In a new lawsuit filed this week, lawyers for 23 coal companies owned by Gov. Jim Justice and his family argue that federal courts cannot hold the companies in contempt for failure to pay fines because they can't afford them.
The memorandum, filed Tuesday in U.S. District Court for the Western District of Virginia and first reported by West Virginia MetroNews reporter Brad McElhinney, came after the federal government took steps earlier this month to hold the companies in contempt of court for owing about $600,000 in mine health and safety fines assessed at the companies' mines over the past decade.
The debt, due to hundreds of health and safety violations, at one point totaled about $5.13 million. Under an agreement reached between the companies and the government in 2020, the debt was to be repaid in full by March 31, 2024. Monthly payment plans were set up in 2020 to enable the companies to meet the debt, but last year, and at other times since the agreement was reached, payments have been irregular, transfers have been late and payments have often not been made in full.
In Tuesday's filing, Justice's lawyers argued that the company couldn't make the payments because it simply wasn't “financially viable.”
“While (the companies) have not fully satisfied their obligations under the Consent Decree, this is not due to a willful violation of the Court's orders,” the memo states. “Rather, (the companies) are unable to pay amounts currently owed.”
This incompetence makes it improper for federal courts to rule in the government's favor and hold companies in contempt, the lawyers argue, and such sanctions should not be used to collect overdue payments.
The memorandum said the companies' financial difficulties were “well documented” and “well known” to the government based on other filings. Justice lawyers said the difficulties were not “self-inflicted” and therefore it would be “overreach” to hold them in contempt.
“Unfortunately, global coal markets, external business factors and financial constraints continually disrupt (the companies') operations and make it nearly impossible to conduct their primary business of coal mining,” the memo reads. “Without active and significant mining operations, (the companies) would not be financially viable and would be unable to meet payment terms.”
One of the companies named in the lawsuit, Southern Coal Corp., has declared bankruptcy and is “currently facing multimillion-dollar judgments” in other federal lawsuits, according to the memo. Another company, Kentucky Fuel Corp., has no assets and has recorded millions of dollars in losses from at least 2015 to 2018.
The Justice family's lawyers wrote that other companies the government is seeking payments from “face similar financial situations.”
The Justice family-owned coal companies are some of the largest assets in the family's vast business conglomerate. The ongoing financial difficulties of these companies are just one example of recent challenges facing the family's business empire. Problems continue to emerge for another Justice family-owned company, the Greenbrier Hotel Corporation, which operates the Greenbrier Hotel, another major asset held by the family.
On Thursday, the Justice family announced that it had reached an agreement with Beltway Capital to cancel the planned public auction of the Greenbrier Hotel. A public hearing on the auction scheduled for Friday was canceled and the auction itself has been called off. The company now owes Beltway an undisclosed payment by Oct. 24, which ends its lawsuit against the Greenbrier.
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