A&G Coal revives lawsuit against Superior Coal Services

A&G Coal Corp., part of coal operator Jim Justice II’s Southern Coal Corp. holding company, has re-opened a December 2011 lawsuit against Superior Coal Services LLC over what it claims was a breach of coal sales agreements.

“This is an action for damages arising from Superior’s breach of a written sales acknowledgment between A&G, as buyer, and Superior, as seller (the ‘Sales Order’), and from Superior’s breach of a written purchase order between A&G, as seller, and Superior, as buyer (the ‘Purchase Order’), each of which involve the sale of coal,” said an A&G Coal filing on April 9 at the U.S. District Court for the Western District of Virginia.

On or about Jan. 11, 2011, A&G and Superior executed the Sales Order, which provides for the sale of coal by Superior to A&G, the lawsuit said. Under the Sales Order, Superior agreed to ship to A&G 75 to 100 carloads of low volatile coal per month, beginning in February 2011 and continuing through the end of 2011. Prior to entering into the Sales Order, A&G said it made clear to Superior that the coal to be provided by Superior to A&G under the Sales Order was necessary for A&G to fulfill its supply obligations to third parties. Prior to entering into the Sales Order, Superior represented that the volume of its readily available coal would support its obligations under the order.

“To date, Superior has delivered to A&G virtually none of the obligated tonnage,” the lawsuit claimed. “Superior’s failure to deliver the obligated tonnage to A&G has caused A&G to be unable to fulfill its contract obligations with third parties.”

On or about Jan. 13, 2011, A&G and Superior executed the Purchase Order, which provides for the sale of coal by A&G to Superior. Under that order, Superior was required to purchase from A&G 200,000 tons of coal in monthly shipments beginning in February and ending in December 2011, or approximately 18,000 tons of coal per month.

“Prior to entering into the Purchase Order, Superior represented that its need for coal and funds to pay for same were such that would support its obligations under the Purchase Order,” said the lawsuit. “To date, Superior has only purchased 10,537 tons in February, 10,664 tons in March, 951 tons in June, and none in July, August, September, October, or November.”

Soon after the initial filing of this case, the parties entered into a settlement agreement, which caused the judge to dismiss the case on Feb. 28. The April 9 A&G Coal filing accuses Superior of breaching that settlement.

“Superior has materially breached the settlement agreement by failing to purchase any of the coal from A&G that it agreed to purchase in connection with the settlement,” said the lawsuit. “In reliance on Superior’s purported settlement, A&G incurred expenses in transporting the coal in an amount in excess of $1,500,000.”

Prior to entering into the settlement, Superior made certain material representations regarding its ability to take A&G’s coal and its available funds to pay for same, including that it had a binding commitment from creditworthy customer that had committed to repurchase the coal that Superior had agreed to buy from A&G, such that A&G believed that Superior was now able to perform under the settlement agreement, the lawsuit said. “Upon information and belief, Superior’s representations were false and were made for the purpose of procuring the settlement,” the lawsuit added.

A&G is asking the court for: compensatory damages plus prejudgment interest; punitive damages; its costs and a reasonable attorney’s fee; a trial by jury on all issues that can be tried; and any other relief the court deems just.

Superior had not filed an answer as of April 23. Back on Jan. 12, it filed a motion to dismiss related to the original lawsuit. It said this dispute should be settled in arbitration under the terms of the agreements between the parties, not in federal court. It didn’t address the specifics of the original lawsuit.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.