West Virginia Supreme Court Reverses $50 Million Verdict Against Massey

By Jeffrey V. Mehalic
West Virginia Business Litigation

November 22, 2007

Yesterday was the last day of the Supreme Court of Appeals of West Virginia’s Fall Term, and the Court released several opinions, including its decision in Caperton v. A.T. Massey Coal Company, Inc. [ http://www.wvbusinesslitigationblog.com/Caperton%20v.%20Massey.pdf ], No 33350. (The Westlaw opinion is not available yet, so the link is to the PDF version on the Court’s website.)

At stake was the $50 million verdict in the plaintiffs’ favor, based on the jury’s finding that A.T. Massey Coal Company, Inc. and several of its subsidiaries intentionally interfered with and destroyed Hugh Caperton’s business. With accrued interest since the verdict in 2002, the plaintiffs’ judgment had grown to approximately $76 million. Here’s my post from last month [ http://www.wvbusinesslitigationblog.com/2007/10/articles/litigation/supreme-court-hears-masseys-appeal-of-50-million-verdict-today/ ] when the case was argued.

In a 3-2 decision written by Chief Justice Robin Davis, the Supreme Court reversed the verdict and remanded the case to the Circuit Court of Lincoln County with directions to enter an order dismissing with prejudice the plaintiffs’ claims against the defendants. The Court identified two grounds for the reversal. First, the circuit court should have granted the defendants’ motion to dismiss based on a forum selection clause contained in “a contract directly related to the conflict giving rise to the instant lawsuit.” Second, assuming that the circuit court’s ruling on the forum selection clause was not erroneous, the Supreme Court found that the doctrine of res judicata based on an action that had been litigated in Virginia.

The Virginia litigation to which the Court refers is the plaintiffs’ 1998 suit against a Massey subsidiary in the Circuit Court of Buchanan County, Virginia, which alleged breach of contract and breach of the duty of good faith and fair dealing. Only the breach of contract claim was considered by the jury, which returned a verdict in the plaintiffs’ favor for $6 million. That verdict resulted in Massey suing its Virginia counsel for malpractice, on the grounds that they failed to sign the notice of appeal, which resulted in the dismissal of the appeal and the affirmance of the verdict, which I also wrote about last month [ http://www.wvbusinesslitigationblog.com/2007/10/articles/legal-malpractice/massey-alleges-legal-malpractice-by-counsel-in-virginia-lawsuit/ ].

The first paragraph of the Court’s discussion will not provide any comfort to the plaintiffs: “At the outset we wish to make perfectly clear that the facts of this case demonstrate that Massey’s conduct warranted the type of judgment rendered in this case. However, no matter how sympathetic the facts are, or how egregious the conduct, we simply cannot compromise the law in order to reach a result that clearly appears to be justified. As we will demonstrate below, the law simply did not permit this case to be filed in West Virginia.” So, if the Court had not reversed based on the forum selection clause and the doctrine of res judicata, it would have affirmed the verdict.

Interestingly, the Court acknowledged that while the circuit court was correct in denying the defendants’ motion for summary judgment based on the doctrine of res judicata because the Virginia judgment was pending when the motion was filed, the Court concluded that it “may address the issue anew because a final judgment was rendered in the Virginia case by the time this appeal was prosecuted.”

Justices Larry Starcher and Joseph Albright filed separate dissenting opinions, which are here [ http://www.wvbusinesslitigationblog.com/Starcher%20dissent.pdf ] and here [ http://www.wvbusinesslitigationblog.com/Albright%20dissent.pdf ], both of which quote from the Court’s initial paragraph of its discussion, in which it affirms the factual basis for the jury’s verdict. The Albright dissent points out that the majority opinion created seven new syllabus points having to do with forum selection clauses “applied to the facts of this case so as to relieve the defendants in excess of a verdict in excess of $50 million, plus interest and costs, which would have resulted in a judgment calculated to be in excess of $75 million.”

The Starcher dissent focuses on jury’s assessment of the conduct of Don Blankenship, Massey Energy Company’s chairman, in bringing Hugh Caperton and his businesses to financial ruin.

This opinion will generate a lot of discussion, particularly because the Court agreed that the plaintiffs were entitled to the verdict returned by the jury, but reversed on relatively narrow grounds. Paul J. Nyden wrote about the decision [ http://www.wvgazette.com/section/News/2007112134 ] in this morning’s Charleston Gazette.

At this point, I will conclude this post and turn my attention to dinner, which is nearly ready. Happy Thanksgiving to everyone.

Posted at 3:48 PM