Armstrong Coal, Delta Coals settle legal issues

Coal marketer Delta Coals LLC and western Kentucky coal producer Armstrong Coal filed a Sept. 21 notice with a federal court that they have reached an unspecified settlement of their dispute and want a Delta Coals lawsuit dismissed with prejudice.

There had been indications back in July that Delta Coals and Armstrong Coal were close to a deal in a lawsuit pending at the U.S. District Court for the Middle District of Tennessee. Delta Coals on Jan. 6 had filed a second amended complaint against Armstrong Coal that accused it of trying to cut Delta Coals out of sales business that Delta Coals helped arrange with the Tennessee Valley Authority and Tampa Electric. The original version of the lawsuit was filed in April 2011 and focused on business that Delta Coals helped arrange with TVA, while the two latest versions added new complaints related to Tampa Electric.

By a letter agreement dated October 2006, Delta said it was engaged by Armstrong to market and sell coal to certain designated customers, including TVA and Tampa Electric. This was at a time when Armstrong was just entering the coal business and needed contacts with potential customers, Delta Coals pointed out. After working on Armstrong’s behalf for almost a year without any compensation, the parties entered into a coal sales agreement in July 2007 that provided that Delta would continue to act as Armstrong’s agent to market Armstrong’s coal and to negotiate the terms of coal sales contracts with certain customers, and that Delta would receive commission payments so long as Delta administered the contracts.

On March 17, 2011, while Delta said it was negotiating with Tampa Electric for a term contract, Armstrong revoked Delta’s authorization to act as its sales agent for all designated customers including Tampa Electic. Armstrong has failed to pay Delta any commissions for the tonnage sold to Tampa Electric under these three agreements, Delta said in the latest version of the lawsuit. Tampa Electric, a unit of TECO Energy (NYSE: TE), is called TECO in some of the legal documents.

Said Armstrong in its Jan. 30 motion to dismiss the second amended complaint: “The Court should dismiss each of Plaintiff’s claims because Plaintiff’s Complaint does not contain well-pleaded factual assertions, entitled to a presumption of veracity, that would plausibly support the relief it seeks. Specifically: (a) Plaintiff’s breach-of-contract claims in connection with the TVA Contracts lack plausible factual allegations linking any breach or anticipatory breach with legally-cognizable damages, (b) Plaintiff’s breach-of-contract and quasi-contract claims in connection with alleged 2011 coal sales to TECO are barred by the Statute of Frauds and lack plausible factual allegations in regard to the existence of any payment obligation arising from those transactions, (c) Plaintiff’s derivative declaratory-judgment claims fail for the same reasons, and (d) Plaintiff’s failure to identify a special relationship giving rise to a equitable duty to account dooms the claim for an accounting.”

Other quotes from the Armstrong motion to dismiss include: “Plaintiff’s paranoia that Armstrong might stop paying commissions to Plaintiff does not represent a cogent, plausible allegation of damage that can support a claim for breach of contract.”

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.