of the Act is, in fact, consistent with the legislative history upon which the majority in Carbon Fuel relies. While Congress no doubt wanted to reach back and ensure that companies could not contract out of their obligations to the Funds, the Coal Act solves this problem by making the signatory companies responsible in the first instance for premiums. Once the Commissioner correctly assigns retirees to an operator, liability to the Funds is guaranteed. Allowing for indemnification between private parties if a previous contractual agreement so provides in no way frustrates this goal. Indeed, it may further the goal by providing for an additional entity to be liable, albeit on a contractual basis, for the payments due the Fund. 84 We believe the correct reading of congressional intent is that Congress desired the Act to be remedial--that Congress wanted to ensure that miners would receive the benefits the industry promised and placed liability on the parties responsible for creating the problem in the first place. Whether these parties had contracted with other private organizations for indemnification in case of future liability is irrelevant. In fact, allowing for indemnification could provide for more complete funding inasmuch as small independent contractors such as King Knob are probably more likely to have gone out of business or to have insufficient funds to pay the sometimes substantial premiums than companies similar to Consol that owned and leased the mines. 85 Thus, we will reverse the district court's order granting Consol's motion for judgment on the pleadings on Count Two for indemnification and remand the count to the district court for further proceedings. The court erroneously found the contractual language clear and unambiguous, and erroneously interpreted the Coal Act to prohibit suits for indemnification or reimbursement based upon prior contractual arrangements. 86