BECKLEY — A federal judge has granted a motion to transfer venue in a case involving Carter Bank and the Greenbrier.
The motion involved the defendants' efforts to dismiss or transfer the ongoing legal action brought by the plaintiffs, which include Gov. Jim Justice and his family's business entities, against Carter Bank and several of its directors.
The plaintiffs allege various breaches of agreements and fiduciary duties by the defendants, primarily focusing on loan agreements and subsequent actions by Carter Bank, according to the April 24 memorandum opinion and order by Federal Judge Frank Volk.
The lawsuit originates from a commercial lending relationship between the plaintiffs and Carter Bank starting in 2001, involving significant loan amounts.
Disputes arose when Carter Bank allegedly breached agreements regarding funding for a real estate project and extension of loan payments related to coal mining operations.
The plaintiffs claim they were forced into default and subsequent agreements due to Carter Bank's actions.
Previous legal actions between the parties were settled in 2021, but the plaintiffs allege continued misconduct by Carter Bank afterward.
The defendants filed motions to dismiss for lack of personal jurisdiction and to transfer venue to the United States District Court for the Western District of Virginia, citing forum selection clauses in various loan agreements.
The defendants argue that the clauses mandate resolving disputes in Virginia courts.
The plaintiffs counter, asserting the clauses are unenforceable due to alleged unfair leverage by Carter Bank.
The court is tasked with determining the validity of the forum selection clauses and the appropriateness of transferring the case.
Forum selection clauses, if valid, generally require transferring the case to the specified forum, absent exceptional circumstances.
The defendants argue the clauses are mandatory and should be enforced, pointing to the parties' repeated acceptance of similar clauses in past agreements.
The plaintiffs contest the clauses' validity, alleging they were induced by fraud or overreaching.
However, the plaintiffs failed to provide specific evidence of fraud related to the clauses themselves.
The court notes the parties' previous agreements containing similar clauses, suggesting mutual acceptance and understanding.
If the forum selection clauses are deemed enforceable, the court's analysis shifts to public interest factors and the plaintiffs must show exceptional public policy considerations to override the clauses.
However, they fail to provide sufficient grounds for this, Volk wrote in the opinion.
Alternatively, the court considers transferring the case under U.S. code based on convenience and justice.
The proposed transferee district, the Western District of Virginia, is found to have proper jurisdiction and venue, Volk wrote. Witness convenience, access to evidence, and the interests of justice favor transferring the case to Virginia.
"First, venue is proper where any defendant resides," Volk wrote. "A corporation is deemed to reside 'in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.'"
Carter Bank’s principal place of business is in Martinsville, a city in the Western District of Virginia, Volk wrote.
"Further, seven of the twelve Director Defendants reside in the Western District of Virginia," Volk wrote. "Therefore, venue is proper in the Western District of Virginia."
The court is inclined to enforce the forum selection clauses and transfer the case to the Western District of Virginia, given the lack of exceptional circumstances justifying deviation from the parties' agreement and the practical considerations favoring the proposed venue.
In the Carter Bank case, the Justice companies are being represented by Steven Ruby, Michael W. Carey, Raymond S. Franks II and David R. Pogue of Carey Douglas Kessler & Ruby in Charleston. The defendants are being represented by Goodwin and Carrie Goodwin Fenwick of Goodwin & Goodwin in Charleston as well as by John C. Lynch and Megan E. Burns of Troutman Pepper Hamilton Sanders in Virginia Beach.
Attorneys did not respond to requests for comment by publication.
U.S. District Court for the Southern District of West Virginia case number: 5:23-cv-00731