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Judge Berger OKs $1.23 million civil contempt payment plan for Justice Energy

CHARLESTON, W.Va. — U.S. District Judge Irene Berger has approved a plan to pay down a $1.23 million civil contempt sanction on a company owned by Gov. Jim Justice and his family.

Judge Irene Berger

Berger filed the order on Friday.

Justice Energy owes the money, but another Justice company, Bluestone Resources, has stepped in to pay.

That means federal prosecutors, intervening in the case, will drop a proposal to “pierce the corporate veil” and hold Governor Justice and his son Jay, the president of Justice Energy, personally responsible.

Bluestone Resources promises three installments of $410,000 each.The first installment is due June 17, the second is due Sept. 16 and the third is due Nov. 15.

The parties are supposed to inform Berger when the payments have been made. When that has occurred, counsel on both sides are to provide a proposed order to dismiss the case.

Until then, Berger wrote, “The Court shall retain jurisdiction in this civil action over any disputes which may arise regarding the performance of the agreement set forth in this Order.”

The case first filed Nov. 6, 2013, was only for $148,496.14.

James River Equipment alleged that Justice Energy failed to pay for parts, equipment and service.

But Justice Energy failed to pay and its representatives failed to appear at a series of hearings.

This was at a time when the company was still owned by the Russian Energy company Mechel OAO. Justice had sold to Mechel in May 2009 for $568 million and then bought it back in 2015 for $5 million.

As the struggle continued for James River to receive the judgment, the company in late 2015 filed a motion for contempt.

That motion also included a request to “pierce the corporate veil” of Justice Energy and to imprison its corporate officers and directors until the payment was made.

At the time, Berger declined to go that far.

“The Court notes that piercing any corporate veil is an extraordinary remedy, and unnecessary at this point to achieve the plaintiff’s intended results in this case,” Berger wrote in a Jan. 5, 2016, order.

But the judge did grant the contempt motion and ordered Justice Energy to be fined $30,000 a day until it could demonstrate compliance with the earlier order.

By Feb. 26, 2016, as Justice was warming up for the Democratic primary race for governor, the situation had barely improved.

But the two parties had worked out a payment plan, and Berger agreed. 

She ordered the judgment of $1,230,000, representing the total amount of the sanction from her earlier order.

Justice’s companies appealed the case, but on August 17, 2018, the Fourth Circuit Court of Appeals affirmed Berger’s rulings.

This past Jan. 31, Berger granted a motion for federal prosecutors to intervene and conduct discovery of Justice Energy’s assets.

In a joint status update filed April 19, both parties indicated that process was concluding.

Noting the lack of payment so far, Berger ordered the parties to submit a proposal no later than June 6 “to inform the court as to the date by which the payment will be made in full or proposing a schedule of payments, to be completed no later than Jan. 1, 2020, for the court’s review.”

Bluestone Energy Group chief operating officer Tom Lusk issued a statement summing up much of that tangled history.

“We are grateful to U.S. Attorney Mike Stuart for recognizing that our negotiations with his office have resulted in the debt with James River Equipment being satisfied, even though we think this sanction was excessive for what was, at bottom, a $180,000 dispute,” Lusk said.

“Despite this disproportional penalty, the Justice Family has once again stepped up to pay an obligation, not of their making, that resulted from the inattention of the Russian lawyer hired by the Russian company.”

Berger Order Approving Payment Plan (Text)

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