Justice companies file suit to block $300 million loan guarantees

“The suit seeks in excess of $1 billion in damages arising from the defendants’ illegally blocking the Justice plaintiffs from doing business with lenders other than Carter Bank,” said Justice attorney Steve Ruby, a former assistant U.S. Attorney for the Southern District of West Virginia. “The suit asserts that the defendants violated the federal Bank Holding Company Act, among other laws.”

The suit was filed two days before a scheduled hearing Wednesday, Nov. 15, in the Martinsville Circuit Court in Virginia, where attorneys for Justice and Carter Bank were supposed to make oral arguments. A spokesperson for Carter Bank declined to comment on this story.

The Justices have made more than $300 million in personal loan guarantees to Carter Bank. Attorneys for Carter Bank have filed 21 confessed judgments since April against Gov. Justice, Cathy Justice, Jay Justice and multiple Justice-owned companies, seeking more than $301 million plus interest and attorney fees.

Carter’s efforts to collect on Justice’s loan guarantees comes more than two years after Justice dropped a federal lawsuit against the bank. Carter Bank filed 11 individual cases — called confessions of judgment — against Jim and Cathy Justice in an attempt to collect on those loan guarantees.

In a press release in April, Jay Justice — who manages the Justice family’s coal and agricultural businesses — said the companies tried to reach an agreement with Carter Bank officials, offering them $250 million up front, leaving them with four outstanding loans totaling $57 million secured with $325 million in collateral.

“Our companies’ refinancing plan would immediately pay off several of our loans with Carter Bank and set the stage to quickly eliminate all the remaining loans,” Jay Justice said, “But the bank has blocked those efforts, instead seeking to stop us from refinancing our loans with other lenders … Unfortunately, the bank’s predatory behavior will now obligate us to aggressively protect our legal interests.”

Justice’s companies dropped a federal lawsuit against Carter Bank in 2021, with Carter Bank dropping a circuit court lawsuit against Justice’s companies over $368 million in loans that were also personally guaranteed by Justice.

The history between the Justices and Carter Banks goes back to 2001, when Carter Bank became the primary lender to his companies due to a personal relationship between Gov. Justice and Worth Carter, the founder of the bank. But after Worth Carter died in April 2017, Carter Bank started seeking payment towards the loan guarantees.

According to their court filing Monday, the portfolio of loans to Justice’s companies grew from a $4.5 million real estate loan in 2001 to more than $740 million between Justice’s various coal, agriculture, hospitality businesses, and other companies.

“After Mr. Carter’s death, the Justice family could have moved their business to another bank,” Ruby wrote in Monday’s filing. “But the Bank’s new management swiftly moved to cut off that option, effectively seizing control of the Justice businesses and making it impossible for Plaintiffs ever to fully pay off their loans, with the goal of securing for the Bank a permanent stream of tens of millions of dollars in annual revenue. Carter has pursued that goal relentlessly — and unlawfully — ever since.”

The Carter Bank personal loan guarantees are some of the hundreds of millions of dollars owed by Gov. Justice and his family to banks, vendors, tax collectors, and the federal government for unpaid penalties. One company is seeking a Justice-owned helicopter to satisfy a debt. Justice’s salary as governor was subject to garnishment earlier this year by Elkins-based Citizens Bank of West Virginia over a $861,085 unpaid civil judgment.

The governor and first lady Cathy Justice personally guaranteed loans for Bluestone Resources to now-defunct Greensill Capital for approximately $700 million beginning in 2018. Bluestone made an offer with Credit Suisse last year to settle past loans to Greensill, offering Credit Suisse $300 million by refinancing the existing loans through a third-party lender. The company also offered Credit Suisse half of any proceeds from the future sale or initial public offering of Bluestone.