WILMINGTON, Del. – Multiple companies, including some owned by Greenbrier resort owner Jim Justice, are suing Xcoal Energy & Resources after they claim it breached its contract with them.
James C. Justice Companies Inc., Southern Coal Corporation, Southern Coal Sales Corporation, Virginia Fuel Corporation, Kentucky Fuel Corporation, Tams Management Inc., A & G Coal Corporation, Black River Coal LLC, Justice Low Seam Mining Inc., and Sequoia Energy LLC filed the lawsuit against Xcoal and Ernie L. Thrasher.
On June 18, 2012, the plaintiffs filed a lawsuit against the defendants for illegal actions that caused the plaintiffs extreme financial duress, according to a complaint originally filed on April 11 in the U.S. District Court for the Western District of Virginia and transferred to Delaware on March 26.
The plaintiffs claim in order to resolve the lawsuit, they, in good faith, under the financial duress that the defendants had caused and believing the defendants were acting in good faith, entered into a settlement that involved signing of a mutual release.
"Based on the belief that defendants would act in good faith regarding the mutual release and the varying commitments required of those defendants by the mutual release and the various agreements entered pertaining to the mutual release, plaintiffs agreed to the dismissal of their claims in the lawsuit," the complaint states.
Compliance with the mutual release and the terms of the various agreements that were required by the mutual release were essential terms of the bargain for the mutual release, according to the suit.
The plaintiffs claim the defendants did not and have not proceeded to perform the commitments required of them and have in fact acted fraudulently as to the plaintiffs with respect to the duties of the defendants to perform.
"The illegal actions of the defendants are a continuation of the same kind of wrongful actions that led to the filing of the lawsuit jeopardizing hundreds of jobs in this district and elsewhere," the complaint states.
The defendants represented that they had existing contracts with Norfolk Southern Railway that would permit them to charge the plaintiffs those rates with respect to shipments of coal, according to the suit. However, the defendants did not have those existing contracts and have been attempting to charge freight rates at higher than those to which the defendants committed.
The plaintiffs claim the defendants, after execution of the mutual release and coal supply agreement and to the plaintiffs' detriment, have entered into new agreements with Norfolk Southern Railway specific to the plaintiffs' coal delivers providing for higher rates than those represented to the plaintiffs.
"Defendants’ representations about their existing railroad freight rate contracts with Norfolk Southern Railway to deliver the coal they proposed to buy from SCS ... were false and constitute a misrepresentation of existing fact, which defendants made in order to induce SCS’s reliance thereupon," the complaint states.
The plaintiffs sent the defendants a notice of default and, following receipt of the notice, the defendants have intentionally and willfully engaged in a further fraudulent course of conduct, according to the suit.
The plaintiffs claim they did not know that defendants were acting in bad faith and since the notice of default, the defendants have issued a number of letters to the plaintiffs in an effort to disguise the fact that they were not going to make any further payment for shipped coal.
"Since the notice of default, defendants hurriedly ordered trains of coal for all vols of coal required of it," the complaint states. "Prior to the Notice of Default, defendants had not ordered trains of coal for all vols of coal required to be ordered."
The plaintiffs claim the defendants had no intent to pay for these trains of coal but were engaged in a subterfuge and fraud to induce having these shipments fulfilled without any intent to pay for them.
The plaintiffs are seeking a declaratory judgment finding that the defendants' conduct has resulted in a breach of the mutual release. They are being represented by Allen W. "AJ" Dudley Jr. and Dustin M. Deane.
U.S. District Court for the District of Delaware case number: 1:15-cv-00267
