BECKLEY — Gov. Jim Justice and his family have filed another lawsuit alleging a bank is liable for millions of dollars it lent to Justice's coal companies.
In the latest lawsuit, filed May 31 in U.S. District Court for the Southern District of West Virginia at Beckley, Justice, his son, his wife, Bellwood Corp., Greenbrier Hotel Corp., Greenbrier Golf and Tennis Club Corp., Greenbrier Medical Institute, The Greenbrier Sporting Club Development Company, The Greenbrier Sporting Club, Justice Family Group, James C. Justice Companies, Justice Farms of North Carolina, Justice Low Seam Mining, Oakhurst Club, TAMS Management, Triple J Properties filed the lawsuit alleging that Carter Bank & Trust was breached its fiduciary duties, particularly the covenant of good faith and fair dealing.
Justice and the rest of the plaintiffs want $421 million and a declaratory judgment that the loan modifications provided by the plaintiffs to the defendants, implemented by the defendants beginning in Fall 2017 relating to certain financing arrangements are unenforceable.
Justice and Worth Carter, who merged several banks together to create Carter Bank & Trust in 2006, met in 2001 and worked together until Carter's death in 2017. The plaintiffs claim after Carter's death, the relationship with the bank rapidly began to deteriorate and the defendants were hostile toward the plaintiffs.
In August and September 2017, the defendants induced several Justice coal companies into technical default on just $1.9 million in amortization payments by orally accepting a request in the lead-up to the payment date to forbear and provide additional short-term capital, a commitment they relied on based on the relationship of trust built over two decades, according to the suit.
"But as the final hour approached and Plaintiffs repeatedly sought Defendant Carter Bank’s written confirmation of the oral agreement, Defendants intentionally went radio-silent, allowing the payment date to pass, and then immediately sending the Justice Entities not the promised agreement to forbear and extend, but a notice of default and acceleration," the complaint states.
The plaintiffs claim the defendants accelerated more than $268 million of outstanding debt and used the technical default as leverage.
"These demands put Plaintiffs between a rock and a hard place," the complaint states. "Facing an acceleration of over $268 million in debt as a result of the technical default and fearful of alienating its near exclusive financing provider, Plaintiffs had no choice but to acquiesce to the oppressive demands."
The plaintiffs claim the defendants have acted in bad faith and conduct.
The plaintiffs are seeking a declaratory judgment in its favor and damages in the amount of $421 million, as well as punitive damages and pre- and post-judgment interest. They are represented by Christopher Schroeck of Bluestore Resources and H. Rodgin Cohen, James Bromley and Benjamin Beller of Sullivan & Cromwell.
This is the second lawsuit Justice and his companies have filed against a financial institution over loans just this year. In March, Justice and his companies sued Greensill Capital over $700 million in loans that they claim the company induced them into major loans before it collapsed. Justice personally guaranteed those loans, as well as the Carter loans, putting him on the hook for more than $1 billion between the two institutions.
U.S. District Court for the Southern District of West Virginia at Beckley case number: 5:21-cv-00320