CHARLESTON – Foreign judgments have been filed against Gov. Jim Justice, his wife, his son and the family businesses related to ongoing litigation involving his family businesses and a Virginia-based bank.
Last month, Martinsville (Va.) Circuit Judge G. Carter Greer issued 21 final orders denying requests by Justice, his family and companies to set aside more than $300 million in confessed judgments. The orders in favor of Carter Bank & Trust name Justice, his wife Cathy and son Jay – who oversees the family coal businesses – as well a host of the companies.
On February 26, Carter Bank filed the notices of filing of foreign judgment in several counties, including Kanawha, Raleigh, Greenbrier and McDowell.
R. Booth Goodwin II
| goodwingoodwin.com
The notices, filed by attorney Booth Goodwin, seek to collect the money Carter Bank says is owed after the Justice entities failed to pay loans that Justice, his wife and son personally guaranteed.
There were 10 filed in Kanawha County against Jim and Cathy Justice as well as 11 in Greenbrier County, four in Raleigh County and one in McDowell County against various Justice companies.
For example, one of the notices filed in Kanawha Circuit Court against Jim and Cathy Justice is for more than $51 million.
The affidavit and request to file the foreign judgment included in the filing says Carter Bank obtained a money judgment against Jim and Cathy Justice on April 20, 2023, in Martinsville Circuit Court.
“An authenticated copy of the foreign judgment to be filed in this court is attached hereto,” the affidavits filed by Goodwin state. “To the best of my knowledge, the attached foreign judgment is in full force and effect in Virginia; this judgment has not been modified, vacated or stayed; and the court that entered the judgment had jurisdiction to do so.”
In Martinsville, Greer’s orders last month closed the case, but the defendants always could appeal the decision.
Those orders did include an objection from an attorney for the Justice parties was included in the order, saying the defendants object “to the court applying a standard not found in Virginia code … by mandating a heightened pleading requirement by the defendants’ motion.”
“Defendants object to the court’s failure to consider a legal complaint filed in a United States District Court as a factual proffer to support their motion when the filing was undisputed,” the objection signed by Salem attorney Aaron B. Houchens states. “The court’s failure to consider this was a denial of due process.
“Defendants object to the court’s failure to find it had adequate defenses to the confession of judgment when Carter Bank & Trust violated the Bank Holding Company Act and the decision regarding this is the subject of a federal lawsuit that is being litigated. If successful, this would constitute a potential setoff of the sums due under the note – a defense recognized by Virginia code.”
The objection goes on to list several more reasons the defendants believe Greer erred.
Also last month, Carter Bank placed notice to auction the private Greenbrier Sporting Club to satisfy the $302 million debt personally guaranteed by Justice, his wife and their son. The legal notice of the auction appeared in the February 6 edition of The Charleston Gazette-Mail.
Soon after, the Justice companies asked for injunctive relief to temporarily stop the planned auction. The sporting club is a group of private residences near the resort, which was purchased by Justice in 2009.
Carter Bank has since told the court it would reschedule the auction, which was scheduled for March 5 on the steps of the Greenbrier County Courthouse in Lewisburg. The bank filing states it did so to allow the court to consider the merits of the Justice request to stop the auction, noting "homeowners within the Greenbrier Sporting Club development are also very interested in this matter and may be considering undertaking action of their own" because some say they own interest in the club rather than the Justice family.
Last year, Carter Bank filed orders of confessed judgments adding up to $302 million, citing the personal guarantees by the Justices. The confessed judgments are for loans Carter Bank made to James C. Justice Companies, Justice Family Group, Greenbrier Hotel Corp., Greenbrier Golf and Tennis Club, Greenbrier Sporting Club, Players Club LLC, Oakhurst Club, Greenbrier Medical Institute, Justice Low Seam Mining, Twin Fir Estates and Wilcox Industries.
Justice attorneys had asked Greer to set aside the confessed judgments, claiming Carter Bank placed restrictions on the loans that were too rigid. They also accused the bank of unfair business practices. But Greer dismissed those requests last month saying the Justice companies had not presented enough of a factual defense to convince him to set aside more than $300 million in defaulted loans. This week’s orders essentially confirmed that memo and finalized the cases.
“The motions contain no allegation of any well-recognized defense in the realm of commercial paper, such as fraud, duress, mutual mistake of fact, statute of limitations or scrivener's error,” Greer wrote in a January 22 memo. “As the plaintiff (Carter Bank & Trust) points out, the defendants do ‘not allege that the confessed judgment claimed amounts that are incorrect or that were not due and owing.’ …
“The defendants offer sparse analysis as to how these defenses are either adequate or dispositive. The defendants allege no facts to support their legal conclusions. …
“Surely, if any such defense existed, the defendants would have alleged the facts to support it. The motions to set aside the confessions of judgment are denied.”
In a recent statement to stockholders that was filed with the U.S. Securities and Exchange Commision, Carter Bank said it wants the Justice companies to pay back every cent.
“As with all its customers, Carter Bank expects to be repaid by the Justice Entities in full all amounts due and owing although the timing of such payment in full in these matters is presently indeterminate,” the filing stated. “Carter Bank plans to pursue aggressively all remedies afforded it to collect all amounts due and owing by the Justice Entities.”
A confession of judgment is an agreement accepting liability in the event of default. The note can be presented in court without alerting a debtor or having a hearing. By signing, a borrower can give up his right to a court hearing.
In November, the Justice companies filed a federal lawsuit in West Virginia against Carter about the alleged unfair business practices. That case still is pending, but Carter Bank maintains venue is improper because the bank, its board members and most Justice operations are in Virginia.
In its SEC filing, Carter Bank said that complaint contains “false and misleading claims.” It also said it will “vigorously defend” against it.
Also in January, a trustee for one of Justice’s creditors sued Carter Bank. GLAS Trust Company says Carter Bank’s actions forced the Justice companies to transfer money from Bluestone, which had borrowed the money from lender Greensill which went bankrupt when Bluestone couldn’t pay. GLAS wants $226.2 million from transfers it calls improper made to Carter Bank.
