A federal judge on Wednesday ordered that a $1 billion federal lawsuit filed by West Virginia’s governor, his family and their companies against a Martinsville-based bank and its board be transferred from a court in West Virginia to Virginia.
Gov. Jim Justice; his wife, Cathy; their son, Jay; and more than a dozen of their family companies filed the suit in November. They allege that Carter Bank & Trust and its directors have violated banking laws and prevented the Justices from working with other lenders so that the bank can continue collecting interest on the family’s loan portfolio.
Carter Bank has denied the allegations and said the Justices are stalling on repaying more than $300 million in past-due loans. The bank has said it repeatedly worked with the family and their agricultural, mining and hospitality businesses over the years, including by extending existing loans and advancing new credit.
On Wednesday, U.S. District Judge Frank Volk ordered the Justices’ lawsuit transferred from the Southern District of West Virginia to the Western District of Virginia. Among his reasons: Several witnesses live in Virginia, none of the defendants live in West Virginia, and Virginia has a greater interest in the case due in part to Carter Bank being based in the commonwealth.
“[W]hile West Virginia is undoubtedly ‘home’ for many of the Plaintiffs, it matters little,” Volk wrote in his order, noting that most of the Justices’ companies operate from White Sulphur Springs, West Virginia. “White Sulphur Springs is approximately 59 miles from our Beckley Federal Courthouse but only 82 miles from a Western District of Virginia courthouse in Roanoke. Plaintiffs thus reside almost as close to the Western District of Virginia as this Court.”
In their original complaint, the Justices had argued for the case to be heard in West Virginia because, among other reasons, “essentially all of the collateral securing the Carter Bank loans, together with nearly all the operations associated with that collateral” are in that state.
That collateral includes such companies as the Greenbrier Hotel Corp., which owns the luxury Greenbrier resort; the associated Greenbrier Sporting Club; and the Roanoke-based James C. Justice Companies, which has coal mining operations in West Virginia.
Carter Bank responded with a motion to transfer the case to the Western District of Virginia, noting that Jay Justice lives in Roanoke, the defendants are in Virginia and the loan documents and other written agreements reference Virginia law.
“This case simply does not involve a controversy localized in West Virginia, despite the political notoriety of Jim Justice,” the bank wrote in support of its motion in December.
The Justices and Carter Bank & Trust have been battling in court for years over the family’s bank loans. The latest developments have come as Justice, a Republican who has been West Virginia’s governor since 2017, is running for the U.S. Senate seat being vacated by Democrat Joe Manchin. Justice faces a primary challenge from U.S. Rep. Alex Mooney.
The Justices have said in court filings that they and the bank had an easygoing relationship beginning with a $4.5 million real estate loan in 2001 from Worth Carter Jr., who later merged 10 banks to form Carter Bank & Trust. That relationship soured after Carter died in 2017 and new management took over, the Justices say.
Carter Bank & Trust is a community bank with $4.5 billion in assets and more than 60 locations in Virginia and North Carolina, and the Justices and their companies collectively are the bank’s largest borrower. The bank has said in court filings that since approximately five years ago it has sought to reduce its credit exposure to the Justices, has told the Justices of this goal, and has repeatedly cooperated with them on restructuring their loans.
In January, a Martinsville judge denied the Justices’ request to set aside judgment claims that the bank filed in the city’s circuit court regarding the loans, which were due April 15. Following that ruling, the bank said it would “pursue aggressively” its options in seeking the money that the Justices owe.
In February, Carter Bank scheduled an auction of Greenbrier Sporting Club property, and the club filed suit to stop it from proceeding. The two sides have agreed to pause the auction while they continue discussions.
