Justice companies respond to complaint
CHARLESTON — Several companies owned by Gov. Jim Justice are asking to be removed from a federal complaint seeking millions in unpaid mine penalties.
On Tuesday, nine of the 23 companies listed in a complaint filed by the U.S. Attorney’s Office for the Western District of Virginia and the U.S. Mine Safety and Health Administration in May filed a motion to dismiss the complaint, citing lack of jurisdiction.
“The (companies) are not ‘at home’ in this forum; and…there is no affiliation with this forum and the underlying controversy,” according to the motion. “The court does not have jurisdiction…because the (companies) are not incorporated under the laws of Virginia and none…maintain their principal place of business in Virginia.”
The companies seeking the motion to dismiss include: Double Bonus Coal Co., Dynamic Energy, Frontier Coal Co., Justice Energy Co., Justice Highwall Mining, Keystone Services Industries, M & P Services, Nufac Mining Co., and Pay Car Mining Co. All are subsidiaries of Bluestone Resources, also owned by Jim Justice and managed by his son, Jay Justice.
Tom Lusk, chief operating office of Bluestone Resources, filed an affidavit Tuesday supporting the motion to dismiss.
“The entities…are not incorporated in the Commonwealth of Virginia and do not maintain their principal place of business in Virginia,” Lusk wrote. “The principal place of business for the entities…is in Daniels, W.Va. None of the entities…operate any coal mines in Virginia.”
Officials with the U.S. Attorney’s Office and MSHA filed a civil action May 7 against 23 Justice-owned coal companies for $4.8 million in unpaid mine penalties. The 23 companies were issued 2,297 citations and civil penalties by federal mine inspectors between 2014 and 2019.
According to the civil complaint, Justice’s companies didn’t pay the penalties and didn’t provide notice of intent to contest the penalties. The federal government is seeking $3.9 million in unpaid penalties, plus $821,386 in administrative costs and interest.
If the motion to dismiss is granted, the following Justice-owned companies would still be party to the complaint: A & G Coal Corp., Black River Coal, Chestnut Land Holdings, Four Star Resources, Infinity Energy Co., Kentucky Fuel Corp., Nine Mile Mining, Premium Coal Co., S & H Mining, Sequoia Energy, Virginia Fuel Corp., Southern Coal Corp., Justice Coal of Alabama, and Tams Management.
In a separate filing, these companies denied the allegations made by federal officials, refuting the allegations point-by-point.
The Justice companies’ reputation for not paying vendors and tax debts have been well documented, but recent court filings have shown a spotlight into how the Justice family uses multiple companies to shift assets around to avoid obligations.
Mike Stuart, the U.S. Attorney for the Southern District of West Virginia, accused Justice of running a shell game in a filing in May. Stuart filed a motion to pierce the corporate veil and directly go after Justice and his son for a $1.23 million civil contempt penalty for not paying James River Equipment. A deal was worked out shortly after Stuart’s motion allowing Justice Energy parent company Bluestone Resources to make three $410,000 payments by Jan. 1.
In another case before the U.S. District Court for the Southern District of New York, 12 Justice-owned companies in June filed a similar motion to dismiss in a case involving a failed deal between Southern Coal Sales Corp. and a Canadian steel manufacturer.
Essar Steel Algoma Inc. made a deal with Justice’s Southern Coal in 2015 to supply 780,000 tons of metallurgical coal used in steel-making – a figure that represented more than half of Algoma’s annual needs. Instead, Algoma alleges that Southern Coal Sales Southern Coal Sales only supplied 246,526 tons — 31 percent of what the deal required.
Algoma named Southern Coal Sales and 12 other Justice-owned companies in their civil suit, asking for a $6.7 million judgment. Attorneys for Algoma accused the Justice companies of acting as “alter egos” for Southern Coal Sales, which attorneys for Justice denied.
“Algoma formed an opinion that a group of 12 entities…were so connected to (Southern Coal Sales) as to actually be its alter egos – a theory no doubt driven by Algoma’s realization that any recovery from the sales company it contracted with…may be limited,” according to Justice’s motion to dismiss.
Southern Coal in another case was ordered by a federal court in New York to pay $800,000 to National Union Fire Insurance in 2017. In 2018, the U.S. District Court for Southern West Virginia ordered Southern Coal to pay the remaining $559,286 plus interest and fees. When U.S. Marshals were dispatched to search Southern Coal’s bank accounts, there was no money left.
Marshals also were ordered last month to seek payment from Justice’s Bluestone Coal Corp. for more than $662,000 in a case brought in 2016 by coal miners who were laid off without warning, a violation of federal law.