A coal company owned by West Virginia Gov. Jim Justice was sued in bankruptcy court Wednesday for allegedly failing to pay nearly $1 million from a settlement agreement stemming from earlier litigation.
In the Chapter 11 bankruptcy proceedings of Dennis Ray Johnson II, Peoples Bank — an Ohio company that took on the credit of Producers Coal Inc. and Moussie Processing — sued Kentucky Fuel Corp., which Justice owns. It filed the lawsuit in U.S. Bankruptcy Court for the Southern District of West Virginia.
In December 2014, Producers Coal and Moussie Processing sued Kentucky Fuel in Knott County Circuit Court, in Kentucky, alleging that the company failed to satisfy its end of a coal transaction, and other alleged infractions.
All parties settled the lawsuits in April 2015, with an agreement that Kentucky Fuel would pay Producers Coal $2 million, with $1 million paid up front and $1 million paid in 20 monthly installments of $50,000.
According to Peoples Bank’s filing, Kentucky Fuel paid the $1 million up front and made its first $50,000 payment, but then stopped.
“As of the date of this Complaint, Kentucky Fuel still owes a balance under the letter Agreement of $950,000,” the suit states.
Johnson filed Chapter 11 bankruptcy in mid-2016, as did 13 coal industry entities he owned, including Producers Coal and Moussie Processing, all of which were consolidated with Johnson’s case.
Wednesday’s lawsuit alleges that Kentucky Fuel has not made any payment as required since its $50,000 transaction in May 2015.
In the cases handled in Knott County Circuit Court, both companies sued Justice on December 31, 2014.
Producers Coal alleged that Kentucky Fuel failed to deliver the specific quantities of coal at the specifications set forth in their purchase and sale agreement. It sought $1.2 million in damages.