ST. CROIX — Port Hamilton Refining & Transportation has filed a civil complaint against a Florida-based company relating to the oil refinery’s right to repurchase over $5 million worth of scaffolding that remains at the refinery for $1.
PHRT, in a complaint filed Tuesday in Superior Court, Division of St. Croix by attorney Andrew Simpson, is seeking the court’s intervention to prevent National Industrial Services LLC from removing the scaffolding from the refinery.
Port Hamilton, in its complaint, claims over $5 million dollars in scaffolding and scaffolding equipment that remains within the boundaries of the refinery is subject to an existing agreement allowing PHRT to repurchase the items from NIS for $1.
For over 30 years, the owner of the refinery, whether it was Hess Oil Virgin Islands Corp., Hovensa, Limetree Bay Terminals, Limetree Bay Refining, or Port Hamilton, followed an identical process for the deployment of scaffolding used within the refinery by purchasing the scaffolding and storing it at the refinery, according to the complaint. The purchase of the scaffolding reduced the logistics involved with a change in scaffolding contractors since the scaffolding would remain at the refinery and allowed the refinery owners to obtain lower bids from scaffolding contractors. To reduce the potential liability associated with ownership of the scaffolding when a contractor was using it at the refinery, the owners of the refinery developed a practice of selling the scaffolding to the contractor for $1 with a stipulation it could be repurchased for $1 at the conclusion of the contractor’s services.
In 2018, Limetree Bay Terminals created a related entity, Limetree Bay Refining, and transferred to LBR ownership of the refinery and all its associated equipment, including the right to repurchase the scaffolding within the facility. On May 20, 2019, Paul Falterman, an independent consultant who died on November 16, 2020, allegedly signed a fraudulent letter purporting to cancel LBR’s right to repurchase over $7 million in scaffolding from National Industrial Services for $1. NIS owner Jeff Nations is described in Falterman’s obituary as Falterman’s best friend. Discovery needs to be done to determine whether in May 2019 Falterman was aware that he was dying and, therefore, may have had limited reason to avoid engaging in criminal activity to assist Nations, according to the complaint.
When Port Hamilton acquired all Limetree Bay Refining’s assets on January 21, 2022 in accordance with a sale order entered by the bankruptcy judge presiding over LBR’s bankruptcy proceeding, the assets included LBR’s ownership interest in all scaffolding located within the refinery complex as well as LBR’s rights to repurchase scaffolding for $1.
On information and belief, National Industrial Services already removed millions of dollars worth of scaffolding and related equipment between May 2021 and November 2023 that is subject to Port Hamilton’s right to repurchase and shipped it in 22 different containers to Puerto Rico or the U.S. mainland, according to the complaint. In July, NIS allegedly began loading millions of dollars worth of additional scaffolding and related equipment onto eight flatbed trailers with the intent to remove the trailers from the refinery and ship them to the mainland. On or about July 26, Port Hamilton exercised its contractual right to repurchase all scaffolding from National Industrial Services by wire transferring $1 to NIS.
Port Hamilton has a critical need for over $5 million in scaffolding that remains in the refinery because its efforts to restart the refinery will suffer significant setbacks without the scaffolding and prevent the company from complying with regulatory requirements, according to the lawsuit. PHRT claims that failure to comply with the U.S. Environmental Protection Agency, Virgin Islands Department of Planning and Natural Resources, and Occupational Safety and Health Administration would endanger the health and welfare of employees and residents living near the refinery as well as make it difficult — if not impossible — to obtain the financing needed to restart the refinery. If the refinery is unable to restart, it will be sold for scrap. Even if PHRT was able to get the financing, the restart of the refinery would be further delayed by at least four months without the scaffolding that NIS is allegedly attempting to assert ownership over, causing significant damage to the local economy.
Port Hamilton claims breach of contract, conversion, and past breaches of contract. Port Hamilton seeks a temporary restraining order that prohibits National Industrial Services from exercising control or maintaining custody over the scaffolding and related equipment and requires NIS to return the scaffolding to Port Hamilton’s custody and control. Port Hamilton also seeks preliminary and permanent injunctions that prohibit NIS from exercising custody or control over the scaffolding and related equipment.
