BECKLEY — Federal Judge Irene Berger issued an order approving Justice Energy's plan to repay $1.23 million in sanctions by the federal government in a case filed by James River Equipment Virginia.
Berger agreed that Bluestone Resources would pay the sanctions in three payments in the amount $410,000 in June, September and November, according to her June 7 order in U.S. District Court for the Southern District of West Virginia.
The payments are to be paid by electronic funds transfer and the parties agreed that the motion can be refiled if Justice Energy and Bluestone Resources don't make payments.
Berger wrote that Bluestone Resources is now legally obligated to make the installment payments on behalf of Justice Energy Company
"After all of the installment payments have been paid and the funds from those installment payments have been received by the United States to the satisfaction of the Court, this civil action shall be dismissed with prejudice, with each party paying its own attorney’s fees and costs," Berger wrote.
Bluestone Energy Group, Inc. Chief Operating Officer Tom Lusk issued a statement earlier this month, saying he felt the sanction was excessive, but that it would be paid.
"We are grateful to U.S. Attorney Mike Stuart for recognizing that our negotiations with his office have resulted in the debt with James River Equipment being satisfied, even though we think this sanction was excessive for what was, at bottom, a $180,000 dispute," Lusk said in a prepared statement. "Despite this disproportional penalty, the Justice family has once again stepped up to pay an obligation, not of their making, that resulted from the inattention of the Russian lawyer hired by the Russian company."
On June 5, Stuart sought to have the governor and his son pay the sanctions if Justice Energy did not, calling Justice Energy a shell company.
"JEC is essentially a shell corporation with no substantive assets that is dominated and controlled by a limited liability company and certain other corporate entities which are dominated and controlled by their shareholders, James C. Justice II and James C. Justice III," the June 5 document states. "It would be an injustice to allow the alter egos of JEC to escape liability for the civil contempt sanction since their decisions and actions directly led to the imposition of the civil contempt sanction on JEC because these alter egos dominated and controlled JEC to engaging in the conduct which led to the imposition of the civil contempt sanction by the Court."
In May, Berger ordered Justice Energy to share how it would pay the sanctions that had been imposed in 2016.
In her May 30 order, Berger wrote that Justice Energy had not paid any of its sanctions yet.
"To date, however, Justice Energy has made no payments with respect to a sanction entered more than three years ago," Berger wrote. "Following careful consideration, the Court orders the parties to submit a proposal, no later than June 6, 2019, informing the Court as to the date by which payment will be made in full or proposing a schedule of payments, to be completed no later than January 1, 2020, for the Court’s review."
The court entered a memorandum opinion and order on Jan. 5, 2016, granting a motion to hold the Justice Energy in civil contempt and imposing a $30,000 per day sanctions.
On Feb. 25, 2016, the court entered judgment in favor of the United States for a total civil contempt sanction of $1,230,000.
The Fourth Circuit Court of Appeals affirmed the civil contempt fines in an opinion entered on Aug 17, 2018.
"In the months since the Fourth Circuit’s decision, the Court has periodically requested status updates," the order states. "The Court granted a motion for the United States to intervene as an interested party on January 31, 2019, and the United States sought to conduct discovery related to the Defendant’s assets."
Berger wrote in the order that on April 19, the parties indicated that review of discovery materials was nearing completion.
In January, Berger ordered Justice to release information requested by federal prosecutors in the case.
"The United States indicates that the defendant has not made any payment to satisfy the court's civil contempt sanction and has not furnished financial information in response to a request by the United States," the order stated.
The government asked Berger for leave to depose employees and representatives of Justice Energy and Berger granted the request.
"The defendant's decision to simply ignore court orders, deadlines and obligations precipitated the imposition of the contempt sanction," Berger wrote in a footnote on the last page of the order. "Continuing to flout the court's directives is not a strategy likely to engender positive results."
A status report was filed on Dec. 21 in the U.S. District Court for the Southern District of West Virginia at Beckley in which U.S. Attorney Michael B. Stuart said no payment had been made by the defendant to satisfy the civil contempt sanction imposed by the federal court of $1.23 million.
"Counsel for the United States sent a letter and a request for financial information to counsel for Justice Energy Company, Inc., on November 28, 2018," the document obtained by The West Virginia Record stated. "The request allowed Justice Energy Company, Inc., ten business days to furnish the requested financial information."
In the Nov. 28 letter, Stuart wrote that based on his conversations with Justice's attorneys, it was suggested that the coal company "may not have the financial resources" to pay the sanctions imposed by the court.
The 2013 lawsuit involves James River Equipment-Virginia LLC and Justice Energy. James River claims Justice began purchasing parts, equipment and services in April 2013 and failed to pay back what it owed for them.
James River claimed Justice breached its contract and was unjustly enriched at James River's expense.
U.S. District Court for the Southern District of West Virginia Case number: 5:13-cv-28160