Virginia Supreme Court remands Caperton, Massey case to trial co - WTRF 7 News Sports Weather - Wheeling Steubenville

Virginia Supreme Court remands Caperton, Massey case to trial court

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A court battle spanning two states and lasting more than a decade between Hugh Caperton and A.T. Massey has been remanded back to a trial court in Virginia.

The Virginia Supreme Court of Appeals released its opinion April 18 in the case of Hugh M. Caperton et al. v. A.T. Massey Coal Company Inc.

Sound familiar?

Well, this case has actually been in West Virginia before and had even sparked debate for a change in recusal rules in last year's election of state Supreme Court justices.

Suits have bounced from circuit courts in both Virginia and West Virginia, federal courts, the West Virginia Supreme Court and even the U.S. Supreme Court of Appeals.

The most recent one before the Virginia Supreme Court stems back to an action filed in Buchanan County Circuit Court where the court ruled Caperton's claims were barred by the doctrine of res judicata since the case had been before that trial court before.

However Virginia Supreme Court justices ruled that this doctrine did not apply and sent the case back to the trial court.

The case originates back to 1998 where two of Caperton's companies, Harman Mining Corporation and Sovereign Coal Sales Inc, sued Donald Blankenship's companies, Wellmore Coal Corporation for breach of contract.

According to the opinion, Caperton acquired Harman Mining Corporation and Sovereign Coal Sales Inc. in Jan. 1, 1993. He also formed Harman Development Corporation.

Two of his companies, Harman Mining and Sovereign, mined and sold metallurgical coal from a Buchanan County mine and in 1992, these two companies entered into a coal supply agreement with Wellmore Coal Corporation, court documents state.

The two companies entered into a new agreement with Wellmore in 1997.

"Because Caperton invested significant capital to improve the long-term prospects of the Harman Mine, the (coal supply agreement) reflected a substantial increase in price paid for coal by Wellmore," the opinion notes. "Wellmore was willing to pay a higher fee because it supplied LTV Steel Corporation with coal blended with the Harman Mine product, and the metallurgical qualities of that coal made it desirable to steel producers."

Later that year, Massey acquired United Coal Company, which was Wellmore's corporate parent.

At the end of the year, Wellmore told Harman Mining and Sovereign that it would accept a reduced quantity of coal for the next year — which amounted to 205,707 tons instead of 573,000 tons that was originally agreed upon.

Wellmore cited the force majeure clause of the agreement for this.

"The effect of the tonnage reduction was the financial collapse of Harman Mining," court documents state.

Harman Mining and Sovereign filed an action in Buchanan County Circuit Court alleging Wellmore breached its agreement when it reduced the tonnage of coal.

Wellmore countered that LTV didn't want to buy the Harman coal blend because it was shutting down one of its processing plants.

"Harman Mining and Sovereign alleged that Wellmore knew that LTV was not considering the shutdown of its Pittsburgh plant," court documents state.

Additionally, Caperton's two companies asserted the real reason LTV didn't want to do business with Wellmore's parent company was because Massey attempted to sell an inferior blend of coal to LTV. 

The jury later found that Wellmore breached the agreement, returning a $6 million verdict in favor of Harman Mining and Sovereign.

The Virginia Supreme Court dismissed Wellmore's appeal.

In October 1998, Caperton, Harman Mining, Sovereign and Harman Development Corporation sued A.T. Massey Coal Inc. for tort claims in Boone County Circuit Court in West Virginia.

The events leading up to this also started in the late 90s before Massey acquired UCC.  Massey tried unsuccessfully to sell its West Virginia-mined coal directly to LTV, the court document continues.

After acquiring UCC and Wellmore, Massey provided LTV with quotes for coal that was mainly from Massey Mines instead of Harman coal and told LTV to make Massey the sole-source provider in a long-term coal contract.

However, LTV didn't agree to this and stopped buying coal form Wellmore.

Then, Massey told plaintiffs that since LTV Steel would close one of its operations, Wellmore anticipated a reduction in the tonnage amount.

Massey entered into negotiations with Caperton in 1997 to purchase the Harman Mine.

"During this period, plaintiffs shared confidential information with Massey to accurately reveal the Harman companies' worth," the opinion notes.

But Massey kept delaying this acquisition, the opinion continues.

The opinion continues, saying this continued delay "not only detrimentally affected those companies but also Caperton individually" when Grundy National Bank obtained judgment against Caperton and Senstar Financial filed suit to enforce Caperton's default payment for leased mining equipment.

Caperton and his companies filed an action in Boone County Circuit Court in December 1998 alleging tortuous interference with existing and prospective contractual relations, fraudulent misrepresentation, civil conspiracy and negligent misrepresentation.

The West Virignia jury awarded Caperton and his companies a $50 million award.

Then came the appeals.

Massey appealed this decision to the West Virginia Supreme Court. Justices reversed the opinion back to the trial court but this was later vacated because two justices voluntarily disqualified themselves after the decision.

The second time around, the West Virginia Supreme Court once again reversed and remanded the decision back to the trial court.

Caperton appealed the decision to the nation's highest court, arguing Justice Brent Benjamin should have recused himself because Blankenship and Massey contributed to his campaign.

"To provide some perspective, Blankenship's $3 million in contributions were more than the total amount spent by all other Benjamin supporters and three times the amount spent by Benjamin's own committee."

The nation's highest court agreed with Caperton and reversed and remanded the case back to the West Virginia Supreme Court, asking Benjamin to recuse himself.

Letitia "Tish" Chafin brought this issue up for debate during last year's election of state Supreme Court justices when she proposed her balanced court initiative to reform the state's recusal rules.

And again, the state's highest court reversed and remanded the decision back to the Boone County Circuit Court.

However, even after this "bouncing back and forth," the West Virginia Supreme Court later dismissed the case saying a forum selection clause in the agreement required plaintiffs to bring their claims in Virginia.

And that's just what Caperton did when he filed his suit in Buchanan County Circuit Court in November 2010.

This suit alleged tortious interference with existing and prospective contractual and business relations, fraudulent misrepresentation/deceit/concealment, and seeking punitive damages.

But Massey said res judicata would bar these claims because the claims came out of Wellmore's force majeure and plaintiffs should have brought these claims the first time around in Virginia.

The court agreed that res judicata would bar these claims.

Res Judicata is defined as "a matter finally decided on its merits by a court having competent jurisdiction and not subject to litigation again between the same parties."

Caperton then appealed to the Virginia Supreme Court, which ruled that the circuit court erred in its ruling.

The opinion states the circuit court violated due process clauses by interpreting res judicata would apply retroactively to "deprive plaintiffs of their constitutionally protected tort claims and any remedies for those claims."

Justices also said evidence in this case is different than the first case, explaining the first action was a breach of the agreement where the two companies had to show the agreement legally obligated Wellmore to purchase a certain amount of coal.

Justices said proof focused on whether Wellmore "suffered a force majeure event."

In this case, justices continued, saying plaintiffs had to have different evidence to support their claims.