Opinion
Civil Action No. 2:19-cv-00703
2022-03-04
RAMACO RESOURCES, LLC, Plaintiff, v. FEDERAL INSURANCE COMPANY and ACE American Insurance Company, Defendants.
Brian A. Glasser, Bailey & Glasser, Charleston, WV, Joshua I. Hammack, Pro Hac Vice, Michael L. Murphy, Nicholas S. Johnson, Bailey & Glasser, Washington, DC, Rebecca L. Donnellan-Pomeroy, Bailey & Glasser, Bridgeport, WV, for Plaintiff. Grace E. Leeper, Pro Hac Vice, Jonathan Hacker, Pro Hac Vice, O'Melveny & Myers, Washington, DC, James Jarrod Jordan, Huddleston Bolen, Matthew J. Perry, Lamp Bartram Levy Trautwein & Perry, Huntington, WV, John Eggum, Pro Hac Vice, Matthew S. Ponzi, Pro Hac Vice, Foran Glennon, Chicago, IL, for Defendant Federal Insurance Company. Grace E. Leeper, Pro Hac Vice, Jonathan Hacker, Pro Hac Vice, O'Melveny & Myers, Washington, DC, James Jarrod Jordan, Matthew J. Perry, Lamp Bartram Levy Trautwein & Perry, Huntington, WV, John Eggum, Pro Hac Vice, Matthew S. Ponzi, Pro Hac Vice, Foran Glennon, Chicago, IL, for Defendant ACE American Insurance Company.
Brian A. Glasser, Bailey & Glasser, Charleston, WV, Joshua I. Hammack, Pro Hac Vice, Michael L. Murphy, Nicholas S. Johnson, Bailey & Glasser, Washington, DC, Rebecca L. Donnellan-Pomeroy, Bailey & Glasser, Bridgeport, WV, for Plaintiff.
Grace E. Leeper, Pro Hac Vice, Jonathan Hacker, Pro Hac Vice, O'Melveny & Myers, Washington, DC, James Jarrod Jordan, Huddleston Bolen, Matthew J. Perry, Lamp Bartram Levy Trautwein & Perry, Huntington, WV, John Eggum, Pro Hac Vice, Matthew S. Ponzi, Pro Hac Vice, Foran Glennon, Chicago, IL, for Defendant Federal Insurance Company.
Grace E. Leeper, Pro Hac Vice, Jonathan Hacker, Pro Hac Vice, O'Melveny & Myers, Washington, DC, James Jarrod Jordan, Matthew J. Perry, Lamp Bartram Levy Trautwein & Perry, Huntington, WV, John Eggum, Pro Hac Vice, Matthew S. Ponzi, Pro Hac Vice, Foran Glennon, Chicago, IL, for Defendant ACE American Insurance Company.
MEMORANDUM OPINION AND ORDER
John T. Copenhaver, Jr., Senior United States District Judge
Pending is the renewed motion by defendants Federal Insurance Company and ACE American Insurance Company (together, "Federal Insurance") for judgment as a matter of law or, alternatively, to alter or amend the judgment or for a new trial, filed August 12, 2021.
Federal Insurance Company and ACE American Insurance Company are part of a group of insurance-related companies whereby Federal Insurance Company writes the insurance policy and ACE American Insurance Company adjusts insurance claims. Defs.’ Opening Statement 14, ECF No. 375-4.
I. Background
Ramaco Resources, LLC ("Ramaco"), is a coal mining company operating in, among other places and at all times relevant herein, Logan County, West Virginia, at its Elk Creek mine. Kostic Tr. 22-23, ECF No. 371-3; Blanchard Tr. 16, ECF No. 371-6. Ramaco is headquartered in Lexington, Kentucky, and is owned, in controlling part, by Yorktown Capital Partners, a private equity firm located in New York City. Blanchard Tr. 184, 198-200. This action arises out of Ramaco's insurance claim with Federal Insurance following the collapse of the "hopper" within a coal silo at the Elk Creek mine on November 5, 2018, that brought operations to a halt for a time.
A "hopper" is "a usually funnel-shaped receptacle for delivering material (such as grain or coal)." Hopper, Merriam-Webster, https://www.merriam-webster.com/dictionary/hopper.
The court held a twelve-day bifurcated trial beginning June 30, 2021, and ending July 16, 2021. On July 15, 2021, the jury returned a verdict in Ramaco's favor, awarding Ramaco $7,653,057 in contract damages and pre-verdict interest. ECF No. 347. In view of the size of the award in comparison to the pretrial offers of settlement by the parties, the court found that Ramaco had "substantially prevailed," thereby warranting jury consideration of a Hayseeds verdict, which the next day on July 16, 2021, the same jury returned in Ramaco's favor in the amount of $25,000,000 for aggravation and inconvenience damages. ECF No. 349; Hayseeds, Inc. v. State Farm Fire & Cas., 177 W.Va. 323, 352 S.E.2d 73 (1986).
The primary issue for resolution in this case is the determination under the policy of the "period of restoration" in which Ramaco "with reasonable speed" could have restored operations that were shut down on November 5, 2018. During that period, the policy provided benefits that covered lost business income and extra expense. The jury evidently found the period of restoration to be nearly four months, ending March 3, 2019, and, as reflected on PX411B, adopted the "Silo Failure Costs" total of $7,120,116, adding interest of $532,941, to award the $7,653,057 sum. Pl.s’ Ex. PX411B, ECF No. 371-7; Phase One Verdict, ECF No. 347. Federal Insurance believes the period should have been limited to three-and-a-half weeks ending November 30, 2018, resulting in a far lesser award, in which event Ramaco would not have substantially prevailed and would not have been entitled to a Hayseeds verdict. Ramaco believes the period should have been the seven months required to demolish the failed silo and upgrade the remaining two silos, ending June 7, 2019, and resulting in a far greater amount.
A. Material factual history
In addition to coal mines, the Elk Creek mine includes facilities that process raw coal and debris into marketable coal for delivery to customers. See Blanchard Tr. 16-20; Kostic Tr. 22-23. "[R]un-of-mine or raw coal," "which includes a lot of rock in addition to coal," travels by truck from the mine to a dump site, where a conveyor belt takes the raw coal to a "scalping building." Blanchard Tr. 16-17; Kostic Tr. 15. There, the raw coal passes through a screen to filter out large pieces of rock before being pulverized to a maximum size of about two inches per piece. Blanchard Tr. 16-17; Kostic Tr. 25-26; see also id. at 64-66.
These smaller pieces of coal and debris then travel by a conveyor belt, known as the "silo feed belt" or "silo feed conveyor," to the top of the three coal silos, where it joins directly with Silo 2. Blanchard Tr. 17, 124; Kostic Tr. 28, 64-65. The silos are called Silos 1, 2, and 3, and are set in a line with Silo 2 between Silos 1 and 3. Blanchard Tr. 56, 302. Once at the top of the silos, the coal can either drop into Silo 2, be diverted to Silo 1 via a "transfer conveyor," or be diverted to Silo 3 via a different transfer conveyor. Id. at 307-08; Kostic Tr. 64-65. At the bottom of each silo is a "hopper," or a "cone," equipped with an adjustable feeder. See Blanchard Tr. 17, 49, 72; see also Pl.’s Exs. PX1116, PX1121 (top-down photos of inside two silos with hoppers). When released, the raw coal stored in the silo falls through the hopper's feeder onto another conveyor belt -- the "silo reclaim belt" or "silo reclaim conveyor" -- located at or near the bottom of the silos, which runs directly underneath the hoppers in sequence from, and rises up from, Silo 1 to Silo 2 to Silo 3. See Blanchard Tr. 116, 144, 247; Kostic Tr. 65-67, 77. The silo reclaim belt takes the raw coal to the "preparation plant." See Blanchard Tr. 17-18, 144; Kostic Tr. 36-37, 65-67.
For visualization of the three-silo arrangement, see generally Pl.’s Ex. PX0384 (photo of silo feed belt angling up to the top of three silos in the background, the three silos in the middle ground, and the silo reclaim belt angling up out of the bottom of the silos and to the preparation plant in the foreground), and Pl.’s Ex. PX0017, Photo 7 (photo of silo feed belt at top left in foreground, three silos in middle ground, and silo reclaim belt angling up out of the silos and to the preparation plant in background).
At the preparation plant, the raw coal is further processed until it is marketable for delivery to customers. Blanchard Tr. 18-20. The marketable coal is then stored in piles until it can be loaded onto railroad cars. Blanchard Tr. 19-20.
The coal silos are the focal point of this case and serve two interrelated functions. First, the silos provide bulk storage of raw coal in the processing facility. Blanchard Tr. 18; see also Kostic Tr. 36-37. Second, the bulk storage allows the silos, which are equipped with adjustable feeders as noted above, to provide a "consistent[ ] and continuous[ ]" stream of raw coal to the preparation plant. Blanchard Tr. 18; see also Kostic Tr. 36-37. By contrast, if the processing facility were to run without the silos, then the preparation plant would receive only an intermittent flow of raw coal as trucks periodically arrive at the dump site. See Blanchard Tr. 18; Kostic Tr. 36-38. An intermittent flow increases downtime at the preparation plant, thereby reducing the throughput capacity of the plant over time. See Blanchard Tr. 18, 127, 314-15; Kostic Tr. 37-38.
On November 5, 2018, Silo 1 was the primary source of the stored coal sent to the preparation plant. See Pl.’s Ex. 41. On that day, the hopper inside Silo 1 collapsed, bringing Ramaco's Elk Creek operations to a halt. Blanchard Tr. 21, 83; Kostic Tr. 67; see also Pl.’s Ex. PX1199 (photo of collapsed hopper). On November 6, Ramaco brought an engineering firm, Hungate Engineering, to the site to assess the damage and recommend how to proceed to restart the facility. Blanchard Tr. 121. On November 7, Hungate Engineering filed a report finding damage to Silo 1 and the buckling of the structural steel supporting Silo 1's transfer conveyor at the top. See Pl.’s Ex. PX1880 (Hungate report). Silos 2 and 3 were not damaged. Blanchard Tr. 250; Kostic Tr. 67-68; see also Pl.’s Ex. PX1880. Hungate Engineering recommended that Ramaco (1) demolish Silo 1, (2) maintain a ninety-five-foot radius around Silo 1 until it is demolished, and (3) not use Silos 2 and 3 until installing safety supports underneath their hoppers in order to avoid a hopper collapse such as that in Silo 1. Id. at 122; Kostic Tr. 32-33; see also Pl.’s Ex. PX1880 (Hungate report). Ramaco adopted Hungate Engineering's recommendations. Blanchard Tr. 123. Dennis Kostic, a professional engineer and Ramaco's expert in coal mining and processing operations, mine costs, mine planning, and mine timing, testified that once Silo 1 was demolished and removed, Silos 2 and 3 could be used as before. Kostic Tr. 5-6, 70-72.
The three coal silos were built in 1978 and operated until 1998 when coal mining operations went dormant. Id. at 198, 200-01. The coal silos remained dormant for nearly twenty years until Ramaco purchased the property and resumed operations in December 2017. Id. at 201; see also id. at 294. The collapse inside Silo 1 occurred less than one year later. Id. at 20-21.
Ramaco finished demolishing Silo 1 on November 19, 2018. Kostic Tr. 42-43. But before installing the safety supports to the hoppers in Silos 2 and 3, Ramaco had to restart the processing facility to meet its financial obligations and maintain the business as a going concern. Blanchard Tr. 85-89; see also Kostic Tr. 41, 47-48. So, Ramaco built a "temporary bypass conveyor" to take raw coal from the scalping building directly to the then-repaired and functional silo reclaim belt near the bottom of Silos 2 and 3, bypassing the coal stored in Silos 2 and 3. Blanchard Tr. 123-25, 144; Kostic Tr. 44-45, 68-69; see also Pl.’s Ex. PX0017, Photo 43 (photo of temporary bypass conveyor). The temporary bypass conveyor was operational on November 30, 2018, and would continue in use until March 3, 2019. Blanchard Tr. 150, 248.
As indicated above, Kostic testified that because the silo reclaim belt was working as of November 30, Ramaco could have used Silos 2 and 3 except that it planned to install the safety supports. Kostic Tr. 5-6, 70-72. Kostic acknowledged that the safety supports addressed potential issues that existed prior to the collapse of Silo 1's hopper. See id. at 71. Kostic also testified, however, that with the knowledge of Silo 1's collapse, he believed the safety supports were necessary before using Silos 2 and 3 again. Id. at 70-72.
While the temporary bypass conveyor allowed Ramaco to restart operations at its processing facility without using coal stored in Silos 2 and 3, it prevented Ramaco from installing the safety supports to Silos 2 and 3 because it joined with the silo reclaim belt, which ran near the bottom of the silos. Blanchard Tr. 144; see Kostic Tr. 47. To solve that problem, Ramaco built a "permanent bypass belt" to take raw coal from the silo feed belt directly to the preparation plant, bypassing Silos 2 and 3 and the silo reclaim belt. Blanchard Tr. 144-47; Kostic Tr. 74-76. The permanent bypass belt was operational on March 3, 2019. Blanchard Tr. 150; Kostic Tr. 53.
With the permanent bypass belt in place, Ramaco installed the hopper safety supports in Silos 2 and 3 and, on June 7, 2019, placed the silos back in operation. See Blanchard Tr. 154-58. The permanent bypass belt is an addition to the Elk Creek processing facility, where it is used to divert coal away from the silos for maintenance and is available to continue operations in the event of a silo failure. Id. at 151, 302-03. Ramaco never rebuilt Silo 1, which has not affected Ramaco's ability to run the processing facility. Id. at 197; Kostic Tr. 38-39.
B. Production data
Christopher Blanchard, Ramaco's Chief Operating Officer, testified that the preparation plant has a maximum, or "nameplate," production capacity of 700 to 750 tons of coal per hour, or 450,000 tons per month. Blanchard Tr. 13, 126-27, 304. Blanchard also testified, in reference to Ramaco's production records, that the preparation plant did not operate at its maximum hourly throughput over time because of "mechanical downtime and utilization." See id. at 229-30. That is, even though the preparation plant could process up to 750 tons of coal per hour, Ramaco did not operate the plant at that capacity over time and the actual average throughput of the plant was routinely lower as the chart below reflects. See id.
Blanchard also testified that the Elk Creek mine's processing facility suffered reduced throughput while the silos were not in use because of intermittent flow constraints, described above. Id. at 127, 150-51. According to Blanchard, the temporary bypass conveyor bottlenecked the facility to about 50% of its maximum throughput capacity, id. at 127, and the permanent bypass belt to about 60% to 70%, id. at 150-51. Kostic likewise testified that neither the temporary nor permanent bypass system allowed Ramaco to resume its normal level of throughput. Kostic Tr. 35. According to Kostic, the temporary bypass conveyor "average[ed] about 575 tons per hour," or, he says, "probably" about 60% to 69% of the facility's normal throughput, id. at 38, 48, and the permanent bypass belt about 70% to 80%, id. at 48-49. Blanchard and Kostic testified that the facility's throughput returned to normal once Silos 2 and 3 went back into use. Blanchard Tr. 197; Kostic Tr. 38-39.
It is noted that 575 is 76.67% of 750, well beyond the 50% or the 60% to 69% range. This inconsistency does not affect the court's decision.
Kostic testified that the facility's throughput "averaged 750 tons an hour" when the silos were in use. Kostic Tr. 38; see also id. at 36-38. That claim contradicts Blanchard's testimony, Blanchard Tr. 229-30 (referencing Ramaco's production reports), as well as Ramaco's production records set forth next below and discussed at pages 19-26, infra.
At trial, documentation was introduced of Ramaco's recorded monthly and daily amounts of raw coal processed through the preparation plant for the years 2017, 2018, and 2019. The monthly data is summarized as follows and will be referred to later in this opinion:
| Total throughput of preparation plant (tons) | |||
| 2017 | 2018 | 2019 | |
| January | - | - | 374,672 |
| February | - | 284,096 | 316,692 |
| March | - | 339,064 | 345,846 |
| April | - | 376,570 | 330,293 |
| May | - | 420,444 | 372,227 |
| June | - | 366,558 | 362,630 |
| July | - | 325,950 | 352,996 |
| August | - | 389,198 | 415,815 |
| September | - | 260,154 | 361,333 |
| October | - | 347,739 | 414,141 |
| November | - | 45,353 | 359,137 |
| December | 213,609 | 350,619 | 293,600 |
See Pl.’s Ex. PX1072; Pl.’s Ex. PX1073; Defs.’ Ex. 65; see also Pl.’s Ex. 410 (voluminous daily, hour-by-hour production records). See generally Blanchard Tr. 288-89 (discussing the "Total Washed/Transferred Tons" column of Pl.’s Ex. PX1072 as representing the total throughput of the preparation plant in tons), 293-94 (discussing the "Total Raw Processed" column of Defs.’ Ex. 65 as representing the total throughput of the preparation plant in tons).
C. Procedural history
Ramaco had a mining industries insurance policy with Federal Insurance at the time Silo 1's hopper collapsed. See Blanchard Tr. 21; Pl.’s Ex. PX1887 (policy). The policy contains a property insurance section and a liability insurance section, Pl.’s Ex. PX1887 at FIC_008571, each comprising various coverages for different "premises" of Ramaco's Elk Creek facility, e.g. id. at FIC_008577-80. One such coverage is a property policy for "business income and extra expense," commonly called business interruption, around which this case largely revolves. Id.
On November 6, 2018, one day after the collapse, Ramaco filed an insurance claim, though without a monetary amount. Blanchard Tr. 92. Federal Insurance ultimately denied the claim on January 18, 2019, concluding that the insurance policy excluded coverage for what it deemed to be the cause of the collapse. Defs.’ Ex. 13 (denial letter); see also Defs.’ Ex. 30 (August 29, 2019, letter affirming denial). On August 21, 2019, Ramaco filed this lawsuit in the Circuit Court of Logan County. ECF No. 1-1. The case was removed to this court September 27, 2019. ECF No. 1.
At the trial, Ramaco contended that the collapse of Silo 1's hopper was caused by a "coal arch," which is a risk covered by its Federal Insurance policy. Blanchard Tr. 272, 309, 324-24. The jury agreed. Thus, Ramaco claimed that its business interruption policy entitled it to recover lost income and extra expenses it incurred while restoring its operations. See Blanchard Tr. 23-24.
Payment under the business interruption policy is confined to the "period of restoration," which ends when "operations are restored, with reasonable speed, to the level which would generate the business income amount that would have existed if no direct physical loss or damage occurred, including the time required to ... repair or replace the property." Pl.’s Ex. PX1887 at FIC_008704. During trial, the court ruled from the bench that Ramaco was not entitled to any damages for business interruption to the extent it delayed restoring its operations between March 3 and June 7, 2019, while it installed the safety supports to Silos 2 and 3. See ECF No. 353 at 56-65. The court reasoned that the safety supports were mere upgrades to Silos 2 and 3 unrelated to the business interruption caused by the loss of Silo 1. See id. at 61-63.
After phase one of the trial, the jury returned its verdict in favor of Ramaco, evidently accepting Ramaco's position that a coal arch caused the collapse of the hopper inside Silo 1, and awarded Ramaco $7,653,057 for business interruption, including pre-verdict interest. ECF No. 347. The jury's award comprised all the damages Ramaco presented to the jury through March 3, 2019. See Pl.’s Ex. PX411B at 1. Those damages included, inter alia, "direct costs" related to the demolition and removal of Silo 1; "extra expense" related to the re-handling of coal, hauling and loading expenses, demurrage, equipment usage, labor, clean-up, and various other expenses; "new construction by pass belt" related to construction of the permanent bypass conveyor; and missed shipments. See id.; Marcum Tr. 89, ECF No. 371-8. After phase two, the jury again returned its verdict in favor of Ramaco and awarded $25,000,000 in aggravation and inconvenience damages, ECF No. 349, pursuant to Hayseeds and its progeny.
On August 12, 2021, Federal Insurance filed a renewed motion for judgment as a matter of law or, alternatively, to alter or amend the judgment or for a new trial. ECF No. 371.
II. Standard of Review
Federal Rule of Civil Procedure 50(b) allows a party to renew a motion for judgment as a matter of law after a jury's verdict. A district court may grant such a motion only when "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on [an] issue." Fed. R. Civ. P. 50(a)(1) ; see also Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 391 (4th Cir. 2014) ("Judgment as a matter of law ‘is properly granted if the nonmoving party failed to make a showing on an essential element of his case with respect to which he had the burden of proof.’ ") (quoting Wheatley v. Wicomico County, 390 F.3d 328, 332 (4th Cir. 2004) ); 9B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2521 (3d ed. April 2021 update) (stating that Rule 50 allows a district court to decide an issue "when the facts are sufficiently clear that the law requires a particular result").
The United States Court of Appeals for the Fourth Circuit explains that "[w]hen a jury verdict has been returned, judgment as a matter of law may be granted only if, viewing the evidence in a light most favorable to the non-moving party (and in support of the jury's verdict) and drawing every legitimate inference in that party's favor, the only conclusion a reasonable jury could have reached is one in favor of the moving party." Drummond Coal Sales, Inc. v. Norfolk S. Ry. Co., 3 F.4th 605, 610 (4th Cir. 2021) ; see also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ("In [reviewing all of the evidence in the record], the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence."). "A court, however, may not disturb the verdict where there was sufficient evidence for a reasonable jury to find in the non-movant's favor." Dotson v. Pfizer, Inc., 558 F.3d 284, 292 (4th Cir. 2009).
III. Discussion
A. Phase one -- business interruption
Federal Insurance primarily argues that the trial evidence showed that Ramaco's period of restoration conclusively ended on November 30, 2018, when the temporary bypass conveyor was connected to the silo reclaim belt and became operable. Fed. Ins. Mem. Supp. 15, ECF No. 372. Federal Insurance contends that Ramaco's business interruption award should thus be reduced from $7,653,057 to $592,790, exclusive of pre-verdict interest, the amount of damages Ramaco presented to the jury through November 2018. Id. (citing Pl.’s Ex. PX411B at 1). Ramaco counters that the period of restoration ended no earlier than March 3, 2019, when it finished installing the permanent bypass belt. Ramaco Resp. 7, ECF No. 375.
Ramaco also maintains its objection to the court's ruling from the bench that prevented Ramaco from presenting damages it claims were caused by installation of the safety supports to Silos 2 and 3 beginning March 3, 2019. Ramaco Resp. 8 n.4. Ramaco submits that the period of restoration ended June 7, 2019, when it contends that the safety supports to Silos 2 and 3 were completed. See id. However, as Ramaco notes, its objection is not subject to the pending motion. Id.
The Supreme Court of Appeals of West Virginia instructs that "[l]anguage in an insurance policy should be given its plain, ordinary meaning." State ex rel. Universal Underwriters Ins. Co. v. Wilson, 241 W.Va. 335, 825 S.E.2d 95, 100 (2019) (alteration in original) (quoting Cherrington v. Erie Ins. Prop. & Cas. Co., 231 W.Va. 470, 745 S.E.2d 508, 524 (2013) ). Thus, a court's "primary concern is to give effect to the plain meaning of the policy" and "enforce it as written," which entails "constru[ing] all parts of the document together." Motorists Mut. Ins. Co. v. Zukoff, 244 W.Va. 33, 851 S.E.2d 112, 116 (2020) (quoting Payne v. Weston, 195 W.Va. 502, 466 S.E.2d 161, 166 (1995) ).
Ramaco's business interruption policy, titled "Business Income And Extra Expense," provides as follows, in relevant part:
We will pay for the actual:
• business income loss you incur due to the actual impairment of your operations; and
• extra expense you incur due to the actual or potential impairment of your operations,
during the period of restoration ....
This actual or potential impairment of operations must be caused by or result from direct physical loss or damage by a covered peril to property, unless otherwise stated.
Pl.’s Ex. PX1887 at FIC_008623. As noted earlier, payment for business interruption is confined to the "period of restoration." Part I.C, supra. Additionally, the policy instructs that "business income loss will be determined based on," inter alia, "the net income of your business before the direct physical loss or damage occurred [and] the likely net income of your business if no loss or damage occurred." Id. at FIC_008631.
There is no dispute that the period of restoration began November 5, 2018, when the hopper inside Silo 1 collapsed. Regarding an end date, the insurance policy provides as follows, in relevant part:
Period of restoration will continue until your operations are restored, with reasonable speed, to the level which would generate the business income amount that would have existed if no direct physical loss or damage occurred, including the time required to:
A. repair or replace the property ....
Id. at FIC_008705; see also id. at FIC_008723 (providing the same relevant portion of the definition under "Amended Definitions"); Part I.C, supra (quoting the same relevant portion of the definition).
Understanding when the period of restoration ends requires consideration of additional definitions from the policy:
"Operations" means "business activities occurring at your premises ... prior to the loss or damage." Pl.’s Ex. PX1887 at FIC_008704.
"Property" means, inter alia, "building." Id. at FIC_008710.
And a "building" means, inter alia, "a structure." Id. at FIC_008693; see also id. at FIC_008721 (providing the same relevant portion of the definition under "Amended Definitions").
Effectively, then, the jury found that Ramaco restored its business activities at the Elk Creek mine processing facility on March 3, 2019, and that it did so at reasonable speed. For reasons explained below, however, the court finds that the trial evidence inescapably leads to the conclusion that Ramaco's period of restoration ended November 30, 2018.
To begin, the policy measures the end of the period of restoration in throughput of coal, not in restoration of income or earnings. The policy states that the restoration of operations, or business activities, that would generate the business income Ramaco would have achieved had the loss not occurred marks the period of restoration's end, so long as the time taken to do so is within reason. See id. at FIC_008705, FIC_008723; see also Ramaco Res., LLC v. Fed. Ins. Co., 545 F. Supp. 3d 344, 369 (S.D. W. Va. 2021). In Ramaco's case, those business activities consist of passing a flow rate of coal through the preparation plant. Ramaco's period of restoration therefore ended when it achieved the ability to pass into the preparation plant the flow rate of coal it would have experienced had the loss not occurred, so long as Ramaco achieved restoration of that rate at reasonable speed. The parties seem to agree with this construction of the policy to the extent throughput is the benchmark for ending the period of restoration. See Fed. Ins. Mem. Supp. 10-11, 14; Ramaco Resp. 8, 10-11.
Furthermore, the policy contains a condition predicate to coverage for business interruption. The "impairment of operations must be caused by or result from direct physical loss or damage by a covered peril to property." Pl.’s Ex. PX1887 at FIC_008623.
When the policy is construed in accordance with its plain language, the only conclusion a reasonable jury could have reached was that Ramaco's period of restoration ended November 30, 2018, for two independent reasons.
1. Ramaco restored its throughput of coal by using the temporary bypass conveyor
Ramaco's production records show that the monthly throughput for December 2018 was in line with what it experienced before and after the loss of Silo 1. See 12A Steven Plitt et al., Couch on Insurance § 185:3 (3d ed. June 2021 update) (stating that losses payable under business interruption policies "are to be determined in a practical way, having regard to the experience of the business before the catastrophe and its probable experience thereafter"). The average monthly throughput for the months leading to the loss of Silo 1, February through October 2018, was 345,530 tons. See Part I.B., supra. December 2018's throughput, the first month using the temporary bypass conveyor, was 350,619 tons. Id. The average throughput for the three months using the temporary bypass conveyor, December 2018 through February 2019, was 347,328 tons, with a maximum of 374,672 tons in January 2019. See id. The average monthly throughput after installation of the permanent bypass belt, March through December 2019, was 360,802 tons. See id. And the average monthly throughput for January through October 2018 together with March through December 2019, every month other than those three months when the temporary bypass conveyor was in use, was 353,568 tons, with a low of 260,154 tons in September 2018. See id. Thus, there is no material difference between Ramaco's production capacity whether it used the temporary bypass conveyor or not. Importantly, the throughput for December 2018 and the average throughput for the three months using the temporary bypass conveyor were both greater than the historical average, measured from February through October 2018, leading up to the collapse of Silo 1's hopper. Accordingly, inasmuch as the temporary bypass conveyor restored Ramaco's throughput, the period of restoration ended when Ramaco began using the temporary bypass conveyor. No reasonable jury could disagree.
Ramaco suggests that using month-by-month comparisons of throughput "would justify -- if anything -- a December 31, 2018, date, not a November 30, 2018, one." Ramaco Resp. 9 n.5 (emphasis in original). But Ramaco's position is misplaced because a monthly measurement is retrospective, meaning it measures, for December, the production that began on December 1. And the period of restoration ends when it started passing through the preparation plant the flow rate of coal it would have experienced had the loss not occurred, which its production records show it did on a monthly basis starting December 1. See generally Blanchard Tr. 229-30 (testifying that "mechanical" and "utilization" downtime cause varying flow rates in the short-term, yielding the actual throughput rate over time).
Ramaco also points to the testimony of Blanchard and Kostic, who surmised that the temporary bypass conveyor bottlenecked the processing facility. Ramaco Resp. 10. As Federal Insurance notes, however, Ramaco's own production records belie Blanchard's and Kostic's testimony. Fed. Ins. Mem. Supp. 14-15. The temporary bypass conveyor did not, as a matter of fact, bottleneck the processing facility. Even though the court must draw all legitimate inferences in Ramaco's favor, the court cannot credit mathematical testimony that so clearly contradicts Ramaco's own production records.
In addition, Ramaco insists that comparing production data from months when the temporary bypass conveyor was in use with the months before and after its use is "the wrong test." Ramaco Resp. 10; see also id. at 9-10. Instead, Ramaco states that the insurance policy requires comparison to a hypothetical of what production would have been at that time had operations continued as normal. See id. at 9. The distinction between what production tended to be and what production would have been in fact is fine, and Ramaco is correct that the period of restoration requires inquiry into production "that would have existed" at the time. Pl.’s Ex. PX1887 at FIC_008705.
The fact remains, however, that the best way to suppose what throughput "would have existed" at the time is the common-sense comparison to what throughput was without the loss. As noted above, the general rule is that business interruption losses "are to be determined in a practical way, having regard to the experience of the business before the catastrophe and its probable experience thereafter." 12A Couch on Insurance § 185:3, supra; accord Fidelity-Phenix Fire Ins. Co. of N.Y. v. Benedict Coal Corp., 64 F.2d 347, 352 (4th Cir. 1933) ; Felman Prod. Inc. v. Indus. Risk Insurers, No. 3:09-cv-00481, 2011 WL 4543960, at *6 (S.D. W. Va. Sept. 29, 2011).
The policy's "Loss Determination" provision supports a holistic, practical analysis. Pl.’s Ex. PX18887 at FIC_008631. That provision states, "[i]n making any loss determination under [business interruption] coverage, we may utilize relevant sources of information, including" items like "financial records," "status and feasibility reports," and "budgeting and marketing records." Id. Further, the period of restoration policy language naturally leads to an historical comparison of throughput: the phrase "would have existed if no ... loss or damage occurred" implies a look to what state of operations existed without the loss. Pl.’s Ex. PX1887 at FIC_008705. So too does the policy's instruction for calculating business income loss, which expressly directs an analysis of "net income ... before the" loss. Id. at FIC_008631.
The case law also counsels in favor of a comparison against historical operational performance. The Fifth Circuit explains that "[h]istorical sales figures reflect a business's experience before the date of the damage or destruction and predict a company's probable experience had the loss not occurred, and that [t]he strongest and most reliable evidence of what a business would have done had the [loss] not occurred is what it had been doing in the period just before the interruption." Catlin Syndicate Ltd. v. Imperial Palace of Miss., Inc., 600 F.3d 511, 514 (5th Cir. 2010) (quotation marks omitted and last alteration added); see also Georgia-Pacific Corp. v. Allianz Ins. Co., 977 F.2d 459, 463 (8th Cir. 1992) ; Compagnie Des Bauxites de Guinea v. Ins. Co. of N. Am., 794 F.2d 871, 877 (3d Cir. 1986). See generally Ross v. Travelers Indem. Co., 325 A.2d 768, 771-72 (Me. 1974) (stating that policy language directing comparison with past performance "is consistent with the general rule," cited above, of determining business interruption "in a practical way"). Thus, Ramaco's position that comparison with historical throughput data is inapposite is meritless.
Ramaco also asserts that the period of restoration could not have ended on November 30, 2018, because the temporary bypass conveyor was only "a Band-Aid," not a "permanent repair or replacement." Ramaco Resp. 10-11. In addition, Ramaco notes that it amassed "substantial stockpiles of raw coal" after the loss of Silo 1, and because it "could [not] have processed hundreds of thousands of tons of coal during the single day of November 30, 2018," its operations were not restored. Id. at 12-13. Ramaco also states that it eventually had "to cancel shifts and pay miners for non-productive ‘make-work’ " when its coal stockpiles became full, further hindering restoration of its operations. Id. at 13-14.
Ramaco's assertions are without merit. Regarding the temporary bypass conveyor's short-term operation, the policy states that the period of restoration includes "the time required to ... repair or replace the property." Pl.’s Ex. PX1887 at FIC_008705. As explained in more detail below, Part III.A.2, infra, the property was repaired and replaced on November 30: there is no dispute that the silo reclaim belt was repaired and that coal could have traveled through Silos 2 and 3 just as it did before the collapse in Silo 1.
Turning to the raw coal stockpiles, it has been established above that Ramaco's period of restoration ended when it started passing into the preparation plant the flow rate of coal it would have experienced had the loss not occurred, so long as Ramaco achieved restoration of that rate at reasonable speed. Part III.A, supra. The presence of coal stockpiles at the front end of the processing facility is irrelevant to that standard.
Courts have explained that periods of restoration in business interruption policies are designed to provide a necessary "cut off date":
It is common knowledge that a business interruption for any extended period may, and often does result in a loss of [business], some for a short period, some for longer periods and some permanently. A "cut off" date is a necessity. Otherwise, claims would be opened to a degree of speculation which would be absurd. There would be no available method to determine with any degree of accuracy the amount of such losses.
Rogers v. Am. Ins. Co., 338 F.2d 240, 243 (8th Cir. 1964) ; see also Pennbarr Corp. v. Ins. Co. of N. Am., 976 F.2d 145, 148, 152-53 (3d Cir. 1992) ; Retail Brand All., Inc. v. Factory Mut. Ins. Co., 489 F. Supp. 2d 326, 332-34 (S.D.N.Y. 2007) ; Midland Broadcasters, Inc. v. Ins. Co. of N. Am., 636 F. Supp. 165, 166-67 (D. Kan. 1986) ; Constr. Sys., Inc. v. Gen. Cas. Co. of Wisc., No. 09-3697 (RHK/JJG), 2010 WL 11575518, at *8 (D. Minn. Aug. 31, 2010). See generally Steel Prods. Co. v. Millers Nat'l Ins. Co., 209 N.W.2d 32, 37-38 (Iowa 1973) (citing cases and stating rule).
In this case, Ramaco had coal stockpiles that persisted through 2019 and into at least the next year. See Pl.’s Exs. PX1072, PX1073. Its losses payable for business interruption, however, are constrained to the period of restoration.
Accordingly, because Ramaco in fact restored on November 30, 2018, the flow rate of coal into the preparation plant it would have experienced had the loss not occurred, and because no reasonable jury could disagree, Federal Insurance is entitled to judgment as a matter of law that the period of restoration ended November 30, 2018.
2. Ramaco could have restored its throughput of coal by using Silos 2 and 3 commencing December 1, 2018
The evidence at trial showed that Silos 2 and 3 were undamaged by the collapse of Silo 1's hopper. Thus, Kostic testified that Ramaco could have used Silos 2 and 3 when the silo reclaim belt was repaired and in use on November 30, 2018, except that Ramaco planned to install safety supports to the silos. Kostic also testified that the safety supports addressed potential issues that existed prior to the collapse of Silo 1's hopper, although Kostic believed the supports were necessary in light of the hopper collapse. Ultimately, Ramaco never rebuilt Silo 1, and having only two silos in use, Silos 2 and 3, has not affected Ramaco's ability to run the Elk Creek mine's processing facility at its normal throughput.
As noted above, the policy imposes a precondition to recovery for business interruption. Ramaco's operations must be impaired by "direct physical loss or damage by a covered peril to property." Pl.’s Ex. PX1887 at FIC_008623. Once that precondition is met, Ramaco is entitled to payment until it achieves the throughput of coal it would have experienced had the loss not occurred, so long as it does so at reasonable speed. The reasonable speed element of the policy unambiguously contemplates a "theoretical" time by which Ramaco should have restored operations regardless of when it actually restored operations. See Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 F.2d 349, 355 (8th Cir. 1986) ; Milk Indus. Mgmt. Corp. v. Travelers Indem. Co. of Am., 337 F. Supp. 3d 423, 431 (D.N.J. 2018) ; G&S Metal Consultants, Inc. v. Cont'l Cas. Co., 200 F. Supp. 3d 760, 769 (N.D. Ind. 2016) (collecting cases).
It was undisputed at trial that Silos 2 and 3 were undamaged by the collapse of Silo 1's hopper, which the jury found was caused by a covered risk. As a result, the condition of Silos 2 and 3 could not have been a "direct physical loss or damage" as required to be an "impairment" to Ramaco's operations. Indeed, Ramaco's expert testified that Ramaco could have used Silos 2 and 3 when Ramaco placed the silo reclaim belt into operation on November 30, 2018.
Because Ramaco could have used Silos 2 and 3, and because the evidence at trial established that use of only two silos does not hamper Ramaco's throughput, there were no remaining covered impairments to Ramaco's operations once Ramaco resumed use of the silo reclaim belt. The jury lacked a legally sufficient evidentiary basis to find otherwise.
This conclusion underscores an important distinction regarding Ramaco's business interruption policy. The evidence at trial demonstrated that Ramaco believed that Silos 2 and 3 impaired its operations and warranted upgrade or repair. While it may have believed that any number of conditions at the Elk Creek mine impaired its operations and warranted upgrade or repair, the issue here is circumscribed by contract: to what extent does the policy pay for such upgrade or repair, and for how long. Ramaco's insurance policy is clear. Without a covered risk causing damage to or loss of property, thereby impairing operations, the policy does not provide payment for the restoration of operations for any period.
Ramaco lacked policy coverage for the time to upgrade Silos 2 and 3. It upgraded the silos at its own expense. Cf. Pentair, Inc. v. Am. Guarantee & Liab. Ins. Co., 400 F.3d 613, 616 (8th Cir. 2005) (stating that "direct physical loss or damage" is not so broad that it is "established whenever property cannot be used for its intended purpose" (emphasis in original)); Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co., 311 F.3d 226, 236 (3d Cir. 2002) (finding that, without an insured loss, "[t]he fact that the [insured] may choose to" upgrade or repair property "does not bring the expense within first-party coverage"); Congress Bar & Restaurant v. Transamerica Ins. Co., 42 Wis.2d 56, 165 N.W.2d 409, 413 (1969) ("[A]n insured may find it advantageous to utilize a business interruption caused by a fire to upgrade his business property; e.g., he may decide to demolish a building with repairable damage structure.... However, if he does, that decision should not increase the amount of recovery to which he is entitled -- he would still be limited to compensation for the shorter period of time in which the structure could be repaired."); Neeb Kearney & Co. v. Cont'l Cas. Co., No. 1:09CV832-LG-RHW, 2012 WL 12882924, at *1, 3-4 (S.D. Miss. May 3, 2012) (finding that insured could not extend period of restoration by performing upgrades beyond what was necessary to restore operations and that were intended to reduce risk of another breakdown).
Ramaco counters that Silos 1, 2, and 3 "cannot be divided for purposes of the Period of Restoration" and, therefore, "the Period of Restoration must continue at least until Ramaco was able to ‘repair or replace’ all three silos." Ramaco Resp. 15; see also id. at 16-17. Ramaco points to the policy declarations, which identify the "Elk Creek Raw Coal Silos" as "Premises #4, Bldg #1" under "Premises Coverages." Id. at 14 (citing Pl.’s Ex. PX1887 at FIC_008579, FIC_008923). Ramaco also notes that the definition of "property" includes "building." Id. (citing Pl.’s Ex. PX1887 at FIC_008710). Ramaco reasons that because the period of restoration includes the time to "repair or replace the property," it "must mean the three silos [Federal Insurance] insured as a single building in Premises #4, [Bldg] #1." Id. (emphasis in original) (first passage quoting Pl.’s Ex. PX1887 at FIC_008705). This is simply not the case. The premises "Bldg #1" is not a single "building," and it is undisputed that Silos 2 and 3 did not sustain physical damage as a result of the Silo 1 hopper collapse.
Ramaco also insists that "the Court has already held that the three silos were insured as a single building." Ramaco Resp. 14 (citing Ramaco Res., 545 F. Supp. 3d at 369 ). In determining the period of restoration, it matters not whether the three silos are treated for insurance purposes as a single structure or three. Only Silo 1 suffered damage or loss.
Ramaco also contends that the jury's verdict must stand because "a contrary ruling would violate public policy, as it would eventually require Ramaco to expose workers to unsafe conditions (e.g., workers required to inspect or perform maintenance on the reclaim conveyor that runs under Silos 2 and 3 would have no way to access it except by entering the silos)." Id. at 16 (emphasis in original). It is quite unclear how Ramaco's business interruption policy could force Ramaco to expose its employees to unsafe working conditions.
Most prominently, Ramaco argues that "the physical damage to Silo 1 ... resulted in physical loss to Silos 2 and 3," impairing Ramaco's operations and triggering business interruption coverage for the period of restoration. See id. at 17-18. Ramaco states that "the newly discovered threat of physical damage from a coal arch," Ramaco's theory of causation accepted by the jury, "generated a covered ‘loss’ under the policy, just as the physical damage caused by a coal arch ... was covered ‘damage’ under the policy." Id. at 21. That is, the physical damage to Silo 1 is said by Ramaco to have revealed or caused the physical loss of Silos 2 and 3 because Silos 2 and 3 were also susceptible to a coal arch collapse. See Pl.’s Ex. PX1887 at FIC_008623.
In support, Ramaco likens this case to Murray v. State Farm Fire and Casualty Co., 203 W.Va. 477, 509 S.E.2d 1 (1998). Ramaco Resp. 19-20. In Murray, three insureds owned houses at the base of a fifty-foot man-made highwall. 509 S.E.2d at 4. Several large boulders and rocks fell off the highwall and on two of the houses, extensively damaging the two houses but leaving the third house undamaged. Id. at 5. It appears undisputed in Murray that additional rockfalls would occur, and local government authorities "compelled all three families to leave their homes ... and turned off all electricity and water." Id. The insureds had an insurance policy providing coverage for "accidental direct physical loss to the property." Id. at 16.
The insurer "contend[ed] that while [its] polic[y] might cover the actual physical damage to the [two damaged] homes, the polic[y] do[es] not cover any losses occasioned by the potential damage that could be caused by future rockfalls," including to the undamaged house. Id. The West Virginia Supreme Court of Appeals disagreed. Instead, the state's high court decided that "direct physical loss ... requires only that the property be damaged, not destroyed. Losses covered by the policy, including those rendering the insured property unusable or uninhabitable, may exist in the absence of structural damage to the insured property." Syl. Pt. 10, id. ; see also id. at 16 (quoting Sentinel Mgmt. Co. v. N.H. Ins. Co., 563 N.W.2d 296, 300 (Minn. Ct. App. 1997) ). Inasmuch as the undamaged house "became unsafe for habitation" by virtue of the external threat posed by the unstable highwall and "could scarcely be considered [a] ‘home[ ]’ in the sense that rational persons would be content to reside there," the Supreme Court of Appeals found that the undamaged house "suffered real damage when it became clear that rocks and boulders could come crashing down at any time." Id. at 16.
Ramaco insists that "[t]he situation is virtually identical here." Ramaco Resp. 20. Ramaco reasons that "[w]hen Silo 1 failed because a coal arch collapsed[,] ... engineers identified a threat of physical damage to Silos 2 and 3," which, under Murray, Ramaco contends is "a ‘physical loss’ of those two silos" that impaired its operations. Id.; see also id. at 18 (contending that "Silos 2 and 3 were unusable because of the event in Silo 1 such that they, like the homes in Murray, could scarcely be considered raw coal silos in the sense that rational coal operators would be content to use them"). Ramaco's position has superficial appeal. Further examination reveals that it misses the mark.
Murray is part of a line of cases where some physical force or condition could be said to have entered or imposed itself upon an insured property and physically altered its space, thereby rendering it unusable, such as noxious fumes, soil contamination, or threat of earth movement. As the Supreme Court of New Hampshire aptly summarized, "an insured may suffer ‘physical loss’ from a contaminant or condition that causes changes to the property that cannot be seen or touched" so long as the "changes" are "distinct and demonstrable." Mellin v. N. Sec. Ins. Co., 167 N.H. 544, 115 A.3d 799, 803-05 (2015) (collecting and discussing cases, including Murray ); see also, e.g., Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co., 506 F. Supp. 3d 360, 374-76 (E.D. Va. 2020) (collecting and discussing cases, including Murray, and concluding that, in certain circumstances, " ‘direct physical loss’ could mean that the property is uninhabitable, inaccessible, or dangerous to use because of intangible, or non-structural, sources"); TRAVCO Ins. Co. v. Ward, 715 F. Supp. 2d 699, 708-09 (E.D. Va. 2010) (collecting and discussing cases, including Murray, and finding "that physical damage to the property is not necessary, at least where the building in question has been rendered unusable by physical forces"); Yale Univ. v. Cigna Ins. Co., 224 F. Supp. 2d 402, 413 (D. Conn. 2002) (collecting and discussing cases, including Murray, and finding that "a variety of contaminating conditions ... constitute ‘direct physical loss of or damage to property’ ").
Indeed, Murray principally relies upon two cases, one where a landslide left a house overhanging a thirty-foot cliff, depriving the house of necessary subjacent and lateral support and rendering it a physical loss even though the house sustained minimal physical damage from the event, 509 S.E.2d at 16-17 (discussing Hughes v. Potomac Ins. Co., 199 Cal.App.2d 239, 18 Cal. Rptr. 650 (1962) ), and the other where asbestos fibers released into a building from asbestos-containing materials contaminated the building, rendering it useless and a physical loss, id. at 17 (quoting Sentinel Mgmt. Co., 563 N.W.2d at 300 ). In accordance with those cases, the Supreme Court of Appeals in Murray resolved "that [on the day of the rockfalls] all three of the ... homes became unsafe for habitation, and therefore suffered real damage when it became clear that rocks and boulders could come crashing down at any time." Id. at 17. Importantly, Murray falls squarely in line with the principle requiring a "distinct and demonstrable" intangible change to a property, resulting in an insured physical loss. See Mellin, 115 A.3d at 804-05.
There was no distinct and demonstrable tangible or intangible change to Silos 2 and 3. The undisputed trial evidence established that the collapse of Silo 1's hopper did not damage Silos 2 and 3. Nor could the covered risk of the coal arch collapse in Silo 1 have "cause[d a] change to" Silos 2 and 3. Id. at 804. Silos 2 and 3 were the same after the coal arch collapse in Silo 1 as they were before, and so, too, was everything within and around them. The covered risk was the coal arch collapse in Silo 1. It cannot be said to have changed the physical status of Silos 2 and 3. In Murray, by contrast, the undamaged house suffered physical loss because of the looming, inevitable threat that it would be struck by additional rockfalls from the same source. See 509 S.E.2d at 17.
Ramaco nonetheless urges that the court in Murray found that a physical loss exists merely where there is "an existing, but previously unknown, threat of physical damage." Ramaco Resp. 19. However, as Federal Insurance notes, Fed. Ins. Reply 8 n.4., ECF No. 378, the decision in Murray states unequivocally that the undamaged house did not sustain an insured physical loss until the covered risk event occurred and "it became clear that rocks and boulders could come crashing down at any time" -- until a distinct and demonstrable covered risk occurred and changed the physical property of the house, 509 S.E.2d at 17. The context of asbestos litigation, upon which Murray relies, further illustrates the point:
When the presence of large quantities of asbestos in the air of a building is such as to make the structure uninhabitable and unusable, then there has been a distinct loss to its owner. However, if asbestos is present in components of a structure, but is not in such form or quantity as to make the building unusable, the owner has not suffered a loss.
Port Auth. of N.Y. & N.J., 311 F.3d at 236 (footnote omitted). The latent risk of a collapse in Silos 2 and 3 is akin to the presence of asbestos that has not yet contaminated the air. There was no evidentiary basis to have found that the physical damage to Silo 1 by the covered risk was also a physical loss of Silos 2 and 3.
Furthermore, while largely honing in on the kind and degree of contamination or change that must exist to give rise to an insured "direct physical loss," the undercurrent of this line of cases is that the physical loss must be "direct." Pl.’s Ex. PX1887 at FIC_008623. The term "direct" "does not refer to the reason for the loss but the relationship between the loss and the damage to the property." 10A Couch on Insurance § 148:60, supra. It means " ‘immediate’ or ‘proximate’ as distinguished from ‘remote,’ " and when used in the phrase "direct physical loss," it "is meant to exclude situations in which an intervening force played some role in the property damage." Id.; see also Direct, Black's Law Dictionary, (11th ed. 2019) ("3. Free from extraneous influence; immediate < direct injury>."). Thus, under Ramaco's business interruption policy, a physical loss that is direct is one that is proximately caused by the covered risk. See Murray, 509 S.E.2d at 11 (quoting 7 L. Russ, Couch on Insurance § 101:44 (3d ed. 1997), and 5 J. Appleman, Insurance Law and Practice § 3083 (1969)) (equating "direct" and "proximate cause"); see also MRI Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co., 187 Cal.App.4th 766, 115 Cal. Rptr. 3d 27, 38 (2010).
For example, in Tocci Building Corp. v. Zurich American Insurance Co., a storm damaged a 100-foot portion of a 1200-foot retaining wall. 659 F. Supp. 2d 251, 253-54 (D. Mass. 2009). Upon inspection of the damage, the local municipality discovered that the entire "wall had not been built in accordance with the approved plans" and, in addition to repairing the 100-foot portion damaged by the storm, required that the entire wall be grouted to comply with the plans. Id. at 254. Even though the storm, a covered risk, brought the entire wall's pre-existing defects to the municipality's attention, the district court concluded that there was not an insured "direct physical loss" of the entire wall because neither the storm nor the storm damage caused the need to grout the entire wall. See id. at 259-60. Instead, only the 100-foot damaged portion damaged by the storm was a direct physical loss of the storm. See id. at 260 ; see also Chattanooga Bank Assocs. v. Fidelity & Deposit Co. of Md., 301 F. Supp. 2d 774, 780 (E.D. Tenn. 2004) ; St. Paul Fire & Marine Ins. Co. v. Darlak Motor Inns, Inc., No. 3:97-CV-1559 TIV, 1999 WL 33755848, at *4 (M.D. Pa. Mar. 9, 1999). Likewise, the coal arch collapse in Silo 1 did not cause the need for upgrades to Silos 2 and 3. Rather, it simply made Ramaco aware of the prudence of the upgrades.
There was thus no direct physical loss sustained by Silos 2 and 3 when the hopper collapsed in Silo 1. Rather, because of a perceived pre-existing structural deficiency in Silos 2 and 3 for the use to which they were being put by Ramaco -- that was revealed by the Silo 1 hopper collapse -- the insured chose to shore up the hoppers in Silos 2 and 3. See Hometown Plumbing & Heating Co. v. Secura Ins. Co., 2012 WL 1245755, at *6 (Iowa Ct. App. Apr. 11, 2012) (concluding that an insured's decision to replace all its pipes after only three pipes failed was "a business decision to mitigate future risk of failure" rather than an insured loss of the undamaged pipes).
Accordingly, because there were no other insured impairments to Ramaco's operations when it repaired the silo reclaim belt by November 30, 2018, and because Ramaco could have then restored the throughput of coal it would have experienced had the loss not occurred by using Silos 2 and 3 and thereby generate the business income that would have existed if the Silo 1 hopper collapse had not occurred, Federal Insurance is entitled to judgment as a matter of law that Ramaco cannot recover business interruption losses occurring after November 30, 2018.
For these reasons, and, alternatively, for the reasons stated in Part II.A.1, supra, Ramaco is entitled to the direct costs for demolition and removal of Silo 1, $260,699; extra expense it incurred in November 2018, $296,760; and expenses for "new construction by pass belt," $35,331, totaling $592,790. See Pl.’s Ex. PX411B. 3. Ramaco is entitled to missed Thyssen shipment damages in December 2018 and the related Kinder Morgan penalty
The court notes that the line item for "new construction by pass belt," see Pl.’s Ex. PX411B, is of dubious validity as a recoverable business interruption loss. John Marcum, Ramaco's chief accounting officer, testified that the amount constitutes "cost[s] related to the permanent bypass system" that went into service on March 3, 2019. Marcum Tr. 7, 89. For reasons explained above, the permanent bypass system was unnecessary for Ramaco to restore pre-loss operations. However, inasmuch as Federal Insurance does not question the amount's validity as a business interruption loss even with a restoration date of November 30, 2018, the court includes such amount in Ramaco's reduced award.
On December 12, 2017, Ramaco contracted with ThyssenKrup Steel Europe AG ("Thyssen") to deliver 150,000 metric tons ("MT") of coal in approximate 25,000 MT shipments from April 2018 through March 2019, scheduled on certain dates during April, June, August, October, and December 2018 and January 2019. See PX0134; see also Belack Tr. 103, ECF No. 371-9. A dispute arose between Ramaco and Thyssen as to the scheduled October 2018 shipment, and it was not then made. See PX0134. Ramaco noted in its January 3, 2019, email by its president, Michael Bauersachs, to Thyssen's Marvin Maxwell that the October 25,000 MT shipment had been delayed by Thyssen until 2019 and had negatively impacted Ramaco. Id. The October shipment was apparently included in Ramaco's only shipment to Thyssen after August 2018, consisting of 31,279.895 MT on March 10, 2019. Id.
Ramaco attempted to invoke force majeure in its email to Thyssen on November 7, 2018, two days after the collapse, to excuse its failure to make the upcoming December 20 to 29, 2018, scheduled shipment of approximately 25,000 MT. Id. Thyssen rejected that effort, stating force majeure was unsupported in its return email on November 26, 2018, in which Thyssen gave Ramaco until November 30, 2018, to support its force majeure claim. Id. Ramaco's email reply on November 27, 2018, is not in evidence but Thyssen's response email of December 4, 2018, took note of it and again states that the force majeure claim had not been supported by Ramaco, and notifies Ramaco that Thyssen had now arranged to obtain delivery of the December 20 to 29 shipment of 25,000 MT from another supplier in order to meet its needs timely. Id. That same December 4, 2018, response asked Ramaco if and when it would be able to deliver the "outstanding supply of 50,000 by the end of March, 30." Id. The court notes that the 50,000 figure was excessive inasmuch as 84,911.255 MT had been furnished on the 150,000 MT contract by the end of August 2018. The diversion of the December 25,000 MT to another supplier would leave only about 40,000 MT remaining on the contract. The status of the Thyssen shipments as of the Silo 1 hopper collapse is summarized as follows:
| 2018 | Shipped coal (MT) |
|---|---|
| April | 24,509.797 |
| June | 33,000.000 |
| August | 27,401.458 |
| TOTAL | 84,911.255 |
See id.
Ramaco's agent responded by email on December 11, 2018, that it confirmed "a shipment in March of minimum 40,000MT," and on December 14, 2018, offered to increase that amount to 50,000 MT. Id. Thyssen's email reply on December 18, 2018, set forth in chart form the above accounting and noted the contract quantity of 150,000 MT from which there is deducted the 84,911.255 previously shipped and the 25,000 MT "FM tonnage" [force majeure December 2018 tonnage], leaving "To be delivered ... 40,088.745" MT, and added, "Could you pls reconfirm. We will come back to you with a proposed ... tonnage." Id. Ramaco responded on December 19, 2018, "We agree with the balance tonnage to be shipped under our Agreement dated December 12, 2017 .... Please suggest a laycan[ ] for shipment in March 2019." Id.
" ‘Laycan’ refers to the window of time during which a vessel must arrive at the port to avoid cancellation by the charterer." Teras Chartering, LLC v. Hyupjin Shipping Co., No. C16-0188RSM, 2017 WL 3424960, at *2 (W.D. Wash. Aug. 9, 2017).
Thyssen followed up with an email on December 21, 2018, in which it offered to receive "approximately 25,089 t ... in one final shipment: laycan 1-10 March." Id. Ramaco responded on January 3, 2019, that it agreed to ship 40,000 MT, but noted that Thyssen had "suggested that you were unable to accept the larger volume," and proposed a shipment of 20,000 to 25,000 MT for March 1 to 10. Id. By email on January 10, 2019, Thyssen agreed to "round about 25,000 t ... in one last shipment 1/10 March. ... [R]emaining quantities will be canceled and the contract ends." Id. In accordance with the revision by Ramaco and Thyssen of their 150,000 MT contract, occurring prior to the scheduled January 20 to 30, 2019, shipment, the final shipment was completed as agreed on March 10, 2019, and consisted of 31,279.895 MT. Id.
Federal Insurance's expert, Jeffrey Belack, refers in his testimony to what he describes as a September 18 email -- that is not in evidence -- purportedly from Ramaco's Brian Varney to Thyssen. Belack Tr. 121. Belack suggests that the email references a cancellation by Thyssen of both the October and December shipments. Id. at 121-23. Based thereon, Belack concludes that the November silo collapse had nothing to do with Ramaco's loss of the December shipment. Id. at 122. His conclusion is completely uprooted by PX0134, which is the email/letter chain between Ramaco and Thyssen -- that is in evidence -- reflecting that the October shipment was deferred to 2019 and the December shipment was canceled by Thyssen when in November 2018 it learned that Ramaco claimed it could not deliver the December shipment based on its invocation of force majeure, which Thyssen twice deemed unsupported, following the November 5 shutdown.
As a consequence, Thyssen advised Ramaco by its letter email of December 4, 2018, that "We have now arranged for delivery of such 25,000 MT from other sources at a slightly higher cost ... and will charge you for the extra costs when we have received the invoice." PX0134. It is apparent that the jury accepted Ramaco's version of these events.
The losses Ramaco claims related to its contract with Thyssen represent the lower price that replacement customers paid for the coal Thyssen did not accept. See Marcum Tr. 136-37. Ramaco submitted to the jury its associated losses of $931,371 and $100,878 occurring December 20-29, 2018, and January 20-30, 2019, respectively, Pl.’s Ex. PX411B, which correspond to the final two scheduled shipment dates under its contract with Thyssen, see Pl.’s Ex. PX0134. As just noted, Ramaco and Thyssen agreed to movement of the October and January 20-30 shipments to a March 10, 2019, final shipment of whatever tonnage they would ultimately agree upon. Consequently, the January scheduled shipment need not be further addressed.
The court notes that Ramaco's business interruption policy covers business income loss "incur[red] due to the actual impairment of your operations ..., during the period of restoration." Pl.’s Ex. PX1887 at FIC_008623. Accounting for the "cut off" of recovery by the expiration of the period of restoration, Rogers, 338 F.2d at 243, the policy language nonetheless contemplates scenarios where business income loss is incurred during the period of restoration even though the monetary amount of loss is not revealed until a later time. For instance, as it relates to Ramaco's scheduled December 2018 shipment to Thyssen, the jury had sufficient evidence, in the form of Ramaco's November 7 and 27, 2018, requests for force majeure relief and Thyssen's November 26, 2018, letter initially questioning Ramaco's force majeure claim, together with Thyssen's December 4, 2018, notice of rejection of it, to find that Ramaco incurred business income loss during the period of restoration even though the amount of such loss was not determined until Ramaco mitigated its damages by shipping to a replacement customer at a lower price per ton of coal.
Moreover, some courts have recognized that an insured can incur a business income loss during a restoration period even if the monetary effect does not manifest until a later time. In National Union Fire Insurance Co. of Pittsburgh v. TransCanada Energy USA, Inc., the New York state trial court found that a monetary effect that did not "manifest or realize[ ] until" after the restoration period was covered under a business interruption policy because the "loss[ ] directly resulted from covered physical loss or damage, and [is] neither speculative nor incapable of being linked directly to the period of liability at issue." 52 Misc.3d 455, 28 N.Y.S.3d 800, 811 (N.Y. Sup. Ct. 2016), aff'd 153 A.D.3d 1153, 61 N.Y.S.3d 4 (2017) ; see also Nonpareil Corp. v. Hartford Cas. Ins. Co., No. 4:10-cv-00500-EJL, 2014 WL 1017606, at *12 (D. Idaho Mar. 17, 2014). To hold otherwise, the trial court explained, would controvert the purpose of business interruption insurance and "would result in a windfall" for the insurer "simply because [the insured]," to the extent losses were fixedly predestined during the restoration period, "did not actually receive the decreased revenue until months after the" expiration of the restoration period. TransCanada Energy, 28 N.Y.S.3d at 811.
The court concludes, as did the jury, that the inability of Ramaco to make the December 20 to 29, 2018, shipment of 25,000 MT was due to the collapse of the Silo 1 hopper and the loss of production in November 2018. Although the period of restoration ended November 30, 2018, and Ramaco could have continued its operations with Silos 2 and 3 and the repaired reclaim conveyor on December 1, 2018, the jury had sufficient evidence to find that Ramaco could not satisfy its shipment obligation to Thyssen in December 2018 because of the Silo 1 hopper collapse, and that Ramaco incurred such loss during the period of restoration.
The remainder of any loss that Ramaco may have sustained on the Thyssen 150,000 MT contract consists in part of the pre-collapse October 25,000 MT dispute with Thyssen which was concluded when the final shipment was made of 31,279.895 MT on March 10, 2019. While Ramaco and Thyssen had agreed as early as mid-December to the final shipment in March 2019, which otherwise would have been January 20-30, 2019, that same shipment concluded the further question as to the amount of the then-remaining 40,088.745 MT (which included the October 25,000 MT) that would then be delivered. Deducting the 31,279.895 MT shipment left 8,808.850 MT undelivered on the contract when the final March 10, 2019, shipment ended the relationship of Ramaco and Thyssen on the 150,000 MT contract. Although it appears to have been resolved by agreement between Ramaco and Thyssen as reflected in the email/letter exchange set forth in PX0134, any claim that Ramaco may have respecting the delayed October 25,000 MT shipment and the undelivered 8,808.850 MT is limited to a claim against Thyssen.
As a related matter, Ramaco had a contract with a company called Kinder Morgan, which owns and rents space for the stockpiling of coal at the port from which Ramaco's coal was shipped to some of Ramaco's customers, including Thyssen. Marcum Tr. 46-47, 93-94, 233; Belack Tr. 100-01; see also Pl's. Ex. PX0773 (customer "TKS" is Thyssen); Pl.’s Ex. PX0802 (showing customer MetInvest, Tata, and Thyssen dates and vessels that correspond to PX0773). Under the Kinder Morgan contract, coal is transported by rail from Ramaco's Elk Creek facility to Kinder Morgan's property at the port. Marcum Tr. 46-47. Once there, Kinder Morgan takes custody of the stockpiled coal to be loaded onto a vessel at an appropriate time. Id. Ramaco's contract with Kinder Morgan ran from May 1, 2018, through March 31, 2019, and provided that Ramaco would pass 600,000 tons (not metric tons) of coal through Kinder Morgan's stockpiles. Id. at 90, 93, 262; Pl.’s Ex. PX0773. The contract further provided that Ramaco would pay at the end of the contract period a penalty of $3.95 per ton for any shortfall of coal through Kinder Morgan's stockpiles. Marcum Tr. 90, 94; Pl.’s Ex. PX0773.
Inasmuch as the jury had sufficient evidence to find that the loss of the December 2018 shipment of 25,000 MT to Thyssen was incurred during the period of restoration, the jury likewise had sufficient evidence to find the accompanying penalty for such shortfall to Kinder Morgan of 27,557.783 tons was incurred during the period of restoration, in the rounded dollar amount of $108,853, even though such loss was not realized until April 2019.
Accordingly, under its business interruption insurance policy, the recoverable damages sustained by Ramaco related to its contract with Thyssen were $931,371, arising out of Ramaco's inability to make the December 2018 shipment by virtue of the November 5 shutdown, and $108,853, arising out of Ramaco's accompanying Kinder Morgan penalty. Pl.’s Ex. PX411B.
4. The $100,000 deductible does not apply to Ramaco's recovery
Federal Insurance seeks to further reduce Ramaco's damages through application of a $100,000 deductible. Fed. Ins. Mem. Supp. 24-25. The parties agreed to have the court, not the jury, address and decide the applicability of the deductible. ECF No. 374 at 23.
As noted in Part I.C., supra, Ramaco's mining industries insurance policy contains a property insurance section, itself comprising various coverages for different "premises" of Ramaco. Relevant here are the building, personal property, and business income with extra expense (business interruption) coverages for Premises #4, Bldg #1 (the three coal silos at issue). The policy insures buildings and personal property as follows:
[Federal Insurance] will pay for direct physical loss or damage to:
• building; or
• personal property,
caused by or resulting from a peril not otherwise excluded ....
Pl.’s Ex. PX1887 at FIC_008593. The policy values such loss or damage, insofar as pertinent here, according to either "the covered value of the lost or damaged covered property" or "the cost of repairing or replacing the lost or damaged covered property." Id. at FIC_008612. In such case, the building and personal property coverages are subject to a $100,000 deductible. Id. at FIC_008579. However, Silo 1 was neither repaired nor replaced, nor was its covered value sought to be established by either the insurer or the insured. Rather, Ramaco followed the recommendation of Hungate Engineering based on the "significant damage" to Silo 1 found by Hungate -- that the silo be demolished and that, as required by the Mine Safety and Health Administration (MSHA), a 95-foot radius "dangered off area" be marked around the damaged silo. Pl.’s Ex. PX1880. The cost to do so amounted to $260,669. See Pl.s Ex. PX411B.
Ramaco seeks recovery of that sum as an "extra expense" under the business interruption coverage, Ramaco Resp. 33, to which a deductible is not applicable, see Pl.’s Ex. PX1887 at FIC_008579; see also id. at FIC_008582. The policy defines "extra expense" as follows:
Extra expense means necessary expenses you incur:
A. in an attempt to continue operations, over and above the expenses you would have normally incurred; and
B. to repair or replace any property, ... if such action will reduce any loss we would pay under this insurance.
Id. at FIC_008698. As earlier noted, Ramaco's business interruption policy provides for coverage of such extra expense:
We will pay for the actual:
• business income loss you incur due to the actual impairment of your operations; and
• extra expense you incur due to the actual or potential impairment of your operations,
during the period of restoration ....
Pl.’s Ex. PX1887 at FIC_008623.
Ramaco demolished and removed Silo 1 in an attempt to restore and safely continue its operations, not to repair or replace Silo 1. Accordingly, the Direct Costs line item from November 2018 is an extra expense not subject to the $100,000 deductible.
Federal Insurance nevertheless claims in its post-trial briefing that demolition of the silo was necessary in order to repair the reclaim conveyor and thus would constitute a property repair to which the deductible would apply. Fed Ins. Mem. Supp. 24-25. Not so. The reclaim conveyor could have been readily repaired, even without removal of Silo 1, by simply severing it where it joined with Silo 1. Except for Ramaco's decision to eschew use of coal stored in Silos 2 and 3 until their hoppers were strengthened in place, once the reclaim conveyor was repaired in Silo 2, the coal could continue to be fed into the top of Silos 2 and 3 and lowered onto the reclaim conveyor from whence it would be delivered to the preparation plant just as was done prior to the Silo 1 failure and as was done after the hoppers in Silos 2 and 3 were upgraded. Federal Insurance's motion as to the deductible is denied.
5. Summary
The phase one extra expense and loss of business income recoverable by Ramaco under the insurance policy is as follows:
| November 2018 direct costs (demolition) | 260,699 |
| November 2018 extra expense | 296,760 |
| November 2018 "new construction by pass belt" | 35,331 |
| Missed Thyssen shipment damages realized in December 2018 | 931,371 |
| Kinder Morgan penalty accompanying missed Thyssen shipment realized in April 2019 | 108,853 |
|---|---|
| TOTAL | $1,633,014 |
See Pl.’s Ex. PX411B. These are all items found by the jury to be recoverable in these same amounts, as set forth in PX411B, except that the Kinder Morgan recovery found by the jury ($436,582) is limited to the above $108,853. The remainder of the entries on PX411B, all accepted by the jury, relate to Ramaco's decision to upgrade Silos 2 and 3 rather than using them as before and, being beyond the period of restoration ending November 30, 2018 -- the "cut off" date by which losses must be incurred -- are not imposable upon Ramaco's insurer.
B. Phase two -- Hayseeds damages
Federal Insurance contends that Ramaco is not entitled to aggravation and inconvenience damages because it did not "substantially prevail" in its claim as required under Hayseeds, 352 S.E.2d 73. See Fed. Ins. Mem. Supp. 26-29. In Hayseeds, the West Virginia Supreme Court of Appeals announced that
[w]henever a policyholder substantially prevails in a property damage suit against its insurer, the insurer is liable for: (1) the insured's reasonable attorneys’ fees in vindicating its claim; (2) the insured's damages for net economic loss caused by the delay in settlement, and damages for aggravation and inconvenience.
Syl. Pt. 1, 352 S.E.2d 73.
Whether an insured substantially prevails in the first instance is a question for the trial court. See Miller v. Fluharty, 201 W.Va. 685, 500 S.E.2d 310, 321 (1997). "An insured ‘substantially prevails’ ... when the action is settled for an amount equal to or approximating the amount claimed by the insured ...." Syl. Pt. 2, id. "When examining whether a policyholder has substantially prevailed against an insurance carrier, a court should look at the negotiations as a whole from the time of the insured event to the final payment of the insurance proceeds," including negotiations during litigation. Syl. Pt. 4, id. ; see also McCormick v. Allstate Ins. Co., 197 W.Va. 415, 475 S.E.2d 507, 517-18 (1996).
Prior to suit, Federal Insurance denied Ramaco's insurance claim. ECF No. 364 at 29 (findings of court during July 16, 2021, proceedings). At a March 28, 2019, meeting with Federal Insurance, Ramaco informed the insurer that it had sustained $5.8 million in damages plus nearly another $6 million in ongoing damages, for a total of around $12 million. Id. at 29-30. Federal Insurance issued denial letters in June and August 2019. Id. at 30. Ramaco filed suit in August 2019. Id. The parties mediated in October 2020, during which Ramaco demanded first around $32 million and then $25 million, and to which Federal Insurance responded with offers of $100,000 and $200,000, respectively. Id. Lastly, on the eve of trial, Ramaco demanded $11.8 million, and Federal Insurance responded with an offer of $2.1 million. Id.; Ramaco Resp. 36; see also ECF No. 371-10, ¶¶ 15-17 (Declaration of William T. Blake, Vice President of ACE American Insurance Company).
Ramaco being entitled as a matter of law to $1,633,014, which is the sum of its lost business income and extra expense attributable to the period of restoration, exclusive of prejudgment interest, it is clear that Ramaco did not substantially prevail in this matter and is not entitled to recovery of any Hayseeds damages. Accordingly, the phase two jury award of $25,000,000 is vacated and set aside.
C. Judgment award
The court grants judgment as a matter of law that Ramaco's judgment award is reduced to the amount of $1,633,014 with prejudgment interest from the parties’ agreed date of September 1, 2019, and continuing at the parties’ agreed rate of 4% per year to this date in the amount of $163,570, aggregating $1,796,584.
D. Conditional ruling on Rule 59 motion for new trial or for an amended judgment
Federal Insurance moved for a new trial under Federal Rule of Civil Procedure 59. See Fed. Ins. Mem. Supp. 38-40. Rule 50(c)(1) requires the court conditionally to provide a reasoned decision on the motion:
If the court grants a renewed motion for judgment as a matter of law, it must also conditionally rule on any motion for a new trial by determining whether a new trial should be granted if the judgment is later vacated or reversed. The court must state the grounds for conditionally granting or denying the motion for a new trial.
Rule 59(a)(1)(A) provides that "[t]he court may, on motion [after a jury trial], grant a new trial on all or some of the issues ... for any reason for which a new trial has heretofore been granted in an action at law in federal court." Fed. R. Civ. P. 59(a)(1)(A). Rule 59(e) simply states that a party may file "[a] motion to alter or amend a judgment." Fed. R. Civ. P. 59(e).
The Fourth Circuit instructs that "[a] district court ha[s] a duty to order a new trial if ... required in order to prevent injustice." Wilhelm v. Blue Bell, Inc., 773 F.2d 1429, 1433 (4th Cir. 1985) (quotation marks omitted), cert. denied, 475 U.S. 1016, 106 S.Ct. 1199, 89 L.Ed.2d 313 (1986). "It has been said that the general grounds for a new trial are that the verdict is against the weight of the evidence, that the damages are excessive, or that for other reasons the trial was not fair, and that the motion also may raise questions of law arising out of substantial errors in the admission or rejection of evidence or the giving or refusal of instructions." 11 Wright & Miller § 2805, supra. A district court "may weigh the evidence and consider the credibility of the witnesses" on a Rule 59 motion. Chesapeake Paper Prods. Co. v. Stone & Webster Eng'g Corp., 51 F.3d 1229, 1237 (4th Cir. 1995) (quoting Poynter v. Ratcliff, 874 F.2d 219, 223 (4th Cir. 1989) ). "The decision to grant or deny a motion for a new trial is ‘within the sound discretion of the district court and will not be disturbed absent a clear showing of abuse of discretion.’ " Id. (quoting Wilhelm, 773 F.2d at 1433 ).
Starting with the phase one trial, Federal Insurance contends that "[it] is at least entitled to a new trial for th[e] same reasons" it is entitled to judgment as a matter of law. Fed. Ins. Mem. Supp. 38. The court disagrees inasmuch as the court has found Federal Insurance entitled to judgment as a matter of law because the undisputed evidence at trial established that the period of restoration ended November 30, 2018. If an appellate court disagrees and finds that there was a legally sufficient basis for the jury's decision, then the court recognizes it would be improper to order a new trial on those same grounds. To order otherwise would be akin to finding that the court simply disagrees with what would have been determined to be the reasoned outcome of the jury's deliberations.
As noted above, during trial, the court ruled from the bench that Ramaco was not entitled to any damages for business interruption from March 3, 2019. Part I.C, supra. If an appellate court finds that the court's decision was in error, then this court finds that a new trial on phase one would be warranted to allow presentation of that issue to a jury, which may also require a corresponding new trial on phase two.
Turning to the phase two trial, Federal Insurance raises four points as to why it believes the court should order a new trial: (1) Ramaco did not substantially prevail as required under Hayseeds, (2) the award was excessive, (3) publicly traded companies cannot be aggravated or inconvenienced and thus cannot receive Hayseeds damages, (4) Ramaco did not plead Hayseeds damages. See Fed. Ins. Mem. Supp. 26-40.
The court agrees with Federal Insurance that the jury's Hayseeds award was plainly excessive and punitive in nature and thus conditionally grants a new trial on Hayseeds damages. The remaining issues need not be addressed here and may be raised again if a new trial is directed by an appellate court.
The court "must apply state law standards when it considers a Rule 59(a) motion for a new trial based upon the alleged excessiveness of the jury's compensatory damage award." Konkel v. Bob Evans Farms Inc., 165 F.3d 275, 280 (4th Cir. 1999) (citing Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 438-39, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ). In West Virginia, "[c]ourts must not set aside jury verdicts as excessive unless they are monstrous, enormous, at first blush beyond all measure, unreasonable, outrageous, and manifestly show jury passion, partiality, prejudice or corruption." Syl., Addair v. Majestic Petroleum Co., 160 W.Va. 105, 232 S.E.2d 821 (1977). This court has observed that "[t]he determination of whether, and in what amount, a verdict for indeterminate damages," like Hayseeds damages, "should be remitted is necessarily subjective." N. Am. Precast, Inc. v. Gen. Cas. Co. of Wisc., No. 3:04-cv-01307, 2009 WL 3017815, at *8 (S.D. W. Va. Sept. 15, 2009). And as under federal law, a trial court in West Virginia "has the authority to weigh the evidence and consider the credibility of the witnesses" when considering a motion for new trial, and such decision "is not subject to appellate review unless the trial judge abuses his or her discretion." Syl. Pt. 1, Neely v. Belk, 222 W.Va. 560, 668 S.E.2d 189 (2008).
Blanchard testified on Ramaco's behalf regarding the company's annoyance and inconvenience as a result of Federal Insurance's denial of its insurance claim. See ECF No. 356 (Blanchard phase two transcript). Without deciding the issue of whether a publicly traded corporation can be annoyed and inconvenienced, it is apparent from Blanchard's testimony that Ramaco experienced some degree of aggravation and inconvenience stemming from Federal Insurance's failure to pay insurance money. See id. Yet, mindful of the admonition that Hayseeds damages not comprise "punitive damages ... under another sobriquet," Hayseeds, 352 S.E.2d at 80, it is clear that the jury's award of $25 million was impermissibly punitive. And because the jury's $25 million award was punitive, the court finds it excessive. Federal Insurance is therefore conditionally entitled to a new trial on Hayseeds damages in the event that the jury's phase one verdict is upheld or a new phase one trial is ordered.
IV. Conclusion
For the foregoing reasons, it is ORDERED that Federal Insurance's renewed motion for judgment as a matter of law be, and hereby is, granted to the extent set forth herein.