Utica Mutual Insurance Company v. Vigo Coal Company, Inc.

After Vigo Coal (defendant) purchased Buck Creek Coal, Utica Mutual Insurance (plaintiff) issued required reclamation bonds conditioned on a 1991 indemnity agreement signed by Vigo, Atlas Minerals (defendant), and their owners; in 1992, Vigo sold the mine to Atlas and Charles Schulties, who signed a second indemnity agreement without Vigo, and evidence showed Schulties and Atlas together had enough assets to satisfy Utica that this new arrangement replaced Vigo's obligations under the first agreement. After Buck Creek later failed to reclaim the land, requiring Utica to perform the work itself and sue all signers of both agreements for $400,000, the district court considered this extrinsic evidence and found the 1992 agreement constituted a novation releasing the original 1991 signers, including Vigo, from liability. When Schulties went bankrupt and Atlas couldn't cover the full loss, Utica challenged the novation finding.