West Virginia governer, company ordered to pay USD6.8M in coal feud

DOVER, DELAWARE (AP) — A federal judge in Delaware has ordered West Virginia Governor James Justice and one of his family-owned coal companies to pay USD6.8 million for breaching a contract with a Pennsylvania coal exporter.

The ruling was handed down last Monday in a lawsuit filed in 2018 by Pennsylvania-based Xcoal Energy and Resources.

Xcoal claimed that the billionaire coal magnate and two of his companies, Roanoke, Virginia-based Bluestone Energy Sales Corporation and Southern Coal Corporation, failed to fulfil a 2017 agreement to deliver hundreds of thousands of tonnes of coal for shipment overseas.

The Justice companies argued that Xcoal breached the agreement in several ways, and that it has a history of being sued by other coal companies for failing to complete shipments and then deflecting blame.

United States (US) District Court Judge Leonard Stark ruled that Xcoal had proven by a preponderance of the evidence that Bluestone was the party that breached the coal supply agreement, and that the defendants failed to prove any of their counterclaims.

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Stark determined that Xcoal was entitled to slightly more than USD6.8 million in damages from Justice and Southern Coal.

Xcoal and Bluestone entered into an agreement in 2017 under which Bluestone would supply Xcoal with 720,000 net tonnes of metallurgical grade coal from a mine in Bishop, West Virginia. Southern Coal and Justice guaranteed the payment and performance obligations of Bluestone, a pass-through entity with no assets.

The agreement entitled Xcoal to USD9.88 per tonne discount from market price, with deliveries to be made in monthly instalments of about 30,000 tonnes over 24 months.

The companies quickly found themselves at odds over the timing and method of rail shipments, as well as the sampling and quality of the coal being delivered. As a result, Xcoal received less than 24,000 tonnes of coal over seven months between November 2017 and May 2018, when Xcoal filed its lawsuit, leaving more than 696,000 tonnes undelivered.