A private club owned by West Virginia Gov. Jim Justice has filed a lawsuit to stop a Martinsville-based bank from auctioning off the club’s property.
The Greenbrier Sporting Club’s lawsuit comes as more than 40 of its lots and other parcels are scheduled to go up for auction March 5 in Lewisburg, West Virginia, at the request of Carter Bank & Trust, which extended the club a line of credit secured by a deed of trust on the club property.
The bank is seeking to recover more than $300 million in unpaid loans, interest and attorneys’ fees from Jim Justice; his wife, Cathy; their son, Jay; and a number of the family’s coal, agricultural and hospitality businesses.
In its lawsuit filed Wednesday evening in Greenbrier Circuit Court in West Virginia, the club argues that the deed of trust is invalid and that the bank has breached its contract and its fiduciary duty. It seeks an injunction to prevent the auction from proceeding, a judgment in its favor declaring that it is no longer obligated to repay the bank, and a jury trial to decide the issues.
“The current attempt to sell Plaintiffs’ property is nothing more than an effort to circumvent Plaintiffs’ pending claims against Carter Bank,” the lawsuit states, referring to a federal lawsuit filed in November that claims, among other things, that the bank is deliberately preventing the Justices from repaying their loans in order to preserve a steady stream of interest revenue — an allegation that the bank denies.
The bank had not responded to the West Virginia lawsuit as of Thursday afternoon.
The Greenbrier Sporting Club is a private equity club with a golf course, lodges, a restaurant and other amenities. Its memberships are available to owners of real estate around The Greenbrier resort, a luxury venue in White Sulphur Springs, West Virginia, that includes a hotel and casino. Jim Justice acquired the resort and club in 2009 and used it to secure the line of credit in 2015.
The club’s lawsuit alleges that in 2021, Carter Bank & Trust “coerced” various Justice family companies into an arrangement in which collateral that each company had pledged as security for its own loan became collateral for the Justices’ entire loan portfolio.
The bank modified the secured amount on the The Greenbrier Sporting Club’s deed of trust, increasing it tenfold from its original $25 million to $250 million, and said that the deed of trust also secured debts from a number of other Justice-owned companies, including Greenbrier Hotel Corp., Greenbrier Medical Institute, Justice Farms of North Carolina and the James C. Justice Companies, the lawsuit states.
With those modifications, the approximately $300 million in total debts owed by all companies named in the deed of trust exceeds the $250 million limit, rendering the deed of trust invalid under West Virginia law, the lawsuit claims.
“State law expressly provides that the debts secured by a credit line deed of trust cannot exceed the maximum amount expressly stated in the deed,” according to the club’s lawsuit.
The club also argues that it doesn’t need to pay the debt secured by the deed of trust because the bank has committed breaches of contract and of fiduciary duty that void the club’s obligations to the bank.
“Even if some amount is found to be payable from Plaintiffs to Carter Bank, moreover, it will be substantially reduced as the result of Carter Bank’s actions against Plaintiffs and Plaintiffs’ offsetting damages against Carter Bank,” the complaint states.
Furthermore, the club said in its lawsuit, auctioning The Greenbrier Sporting Club property will “irreparably harm” both the club and the local community.
“Plaintiffs’ operations are a significant contributor to the local economy, and Plaintiffs are closely intertwined with The Greenbrier resort, which is Greenbrier County’s largest employer,” the lawsuit states. “The proposed sale will severely damage not only Plaintiffs but also The Greenbrier, jeopardizing thousands of local jobs.”
Justice, a Republican who has served as West Virginia’s governor since 2017, is running for the U.S. Senate seat being vacated by Democrat Joe Manchin.
The pending auction and the lawsuit trying to stop it are the latest developments in a yearslong dispute between the Justice family and Carter Bank & Trust.
The relationship between the Justices and the bank dates back to a $4.5 million real estate loan in 2001 from Worth Carter Jr., who later merged 10 banks to form Carter Bank & Trust. The Justices’ loan portfolio grew to a peak of around $775 million in loans in 2016 before dropping to the current figure of around $300 million.
The Justices claim that their relationship with the bank soured when new management took over after Worth Carter’s 2017 death, and the Justices now accuse the bank of violating federal regulations and preventing the family from working with other lenders.
The bank has denied those claims and has said it repeatedly cooperated with the family on their loans for years but that the Justices are stalling on repaying what they owe.
This past spring, Carter Bank & Trust filed judgment claims in Martinsville Circuit Court against Jim, Cathy and Jay Justice and some of the family companies, seeking repayment of the approximately $300 million in loans that were due April 15 plus interest and fees.
The loans were personally guaranteed by Jim and Cathy Justice, and many of those loans were also guaranteed by Jay Justice, according to the bank. Jay Justice runs many of the family businesses, while Jim and Cathy Justice’s daughter, Dr. Jill Justice, is president of The Greenbrier Resort.
After the Justices unsuccessfully tried to convince Martinsville Circuit Judge G. Carter Greer to set aside those judgment claims and hold a trial instead, the bank said last month it would “pursue aggressively all remedies afforded it” to collect what it’s owed.
