## Facts

- Burnham transferred interests in several strip-mining properties and related equipment to PBS under a written agreement drafted by Burnham.
- One transferred property was known to need reclamation; the parties reflected estimated reclamation cost by reducing the sale price of a dragline included in the transaction.
- The agreement provided that PBS would assume Burnham’s obligations to property owners under prior agreements and would take the properties “as is.”
- Before closing, a PBS official inspected the dragline on snow-covered land; after execution Burnham left and PBS began reclamation activities.
- After a spring thaw, PBS discovered an acid mine drainage discharge on one transferred property; both parties agreed they were unaware of the condition when they contracted, even if it existed then.
- PBS initially attempted corrective measures to protect its regulatory permits and mining operations, but later withheld part of the purchase price to offset remediation costs.
- PBS sought a declaration that it had no contractual duty to treat the acid drainage; Burnham asserted the contract placed reclamation and remediation obligations on PBS.

## Issues

1. Whether the agreement’s “as is” and assumption-of-obligations provisions required PBS to correct an acid mine drainage condition that existed on the transferred property but was unknown to both parties at contracting.

## Decision

- The Superior Court reversed the trial court’s decree in equity.
- The court held the contract was unambiguous and that PBS assumed responsibility for the acid mine drainage condition.
- Because the language was clear, the trial court erred by finding ambiguity and relying on extrinsic evidence to limit PBS’s assumed obligations to surface reclamation only.
- The case was remanded for further proceedings consistent with the holding that PBS was responsible for correcting the drainage condition.

## Legal Principles

- When contract terms are clear and unambiguous, courts determine the parties’ rights and duties from the writing alone and do not consider extrinsic evidence.
- A contract is not ambiguous merely because the parties dispute its meaning or because enforcement produces a harsh result; ambiguity exists only when language is reasonably susceptible of more than one meaning.
- Broad “as is” transfer language and broad assumption-of-obligations clauses can allocate to the buyer responsibility for preexisting conditions and associated obligations, including unknown defects, absent express contractual limitations.
- Where a contract is unambiguous, the parties’ post-contract conduct and subjective motivations generally do not control interpretation.

## Conclusion

The court enforced the agreement as written, holding that PBS’s “as is” acquisition and broad assumption of Burnham’s obligations placed on PBS the duty to remediate a preexisting acid mine drainage condition even though neither party knew of it when they contracted.


PBS Coals, Inc. v. Burnham Coal Co., 558 A.2d 562 (Pa. Super. Ct. 1989)