Aracoma lawyers alleged that a potential settlement with the families of miners Don Bragg and Ellery Hatfield was scuttled by the insurance company's refusal to sign off on the deal.
LOGAN, W.Va. - As two widows begin trial in their wrongful-death case against Massey Energy, company lawyers are fighting with an insurance firm they say blocked a $20 million deal that could have settled the case.
Late last month, Massey's Aracoma Coal Co. sued American International Specialty Lines Insurance Co., seeking a court declaration that the firm's policies cover the January 2006 fire at the Aracoma Alma No. 1 Mine.
Aracoma lawyers alleged that a potential settlement with the families of miners Don Bragg and Ellery Hatfield was scuttled by the insurance company's refusal to sign off on the deal.
In an eight-page complaint, Aracoma lawyers accuse the insurer of a breach of contract that is "exposing Aracoma to a verdict in excess" of its $20 million policy limit.
The lawsuit by Aracoma was filed on Oct. 29 in Logan Circuit Court against American International Specialty Lines Insurance, which is part of American International Group, or AIG.
Families of Bragg and Hatfield have sued Aracoma Coal, parent companies A.T. Massey Coal Co. and Massey Energy, and Massey President Don Blankenship. They allege the companies and Blankenship put coal production ahead of safety, causing the Jan. 19, 2006, fire that killed the two miners.
Opening arguments were held Monday in the trial before Logan Circuit Judge Roger L. Perry. The Bragg and Hatfield estates are seeking monetary damages both to compensate them for their loss and to punish the companies and Blankenship.
Aracoma alleged that the Bragg and Hatfield families had offered to settle their case for an amount "within the applicable limits of coverage" under the company's $20 million stopgap policy. Aracoma lawyers said that Aracoma had agreed to pay its $5 million deductible portion of the settlement.
But Aracoma alleged the insurance company refused to go along with the deal. Insurance company officials wanted the other defendants - Massey Energy, A.T. Massey Coal, and Blankenship - to pay "all or a portion of" their $10 million deductible under a separate general liability policy "before taking any further steps to resolve the claims against Aracoma."
LOGAN, W.Va. - As two widows begin trial in their wrongful-death case against Massey Energy, company lawyers are fighting with an insurance firm they say blocked a $20 million deal that could have settled the case.
Late last month, Massey's Aracoma Coal Co. sued American International Specialty Lines Insurance Co., seeking a court declaration that the firm's policies cover the January 2006 fire at the Aracoma Alma No. 1 Mine.
Aracoma lawyers alleged that a potential settlement with the families of miners Don Bragg and Ellery Hatfield was scuttled by the insurance company's refusal to sign off on the deal.
In an eight-page complaint, Aracoma lawyers accuse the insurer of a breach of contract that is "exposing Aracoma to a verdict in excess" of its $20 million policy limit.
The lawsuit by Aracoma was filed on Oct. 29 in Logan Circuit Court against American International Specialty Lines Insurance, which is part of American International Group, or AIG.
Families of Bragg and Hatfield have sued Aracoma Coal, parent companies A.T. Massey Coal Co. and Massey Energy, and Massey President Don Blankenship. They allege the companies and Blankenship put coal production ahead of safety, causing the Jan. 19, 2006, fire that killed the two miners.
Opening arguments were held Monday in the trial before Logan Circuit Judge Roger L. Perry. The Bragg and Hatfield estates are seeking monetary damages both to compensate them for their loss and to punish the companies and Blankenship.
Aracoma alleged that the Bragg and Hatfield families had offered to settle their case for an amount "within the applicable limits of coverage" under the company's $20 million stopgap policy. Aracoma lawyers said that Aracoma had agreed to pay its $5 million deductible portion of the settlement.
But Aracoma alleged the insurance company refused to go along with the deal. Insurance company officials wanted the other defendants - Massey Energy, A.T. Massey Coal, and Blankenship - to pay "all or a portion of" their $10 million deductible under a separate general liability policy "before taking any further steps to resolve the claims against Aracoma."
Massey already faces proposed civil fines of $1.5 million for 25 major violations cited by the U.S. Mine Safety and Health Administration, and a federal criminal investigation of the fire is ongoing.
Federal and state investigators found that a poorly maintained conveyor belt system caught fire, and a missing ventilation wall allowed smoke to spread to the mine's primary escape tunnel. A crew of 12 workers ran into that smoke as they tried to evacuate. As they sought another way out, Bragg and Hatfield became separated from the group, got lost, and eventually succumbed to the smoke.
In U.S. Securities and Exchange Commission filings, Massey has told stockholders that it has "insurance coverage applicable to" the Aracoma wrongful-death case.
But Massey also noted that the ongoing criminal probe "could result in criminal fines for Aracoma or other subsidiaries of ours."
"While we believe we have sufficient legal reserves for these matters, it is possible that the actual outcome of these matters could vary significantly from those amounts," Massey said. "We believe these matters will be resolved without a material impact on our cash flows, results of operations or financial condition."
A court ruling for Aracoma in the insurance case could later be used by Massey to try to force its insurer to pay if the jury in the wrongful-death case awards the families more than the $20 million policy limit. At the same time, the outcome of the criminal case could be used by the insurance company to try to avoid paying anything if Massey reaches a plea deal with federal prosecutors.
There was no testimony in the wrongful-death trial Tuesday because of the Veterans Day holiday.
State mine inspector Eugene White has been subpoenaed to appear as the families' first witness today. More than a half-dozen Aracoma Mine managers are scheduled to be called to testify today. But most are expected to assert their Fifth Amendment right and refuse to answer questions.
Reach Ken Ward Jr. at kw...@wvgazette.com or 348-1702.
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Saw where AIG was infused with another 40 billion of taxpayers dollars last week. I have couple of suggestions to get to the root of the problem. Perhaps you could phone Henry Paulson ( Bushe's treasury treasury) He overtly spearheaded bailout terms. Another possibility would be to phone Obama's Financial Advisor Robert Rubin who also supported the bailout terms. You see both Rubin & Paulson are "Democrats" and "Republicans"..Both became prominent Wall Street Figureheads via being CEO at Goldman Sachs..