ON THE MOVE — A federal judge transferred a case brought by Gov. Jim Justice against Carter Bank and Trust to a neighboring Virginia federal court Wednesday. — Steven Allen Adams
CHARLESTON — A Virginia-based bank that loaned hundreds of millions of dollars to companies owned by Gov. Jim Justice has successfully moved a lawsuit by the governor to stop the collection from West Virginia to Virginia.
U.S. District Judge Frank W. Volk issued a memorandum opinion and order Wednesday granting a motion by Carter Bank and Trust and its board of directors to transfer a lawsuit filed last November by attorneys representing Justice, first lady Cathy Justice, and 15 Justice-owned companies — including the historic Greenbrier Resort.
Volk’s order transfers the case from the U.S. District Court for the Southern District of West Virginia to the U.S. District Court for the Western District of Virginia where Carter Bank is headquartered. Volk also denied a motion by Carter Bank’s board of directors to dismiss the lawsuit.
The Justice family filed the suit in federal court in West Virginia on Nov. 13, 2023 – two days before a scheduled hearing in the Martinsville Circuit Court in Virginia where attorneys for Justice and Carter Bank were supposed to make oral arguments regarding Carter Bank’s attempt to collect on more than $300 million in personal loan guarantees to Carter Bank made by the Justices.
According to the ruling, Volk explained that several of the contract clauses between the Justices and Carter Bank require any lawsuits to be filed either in the Martinsville Circuit Court or the federal courts in Virginia. Volk said the two parties signed 19 agreements that all required future lawsuits to be filed in Virginia.
“In each of these Release and Reaffirmation Agreements, (the Justices and Carter Bank) agreed the exclusive venue for any dispute would lie in the Martinsville Circuit Court or the United States District Court for the Western District of Virginia,” Volk wrote. “…The forum selection clauses are mandatory and thus presumptively enforceable.”
Attorneys for Carter Bank filed 21 confessed judgments since last April against Justice, Cathy Justice, son Jay Justice, and multiple Justice-owned companies, seeking more than $301 million plus interest and attorney fees. Carter’s efforts to collect on Justices’ loan guarantees comes more than two years after Justice dropped a federal lawsuit against the bank. Carter Bank filed 11 individual cases — called confessions of judgment — against Jim and Cathy Justice in an attempt to collect on those loan guarantees.
In a press release last year Jay Justice — who manages the Justice family’s coal and agricultural businesses — said the companies tried to reach an agreement with Carter Bank officials, offering them $250 million up front, leaving them with four outstanding loans totaling $57 million secured with $325 million in collateral.
Justice’s companies dropped a federal lawsuit against Carter Bank in 2021, with Carter Bank dropping a circuit court lawsuit against Justice’s companies over $368 million in loans that were also personally guaranteed by Justice. According to court filings, the portfolio of loans to Justice’s companies grew from a $4.5 million real estate loan in 2001 to more than $740 million between Justice’s various coal, agriculture, hospitality businesses, and other companies.
While all the 15 companies in the lawsuit are located in West Virginia, Jay Justice resides in Roanoke, Va., as does in-house Justice legal counsel Stephen Ball, as well as other attorneys representing the Justice family and bank officials. And all the loan agreements were signed in Virginia and follow Virginia law.
“…The Court anticipates a majority of witnesses and evidence are located in the Western District of Virginia,” Volk wrote. “And inasmuch as Carter Bank’s assets are exposed in this litigation, an adverse outcome would deeply affect Virginia’s economy, with Carter Bank’s headquarters, sixty-nine branches, and hundreds of employees there located.”
“Moreover, the Justice Family moved to set aside the confessed judgments in Virginia state court for many of the same reasons it now asks this Court to declare them void,” Volk continued. “…The Western District of Virginia has a much weightier interest than this District.”
