MARTINSVILLE, Virginia – A Virginia judge has decided companies owned by Gov. Jim Justice and his family have not presented enough of a factual defense to convince him to set aside more than $300 million in defaulted loans.
“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,” Martinsville Circuit Judge G. Carter 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.’
“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.”
Justice’s attorneys asked to have the confessed judgments in all 11 cases set aside, arguing Carter Bank engaged in unfair business practices with oppressive lending terms. They also said enforcing confessed judgments is difficult and want more time to offer a more detailed defense.
Greer wasn’t having it.
“The defendants offer sparse analysis as to how these defenses are either adequate or dispositive,” he wrote. “The defendants allege no facts to support their legal conclusions.”
Greer asks attorneys for Carter Bank to prepare an order for him to approve.
The bank seeks the $302 million plus interest and fees to pay back the 11 defaulted loans that have personal guarantees signed by Justice, his wife Cathy and son Jay, who runs the family’s coal businesses. The loans were written to James C. Justice Companies, Justice Family Group, Greenbrier Hotel Corp., Greenbrier Golf and Tennis Club, Greenbrier Sporting Club, Players Club, Oakhurst Club, Greenbrier Medical Institute, Justice Low Seam Mining, Twin Fir Estates and Wilcox Industries.
The bank filed the confessed judgments in April with the loans were due.
In a 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 have 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.