West Virginia Gov. Jim Justice and his family want legal actions by Martinsville-based Carter Bank & Trust seeking millions of dollars in loan payments to be set aside and instead are asking a judge to schedule the dispute for a trial.
Last month, the bank filed confessions of judgment against Justice, a Republican who recently announced a bid for the U.S. Senate seat held by Democrat Joe Manchin; his wife, Cathy; and their son, James “Jay” Justice III, who heads some of the family’s businesses.
The filings seek principal, interest and attorneys’ fees on about $300 million in loans to the family’s businesses that were due to be paid in full by April 15.
A confession of judgment is sometimes included as a clause in a loan contract. If the debtor fails to pay, it allows a creditor to obtain judgment against the debtor without the creditor having to file a lawsuit or appear before a judge.
In motions filed Friday in Martinsville Circuit Court, the Justices summarize why they say the confessions of judgment should be set aside.
They accuse Carter Bank & Trust of violating federal banking regulations, of breaching its contract with the family and its businesses, and of interfering with the Justices’ business relationships with other lenders.
They argue that the confessed judgments violate due process, say the Justices’ personal guarantees on the loans have been voided and are unenforceable, and claim that damages due to them because of the bank’s actions “far exceed” the amount of the confessed judgments and would therefore offset any amount claimed by the bank.
Because, the Justices argue, Virginia law requires courts to set aside confessed judgments if a defendant claims an adequate defense, they ask that the case instead be scheduled for trial.
“Defendant hereby asserts defenses that are more than adequate to defeat any action at law by Plaintiff,” the court filing states.
Carter Bank & Trust officials could not be reached for comment Monday, but the bank has previously declined to talk about the case, citing its policy “not to comment to the press regarding matters in litigation or matters involving customers of the bank.”
On April 21 — a day after Carter Bank & Trust filed the confessed judgments in Martinsville Circuit Court — the Justice companies issued a news release in which Jay Justice said the companies have developed a refinancing plan that would pay the bank $250 million in cash immediately and pay off more than $50 million of remaining loans within months.
But, the news release said, Carter Bank & Trust earns more than $20 million annually in interest revenue from the Justices. The release claimed “the companies have made efforts to pay off their Carter Bank loans only to have the bank block them, in an apparent attempt to continue extracting interest payments from the Justices.”
That news release prompted Carter Bank & Trust to obtain an injunction against Jay Justice to prevent him from disclosing confidential information.
The bank’s motion said Justice’s news release had already disclosed such confidential information about the family’s loans and negotiations with the bank.
In the motion, Carter Bank & Trust disputed the news release’s claims that the bank was preventing the Justices from refinancing its loans with other lenders and was engaging in “predatory behavior.”
“The allegations contained in the Improper Press Release are inflammatory and baseless,” the bank’s motion for an injunction stated.
The bank’s motion later stated that the news release “caused and will continue to cause damage to Carter Bank’s reputation, goodwill and standing in the community.”
Carter Bank & Trust, founded in 1974, is a community bank with $4.1 billion in assets and locations in Virginia and North Carolina.
Among other interests, the Justices have coal mining, agricultural and hospitality businesses in Virginia, South Carolina and West Virginia. The family’s holdings include Bluestone Resources Inc., a coal-mining firm, and The Greenbrier, a luxury resort in West Virginia. The James C. Justice Companies Inc., one of the family’s businesses, is based in Roanoke.
The Justices have claimed in previous court filings that they enjoyed a friendly banking relationship with Carter Bank & Trust founder Worth Carter. That relationship grew to encompass more than $775 million in loans in 2016 before the balance was paid down to current levels.
The Justices have said their relationship with the bank soured after new management took over following Carter’s death in 2017. The two sides sued each other in 2021, although West Virginia news media later reported the Justices announced the family and the bank had reached a resolution in those matters.