A little back story; a group of gnomes were mining in a border territory, or the gray elvish lord who recently claimed the lands after taking them from a dragon came across the cave/mine entrance while exploring his new territory. Who is to blame, the gnomes that attacked "trespassers" without offering parley or the elf making claims without seeing if there was anyone there before him?
Only one gnome their leader survived and fled, making his way to a nearby dwarven clan. Over time with guile he influenced the clan leaders to take this mine for themselves. The dwarfs attacked killing one of the elf's loyal retainers who was also a dwarf placed in charge of the mine. The retainer could not be raised or resurrected, the grace of the divine was not to be had that day.
In vengeance the elf took the dwarven clan hold, executed the clan leaders and expelled every other dwarf. He then gave the clan hold to a group of dark elves (Eilistraee followers, in game our equivalent).
The dwarven survivors made their way to their king who then marched on the elf. With a preemptive strike the elf forced the dwarf king to bend the knee and recognize the lands as elvish.
Enter Melgar Coalhammer the youngest and only surviving son of the slain clan leaders who swore to have revenge.
When the players city was being attacked the dwarf king came to his neighbor's aid, and there on the battle field the forces of Melgar and his landless allies turned on the king's formation and unleashed hell as they then left the field and the king to face alone the enemy who quickly surrounded them. Melgar's agents then seized the royal family, took the queen's head, and forced the princesses to marry, the eldest to him, the younger ones to his relatives. Lands were granted to his allies.
Now Melgar sits as king with the last legitimate prince who survived the battle in exile. A state of civil war exists with the players free to choose who they support.
What might have happened if the players had in the beginning explored the reason behind Melgar's dislike of elves?
And still the one gnome is out in the world slinking about somewhere.....