West Virginia Gov. Jim Justice, along with his wife, son and a portfolio of companies tied to the Justice family, have filed a new lawsuit against Martinsville-based Carter Bank & Trust and members of its board, seeking at least $1 billion.
It’s the latest move in a yearslong dispute between the Justices and the bank over hundreds of millions of dollars in unpaid loans, and it comes as the two sides are scheduled to meet Wednesday in Martinsville Circuit Court over a related case [Update: After this story was initially published, Wednesday’s court hearing was rescheduled for Dec. 11.]. Justice, a Republican, is currently running for the U.S. Senate, seeking the seat that will be vacated by Democrat Joe Manchin, who recently announced he won’t seek another term next year.
The Justices accuse Carter Bank of violating federal banking regulations and using its control over the family businesses to prevent them from taking actions, such as doing business with other banks, that they say would allow the family to repay more than $300 million in loans. They say the bank wants to preserve millions of dollars in annual interest revenue from the Justices’ companies.
“Defendants’ predatory, unlawful conduct has caused, and will continue to cause, enormous past and future damages to Plaintiffs,” the Justices’ complaint states. “Faced with Defendants’ bad-faith conduct, Plaintiffs have no choice but to bring this lawsuit to remedy the ongoing and future harm to their businesses that Defendants have caused.”
Among the more than a dozen Justice family companies listed as plaintiffs are entities associated with the Greenbrier Resort, coal mining companies and real estate holding companies.
Carter Bank & Trust, founded in 1974, is a community bank with $4.1 billion in assets and locations in Virginia and North Carolina.
“We have not been served the complaint at this point and have obviously not had a chance to review it,” Carter Bank spokesperson Brooks Taylor said Monday. “Therefore we have no comment at this point. We will have an appropriate response once we have a chance to review the complaint.”
In previous court filings, the bank has called the Justices’ allegations “inflammatory and baseless” and has accused the Justices of engaging in stall tactics to delay paying back the money they owe.
A Martinsville circuit judge is set to hear arguments Wednesday over the Justice family’s motion to dismiss confessed judgments the bank filed against it earlier this year on the more than $300 million in loans that were due April 15.
A confession of judgment essentially allows a creditor to obtain judgment against a non-paying debtor without having to go before a judge. But the Justices have challenged the confessions of judgment, asking instead for the case to go to trial.
Many of the specific allegations in the new lawsuit, filed Friday in the Southern District federal court in West Virginia, are redacted. In a footnote in the suit, the Justices say Carter Bank forced them to sign a nondisclosure agreement in 2021 “which purports to impose a broad prohibition on Plaintiffs’ discussing Carter Bank’s statements and actions even in a judicial proceeding brought to assert Plaintiffs’ rights.”
The Justices say that the agreement “is plainly unenforceable” but “in an abundance of caution” they broadly redacted the public version of their legal complaint and plan to file an unredacted, sealed version too.
Unredacted portions of the lawsuit echo claims made in previous court filings. The Justices say a previously easygoing relationship with Carter Bank has soured since the 2017 death of its founder, Worth Carter, when new bank management stymied communication with the Justice companies and tightened its lending rules, “pulling the rug of trust and confidence right out from under Plaintiffs.”
In May 2021, the Justices sued Carter Bank & Trust for $421 million, claiming the bank engaged in anticompetitive behavior and breach of contract, among other things. Federal court documents show the two sides agreed to a dismissal of the suit in September 2021.
The ongoing dispute with Carter Bank & Trust is among a number of financial challenges faced by the Justice family, which owns more than 100 companies in Virginia and West Virginia.
Among recent examples in Virginia: In May, the U.S. Justice Department filed a civil action in the Western District of Virginia federal court against 13 Justice family coal companies and Jay Justice, son of the West Virginia governor, seeking unpaid federal environmental penalties and interest totaling about $7.6 million.
And in June of this year, more than 30 properties spanning more than 2,200 acres in Lee County owned by Roanoke-based Blackstone Energy Ltd. — of which Jay Justice is president — headed to auction because of about $162,000 in unpaid taxes, penalties, interest, costs and attorney fees.