Justices say farmers can't seek more money after selling to coal company

CHARLESTON – Farmers who sell land to coal companies without knowing it can't sue for more money after they find out who bought the land, the state Supreme Court has decided.

On Dec. 12, the Justices agreed that Robert Morgan and Vickie Morgan, who accepted $525,000 from a Consol Energy subsidiary for 173 acres, can't reform the sales contract.

The Morgans "conducted no investigation and made no inquiries prior to entering into the contract," the Justices wrote in an unsigned opinion.

The Justices affirmed Monongalia Circuit Judge Robert Stone, who last year granted summary judgment to the buyer, Terra Firma Company.

The opinion cleared Terra Firma President James Russell, a member of Steptoe & Johnson law firm in Morgantown, of fraud and misrepresentation charges.

It also cleared Russell's real estate agent, William Burton.

The Morgans bought the farm in 1996, for $185,000.

In 2004, they hired real estate agent Nancy Kincaid to sell it. She listed it at $640,000.

Burton offered $480,000 and Kincaid turned it down.

Burton offered more and more. His offers carried agency relationship notices on West Virginia Real Estate commission forms, with Russell's signature as buyer.

The forms stated that an agent must disclose to both buyer and seller "all facts known to the agent materially affecting the value or desirability of the property."

Buyer and seller agreed on $525,000, with a lease to keep the Morgans on the land.

The agreement closed at Steptoe & Johnson on Dec. 14, 2004. The Morgans met Burton and Russell for the first time.

In 2005, a neighbor told the Morgans they had sold to Consolidated Coal. The Morgans stopped paying on the lease, and Terra Firma terminated it.

Terra Firma sued the Morgans in 2006, seeking to oust them and collect back rent.

The Morgans counterclaimed, seeking judicial reformation of the contract. They argued that Burton breached his duty as an agent by concealing true ownership.

Twelve days after Terra Firma filed suit, Stone ordered the Morgans off the land and assessed five months back rent.

Their counterclaim remained active, however, and Stone said discovery would proceed.

When discovery ended, Stone couldn't find anything to support the counterclaim. He granted summary judgment to Terra Firma in June 2007.

He wrote that "neither Terra Firma's corporate structure, nor Terra Firma's intended use of the property were ever addressed by the negotiations."

The Morgans couldn't claim that misrepresentations about Terra Firma's identity and intended use of the land were material to the decision to sell, he ruled.

He wrote that "seller's remorse based on the discovery that one's neighbors may have negotiated better terms in similar transaction actions does not constitute damage."

The Morgans moved to alter judgment, Stone denied it, and the Morgans appealed.

They stated that they asked Kincaid if Terra Firma was a coal or landfill company.

The Justices wrote, "Ms. Kincaid informed the appellants –- based upon her own speculation -– that Terra Firma was a company of investors who were purchasing the property for land development."

After that, the Morgans stated, they expected residential development.

They claimed that at closing, they asked Burton if it was a coal or landfill company. They claimed Burton assured them it was for land development only.

The Morgans argued to the Justices that a jury could conclude that Terra Firma orchestrated a scheme to hide references to its true identity.

If jurors felt that way they still couldn't reform a deed, the Justices figured.

Courts may reform deeds only in cases of mutual mistake or cases of mistake on one side and fraud on the other side, they wrote.

The Morgans made no mistake, they wrote, for the legal definition of mistake requires that it must be not only material but also hard to find out.

The Justices found nothing in the record establishing that identity was material or that the Morgans couldn't have discovered it through reasonable diligence.

The Morgans knew Kincaid was speculating about the buyer's purpose, they wrote.

They wrote that Burton's agency relationship form didn't apply because it required him to disclose material information.

They found "insufficient evidence to establish a material question of fact regarding whether the appellee engaged in fraud, misrepresentation or inequitable conduct."

Kimberly Croyle of Bowles Rice in Morgantown represented Terra Firma. Martin Wright Jr. of Bailey, Riley, Buch and Harman in Wheeling represented the Morgans.