UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

ASHLAND DIVISION

IN RE:

HNRC DISSOLUTION CO., f/k/a

Horizon Natural Resources

Company, et al. CASE NO. 02-14261

DEBTOR

MEMORANDUM OPINION AND ORDER

This matter is before the court on the Motion to Reconsider Order Entered December 1, 2005 (Doc. # 7101)(“the Motion to Reconsider”), filed by Lonnie Loveridge, et al. (“the Loveridges”), and the Response to Loveridge Motion to Reconsider Order Entered December 1, 2005 (Doc. # 7144)(“the Response”), filed by Lexington Coal Company, LLC (“Lexington Coal”). The Loveridges were parties to a coal lease (“the Mineral Lease”) with one of the former Debtors. The subject order (Doc. # 7089)(“the Order”) sustained Lexington Coal’s objection to the Loveridges’ administrative expense request, and held that their Claim No. 20286 in the amount of $645,810.00 was not entitled to administrative expense priority treatment.

The court, in its Memorandum Opinion (Doc. # 7088)accompanying the Order, determined that the Loveridges had produced no evidence that the former Debtor did not act within its discretion pursuant to the terms of the Mineral Lease in ceasing to mine the Loveridges’ property because there was insufficient mineable and merchantable coal. The Loveridges offered a letter dated June 23, 2003 from Ertel L. Whitt, Jr., a professional engineer, to the effect that “lost coal” worth $645,810.00 was left on the Loveridge property. Mr. Whitt stated that he “examined . . . maps and remaining reserves calculations” provided by Lonnie Loveridge, and came up with calculations which “var[ied] only slightly from those given to Mr. Loveridge by [the Debtor] . . .” Mr. Whitt did not, however, address the fact that the Mineral Lease gave the Debtor sole discretion to determine whether there was sufficient coal that could be profitably mined, i.e., mineable and merchantable coal.

The Loveridges now seek to have the court reconsider its Order, based on a purported (unsigned) affidavit from Mr. Whitt which attempts to explain that he used the term “lost coal” to mean mineable and merchantable coal, and to offer his opinion that “Lexington Coal (sic) appears to have acted in bad faith by failing to employ a high wall miner or another method to mine this coal when the seams containing this coal were exposed.” (Whitt Aff., ¶ 3). Lexington Coal argues that this proffer of evidence is untimely, and that it should be disregarded. Lexington Coal points out that the Loveridges proffer a statement in support of an allegation of bad faith for the first time here, and that in any event, Lexington Coal was not the lessee under the Mineral Lease.

The court is of the opinion that even if Mr. Whitt had substituted the term “mineable and merchantable coal” for the term “lost coal” in the letter tendered to the court before the Memorandum Opinion and Order were entered, the result would have been the same. As the court stated in its Memorandum Opinion:

As Whitt himself states, the information contained in the letter is not appreciably different from that contained in Exhibits 5 and 6, the LR tables showing surface reserves for the Loveridge areas. As stated above, absent bad faith, the decision to mine or not to mine these reserves was in the Debtor’s sole discretion. Whitt’s letter does not offer an opinion as to whether the remaining coal is “mineable and merchantable,” and it does not appear to support any contention that the decision to stop mining was not justified.

Memo. Op., p. 10. A mere statement that there were coal reserves worth $645,810.00 does not constitute an opinion that the coal reserves were mineable and merchantable, no matter what terminology was used.

More significant, however, is the fact that the Loveridges still have offered nothing that counters the Debtor’s right under the Mineral Lease to mine or not, in its sole discretion. In this regard, the court agrees with Lexington Coal that the Loveridges’ attempt to introduce testimony concerning the Debtor’s bad faith because of failure to employ a certain mining method is late. In any event, any such testimony would not support a finding under In re Sunarhauserman, Inc., 126 F.3d 811 (6th Cir. 1997), that the Loveridges’ claim was entitled to administrative priority because the Debtor’s estate received a direct and substantial benefit.

The court has considered the Loveridges’ arguments, and finds nothing in them that convinces the court that its Memorandum Opinion and Order were entered in error. The Loveridges have not established that their claim is entitled to administrative priority, and their Motion to Reconsider is not well taken. The court therefore hereby ORDERS that the Motion to Reconsider Order Entered December 1, 2005 is overruled.