Controversial $50M case against Massey continuing in Va. court

RICHMOND, Va. – The once-$50 million lawsuit that put state Supreme Court Justice Brent Benjamin in the national spotlight has been given new life by the Virginia Supreme Court.

The court ruled April 18 to reverse Buchanan County Circuit Judge Henry A. Vanover’s decision in favor of Massey Energy, which is accused by Harman Mining of unlawfully breaking a coal supply contract. Vanover had ruled that Harman Mining could not bring its lawsuit, filed in 2010, because the claims within the suit were precluded.

Harman, through owner Hugh Caperton, first filed the lawsuit in 1998 in Boone County, W.Va., but the state Supreme Court ultimately reversed a $50 million verdict because of a forum-selection clause in the allegedly broken agreement that required disputes to be brought in Virginia.

In 2010, Caperton did just that, re-filing the suit in Buchanan Circuit Court in Grundy, Va.

Vanover had ruled the lawsuit, grounded in tort claims, was barred by the doctrine of res judicata because the litigants and Caperton’s claims were the same as in a first breach of contract lawsuit brought in Virginia.

“Massey’s actions were not simply limited to Harman Development, Harman Mining and Sovereign (Coal Sales), however,” Justice Donald Lemons wrote.

“Having learned that Caperton personally guaranteed a number of the Harman companies’ obligations, Massey made false representations to Caperton about the closing date for the sale of Harman Development, Harman Mining and Sovereign, causing Caperton to default on those obligations.

“Consequently, in the spring of 1988, both Grundy National Bank and Senstar Financial took actions that severely impacted Caperton’s credit rating and creditworthiness.

“Additionally, Massey’s actions caused Caperton to be listed on the ‘Applicant Violator System,’ a database maintained by the Department of the Interior’s Office of Surface Mining, which listing effectively prevents Caperton from conducting business in the mining industry in the future.

“Finally, ‘(t)he (West Virginia) circuit court noted in its Final Order denying Massey’s post-trial motions that Caperton suffered additional mental anguish due to Massey’s trespassing on his personal property and photographing his personal residence.’”

Proof of those acts, Lemons wrote, was not necessary to prove the breach of contract claims made in the first lawsuit.

The new complaint states that it was filed in Buchanan County, Va., “not because they believe this is the most appropriate venue for this dispute, but because the Supreme Court of Appeals of West Virginia had ruled that this action may be heard only in this court.”

It was Caperton’s original 1998 lawsuit that inspired a John Grisham novel, “The Appeal,” and prompted the U.S. Supreme Court to issue a new standard for judges to recuse themselves.

Former West Virginia Supreme Court Justice Spike Maynard stepped aside in 2008 from the case after photographs had emerged showing him on vacation alongside former Massey CEO Don Blankenship.

Current Justice Brent Benjamin also recused himself after the U.S. Supreme Court ruled in 2009 that he should have recused himself from the case because Blankenship had spent nearly $3 million supporting his 2004 campaign.

“Under our precedents there are objective standards that require recusal when ‘the probability of actual bias on the part of the judge or decision-maker is too high to be constitutionally tolerable,’” Justice Anthony Kennedy wrote for the majority. “Applying those precedents, we find that, in all the circumstances of this case, due process requires recusal.”

The new suit seeks $56.4 million in damages for Caperton and $33 million in compensatory damages and $1.5 million in punitive damages for the three companies.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.