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West Virginia Governor’s Companies Ordered to Pay $35M
By: Associated Press
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LONDON, Ky. (AP) — Companies tied to West Virginia Gov. Jim Justice have been ordered to pay $35 million in damages for defaulting on a mining contract.
The Lexington Herald-Leader reports the lawsuit stems from a 2005 deal in which Kentucky Fuel gained the right to mine coal in Breathitt County in exchange for royalties. The company, operated at the time by Justice and still controlled by his family, never mined the coal.
In 2012, New London Tobacco Market and its agent, Fivemile Energy LLC, sued Kentucky Fuel and the James C. Justice Companies over the unpaid royalties.
Officials for the Justice companies testified in court they believed the contract only required Kentucky Fuel to mine the coal if it was commercially feasible. Their attorneys argued that after signing the lease, they learned in 2005 or 2006 that the coal was of poor quality and couldn’t be mined profitably.
Attorneys for New London argued that Justice company officials signed an updated contract to mine the coal years later. New London’s president testified that the purpose of a contract amendment was to “guarantee that the Fivemile Coal would get mined no matter what,” according to the judge’s decision.
The decision also noted that one draft of a contract revision included language tying mining to economic conditions, but that language was dropped in the final version.
The $35 million judgment includes $17 million for unpaid royalties, $1 million for attorneys’ fees, an another $17 million to punish the Justice companies for abuses such as withholding information they were required by the court to produce.
But the case, already in its seventh year, is not over. The Justice companies are asking the judge to reconsider how much they will have to pay and vowing to appeal if the judge doesn’t change his mind.
Meanwhile, in a separate case, New London and Fivemile claim the Justice companies transferred millions of dollars worth of property to try to avoid paying them. That case is on hold pending a resolution in the case over damages.