What happened: The Sixth Circuit affirmed a $25M judgment against a US senator who personally guaranteed his coal companies’ surety bond premiums.
Who’s involved: Lexon Insurance Company and coal companies owned by Senator James C. Justice II’s family.
What’s at stake: $25,179,709.24 plus interest - $14.25 million in collateral and $10.93 million in accrued premiums.
Why it matters: The guaranty’s use of a dynamic rather than fixed premium reference let the surety recover the full scope of missed payments.
Where it stands: Decided. The Sixth Circuit affirmed in a published opinion on October 9, 2026.
A US senator personally guaranteed his coal companies’ surety bond premiums, and it just cost him more than $25 million.
The US Court of Appeals for the Sixth Circuit affirmed a judgment of $25,179,709.24 plus interest against Senator James C. Justice II on October 9, holding him liable under a personal guaranty tied to surety bonds issued by Lexon Insurance Company.
Justice and his family own several coal companies that began obtaining surety bonds from Lexon in 2010 to guarantee reclamation obligations to state regulators. The bonds exposed Lexon to more than $100 million in risk. The companies paid premiums for years but started missing payments around 2016 as the coal market deteriorated.
In February 2019, the companies signed an amended agreement to post $20 million in new collateral and pay down $3,538,400.75 in past-due premiums at $200,000 a month. Justice personally guaranteed both obligations.
The companies never came close. They put up $5.75 million of the $20 million in collateral and stopped after December 2019. Premium payments totaling $4.21 million ended in March 2021.
The central dispute turned on “Total Indebtedness.” Justice argued it was a fixed $3,538,400.75. Lexon said it was a running total that grew every time the companies missed a premium by more than 60 days.
The Sixth Circuit sided with Lexon. Justice’s own guaranty confirmed the dynamic reading, referring to payments “until the Total Indebtedness (including any new premiums becoming due during the term of the Amended Agreement) is paid in full.”
The court also found the guaranty did not cap premium liability at the initial figure. It used a precise dollar amount for collateral but referred only to “the amount of the Total Indebtedness” for premiums - implying one was fixed and the other was not.
The agreement ran until the companies paid in full, the court held, not until a collateral deadline of October 2021. Result: $14.25 million in unpaid collateral plus $10,929,709.24 in accrued premium debt.
Justice argued the companies would never have the resources to pay. The court was unmoved, quoting a treatise: “the question whether a bargain is smart or foolish is not ordinarily a legitimate subject of judicial inquiry.”
The guaranty’s architecture carries a practical lesson for surety providers - tying premium recovery to a dynamic definition rather than a fixed figure let Lexon recover missed payments over the life of the bond relationship.
The Sixth Circuit’s published opinion affirmed the district court’s judgment in full.
