A judge on Monday said it could be the end of January before he issues an opinion on whether West Virginia Gov. Jim Justice, his family and their companies will be granted a trial as Martinsville-based Carter Bank & Trust seeks to recover more than $300 million in unpaid loans.
Carter Bank on April 20 filed confessions of judgments in Martinsville Circuit Court against Justice; his wife, Cathy; and their son, Jay, in connection with the loans, which were due April 15, and soon followed up with similar filings against multiple Justice-owned companies. A confession of judgment is a clause in a loan document that essentially allows a creditor to obtain judgment against a non-paying debtor without having to go to trial.
Salem-based attorney Aaron Houchens, representing the Justices, said in court Monday that if a debtor can show an adequate defense, Virginia law allows the court to set aside the confessions of judgment and schedule the case for trial instead. The Justices’ primary defense is a claim that Carter Bank has violated federal banking regulations in its dealings with the family.
“All we need to do today is reach a very low burden, and I think we’ve done it,” Houchens said in Martinsville Circuit Court before Judge G. Carter Greer.
Jonathan Hauser, an attorney who represents Carter Bank, said in court that the Justices signed multiple documents stating they would repay the loans by April 15, and said the bank loses $122,000 in interest each day that the loans remain unpaid.
“They owe the money. There’s no question about that,” Hauser said.
Furthermore, Hauser said that although Virginia law allows a judge to set aside confessions of judgment and schedule a case for trial instead, it remains up to the judge’s discretion whether to do so. He asked Greer to rule against the Justices’ motion and “end these cases.”
Monday’s court hearing was the latest development in an ongoing dispute between Carter Bank & Trust and the family of Jim Justice, the Republican governor of West Virginia since 2017 who is running for the U.S. Senate seat being vacated by Democrat Joe Manchin.
The Justices have more than 100 coal mining, agricultural and hospitality companies in Virginia and West Virginia, many of which are operated by Jay Justice. Companies named in the confessions of judgment include the Justice Family Group, the James C. Justice Companies and the Greenbrier Hotel Corp.
Carter Bank & Trust is a community bank with $4.5 billion in assets and more than 60 locations in Virginia and North Carolina.
The Justices have said in court papers that they had an easygoing relationship with the bank based on handshake deals with its founder, Worth Carter Jr., but that relationship soured after Carter’s death in 2017, when new management took over.
They have accused Carter Bank of “obstructive conduct,” including deliberately stymieing communications with the Justices, inducing them into defaulting on their loans and preventing them from working with other lenders, all to preserve millions of dollars in annual interest.
Carter Bank has called the allegations “inflammatory and baseless.” It has maintained in court filings that for years it repeatedly cooperated with the Justices on the family’s loans and that the family and its businesses are stalling on repayment.
As Monday’s hearing began, Houchens presented Greer with a copy of a federal lawsuit that the Justices filed Nov. 10 in the Southern District of Western Virginia.
The suit seeks at least $1 billion from the bank and its board of directors. Large portions of it have been redacted from public view — a footnote in the suit says that the Justices don’t want to run afoul of a nondisclosure agreement they said Carter Bank made them sign in 2021 — but unredacted portions echo arguments made in previous court filings.
After Houchens presented the suit to Greer, Hauser said the bank’s lawyers and Justices’ lawyers had previously agreed that there would be no evidence presented during Monday’s hearing, only arguments.
Hauser pointed out the suit’s numerous redactions and called it a “worthless document.”
Houchens said that the lawsuit provides a “factual basis and further support” for the Justices’ defense that the bank is violating federal regulations.
Since the Justices are using the same defense in both the Martinsville Circuit Court case and in the federal case, a federal judge eventually will rule on the defense that also applies in the state case.
“I think it’s important information for the court to have,” Houchens said.
Hauser said the case in Martinsville involving the confessed judgments has been pending since April, whereas the federal suit in West Virginia was just filed a month ago, and therefore the federal case should cede to the state case.
As Monday’s hearing concluded after about a half-hour of arguments, Greer said that because of the holidays, he might not be able to issue an opinion on whether to set aside the confessed judgments until Jan. 31.
“I would hope to do so sooner and perhaps will be able to,” Greer said.
