Judge rules in favor of landlord Horizon Ventures in lawsuit with Ambit
Nov. 2—FAIRMONT — American Bituminous Power Partners found no treat in the Halloween day ruling handed down by West Virginia's Business Court in the litigation between it and Horizon Ventures of West Virginia.
The case revolves around the Grant Town Power Plant, which is owned by Horizon but leased and operated by Ambit. The company has not paid Horizon rent on the property since 2013.
"We're super pleased, it's a wholesale win on behalf of Horizon in every way," Mark Kepple, attorney for Horizon, said. "Ambit lost their complaint, totally. We won all of our counterclaim of everything we were asking for. There's a hearing set for December 15 where they'll be establishing the damages."
Kepple and fellow attorney Joseph G. Nogay made the convincing case on Horizon's behalf to Business Court Judge Michael Lorenson in October in a Martinsburg courtroom. Ambit's attorney's, Roberta Green and John F. McCuskey failed to overturn Kepple and Nogay's arguments in court.
In his filing, Judge Lorenson found that Ambit breached the lease agreement it had with Horizon by not paying agreed upon rent since 2013. It ordered Ambit to resume paying rent to Horizon at once, as well as provide Horizon with the necessary documentation dating back to 2013 to determine how much back rent is owed. Kepple said that the fact that the judge ordered that documentation to be turned over is significant. As far as Kepple is aware, Ambit has not resumed paying back rent as of Nov. 1.
The ruling rests on a 1996 agreement which modified the terms of the lease between Ambit and Horizon. The agreement was made to resolve litigation that took place at the time over nonpayment of rent in 1994 and 1995. It simplified the rent calculation from a previous arrangement, which set up a complicated series of guidelines that determined what was owed based on the type of fuel that was burned at the plant.
If Ambit burned fuel obtained on site, there was a surcharge for using the landlord's fuel, since the power plant also sits on deposits of waste coal that Horizon owns as well. However, fuel obtained offsite carried a discount. Determining if onsite or offsite fuel was burned to generate electricity, as well as other vagaries in the initial agreements, complicated how the fuel charge was calculated for rent purposes. The cost of rent was based on a percentage of the plant's revenue.
Which is why the 1996 agreement was made. Two Horizon representatives who were signatories to the 1996 agreement, Stanley Sears and John Karras, testified to the court that the intent of the 1996 agreement was to make it easier on everyone by simplifying how the fuel was classified. Karras specifically said one of the features that made the deal attractive was that Horizon no longer had to "look over the shoulder" of Ambit to see what kind of fuel they were burning.
To entice Ambit into signing the deal, Horizon offered Ambit a lowered rent rate and in exchange, Ambit would make certain admissions of fact that made the simplified fuel classifications possible. And most importantly, they agreed that the 1996 deal would apply into the future as well, in order to avoid future litigation or issues.
"Think about it this way," Kepple said. "The 1996 agreement was an agreement to settle a lawsuit over how rent was paid. That's the fundamental thing you have to understand. The 1996 agreement provided that, so long as, meaning into the future, for as long as you have local coal on site, you must pay 2.5% of your gross revenues."
The filing shows that Ambit itself admitted, through the plant's executive director Herb Thompson, that over six million tons of local fuel are on the Grant Town premises, falling under the requirements of the agreement.
By contrast, the filing states Ambit provided no witnesses who could rebut the claims Sears and Karras made about the agreement's intent. That came back to harm them in the judge's ruling, who specifically pointed that out in his determination. Lorenson determined several of Ambit's claims during the trial were without merit, since it provided no witnesses that could rebut any of the claims Horizon made or provided evidence that proved its assertions. It appears that Ambit tried to make the case that the 1996 agreement did not apply into the future, a belief that the judge struck down in paragraph 43 of the filing. The court found unequivocally that there was no evidence to support that position.
What further hurts that assertion, is that Ambit also never provided a reason why Horizon would enter into a deal with Ambit, without securing a commitment from Ambit that dealt with the fuel calculations that were the cause of all the problems.
It's not clear why Ambit stopped paying rent in 2013. The decade-long ordeal initially began because Ambit sued Horizon for rent it had paid during the 17 years between the 1996 agreement and 2013. In an ironic twist, now Ambit might have to pay its back rent on top of damages to Horizon. However, the chance of an appeal in front of the W.Va. Supreme Court of Appeals remains a possibility. Despite the fact that recently, Ambit lost a related case having to do with consulting work with Horizon, they are appealing to the Supreme Court. Based on past behavior, the chance of an appeal in this case is high.
Ultimately, the heart of this case is unpaid rent. Kepple said this case boils down to who gets to benefit from the state's natural resources.
"So in other words, an out of state entity gets to shovel our coal, not pay rent to our West Virginia landowners and make money by selling power into 13 other states," Kepple said. "How many times does West Virginia need to get raked? This is just what happens, big power industry comes and plays a game with West Virginians, screws them and leaves. That's what happened."
Calls to Horizon's attorney, Roberta Green, were not returned by press time.
Reach Esteban at efernandez@timeswv.com
