Court rehears headline-grabbing Massey case

By Steve Korris | Mar 12, 2008








CHARLESTON- State Supreme Court Justice Robin Davis, author of a November opinion that wiped out Hugh Caperton's $76 million jury verdict against Massey Coal, stuck to her guns at a March 12 rehearing of the case.

Caperton's attorneys chose anger as a strategy, and they clearly offended Davis. She matched their accusations with sharp questions and crisp rebuttals.

At oral arguments the previous day, Davis had kept quiet due to a sore throat. Saving her voice for the rehearing allowed her to fill a void left by the absence of two Justices.

Chief Justice Spike Maynard and Justice Larry Starcher disqualified themselves from the rehearing, for opposite reasons. Circuit Judges Donald Cookman and Fred Fox replaced Maynard and Starcher. At Wednesday's rehearing, they kept as quiet as if their throats hurt.

Caperton and his Harman companies won a $50 million jury verdict in Boone County in 2002 on claims that Massey Coal deliberately destroyed his companies. The verdict included $6 million in punitive damages.

Caperton already had won a $6 million jury verdict in Virginia against Massey Coal subsidiary Wellmore, on similar claims. Massey Coal prepared to appeal the Boone County verdict, but had to wait three years for a trial transcript and two more years for a Supreme Court hearing.

By then, interest had swelled the potential verdict to $76 million. Massey Coal argued that its coal supply agreement with Caperton's company required that in any dispute, either side would sue in a Virginia forum.

Massey Coal also argued that the Virginia verdict resolved the issues in the West Virginia trial as "res judicata," which in Latin means a matter already judged.

In a November decision, Davis, Maynard and Justice Brent Benjamin ruled that Circuit Judge Jay Hoke should have enforced the contract's forum clause and dismissed the suit.

They further agreed that the Virginia verdict counted as res judicata.

Davis wrote that while Massey Coal's conduct warranted the verdict, the Court couldn't compromise the law to reach a result that appeared to be justified.

"The law simply did not permit this case to be filed in West Virginia," she wrote. "We would be remiss if we did not acknowledge that the motivating factor for the Harman companies and Mr. Caperton to bring the tort claims in West Virginia may have been due to the fact that Virginia has a cap on punitive damages and West Virginia does not."

Virginia caps punitive damages at $350,000.

"Virginia also does not allow punitive damages for contract claims," Davis wrote.

Starcher and Justice Joseph Albright dissented.

Caperton won a rehearing after photographs of Maynard and Massey Coal owner Don Blankenship together in Monaco surfaced. Maynard disqualified himself from the case.

Starcher, who has made comments about Blankenship in public statements, also disqualified himself and urged Benjamin to do likewise. Benjamin declined.

At the rehearing, Massey Coal attorney D.C. Offutt of Huntington said all claims in Virginia and West Virginia flowed from the coal supply agreement.

"What does Virginia law tell us we have to do -- file there?" Davis asked.

"They had to bring these claims in Virginia," Offutt said.

"Virginia law is not as clear as we would like," Albright said.

"This is one of the most misunderstood cases this court has seen in a long time," Pittsburgh attorney David Fawcett, representing the Harman companies, said. "The reason for that is their egregious misstatements."

Davis asked if he agreed with a majority of courts in the U.S., that the forum clause could apply.

"I don't know," Fawcett said.

"Did you research it?" Davis asked.

Fawcett said he did. He said he found no case like this. He said there was no relationship at all between defendants in the two cases.

"Massey owned Wellmore before you proceeded with your lawsuit in Virginia," Davis said.

"Tell us flat out why, under Virginia law, you weren't compelled to bring your 1998 claims in the suit you filed in Virginia in 1998," Albright said.

Fawcett said it wasn't mandatory. He said the parties who signed the contract didn't contemplate fraud.

Albright asked why he didn't join Massey to the Virginia suit.

"We doubted that the Virginia court would allow them to proceed together," Fawcett said.

He tried to cite a West Virginia precedent but Davis stopped him.

"No!" she said. "I don't understand your argument."

"You adopted a new standard ..." Fawcett said.

"We do in every case," Davis replied.

Fawcett said the jury heard the case for seven weeks.

"We get zero," he said. "That is a very harsh result and there is no law in the country ..."

"No law in the country?" Davis replied. "How can you say that?"

Bruce Stanley of Pittsburgh, representing Caperton as an individual, said Massey Coal shouldn't get the benefit of the forum clause after getting rid of Wellmore.

"He signed," Davis said. "He signed."

She asked how many other shareholders there were. Stanley said none.

He cited a Virginia Supreme Court precedent in a case named Davis, but Justice Davis told him, "Davis was not in existence at the time you filed in Virginia."

Stanley closed by asking the Court not to undo the hard work of the judge and the jury.

Offutt rose for rebuttal, and Albright said Virginia law was not crystal clear. He said the two cases presented a mixture of the same facts and different facts.

"I have been here often enough to know that nothing is crystal clear," Offutt said.

"I have wrestled and wrestled and wrestled with this," Albright said.

"Look at both complaints," Offutt said. "In Virginia they named Massey Coal as an important nonparty. In West Virginia they named Wellmore as an important nonparty."

He said both complaints alleged destruction of Caperton's businesses.

The Court will render a decision.

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