CHARLESTON, W.Va. — Companies owned by Gov. Jim Justice and his family filed a federal lawsuit claiming insurance companies owe at least $100 million to fix damage from an enormous flood that hit the historic Greenbrier Resort and surrounding properties.
Talking about the lawsuit on Friday at the Governor’s Mansion, Justice said the insurance companies have dragged their heels on payment, creating cash flow problems that affected the rest of the family’s business holdings.
“I’m a pretty smart business guy. I can tell you that anybody, anybody that you would hire as an insurance consultant, anybody would tell you if they read our insurance policies, they’re really good. It is top of the line insurance. It is the very best money can buy,” Justice said.
“It is just unfortunate what happens. And it happens every day. It’s a game. It’s a game. They didn’t deny the claims. They just put off, put off, put off and put off and it just keeps going and going and going.”
The lawsuit against a spectrum of insurance companies was filed Feb. 15 in U.S. District Court in the Southern District of West Virginia. The lead lawyer for The Greenbrier and related companies is Mike Carey, a former federal prosecutor who has represented Justice in other cases such as a challenge to his residency.
Justice has been on the defense side of several federal lawsuits, usually over unpaid bills.
He was held personally liable for $2.5 million in a helicopter debt lawsuit that his lawyers settled. The U.S. Attorney is trying to collect a $1.23 million contempt of court penalty in another case that started as a much smaller dispute over supplies.
Justice’s coal operations face a variety of trouble in Kentucky. Controversy has dogged the companies over long-due taxes. Justice and his son Jay, who runs the coal operations, were potentially personally responsible as Kentucky’s state regulators asked for a $2.9 million penalty.
Justice, on Friday, said the cash flow problems at The Greenbrier affected the other debts and legal entanglements.
He suggested those problems have also hurt his reputation.
“You scrape together enough money to keep The Greenbrier going for another month and you get behind paying somebody or whatever it may be. And then everybody just descends on maybe the bad things,” the governor said.
“Maybe you feel like in Kentucky on something maybe you didn’t really feel like you owed that and you want to contest it, but they don’t want you to contest it so they object. And maybe they file suit or whatever it may be. Maybe it’s $200,000 or $400,000 but you can’t scrape it together and keep the doors open.”
The lawsuit
Justice and his companies are suing for more than $100 million to recoup expenses from the catastrophic June 23, 2016, flood.
“I felt like we had incredible insurance. We did. I said ‘We’ll be OK,'” Justice said. “We carry this insurance, and it’s very expensive to carry.”
The defendants — insurance companies and underwriters — are so numerous that describing them takes 18 pages of the 62-page lawsuit.
The lawsuit claims the insurers have paid only $37 million of The Greenbrier’s flood-related expenses.
“Insurance companies paid us $30 million on our claim,” Justice said. “Somebody tell me how the doors are open at The Greenbrier.”
The lawsuit states the same message in a different way:
“Because of Defendant Insurers’ intransigent, bad faith, unreasonable refusal to honor their contractual obligations, Plaintiffs — and in particular Greenbrier Hotel — have been brought to near financial insolvency and have been unable to fulfill certain of their financial obligations.”
The flood
This all started with the devastating flood of 2016, which overwhelmed the Greenbrier Valley. About 11 inches of rain fell in a 12-hour period. Twenty-three West Virginians were killed.
“When you have people who have lost loved ones — you know, The Greenbrier was going to be OK,” Justice said. “And I felt like we had incredible insurance. And I said ‘We’ll be OK, but we’ve got to do all we can for all these people.”
Nevertheless, the damage to The Greenbrier’s properties was substantial.
The event also put the resort’s future on a different course.
When the flood hit, the related Greenbrier Club was in the process of constructing a sixth golf course, the New Oakhurst Course.
Justice had grand plans for it.
It was envisioned as a mountain course designed by four golfing legends — Arnold Palmer, Jack Nicklaus, Gary Player and Lee Trevino.
“You had the four greats, maybe of all time, the only time they’ve designed a golf course together,” Justice said.
There were other big plans, too.
Hundreds of luxury home sites were planned both at the Greenbrier Club at Oakhurst. What’s more, Oakhurst had plans for a ski resort to attract guests in the winter.
In 2015, Oakhurst and Greenbrier Club started an intense marketing campaign to sell lots at the Club and at the Oakhurst Development.
To get a lot at either site, each buyer was required to pay a one-time initiation fee of $140,000 and then annual dues of about $18,000.
Even at those prices, the lots were viewed as desirable because of the presence of the Sam Snead Course at the Greenbrier Club property, the planned Oakhurst Course and the planned ski resort, which was planned to open in 2016.
But all of that activity effectively stopped after the flood.
“The ability to market and sell lots at the Oakhurst Development has likewise been nearly eradicated because of the flood,” the lawsuit states.
“The construction of the New Oakhurst Course and the ski facility, and the existence of the Sam Snead Course, were key selling points for lots at the Oakhurst Development. Those selling points have now been destroyed, or severely damaged, because of Defendant Insurers’ bad faith failure and refusal to pay Plaintiffs’ claims related to those Courses and the ski resort.”
On everything that was lost, Justice said, “People could never know all these little things.”
The Greenbrier Classic
The flood also hurt The Greenbrier Classic, West Virginia’s only professional sports event. The tournament drew golfers like Bubba Watson and Phil Mickelson. As it aired on CBS and The Golf Channel over July 4th weekend each year, scenes from the event and around the state showed West Virginia’s rolling beauty.
The golf tournament was also an investment.
“The golf tournament cost a lot of money,” Justice said. “That’s all there is to it. It cost a lot of money.”
The flood wiped out the tournament in 2016 as trees and debris covered the Old White course and the community fought to recover.
The Greenbrier Hotel had already paid a $9.7 title sponsorship to PGA of America for the 2016 tournament. The PGA eventually paid back $3.6 million of that.
The financial damage put The Greenbrier Classic in a weak bargaining position.
“We became an easy target,” Justice said. “That’s all there is to it.”
The hotel did not have enough funds to pay the $10.4 milion title sponsorship for 2017 up front. So an agreement was hatched to pay in installments in 2018, 2019, 2020 and 2021, along with title sponsorships for those years.
But in exchange the PGA required the Greenbrier Hotel to give up its Fourth of July week and move to September.
“In doing so you lose CBS. You begun competing with college football and everything else,” Justice said. “It was a blow. That’s all there is to it. But there’s no choice you’ve got a gun cocked at your head.”
The lawsuit asks for millions of dollars in losses, plus damages and attorneys fees. Discovery has been referred to Magistrate Judge Dwane Tinsley.
With all of the financial problems, Justice said he tries to keep in mind this basic point about The Greenbrier and its employees: “You’ve got 200 people who are West Virginians and you’re trying to hold it together.”