FAIRMONT – A business court judge has ruled in favor of Horizon Ventures of West Virginia in a long-running case regarding the lease of a Marion County power plant.
Judge Michael Lorensen filed his Findings of Fact and Conclusions of Law from Bench Trial on October 31. The case was remanded to the business court from the state Supreme Court. It involves a dispute about a 370-acre tract of land where the Grant Town Power Plant sits.
American Bituminous Power Partners, or AMBIT, filed the complaint against Horizon Ventures of West Virginia in 2018. Horizon then filed a counterclaim against AMBIT.
Kepple
| File photo
“Horizon and its legal team are most pleased with the outcome of this trial,” attorney Mark A. Kepple told The West Virginia Record. “This verdict represents a complete win for Horizon and a recognition that AMBIT’s legal position that they have asserted for years and that it used to avoid paying rent for years is without any merit whatsoever.
“The court unequivocally recognized that AMBIT breached the lease contract. We look forward to the damages portion of the case.”
The Grant Town power plant is built on the former Federal No. 1 mine in Marion County. AMBIT buys waste coal from Sen. Joe Manchin’s Enersystems Inc. because it pays less money to Horizon if it uses the off-site fuel that is trucked in by Enersystems. The power plant is Enersystems’ primary customer for the waste coal hauled in from two other nearby defunct mines, and it hauls away the coal ash waste.
The power plant employees about 70 people.
Horizon has said AMBIT owes more than $3.2 million in rent for the land where the power plant sits. It wants the money or the ability to evict AMBIT. AMBIT has called the motion for eviction “unfounded and improper,” saying the refusal to pay Horizon is based on court-ordered actions.
The parties first entered into a lease agreement in 1987 for AMBIT to rent land from Horizon to build the power plant that would use waste coal on the property to produce electricity. The electricity is sold to Mon Power via an Electric Energy Power purchase agreement. Mon Power then sells that power into the PJM power grid to be distributed across 13 states.
In 1989, the parties entered into an amended and restated lease agreement that stated AMBIT must pay Horizon 3 percent of all gross revenues if it uses local fuel to generate power. If AMBIT uses foreign fuel for operating reasons, it must pay Horizon 1 percent. If it uses foreign fuel for non-operating reasons, it must pay Horizon 3 percent. This agreement led to litigation regarding rent disputes.
A third amended lease agreement said AMBIT would pay 3 percent for using foreign fuel for any reason from 1993 to 2011. Horizon sued AMBIT again for rent in 1994 and 1995 under this agreement. A subsequent 1996 agreement was made to resolve rent calculation issues going forward and to lower AMBIT’s monthly rent. In exchange for AMBIT defining all foreign fuel as non-operating, Horizon agreed to lower the percentage of applicable gross revenues for use of foreign fuel for non-operating reasons to 2.5 percent plus ancillary costs.
This agreement stood until 2013 when AMBIT didn’t pay rent so it could pay off senior debt to bank creditors. Horizon sued AMBIT in Ohio County in June 2013. A judge ruled banks were entitled to have their senior debt paid ahead of Horizon receiving rent and that Horizon was barred from filing a rent lawsuit under the 1989 lease.
“The percentage of rent payment shall be determined pursuant to the terms of the lease agreement subject to any waiver of a portion of percentage of rent as determined by the formula laid out in … the 1996 agreement,” the Ohio County judge wrote in the 2017 dismissal of Horizon’s rent claim.
After that, AMBIT filed this complaint saying it used foreign fuel for operating reasons from 2003 to present and should have been paying 1 percent rather than 2.5 percent since 2003, which is when it claims usable local fuel was exhausted.
Lorensen ruled the intent of the parties in the 1996 agreement was meant to resolve litigation at the time, eliminate future disputes about foreign fuel, simplify the payment process, protect Horizon from AMBIT allowing the permit on the coal itself to expire and eliminate future disputes over the quality of the waste coal. He said the admissions in the 1996 agreement are binding on the parties and will remain so until the end of the Power Purchase Agreement.
Based on testimony, Lorensen also ruled local fuel still is located at the premises, making the 1996 admissions still effective and ruled in favor of Horizon on AMBIT’s claims.
He also found Horizon did not breach the lease agreement while AMBIT did breach it by failing to pay agreed-upon rent since 2013. He also said AMBIT is not entitled to any rent reimbursement for 1996 to 2012.
Lorensen said AMBIT is required to pay its unpaid balance of rents owed from 2013 to present at the rate of 2.5 percent of gross revenue. He ordered AMBIT to produce all financial reports since January 1, 2013, as well as other records. He also ordered AMBIT to begin paying rent at 2.5 percent until all local fuel, regardless of quality, is used and no longer present.
He set a damages hearing for December 15.
AMBIT is being represented by Roberta F. Green and John F. McCuskey of Shuman McCuskey Slicer in Charleston. Horizon is being represented by Kepple of Bailey & Wyant in Wheeling and Joseph Nogay of Sellitti Nogay & Nogay in Weirton.
Attorneys for AMBIT declined to comment because the litigation still isn't final.
Marion Circuit Court case number 18-C-130