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1
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FINAL ORDER AND JUDGMENT
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EXTRACTED KEY WORDS
AEI CREDITS REFUNDS COAL ACT RAG DISPUTE AFFILIATES RECEIVING TERM DISABILITY BENEFITS AGREEMENT PREDECESSORS-IN-INTEREST MOTION JUDGEMENT DISABILITY BENEFITS EMPLOYEES COAL ACT PAYMENTS PARTIES COURT CYPRUS AMAX SALE TAX COMPLAINT PREJUDICE PURSUANT DEPENDENTS HEREBY COUNTERCLAIM LIFE UNION |
IN THE COURT OF CHANCERY OF THE STATE CIF DELAWARE
IN AND FOR NEW CASTLE COUNTY
RAG AMERICAN COAL COMPANY, 1
a Delaware corporation, as successor-in-interest to )
CYPRUS AMAX COAL COMPANY, ,-,
a Dclawarc corporation, and CYPRUS i
AMAX MINERALS COMPANY. a )
Plaintiffs/ 2,
Counterclaim Defendants, ::,; c.3,
v. 1 C.A. No. 1 6 7 2 8 - N C - L E S
\ -.<. `cd
c.
AEI RESOURCES, INC., i
a D&wire Corporation, )
Defendant.: ;
Counterclaim Plaintiff. )
FINAL ORDER AND JUDGMEN'r,
This matter came to be heard upon the Motion by Defendant: AEI Resources, Inc. ("AEI")
fol- judgment on the pleadings with regard to the question of which party, AEI or RAG American
Coal Company ("RAG"), as successor-in-interest to Cyprus Amax Coal Company ("Cyprus")
and Cyprus Amax Mineral Company, must, under the terms of the Stock Purchase and Sale
Agreement (the "Agreement'), provide ions term disability benefils to certain employees of the
former Cyprus subsidiaries (the "Subsidiaries") acquired by AEI: (the "Benefits Dispute"), as
well as the Motion by RAG for judgment on the pleadings on the Benefits Dispute as well as on
11s claim that AEI has, in violation of the Ageement, improperly retained certain refunds or
credits ofpremiums under the Coal Act, as that term is defined in the Agreement, to which RAG
is entitled (the "Tax Dispute"). Having considered the Motio:as and being otherwise duly
advised, the Court has determined, for the reasons stated in the C!ourt's Memorandum Opinion
dated December 1, 1999, as corrected on December 7, 1999, that AEI's Motion should be
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2
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MEMORANDUM OPINION (CORRECTED)
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EXTRACTED KEY WORDS
AEI AGREEMENT MINERALS COURT PLAN MOTION PROVISIONS EMPLOYEES PREMIUMS DISPUTED BENEFITS LIABILITY TAX PAYMENTS SUBSIDIARIES LIABILITIES SUBSECTION CYPRUS AMAX PLAINTIFFS DISABILITY PLAN LONG-TERM DISABLED EMPLOYEES FINANCIALS DEFENDANTS AEI RESOURCES RESPONSIBILITY SALARY CONTINUATION CATCH-ALL PROVISIONS INTERPRETATION OBLIGATIONS COMBINED FUND |
Pages 1,5,31,32,33,36 and 42 have been corrected.
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
RAG AMERICAN COAL COMP.ANY, >
a Delaware corporation, as successor-in-interest to )
CYPRUS AMAX COAL COMPANY, a Delaware )
corporation, and CYPRUS AMAX MINERALS )
COMPANY, a Delaware corporati.on, >> Civil Action No. 16728
Plaintiffs/ >
Counterclaim Defendants, )
V. >
AEI RESOURCES, INC.,
a Delaware corporation,
Defendant/
Counterclaim Plaintiff.
MEMORANDUM OPINION
Date Submitted: October 4, 1999
Date Decided: December 1, 1999
Date Corrected: December 7, 1999
Kurt M. Heyman, Esquire, Richard L. Abbott, Esquire, Christopher P. Simon,
Esquire, Kimberly L. Gattuso, Esquire, of THE BAYARD FIRM, Wilmington,
Delaware., Attorneys for Plaintiffs/Counterclaim Defendants.
Thomas I'. Preston, Esquire, of I>UANE, MORRIS & HECKSCHER, Wilmington,
Delaware; OF COUNSEL: Barry D. Hunter, Esquire, of BROWN, TODD &
HEYBURN, Lexington, Kentucky, Attorneys for Defendant/Counterclaim Plaintiff.
STRINE, Vice Chancellor
Plaintiffs Cyprus Amax Coal Co. and its then-parent company,
Cyprus Amax Minerals Co. (together, "Cyprus"), filed this action for
specific performance, declaratory and injunctive relief, and damages against
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3
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MEMORANDUM OPINION
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EXTRACTED KEY WORDS
AEI AGREEMENT DISPUTE MINERALS COURT PLAN MOTION PROVISIONS SALE EMPLOYEES PREMIUMS PAYMENTS TAX LIABILITY DISPUTED BENEFITS LIABILITIES SUBSIDIARIES SUBSECTION CYPRUS AMAX TERM DISABILITY PLAINTIFFS LONG-TERM DISABLED EMPLOYEES FINANCIALS RESPONSIBILITY DISABLED EMPLOYEES SALARY CONTINUATION CATCH-ALL PROVISIONS INTERPRETATION OBLIGATIONS |
.y'r h, `._ _
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
RAG AMERICAN COAL COMPANY, >
a Delaware corporation, as successor-in-interest to )
CYPRUS AMAX COAL COMPANY, a Delaware )
corporation, and CYPRUS AMAX MINERALS )
COMPANY, a Delaware corporation, >> Civil Action No. 16728
Plaintiffs/ >
Counterclaim Defendants, )
V.
AEI RESOURCES, INC., . -
..I
a Delaware corporation, ' :
_ 2
Defendant/ >
Counterclaim Plaintiff. > L,.:. : /
MEMORANDUM OPINION 2.. - .
Date Submitted: October 4, 1999
Date Decided: December 1, 1999
Kurt Heyman, Esquire, Richard L,. Abbott, Esquire, Christopher P. Simon, Esquire,
Kimberly L. Gatusso, Esquire, of THE BAYARD FIRM, Wilmington, Delaware,
Attorneys for Plaintiffs/Counterclaim Defendants.
Thomas P. Preston, Esquire, of DUANE, MORRIS & HECKSCHER, Wilmington,
Delaware; OF COUNSEL: Barry D. Hunter, Esquire, of BROWN, TODD &
HEY13URN, Lexington, Kentucky, Attorneys for Defendant/Counterclaim Plaintiff.
STRINE, Vice Chancellor
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4
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ANSWERING BRIEF OF AEI RESOURCES IN OPPOSITION TO MOTION FOR JUDGMENT ON THE PLEADINGS
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EXTRACTED KEY WORDS
AEI MOTION TERM DISABILITY PLEADINGS JUDGEMENT TERM DISABILITY PLAN AGREEMENT COURT EMPLOYEES LIFE INSURANCE LIABILITIES PROVISIONS OPENING COAL ACT PREMIUMS CONSTRUCTION PREMIUM REFUNDS AEI RESOURCES ALLEGATION FINANCIAL STATEMENTS DELAWARE CORPORATION LONG-TERM DISABILITY SUMMARY PLAN ACQUIRED SUBSIDIARIES ACCORDING LIABILITY EXTRINSIC EVIDENCE AMAX COAL COMPANY DEFEAT CYPRUS FORMER CYPRUS |
\
"I i i
~RlGiNAi
IN THE COURT OF THE CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY
a Delaware corporation, and CYPRUS
AMAX MINERALS COMPANY,
a Delaware corporation C.A. No. 16728NC
Plaintiffs,
v.
AEI RESOURCES, INC.,
a Delaware corporation
Defendant.
ANSWERING BRIEF
OF DEFENDANT AEI RESOURCES, INC.
IN OPPOSITION TO CYPRUS'
`-;; MOTION FOR JUDGMENT ON THE PLEADINGS
,,'
/
Thomas P. Preston, Esquire
DUANE, MORRIS & HECK.SCHER LLP
1201 Market Street, Suite 1500
Wilmington, DE 19801
(302) 571-5550
Attorneys for Defendant
AEI R.esources, Inc.
OF COUNSEL:
BROWN, TODD & HEYBURN PLLC
Barry D. Hunter, Esquire
2700 Lexington Financial Center
Lexington, KY 40507
(606) 23 l-000
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5
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OPENING BRIEF IN SUPPORT OF PLAINTIFFS/COUNTERCLAIM DEFENDANTS MOTION FOR JUDGMENT ON THE PLEADINGS
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EXTRACTED KEY WORDS
AGREEMENT LIABILITIES DISPUTE AEI COMBINED FUND COMBINED FUND REFUNDS COURT JUDGEMENT COUNTERCLAIMS EMPLOYEES FACTS MINERALS MOTION LONG-TERM DISABILITY PLAN SUBSIDIARIES SUBSECTION TERM DISABILITY COMPLAINT TAX CREDITS CONSTRUCTION PLEADINGS PLAINTIFFS DEFENDANT LITIGATION FORMER EMPLOYEES LIABILITY PROVISIONS ALLEGATIONS |
IN THE COURT OF CHANCERY OF THE STATE OF DEL.AWARE:
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY >
a Delaware corporation, and CYPRUS AMAX )
MINERALS COMPANY, a Delaware corporation, )
1
Plaintiffs/ 1
Counterclaim Defendants, >>
V. > Civil Action No. 167223
>
AEI RESOURCES, INC., >
a Delaware corporation, >>
Defendant/ >
Counterclaim Plaintiff. >
OPENING BRIEF IN SUPPORT OF
PLAINTIFFS/COUNTERCLAIM DEFENDANTS' MOTION
- FOR JUDGMENT ON THE PLEADINGS
THE BAYARD FIRM
Kurt M. Heyman
Richard L. Abbott
Christopher P. Simon
919 Market Street, Suite 1600
P.O. Box 25 130
Wilmington, DE 19899
(302) 655-5000
Attorneys for Plaintiffs/
Counterclaim Defendants
DATED: July 9, 1999
TABLE OF CONTENTS
TABLE OF AUTHORITIES
PRELIMINARY STATEMENT
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6
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MEMORANDUM OF AEI RESOURCES IN SUPPORT OF MOTION FOR PARTIAL JUDGMENT
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EXTRACTED KEY WORDS
AGREEMENT DEFENDANT JUDGEMENT AMENDED COMPLAINT FORMER CYPRUS EMPLOYEES TERM DISABILITY FORMER CYPRUS COURT LIFE INSURANCE SUBSECTION AEI COUNTERCLAIM MEMORANDUM PLANS SUPPLEMENTAL AMENDED COMPLAINT RELEVANT FACTS BENEFITS OWING PARTIAL JUDGMENT LIABILITY LIFE INSURANCE PORTIONS AEI RESOURCES DISPUTED LIABILITIES SALARY BENEFITS RESPONSIBILITY UNAMBIGUOUS LANGUAGE ACCORDING PROVISIONS COUNSEL NATURE |
IN THE COURT OF THE CHANCERY OF TH
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY 1
a Delaware corporation, and CYPRUS 1
AMAX MINERALS COMPANY, >
a Delaware corporation 1 C.A. No. 1672%NC
>
Plaintiffs/ >
Counterclaim Defendants,
;>
`,I
V . ",
i ,/!
>
AEI RESOURCES, INC., >
a Delaware corporation 1)
Defendant/ )
Counterclaim Plaintiff. 1
MEMORANDUM OF AEI RESOURCES, INC.
IN SUPPORT OF
MOTION FOR PARTIAL JUDGMENT ON THE
PLEADINGS AS TO COUNTS I-IV OF
THE SUPPLEMENTAL AMENDED COMPLAINT
Thomas P. Preston, Esquire
Duane, Morris & Heckscher LLP
1201 Market Street
Suite 1500
Wilmington, DE 19801
OF COUNSEL:
BROWN, TODD & HEYBURN, LLC
Barry D. Hunter, Esquire
2700 Lexington Financial Center
Lexington, KT 40507
(606) 23 l-0000
June 7,1999
TABLE OF CONTENTS
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7
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PLAINTIFFS/COUNTERCLAIM DEFENDANTS REPLY TO SUPPLEMENTAL AMENDED COUNTERCLAIMS
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EXTRACTED KEY WORDS
AEI CACC SUPPLEMENTAL AMENDED COUNTERCLAIMS UNDERSTANDING PLAINTIFFS EMPLOYEES LONG-TERM DISABILITY COURT PARAGRAPH RESPONSE PLAINTIFFS/COUNTERCLAIM DEFENDANTS SCHEDULE INFORMATION SUFFICIENT RELIEF ACCURATE STATEMENT SUBSIDIARIES FORMER EMPLOYEES ALLEGATIONS CACC LACKS KNOWLEDGE TRUTH REASON BASIS ESQUIRE AMAX MINERALS COMPANY CHARACTERIZATIONS INCORRECT CONTEXT PLAINTIFFS RESPECTFULLY REFER LIFE INSURANCE |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY, )
a Delaware corporation, and CYPRUS )
AMAX MINERALS COMPANY, a
Delaware corporation, ;
Plaintiffs/ i
Counterclaim Defendants, )
V.
i
AEI RESOURCES, INC.,
a Delaware Corporation,
Defendant/
Counterclaim Plaintiff. j
PLAINTIFFS/COUNTERCLAIM DEFENDANTS'
REPLY TO SUPPLEMENTAL AMENDED COUNTERCLAIMS
Plaintiffs/Counterclaim Defendants Cyprus Amax Coal Company (,` CACC" ) and Cyprus
Amax Minerals Company ("Minerals") (collectively, "Plaintiffs'), by their undersigned
attorneys, hereby reply to the numbered paragraphs of Defendant/Counterclaim Plaintiff AEI
Resources, Inc.`s ("AEI") Counterclaims to the Supplemental Amended Complaint
(" Supplemental Amended Counterclaims") as follows:
1. Paragraph 1 of the Supplemental Amended Counterclaims requires no response.
2. Paragraph 2 of the Supplemental Amended Counterclaims requires no response.
3. Admitted.
4. To the extent that any characterizations of the Agreement are incorrect in fact or
in context, same are denied, and Plaintiffs respectfully refer the court to the Agreement for an
accurate statement of its contents. Admitted that a true and correct copy of Schedule 3.11.3 to
the Agreement is attached as Exhibit A to the Supplemental Amended Counterclaims, but denied
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8
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ANSWER TO SUPPL. AMENDED COMPLAINT
|
EXTRACTED KEY WORDS
PARAGRAPH EMPLOYEES COMPLAINT DISABILITY AEI DENIES CACC PLANS CLOSING PLAINTIFFS AEI ADMITS LIABILITIES SUPPLEMENTAL AMENDED COMPLAINT AMENDED COMPLAINT MINERALS LONG-TERM DISABILITY SUBSIDIARIES FORMER EMPLOYEES RESPONSIBILITY TERM DISABILITY LIABILITIES OWING LIFE INSURANCE DELAWARE CORPORATION CYPRUS AMAX AMAX COAL COMPANY SHORT-TERM DISABILITY INSURANCE COVERAGES OBLIGATIONS AFFIRMATIVELY ALLEGES AEI INCORPORATES |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY
a Delaware corporation, and CYPRUS
AMAX MIINERALS COMPANY, a
Delaware corporation,
Plaintiffs,
V.
AEI RESOURCES, INC.,
a Delaware corporation,
Defendant,
ANSWER TO SUPPLEMENTAL AMENDED COMPLAINT
Defendant, &I Resources, Inc. ("AEI"), for its answer to the complaint filed herein by
Plaintiffs Cyprus Amax Coal Company ("CACC") and Cyprus Amax Minerals Company
("Minerals"), states as follows:
Nature of the Action
1. AEI admits that the crux of this case is which party is ultimately responsible for
the liabilities owing under Minerals' employee benefit plans to employees and former employees
of the Subsidiaries acquired by AEI from CACC who were (a) on long-term disability at the time
of closing or (b) on short-term disability at the time of closing and later converted to long-term
disability - - in other words, individuals who have never worked for AEI. AEI denies the
supplemental allegations contained in paragraph 1 of the Supplemental Amended Complaint.
2. AEI lacks sufficient knowledge to form a belief as to the truth of the allegations
contained in paragraph 2 of the Complaint.
3. AEI admits the allegations contained in paragraph 3 of the Complaint.
4. AEI denies that it had significant knowledge about the Subsidiaries, and it lacks
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9
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SUPP. AMENDED COMPLAINT
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EXTRACTED KEY WORDS
AEI AGREEMENT SUBSIDIARIES EMPLOYEES LONG-TERM DISABILITY MINERALS INSURANCE LIFE COVERAGE PLANS PURSUANT LIABILITIES CREDITS COURT SOLD FINANCIALS CYPRUS AMAX INJUNCTIVE RELIEF COMBINED FUND STOCK PURCHASE SALE AGREEMENT TERM DISABILITY OBLIGATIONS AMENDED COMPLAINT EXCLUDED ASSETS FINANCIAL STATEMENTS DECLARATORY PARTNERSHIPS COMBINED FUND LITIGATION |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY, )
a Delaware corporation, and CYPRUS )
AMAX MINERALS COMPANY, a >
Delaware corporation, >>
Plaintiffs/ >
Counterclaim Defendants, )
>
V. > C.A. No. 1672%NC
>
AEI RESOURCES, INC., >
a Delaware corporation, >>
Defendant/ >
Counterclaim Plaintiff. )
SUPPLEMENTAL AMENDED COMPLAINT
Nature of the Action
1. This is an action by Plaintiffs Cyprus Amax Coal Company ("CACC")
and its ultimate parent company, Cyprus Amax Minerals Company ("Minerals"), for
specific performance, declaratory and injunctive relief, and damages to remedy breaches
of a May 28, 1998 Stock Purchase and Sale Agreement (the "Agreement") by Defendant
AEI Resources, Inc. ("AEI"). Pursuant to the Agreement, AEI acquired directly and
indirectly the stock of 17 corporate and 3 partnership subsidiaries of CACC. The crux of
this case is which party -- CACC or AEI -- is required under the Agreement to provide
life and medical insurance coverage to current and former employees of the sold
subsidiaries who are on long-term disability. Supplementally, this case also concerns
which party is entitled under the Agreement to the benefits of certain tax refunds and
credits relating to periods prior to the closing date of the Agreement,
The Parties
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10
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INC. REPLY TO AMENDED COUNTERCLAIM
|
EXTRACTED KEY WORDS
AEI AMENDED COUNTERCLAIMS UNDERSTANDING AGREEMENT PLAINTIFFS/COUNTERCLAIM PARAGRAPH COURT PLAINTIFFS/COUNTERCLAIM DEFENDANTS RESPONSE ALLEGATIONS CACC LACKS KNOWLEDGE INFORMATION SUFFICIENT TRUTH REASON RELIEF BASIS ESQUIRE CERTIFICATE DELAWARE AEI RESOURCES CYPRUS AMAX ATTORNEYS HEREBY CHARACTERIZATIONS INCORRECT CONTEXT PLAINTIFFS RESPECTFULLY REFER ACCURATE STATEMENT LAW |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CYPRUS AMAX COAL COMPANY, >
a Delaware corporation, and CYPRUS >
AMAX MINERALS COMPANY, a >
Delaware corporation, >
>
Plaintiffs/ >
Counterclaim Defendants, >
>
V. > C.A. No. 16728-NC
>
AEI RESOURCES, INC.,
a Delaware corporation,
Defendant/
Counterclaim Plaintiff.
PLAINTIFFS/COUNTERCLAIM DEFENDANTS'
REPLY TO AMENDED COUNTERCLAIMS
Plaintiffs/Counterclaim Defendants Cyprus Amax Coal Company ("CACC") and
Cyprus Amax Minerals Company ("Minerals") (collectively, "Plaintiffs"), by their
undersigned attorneys, hereby reply to the numbered paragraphs of
Defendant/Counterclaim Plaintiff AEI Resources, Inc's ("AEI") Counterclaims to the
Amended Complaint ("Amended Counterclaims") as follows:
1. Paragraph 1 of the Amended Counterclaims requires no response.
2. Paragraph 2 of the Amended Counterclaims requires no response.
3. Admitted.
4. To the extent that any characterizations of the Agreement are incorrect in
fact or in context, same are denied, and Plaintiffs respectfully refer the Court to the
Agreement for an accurate statement of its contents. To the extent that paragraph 4 of the
Amended Counterclaims sets forth conclusions of law, no response is required. In all
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