U.S. Attorneys to Justice-Owned Companies: Prove You Can’t Pay MSHA Fines or Declare Bankruptcy
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CHARLESTON -- The U.S. Attorney's Office is not accepting excuses from the companies of the family of Gov. Jim Justice claiming they can't pay the remainder of mine safety fines due to being broke. It's telling the companies to open up their books or declare bankruptcy.
Assistant U.S. Attorneys representing U.S. Attorney Christopher Kavanaugh filed a motion Tuesday in support of their motion for civil contempt filed earlier this month in the U.S. District Court for the Western District of Virginia.
Kavanaugh is seeking to hold Justice-owned Southern Coal Corp. and 22 other Justice-owned companies in contempt over non-payment of Mine Safety and Health Administration (MSHA) civil penalties.
Last week, an attorney representing the Justice-owned companies filed a memorandum of opposition to the federal government's motion for civil contempt, claiming the governor's companies are unable to pay the remainder on overdue mine safety penalties. The full $579,041 in remaining unpaid MSHA penalties became due on March 1.
"...The Defendants have an inability to pay the current amounts due. This inability to pay is well known to the Government and has existed for some time," wrote Aaron Houchens, an attorney for Justice's companies. "The government will undoubtedly argue that the defendants' financial problems are self-induced and they should be prohibited from asserting this defense."
As predicted by Houchens, the U.S. Attorney's Office rejected the argument by Justice's companies that they should not be held in civil contempt for failure to pay remaining fines. Assistant U.S. Attorneys Laura Day Taylor, Krista Consiglio Frith, and Jason Grover argued Tuesday that Justice's companies should not be let off the hook.
"Defendants appear to ask the Court to take them at their word, as they do not provide any evidence of their purported financial difficulties, nor have they filed for bankruptcy protection," the attorneys wrote. "The Court should reject Defendants' attempt to escape their agreed-upon financial obligations and should hold Defendants in civil contempt."
The U.S. Attorney's Office and MSHA brought a lawsuit against 23 Justice-owned companies in 2019 seeking more than $5.1 million in unpaid mine safety penalties. According to the 2020 settlement, the companies made a one-time payment of $212,909.44 and agreed to pay $102,442 per month by the first of every month until the $5.1 million is paid in full.
According to a joint status report filed in July 2023, 23 Justice-owned companies reached an agreement with the U.S. Attorney's Office in Roanoke to resume making payments in a 2020 settlement, plus an additional $51,221 per week beginning in August for 10 weeks to pay more than $409,000 on overdue payments.
According to Houchens, all of the governor's more than 147 assets are pledged to Virginia-based Carter Bank and Trust. In June, the Justice family announced a global settlement with Carter Bank. According to a statement, the settlement offered a pathway to paying off the more than $301 million owed to the bank by the Justices, since reduced to $291.1 million.
Houchens argued that creditors, judgments, and other financial issues make further payment of the MSHA settlement impossible. He also blamed economic issues facing Justice's coal businesses. But the U.S. Attorney's Office said that none of the claims made by Justice's attorneys have merit.
"All of Defendants' arguments fail," the federal attorneys wrote. "Defendants willingly and knowingly entered into the payment plan and consent judgment in this case, representing to the government and the Court that it would comply with the payment plan in the consent judgment. However, they now claim that they faced financial difficulties at the time of the consent judgment that preclude them from being able to pay."
The U.S. Attorney's Office also said that representatives of Justice's companies provided no communication since August 2023 following the July 2023 joint status report to the court despite multiple reminders from the federal government.
"If Defendants knew they could not comply with the consent judgment at the time of execution, they should have said so … ," the attorneys wrote. "Instead of notifying the government about their alleged inability to comply with the consent judgment, Defendants have kept their proverbial heads in the sand," the attorneys continued. "Even when the government notified Defendants in July 2024 that the government would have no choice but to seek action with the Court unless payment in full was made, Defendants offered no explanation or response."
Justice's coal and agriculture businesses are managed by his son, Jay Justice. In another case in a federal court in Kentucky, Jay Justice and another company executive are already being held in civil contempt and subject to daily fines for not complying with discovery requests in a judgment in favor of Kentucky-based New London Tobacco Market and Fivemile Energy LLC.
Fivemile Energy and New London Tobacco Market filed suit against Justice in 2012 and was awarded $18 million over a dispute between the companies regarding mineral rights, though accrued interest and other costs have caused the amount due to balloon.
Fivemile Energy and New London Tobacco Market are seeking garnishment in federal court from Kentucky state agencies and another company in the state to recoup more than $34.8 million owed to the companies by Justice's companies.
Jay Justice is facing another civil contempt of court charge in another case filed in federal court in Alabama due to the companies violating several court orders in a Clean Water Act lawsuit.