A Kentucky company is pressing a federal court for relief at the expense of two of Gov. Jim Justice’s companies in a 12-year-old lawsuit in which the Justice companies have been found to owe over $18 million plus interest and attorney fees.
The Kentucky firm told the court last week it fears missing out on the millions the Justice companies owe it following a mineral rights leasing dispute because Justice business assets were put on a fast track toward receiver control to satisfy debt in another federal case.
In August 2023, New London Tobacco Market Inc., a Kentucky-based tobacco warehouse company, and fellow plaintiff Fivemile Energy LLC, a New London agent, were awarded:
$16.99 million in lost tonnage royalties, with prejudgment interest compounded annually at 8% starting May 8, 2012, with post-judgment interest starting April 24, 2020
$1.04 million in attorney and other fees and expenses, subject to post-judgment interest starting April 24, 2020
$600,000 in unpaid retainer fees, with pre-judgment interest compounded annually at 8% interest through April 24, 2020, and post-judgment interest thereafter
$20,000 for lease reimbursements plus 8% interest beginning Oct. 14, 2011, for the first $5,000; Oct. 4, 2012, for a second $5,000 payment; Nov. 22, 2013, for a third $5,000 payment; and Apr. 28, 2016, for a fourth $5,000 payment
The August 2023 order in the U.S. District Court for the Eastern District of Kentucky threw out another $17 million in punitive damages awarded in 2019 in a judgment against the Justice companies — Kentucky Fuel Corp. and James C. Justice Companies, Inc. — after an appeals court vacated that award upon appeal.
The plaintiffs filed an emergency renewed motion for expedited consideration Thursday, saying an order issued the previous week in a Delaware federal court may limit or block its ability to collect on its judgment through the Kentucky court.
The Delaware court order approved the sale of shares of a key holding company in Justice’s business empire to satisfy what has been an eight-figure debt owed by a Justice coal company.
The order approved the sale of shares held by Justice-owned Bluestone Resources Inc. in Bluestone Mineral Inc., a holding company that court documents indicate houses a wide range of energy companies controlled by Justice and his family.
‘Time is of the essence’
The Delaware federal court order issued June 20 was requested by Caroleng Investments Limited, a British Virgin Islands firm that court in June 2021 ordered Bluestone Resources to immediately pay $10.1 million plus 9% interest from May 2020 until the sum is paid. Caroleng said in its June 19 request that almost the entire amount remains unpaid.
“Time is of the essence in resolving the matters now before the Court,” attorneys for New London and Fivemile Energy argued in their Thursday filing.
In a filing Sunday, Kentucky Fuel and James C. Justice Companies contended there is “no emergency,” arguing that Bluestone Mineral stock ordered sold in the Delaware case is irrelevant in the Kentucky case and that the plaintiffs’ motion is an “excuse ... to evade the reality” that they hold judgments against two defunct entities.
Kentucky Fuel and James C. Justice Companies said in a November case filing they had “no operations, revenues, or unencumbered assets” in response to a request to hold them in contempt for nonpayment of attorney fees and expenses totaling $194,258.
The companies said in their Sunday filing all assets in Bluestone Mineral parent company Bluestone Resources are encumbered by a security agreement with GLAS Trust Company LLC, a United Kingdom-based loan agency and bond trustee services company. GLAS would receive the proceeds of any sale of such assets, the companies said.
Bluestone said to owe at least $700M in defaulted loans
GLAS said in another unresolved federal lawsuit that Bluestone owes it at least $700 million in defaulted loans.
GLAS filed that case in February 2024 against Virginia-based Carter Bank for $226.2 million alleging fraudulent conveyances of monies Carter Bank received from Bluestone Resources and Bluestone subsidiaries using financing extended by Greensill Capital Limited to satisfy debts for which the Bluestone companies weren’t legally liable. Greensill filed for bankruptcy in 2021.
The Justice family and Carter Bank both announced the settlement of a dispute Thursday in which the bank had sought more than $300 million in debt from the Justices. Both sides cited a “pathway of curtailment” in a planned payoff of the debt, with the bank reporting the Justices had paid off roughly $7.8 million of a $301.9 million debt as of the end of the first quarter, with $294.1 million remaining.
In January, a Virginia circuit court judge formally denied attempts by Justice, his family and businesses to set aside documents admitting over $300 million of debt owed to the bank. Terms of the Justices’ settlement with Carter Bank are confidential “per mutual agreement,” the Justice family and companies said in their statement.
In May, a Virginia federal court approved the sale of a helicopter Bluestone Resources had owned for $1.4 million to go toward satisfying the Bluestone debt to Caroleng.
The Carter and Caroleng disputes are separate. Through the latter dispute, Justice could be in peril of losing his confederation of coal businesses.
James C. Justice Companies is a subsidiary under the umbrella of Bluestone Mineral, according to an organizational chart filed as an exhibit by Caroleng in its case indicating Justice owns 60% of parent company Bluestone Resources, Inc., while his son, James C. “Jay” Justice III, owns 40%.
The governor, who claimed a sharp business acumen in his rise to becoming governor in 2017, is in the midst of a U.S. Senate campaign after winning the Republican primary in May.
Mike Tony covers energy and the environment. He can be reached at mtony@hdmediallc.com or 304-348-1236. Follow @Mike__Tony on Twitter.
