Southern Coal Sales, Xcoal settle coal contract dispute

A federal judge on Aug. 30, acting on an Aug. 29 request of the parties, dismissed a lawsuit filed by coal operator Jim Justice’s Southern Coal Sales against coal marketer Ernie Trasher’s Xcoal Energy & Resources LLC.

The Aug. 29 request, which was very brief, said the parties had settled the case on unnamed terms and asked for the case to be dismissed with prejudice, meaning it can’t be taken up again. The case had filed in June 2012 and was being pursued in the U.S. District Court for the Western District of Virginia.

Xcoal had denied claims in a contract lawsuit filed against it and its founder, Ernie Thrasher, by Southern Coal Sales (SCS). The lawsuit said that SCS had agreed to sell metallurgical coal to Xcoal, then Xcoal breached those agreements by refusing to take full delivery of this coal.

The SCS lawsuit was filed in June 2012 at the U.S. District Court for the Eastern District of Kentucky. The SCS principal place of business is in Roanoke, Va. Xcoal, headed by veteran coal marketer Thrasher, is located in Latrobe, Pa. The case in the Kentucky court was later dismissed to clear the way for the same case to be pursued in the Virginia court.

The lawsuit itself wasn’t clear on this point, but attached purchase orders show that SCS is a company of coal operator James “Jim” Justice II, since the purchase orders are addressed to his son, James “Jay” Justice III, who is a senior executive in his father’s companies. The SCS address on the purchase orders is in Beaver, W.Va.

Xcoal filed two responses in August 2012 at the new court, the U.S. District Court in Virginia. One was a point-by-point denial of the SCS claims, with an included counterclaim by Xcoal. The other was an overall brief citing legal precedents for why Xcoal doesn’t think SCS has a legal leg to stand on.

In the point-by-point answer, Xcoal noted that in March and June 2011, SCS and Xcoal entered into a series of seven purchase orders, setting forth the terms and conditions that would apply to Xcoal’s purchase of coal from SCS through March 2012. In February 2012, SCS and Xcoal agreed to amend the purchase orders to extend the end of the term from March 2012 to March 2013. Copies of the purchase orders were attached to the Xcoal answer.

At one point, Xcoal wrote about an SCS claim that SCS had to turn away longstanding coal customers to fill the Xcoal orders: “Here, SCS’s allegations do not amount to a plausible duress claim against Xcoal and Xcoal, LLC. SCS’s complaint is internally inconsistent in that it first alleges that it has numerous ‘existing customers,’ some of which ‘had been customers of SCS’s affiliates for decades.’ Nevertheless, SCS then tries to claim that in spite of its longstanding relationships with numerous customers, its ‘economic survival’ depended upon Xcoal’s acceptance of coal under the purchase orders. Such inconsistent allegations, depicting SCS on the one hand as a robust and well-established coal producer and on the other as a fragile entity wholly dependent upon Xcoal’s mercy, does not ‘state a claim to relief that is plausible on its face.’”

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.