Reply Brief — Harding v. Ward

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No. 93-1049

IN THE

Supreme Court of the United States

OCTOBER TERM, 1993

WILLIAM HARDING, et ai.,

Petitioners,

GARNETT WARD

AND THE COMMONWEALTH OF KENTUCKY.

Respondents.

On Petition for a Writ of Certiorari to the

Supreme Court of Kentucky

REPLY BRIEF OF PETITIONERS

KEVIN M. MCGUIRE REX E. LEE *

JOHN S. PALMORE CARTER G. PHILLIPS

JACKSON & KELLY TAMARA L. PREISS

175 E. Main Street SIDLEY & AUSTIN

Suite 500 1722 Eye Street, N.W.

Lexington, Kentucky 40507 Washington, D.C. 20006

(606) 255-9500 (202) 736-8000

Counsel for Petitioners

February 22, 1994 * Counsel of Record

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF AUTHORITIES

CASES Page

Akers Vv. Baldwin, 736 S.W.2d 294 (Ky. 1987) ....4, 5, 6,7

Buchanan v. Watson, 290 S.W.2d 40 (Ky. 1956)... 3,5

Commerce Union Bank v. Kinkade, 540 S.W.2d

861 (Ky. 1976), cert. denied, 430 U.S. 915

SE ae EE Ce 5

tection Vv. No. 8 Ltd., 528 S.W.2d 684 (Ky.

a, RN RP TERS S Ble Ee” doled 6

First English Evangelical Lutheran Church v.

County of Los Angeles, 482 U.S. 304 (1987)... 8

Hughes v. Washington, 389 U.S. 290 (1967) 1

Keystone Bituminous Coal Ass’n V. DeBenedictis,

480 U.S. 470 (1987) 5

Lucas Vv. South Carolina Coastal Council, 112 S. Ct.

RI i a 2,8

Martin v. Kentucky Oak Mining Co., 429 S.W.2d

395 (Ky. 1968) sadiaceteabapeoencbieaetepinbiahiisadtcemcuaie 5

McIntire v. Marian Coal Co., 227 S.W. 298 (Ky.

I eccseutindicae ise Aeebidiiaeneaidemdeieetiaas ee, 4

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

UE Mitaranicesirenientontst ecient 4

Rudd v. Hayden, 97 S.W.2d 35 (Ky. 1936) 4

IN THE

Suprene Court of the United States

OCTOBER TERM, 1993

No. 93-1049

WILLIAM HARDING, et al.,

7 Petitioners,

GARNETT WARD

AND THE COMMONWEALTH OF KENTUCKY.

Respondents.

On Petition for a Writ of Certiorari to the

Supreme Court of Kentucky

REPLY BRIEF OF PETITIONERS

Respondents’ numerous assertions do not detract from

petitioners’ central argument, viz., review by this Court

is warranted to prevent the evisceration of the Takings

and Due Process Clauses of the United States Constitu-

tion effected by the Kentucky Supreme Court’s decision

to eliminate, by judicial fiat, petitioners’ established prop-

erty rights.

1. In an attempt to downplay the importance of this

case, respondents observe that, since Justice Stewart's

concurring opinion in Hughes v. Washington, 389 US.

290, 294-98 (1967), revived the notion of “judicial tak-

ings,” only two federal courts of appeals have concluded

that a court’s actions may effect a taking. Respondents’

argument misses the point; it is because of the judicial

takings doctrine that very few state courts have retro-

actively eliminated established property rights. Petition-

ers cited numerous cases in which both state and federal

courts recognized that judicial decisions which work

major changes in property law may indeed constitute

“takings.” See Petition for a Writ of Certiorari (“Pet.”)

14-15. Most of these courts declined to disturb existing

precedent solely out of respect for property rights and a

desire to conform to constitutional imperatives. See, e.g.,

State v. Corvallis Sand & Gravel Co., 582 P.2d 1352.

1363 (Ore. 1978) (given state of precedents, adoption

of a contrary rule “would raise serious questions about

the taking of private property for public use without

compensation”). Moreover, this Court’s recent decision

in Lucas vy. South Carolina Coastal Council, 112 S. Ct.

2886 (1992), emphasized the extent to which takings

analysis depends upon the nature of the common law of

nuisance and property. It would be curious indeed if a

property owner’s reasonable expectations about the uses

to which he can put his property hinge upon the state’s

common law, which, in turn, is subject arbitrarily to

revocation at any time by state courts. But that is pre-

cisely the result urged by respondents. See Pet. 16 n.20.

2. Respondents next argue that, regardless of the

validity of “judicial takings,” no taking occurred in this

case because petitioners had no “reasonable, investment-

backed expectations” in any right to engage in surface

mining. Leaving aside for the moment whether this states

the appropriate legal standard (see infra pp. 4-5), peti-

tioners’ “reasonable . . . expectations” could not be

plainer. The deed under which they own and lease the

mineral rights at issue in this case conveyed the right to

use the surface of the land “in any and every manner”

that the grantee “deemed necessary or convenient in the

free exercise and enjoyment of said property, rights and

privileges hereby granted or conveyed.” Pet. App. 45a

(emphasis added). If “necessary or convenient for the

exercise and enjoyment of the said property rights,” the

grant is broad enough to include, for example, “the right

to build, erect, alter and repair, maintain and operate

upon said land . . . any and all such buildings, structures,

appliances, machinery and equipment,” thus permitting

the mineral owner to occupy the entire surface of the

land. Id. at 46a.

Given the breadth of the rights conveyed, it comes as

no surprise that the actual language of the deed appears

nowhere in respondents’ brief. Their assertion that the

holding below “simply restored the parties to their rights

pre-Buchanan” because the deed conveyed only the right

to mine by deep mining methods conveniently ignores the

unequivocal language of the instrument itself, which

formed the basis of 50 years of judicial construction. See

Opp. 20-21. Not only is there no ambiguity to warrant

a judicial inquiry into the “intent of the parties,” it is

difficult to imagine a more clearly expressed intent to

convey the right to use the surface in any way incident

to the mining of coal.’

' Respondents also contend that the Hardings could not have

formed any “reasonable, investment-backed expectations” about the

right to surface mine because they acquired their mineral interests

prior to Buchanan v. Watson, 290 S.W.2d 40 (Ky. 1956), which

clearly established the right of owners of mineral rights under

broad form deeds to engage in surface mining. Regardless of when

they first obtained these rights, however, the Hardings retained

the mineral rights in the years since Buchanan with the ex pecta-

tion of using them when they saw fit, and with no expectation

whatsoever that these rights would be nullified by subsequent judi-

cial action. In fact, the mineral rights were leased to the petitioner

Lash Coal Co. in 1982, long after Buchanan. Pet. App. 49a. It is

no accident that a coal company, which quite obviously leased the

rights with a “reasonable, investment-backed expectation” that it

could mine the coal, is a petitioner in this case. Respondents

assert that Lash’s claim is moot, based solely on their reading,

in isolation, of a single provision of the lease. This issue has never

been litigated in any court, and, in any event, Lash remains a

party to this case by virtue of its interest in the contract. Under

these circumstances, respondents’ mootness claim is nothing more

than a bald effort to avoid review.

Moreover, review of cases decided prior to Buchanan reveals

that Buchanan represented the culmination of, rather than a de-

parture from, case law regarding the relative rights of surface

Respondents also contend that the action of the court

below does not constitute a taking because the court’s

decision destroyed just one “strand” in petitioners’

“bundle of property rights.” Opp. 21-24. Respondents’

analysis is ill-conceived, both factually and legally. First,

it is flatly wrong to call the contention that the coal can

be removed only by surface or strip mining an “unsup-

ported allegation.” See id. at 21. The affidavit of Wil-

liam Harding established that it is economically infeasible

to mine the Hardings’ coal by any method other than

surface mining.” Pet. 17-19. The facts of Harding’s affi-

davit were accepted as true by the Kentucky Supreme

Court for the purposes of its decision in this case and are

not subject to challenge here. /d. at 6.

Second, as a matter of law, and despite respondents’

arguments to the contrary, there is no question that this

case fits squarely within this Court’s takings jurispru-

dence. In Pennsylvania Coal Co. v. Mahon, 260 U.S.

393, 414 (1922), the Court held that the right to coal

carries with it the right to mine it, and thus “[t]o make

it commercially impracticable to mine certain coal has

very nearly the same effect for constitutional purposes as

appropriating or destroying it.” Respondents do not, and

cannot, distinguish this case from Pennsylvania Coal, be-

and mineral owners. See, e.g., McIntire v. Marian Coal Co., 227

S.W. 298 (Ky. 1921) (mineral grantee may use as much of the

surface as is necessary or convenient to the mining business, in-

cluding use and occupancy of the entire surface) ; Rudd v. Hayden,

97 S.W.2d 35 (Ky. 1936) (rights of mineral owner to use the

surface may include surface mining); Treadway v. Wilson, 192

S.W.2d 949 (Ky. 1946) (dominance of mineral estate permits

mineral owners to engage in surface mining); see generally Akers

V. Baldwin, 736 S.W.2d 294, 298-300 (Ky. 1987) (discussing pre-

Buchanan cases).

* Somewhat disingenuously, respondents speculate at one point

that new mining methods developed in the future might allow

petitioners to remove their coal without disturbing the surface,

then, in the next breath, respondents reiterate that petitioners have

no rights to engage in any mining method not in existence at the

time of the original conveyance. Opp. 24.

cause the unrebutted facts confirm that it is commercially

impracticable for the Hardings to mine their coal by

methods other than surface mining and the only purpose

of the state’s law is to shift a property right held by one

private person to another. For this reason, the holding of

Pennsylvania Coal requires reversal of the decision

below.* See Pet. 17-19.

3. Respondents also contend that, regardless of the

significance of the right to surface mine relative to peti-

tioners’ “bundle” of property rights, the decision of the

Kentucky Supreme Court to overrule Buchanan v. Wat-

son, 290 S.W.2d 40 (Ky. 1956), does not represent the

type of abrupt and unpredictable change in state law that

might effect a “taking,” because Buchanan had been

under attack for almost 40 years. This argument simply

mischaracterizes precedent by relying solely on dissenting

opinions in Akers v. Baldwin, 736 S.W.2d 294 (Ky.

1987), and Martin v. Kentucky Oak Mining Co., 429

S.W.2d 395 (Ky. 1968), a concurring opinion in Com-

merce Union Bank v. Kinkade, 540 S.W.2d 861 (Ky.

1976), cert. denied, 430 U.S. 915 (1977), and the opin-

ion below. Opp. 24-31.

The logical fallacy inherent in citing the opinion below

for the proposition that the opinion below works no sea

change in the law requires no comment. The truth re-

mains that the continuing validity of Buchanan has been

affirmed in a long line of cases, including those cited by

respondents. See, e.g., Kinkade, 540 S.W.2d at 864

(broad form deeds grant “such overwhelming mining

rights that the mineral owner in fact has the right to use

the surface of the land, part or all of it, in recovering

the coal acquired by the deeds”); Martin, 429 S.W.2d

at 399 (refusing to reconsider Buchanan; landowners’

* To the extent that this Court’s decision in Keystone Bituminous

Coal Ass’n V. DeBenedictis, 480 U.S. 470 (1987), restricts the

sweep of Pennsylvania Coal, this case provides the Court with the

opportunity to clarify the relationship between the two cases. See

Pet. 18-19.

arguments cannot prevail against “the long entrenched

rule of our previous cases in reliance upon which prop-

erty rights have vested”) (emphasis added); Pet. 4 n.3.

Moreover, the Kentucky Supreme Court has twice re-

jected on constitutional grounds legislative efforts to over-

rule Buchanan. See Akers v. Baldwin, 736 S.W.2d 294

(Ky. 1987); Department for Natural Resources & Envil.

Protection v. No. 8 Ltd., 528 S.W.2d 684 (Ky. 1975);

Pet. 6-8.*

Most surprising, perhaps, is respondents’ reliance on

Akers, decided while this case was pending in the lower

Kentucky courts. Respondents make much of the Akers

court’s decision to modify that part of Buchanan that

denied damages to surface owners for destruction of the

land as a result of surface mining, but they seem obliv-

ious to the fact that Akers expressly left intact the right

of mineral owners under broad form deeds to engage in

surface mining.” 736 S.W.2d at 304-05. The court ex-

plicitly rejected the surface owners’ argument that the

deeds did not convey this right because surface mining

was not contemplated at the time the deed was executed:

4 Respondents incorrectly state that Akers was decided solely on

separation of powers grounds. Opp. 27 n.6. Following the separa-

tion of powers discussion, the court held that “[a] statute that

functions retroactively to determine the meaning of a preexisting

deed or lease is constitutionally impermissible because this impairs

the obligation of a contract,” and therefore “declare{d| that part

of the legislation unconstitutional.” Akers, 736 S.W.2d at 310

(emphasis added). The court found it unnecessary to reach the

other grounds of alleged unconstitutionality, i.e., that the statute

deprived mineral owners of their property without due process of

law and that it effected a taking without just compensation. /d.;