BECKLEY— Carter Bank & Trust filed a form with the U.S. Securities and Exchange Commission stating that it still intends to collect the hundreds of millions of dollars from companies owned Gov. Jim Justice's family.
In the form 8-K, filed June 7, Carter wrote that the May 31 lawsuit was "false and misleading."
"Various Justice Entities have been customers of Carter Bank for many years," the filing stated. "Beginning approximately five years ago, Carter Bank began to reduce its credit exposure to the Justice Entities and repeatedly informed the Justice Entities of the bank’s goal of reducing its credit exposure to the Justice Entities. During the ensuing years and from time to time as matters arose, Carter Bank worked cooperatively with the Justice Entities in restructuring and/or extending various of these loans."
Carter Bank wrote that on more than a half dozen occasions, the Justice Entities executed, in connection with such restructurings and/or extensions, agreements reaffirming the legality, validity and binding nature in accordance with the respective terms of their loan obligations to Carter Bank and releasing Carter Bank from any and all claims and causes of action the Justice Entities might have.
"The allegations in the Lawsuit regarding negotiations between the parties are false and misleading," Carter Bank wrote. "Banks have an obligation to their shareholders and the financial system to collect in full all amounts that are due and owing to them. Carter Bank is no different from any other bank in this regard. As with all its customers, Carter Bank expects to be repaid by the Justice Entities all amounts due and owing in full in a timely manner as agreed-upon in the various loan documents existing between the parties."
Carter Bank wrote that it believes that it is fully secured on all loans it has outstanding to the Justice Entities.
"All those loans are also backed by personal guarantees from James C. Justice, II and his wife, Cathy Justice," the filing stated. "A number of them are also backed by personal guarantees from James C. Justice, III, Mr. Justice’s son."
Carter Bank wrote that it believes that the lawsuit reflects an effort by the Justice Entities to avoid repayment of their obligations in accordance with the agreed-upon terms in the various loan documents existing between the parties.
"Carter Bank will vigorously defend all claims asserted in the Lawsuit and expects to collect in full all amounts due and owing to it from the Justice Entities," it wrote.
In the lawsuit, which was 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 all claim Carter Bank & Trust breached its fiduciary duties.
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.
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