Two officers in Gov. Jim Justice’s sprawling family business have been held in civil contempt by a federal judge who concluded they have stonewalled about financial information in a longstanding case.
Jay Justice, the governor’s son, and Stephen Ball, general counsel for various businesses owned by the Justice family, each have been ordered to pay sanctions of $250 a day until the court considers them fully in compliance by providing financial details. U.S. District Judge Gregory Van Tatenhove filed his order Friday in Kentucky, saying the officers “must be brought to account. There will be no more chasing the wind.”
Judge Van Tatenhove’s order reserved the right to impose even greater sanctions if the officers don’t comply.
Governor Justice, who has a 60% majority share in his family’s overarching Bluestone Resources, according to the company organizational chart, was not cited in this order. Governor Justice’s disclosures on file with the state Ethics Commission show financial interest in dozens of companies, including the one at the center of this case, Kentucky Fuel. The court order does make reference to the governor’s position in the past as a director of the close-knit group overseeing Kentucky Fuel.
Justice, a Republican candidate for U.S. Senate, has repeatedly objected to media questions about financial conflicts. “If it gets to the point where things are totally absurd, totally ridiculous, fake news stuff, and it just goes on and on, won’t stop and everything then we’ve got to go in a different direction,” Justice said last week at a news briefing about those kinds of questions.
The federal sanctions order marked the 744th entry in a dispute involving Justice’s Kentucky Fuel, which has been grappling with Fivemile Energy and its associated New London Tobacco Market over a mineral rights leasing dispute since 2012. Fivemile was awarded $18 million in federal court in Kentucky, but collection has been held up by delays spanning years.
Judge Van Tatenhove touched on that history from the start of his order.
“Since the beginning of this long-suffering case, the Defendants have engaged in a campaign of delay. Their perpetual reluctance to cooperate has already resulted in admonishment, sanctions, and ever-increasing fiscal liabilities in the form of attorneys’ fees and expenses,” he wrote.
Jay Justice is listed as president of Kentucky Fuel and Ball as vice-president in the corporate filing with the West Virginia Secretary of State’s Office. The governor’s daughter, Jill Justice, is listed as a director but the court so far has concluded that she has minimal involvement or knowledge in the running of Kentucky Fuel.
Lawyers for Fivemile have contended that the Justice family officers “fraudulently transferred assets to ensure that the Defendant Entities would ultimately be judgment proof.” New London and Fivemile sought post-judgment discovery targeted at collection, potential fraudulent transfers and evidence that corporate entities like Kentucky Fuel are the alter-egos of the Justice family.
Lawyers for the Justice companies disputed the discovery requests on several grounds. They were trying to narrow the amount of discovery they would have to produce about the Justice companies. And they argued that the sprawling Justice holdings created an undue burden of discovery production — and that many of the Justice companies are not relevant to the case.
U.S. Magistrate Judge Hanly Ingram of Kentucky disagreed and ruled against the Justices. In a show cause order from two years ago, Ingram found that “Stephen Ball and Jay Justice have not met their burden of proving inability to comply with the Discovery Order.
“Defendants have not addressed categorically and in detail why they may have been unable to comply with the different components of the Discovery Order. Further, they have not pointed to any factor beyond their control that prevented compliance. In other words, their noncompliance was self-induced.”
Judge Van Tatenhove, in this most recent filing, was reviewing Ingram’s conclusions.
“In this particular case, the Defendants have continuously evaded and hindered the postjudgment discovery process. In May 2021, Judge Ingram ordered them to respond to interrogatories and to turn over relevant documents. They refused,” Van Tatenhove wrote.
The judge continued, “The purpose of the post-judgment discovery was to discover facts that would support a finding of alter ego. The Defendants then engaged in abusive practices for the sole purpose of frustrating the Plaintiffs’ ability to extract the discovery.”
Van Tatenhove found that the per diem penalty imposed on Jay Justice and Stephen Ball is appropriate until they fully comply with discovery as ordered by Magistrate Judge Ingram.
“The Court reserves jurisdiction to consider such other and further relief as may be appropriate in the event that the Defendant entities fail to comply with Judge Ingram’s discovery order, or in the event that Messrs. Justice and Ball fail to comply with this Court’s order.”
