HENRY TATUM and MYRNA TATUM v. CANYON COALS, INC.; AUSTIN POWDER COMPANY; ETI EXPLOSIVES TECHNOLOGIES INTERNATIONAL, INC.; and SOUTHERN EXPLOSIVES CORPORATION CANYON COALS, INC. AUSTIN POWDER COMPANY; ETI EXPLOSIVES TECHNOLOGIES INTERNATIONAL, INC.; and SOUTHERN EXPLOSIVES CORPORATION
Annotate this Case
Download PDF
RENDERED:
AUGUST 23, 2002; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 2001-CA-001718-MR
HENRY TATUM and
MYRNA TATUM
v.
APPELLANTS
APPEAL FROM MUHLENBERG CIRCUIT COURT
HONORABLE DAVID H. JERNIGAN, JUDGE
CIVIL ACTION NO. 95-CI-00532
CANYON COALS, INC.; AUSTIN POWDER
COMPANY; ETI EXPLOSIVES TECHNOLOGIES
INTERNATIONAL, INC.; and SOUTHERN
EXPLOSIVES CORPORATION
NO.
APPELLEES
2001-CA-001839-MR
CANYON COALS, INC.
CROSS-APPELLANT
APPEAL FROM MUHLENBERG CIRCUIT COURT
HONORABLE DAVID H. JERNIGAN, JUDGE
CIVIL ACTION NO. 95-CI-00532
AUSTIN POWDER COMPANY; ETI
EXPLOSIVES TECHNOLOGIES
INTERNATIONAL, INC.; and
SOUTHERN EXPLOSIVES CORPORATION
CROSS-APPELLEES
OPINION AND ORDER
AFFIRMING APPEAL NO. 2001-CA-001718-MR;
DISMISSING APPEAL NO. 2001-CA-001839-MR
** ** ** ** **
BEFORE:
EMBERTON, Chief Judge; DYCHE and HUDDLESTON, Judges.
HUDDLESTON, Judge:
Henry and Myrna Tatum appeal and Canyon Coals,
Inc. cross-appeals from a Muhlenberg Circuit Court order granting
summary judgment in favor of Canyon Coals and Austin Powder Company
and
granting
a
motion
to
dismiss
Canyon
Coals’
third-party
complaint against ETI Explosives Technologies International Inc.
(formerly Southern Explosives Corporation). In so doing, the court
found that “the Subrogation Receipt of May 6, 1995, assigned and
transferred each and all of Plaintiffs’ claim for loss or damage
caused
by
Company.”
blasting
to
the
Tatum
dwelling
to
Agway
Insurance
The Tatums also appeal and Canyon Coals cross-appeals
from an order denying the Tatums’ motion to alter, amend or vacate
that order without a hearing.
The Tatums are the owners in possession of a parcel of
land located in Muhlenberg County, Kentucky, on which they reside
in a two-story home.
Canyon Coals is the owner and operator of a
surface coal mine located in the vicinity of the Tatums’ property.
Allegedly as a result of blasting activities conducted at the mine
sites1
which
caused
“great
vibrations
of
earth,
and
air
concussions,” the Tatums’ property sustained damage.
1
According to Canyon Coals, it operated the Jacobs Creek
mine from May 1990 through May 1993 and the Canyon Lake mine from
March 1993 through December 18, 1993. At both sites, either Austin
Powder or Southern Explosives (now ETI), the blasting contractors,
were responsible for and conducted the blasting activities. Canyon
Coals was granted leave to file a third party complaint joining the
cross-appellees herein as third-party defendants.
-2-
In a complaint filed on December 4, 1995,2 the Tatums
alleged that blasting by Canyon Coals violated the provisions of
Kentucky
Revised
Statutes
(KRS)
Chapter
350
and
damaged
the
foundation of their residence and “whole superstructure, including
its floors, foundation, front porch, walls, windows, ceiling and
chimney.”
Citing KRS 350.250, the Tatums claimed entitlement to
any and all fees and expenses incurred in litigating their claim.
Specifically,
they
sought
a
judgment
against
Canyon
Coals
compensating them for all losses to their property suffered as a
consequence of the blasting and surface coal mining operations,
including reduction in value, costs and expenses associated with
repairing the damage, incidental expenses such as those incurred by
reason of dislocation and loss of use, any additional damages
resulting from repairs, out-of-pocket expenses, attorney fees,
expert witness, engineering and consulting fees, prejudgment and
postjudgment interest on any award and a trial by jury.
On or about May 6, 1995, the Tatums submitted a sworn
proof
of
loss
to
Insurance Company.
their
homeowners’
insurance
carrier,
Agway
Under the “Time and Origin” section of that
statement, the Tatums listed “blasting” as the cause of loss and
July
24,
1992,
as
the
date
of
occurrence,
with
a
notation
indicating that the blasting began in 1990 and ended in 1993 but
they were “not exactly sure when the damage was first noticed at
2
In an order entered on March 29, 1996, the court granted
the Tatums’ motion for leave to file a first amended complaint so
as to name Canyon Coals, Inc. as the party defendant rather than
Canyon Coal Company.
-3-
[that] time.”
At the time of the loss, the total coverage provided
by the policy was $96,000.00.
When attempts to negotiate a settlement failed, the
Tatums and Agway each selected an arbitrator pursuant to the terms
of
the
insurance
policy
who
together
arrived
at
the
sum
of
$16,074.00 as the amount of damages sustained by the Tatums. Agway
tendered
a
check
for
$15,824.00
($16,074.00
less
a
$250.00
deductible) — which is the figure listed as the “Amount Claimed” on
the proof of loss — to the Tatums along with the proof of loss and
a subrogation receipt.
According to the proof of loss, $16,074.00
constituted the “Whole Loss and Damage.”
However, the Tatums drew
a line through the “was” which followed that phrase and inserted
the following handwritten language, allegedly to preserve their
right to pursue a recovery of the balance of their claims in a
civil action against Canyon Coals: “as covered by insurance and as
settled on in order to effect a compromise, settlement with and
payment by Agway Insurance is,” along with an arrow pointing to the
aforementioned figure. Both of the Tatums signed the proof of loss
and it was notarized by their attorney.
As a condition of their settlement with Agway, the Tatums
also signed a subrogation receipt acknowledging the receipt of
$15,824.00 “in full payment, release and discharge of all claims or
demands against [Agway], arising from or connected with any loss or
damage on or to [the] Henry Tatum [d]welling caused by [b]lasting.
Canyon Coal was conducting the [b]lasting.”
Consistent with the
accompanying proof of loss, said “loss or damage arose or occurred
on or about the 24 day of July 1992” according to the receipt.
-4-
By
way of clarification, the Tatums included the following crossreference above that language: *see Sworn Statement in Proof of
Loss re:
date.”
In consideration of such payment, the Tatums assigned and
transferred to Agway “each and all claims and demands against any
such
town,
county,
city,
municipality,
corporation,
person,
persons, vessels or property arising from or connected with such
loss or damage.”
Agway was also “subrogated in the place of and to
the claims and demands of the [Tatums] against . . . in the
premises.”
Both the executed subrogation receipt and proof of loss
were returned to Agway’s property claims examiner under cover of a
letter written by the Tatums’ counsel.
In the letter, counsel
began by noting that three changes had been made to the proof of
loss
and
explained
the
purpose
behind
each
one.
First,
he
commented that, although Agway documented that the blasting damage
occurred on or about July 24, 1992, in paragraph 1 and that may
very well be correct, the Tatums remain unsure of exactly when the
damage was first noticed and “did not want to swear to a date that
they could not absolutely verify at this time.”
Next, he clarified paragraph 3, confirming that title to
the property is held jointly by the Tatums and the bank no longer
has
an
interest
in
the
property.
Lastly,
he
addressed
the
qualifying language added to paragraph 7, entitled “Whole Loss and
Damage,” saying:
[W]e contend that the whole loss and damage was more than
shown on the sworn statement and proof of loss, but are
-5-
willing to settle with Agway Insurance for the amount of
$15,824.00 at this time in order that we may proceed
against [Canyon Coals] for the balance of what we believe
to be blasting damages and cost of repair.
With respect to the subrogation receipt, he directed
Agway’s attention to the fact that it contains two references to
the proof of loss (the second one being, “* see above,” referring
to the initial cross-reference).
Also enclosed was a copy of the
verified complaint which counsel addressed as follows:
It is my understanding that the settling of this matter
between the Tatums and your company does not preclude[]
the Tatums from proceeding against [Canyon Coals].
If
this is not the case, please notify me as soon as
possible so that we may get this worked out.
Also, if
this is not the case, then the settlement with Agway will
have to be reconsidered.
After acknowledging Agway’s subrogation rights, counsel
suggested that the Tatums and Agway “consult further” so as to
“coordinate [their] efforts,” enabling both parties to recover the
full amount of their claims. In closing, he specifically requested
that Agway inform him if the settlement between Agway and the
Tatums “in any way affects the Tatums’ right to proceed against
Canyon Coal[s],” aside from Agway’s right to subrogation for those
specific items of damage identified by the engineer as being caused
by the blasting.
Neither the Tatums nor their counsel received a
response.
-6-
Accordingly,
Canyon Coals.
subsequently
the
Tatums
initiated
an
action
against
Austin Powder, Southern Explosives and ETI were
joined
as
third-party
defendants.
Following
additional pleading, refining of issues and discovery, Canyon Coals
filed a motion for summary judgment which Austin Powder joined, and
ETI filed a motion to dismiss the third-party complaint against it.
In an order entered on March 30, 2001, the court granted both
motions for summary judgment and the motion to dismiss.
The Tatums moved to alter, amend or vacate the order. In
denying that motion, the court explained that each of the three
notices
for
rehearing
filed
by
the
Tatums
afforded
it
the
opportunity to review the record, specifically their “detailed
motion and the detailed objection and response to same filed by
[Canyon Coals],” rendering a hearing unnecessary.
By virtue of the subrogation receipt, Agway became the
real party in interest to the claim being asserted for damage to
the Tatum’s dwelling.
On September 22, 1995, Agway pursued its
claim against CIGNA Properties and Casualty, the insurance carrier
of Austin Powder Company (the principal contract blaster), in a
binding arbitration proceeding.
Agway’s attempt to recover was
unsuccessful, however, as the arbitration panel found that Agway
had “failed to prove any damages [were] caused by vibration.”
Kentucky Rules of Civil Procedure (CR) 56.03 authorizes
summary
judgment
“if
the
pleadings,
depositions,
answers
to
interrogatories, stipulations, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a
-7-
judgment as a matter of law.”
Summary judgment is only proper
“where the movant shows that the adverse party could not prevail
under any circumstances.”3
However, “a party opposing a properly
supported summary judgment motion cannot defeat that motion without
presenting at least some affirmative evidence demonstrating that
there is a genuine issue of material fact requiring trial.”4
The
circuit court must view the record “in a light most favorable to
the party opposing the motion for summary judgment and all doubts
are to be resolved in his favor.”5
On appeal, we review the summary judgment, to determine
“whether the trial court correctly found that there were no genuine
issues as to any material fact and that the moving party was
entitled to judgment as a matter of law.”6
Since factual findings
are not at issue, deference to the trial court is not required.7
On appeal, the Tatums have framed the issues as follows:
“whether [the Tatums] assigned to [Agway] all of their claims for
loss or damage caused by blasting and whether [Agway] compromised
claims not assigned to it.”
Answering the former question in the
negative, the Tatums argue that the proof of loss and subrogation
receipt must be read in conjunction with the letter limiting their
terms. In their view, the three documents comprise their agreement
3
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky.,
807 S.W.2d 476, 480 (1991), reaffirming Paintsville Hospital Co. v.
Rose, Ky., 683 S.W.2d 255 (1985).
4
Hubble v. Johnson, 841 S.W.2d 169, 171 (1992).
5
Steelvest, supra, n. 3, at 480.
6
Scifres v. Kraft, Ky. App., 916 S.W.2d 779, 781 (1996).
7
Id.
-8-
with Agway with the necessary implication being that they did not
intend to assign nor did Agway acquire all of their claims.
According to the Tatums, the “terms and conditions include what was
set
out
in
the
letter
of
counsel
of
May
8,
1995,
and
the
interlineations” on the other two instruments and the “[a]ppellees
are not entitled to expand [the documents] to defeat rights the
Tatums retained and had not assigned to Agway.”
Because the
present controversy stems from differing interpretations of the
proof of loss and subrogation receipt, our analysis must begin
there.
In Kentucky, the law governing contract interpretation
has been firmly established.
As
a
cardinal
principle
relating
to
the
construction of a contract, it has long been recognized
and held in this and other jurisdictions that where the
instrument is so clear and free of ambiguity as to be
self-interpretive, it needs no construction and will be
performed or enforced in accordance with its express
terms.
Where, however, the language of the contract is
ambiguous and the intent and purpose of the parties is
expressed in obscure and uncertain terms, courts may
resort to established rules of construction.
In so
doing, it is neither the duty nor province of the court
to make a contract for the parties but to so interpret
-9-
the language and construe the contract as to carry out
its purpose and intent.8
Viewing the writings at issue here in light of the
foregoing rules and taking into consideration the situation of the
parties and the circumstances attending its execution as we are
authorized to do,9 it is clear that the Tatums intended to settle
their
claim
against
Agway
for
the
agreed
upon
amount.
In
accomplishing that purpose, they signed a sworn proof of loss upon
the advice of counsel attesting that the whole loss and damage was
valued
at
$16,074.00,
less
their
$250.00
deductible.
As
a
condition of the settlement, they also signed a subrogation receipt
confirming the amount of loss and acknowledging that they received
the sum in “full payment, release and discharge of all claims or
demands against [Agway].” The receipt also explicitly assigned and
transferred all claims “arising from or connected with any such
loss or damage” to Agway and unequivocally subrogated Agway “in the
place of and to the claims and demands of [the Tatums] . . . .”
Rather than redact this language or refuse to sign the document,
the
Tatums
chose
to
accept
the
designated
amount
in
full
satisfaction of the claim. These terms are unambiguous and must be
given effect according to their ordinary meaning.
Accordingly, Agway became the real party in interest as
to the damage claim upon execution of the subrogation receipt.
Agway, standing in the shoes of the Tatums, then opted to pursue
8
Ex Parte Walker’s Executor, 253 Ky. 111, 68 S.W.2d 745,
747 (1933)(citations omitted).
9
Id.
-10-
its subrogated claim through binding arbitration rather than join
the Tatums’ action of which it had full knowledge; why it did so is
irrelevant, as is the fact that the Tatums did not have notice of
or
participate
in
the
arbitration.
Such
a
determination
conclusively resolves the second issue, whether Agway compromised
claims not assigned to it, for present purposes.
Contrary to the Tatums’ assertion, the issue of whether
the
inserted
language
and/or
the
letter
conditioning
their
acceptance of the agreement with Agway on the terms as modified by
it
accurately
represented
dispositive here.
the
parties’
understanding
is
not
Arguably, the Tatums’ contention concerning the
effect of the attempted modification and counsel’s letter on the
documents in question may have validity, but it goes to questions
which are not germane to this appeal since Agway is not a party.
Because the subrogation receipt unquestionably assigned
any remaining claims to Agway, no genuine issue as to a material
fact exists. Canyon Coals and the other appellees were entitled to
judgment as a matter of law.
from the action.
Likewise, ETI was properly dismissed
The order is affirmed.
Given the disposition of this appeal, the cross-appeal is
moot and is dismissed.
ALL CONCUR.
Entered: ______________
_______________________________
Judge, Court of Appeals
-11-
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
Kenneth W. Humphries
Hopkinsville, Kentucky
R. Scott Plain, Sr.
WILSON, WILSON & PLAIN
Owensboro, Kentucky
BRIEF FOR CROSS-APPELLEES:
Norman E. Harned
HARNED, BACHERT & DENTON, LLP.
Bowling Green, Kentucky
-12-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
