Familiar names enter legal tangle between Justice and his banker

When Gov. Jim Justice and his family square off against their longtime banker in court, the lawyer on the other side will be an old political foe.

Booth Goodwin

Charleston lawyer Booth Goodwin, a former U.S. attorney who ran against Justice for the Democratic nomination for governor in 2016, is now representing Carter Bank & Trust. He is joined by his cousin, Carrie Goodwin Fenwick, both of the law firm Goodwin & Goodwin. They filed official notice of their representation earlier this month.

Steve Ruby

Among the team of lawyers on Justice’s side is Steve Ruby, who led white collar criminal prosecutions during Goodwin’s term. Ruby has represented the governor on a variety of matters, including a lawsuit over Justice’s residency and a now-inactive federal investigation of the governor’s finances.

Justice’s family businesses sued Carter Bank and many of its top executives in U.S. District Court for the Southern District of Virginia earlier this month over millions of dollars in loans. The lawsuit indicates the Justice companies have $368 million of outstanding loans with Carter Bank.

The lawsuit claims Justice’s companies once had a personal and relatively loose relationship with banker Worth Carter of Virginia until his 2017 death, but that new leaders at the bank instituted more and more restrictions in recent years, tightening cash flow for the family businesses.

Carter Bank says the allegations in the lawsuit are false and misleading — and that it intends to collect the money the Justices were loaned.

The Goodwins’ first legal move on behalf of the bank has included the suggestion that the case should be dismissed or, alternatively, to have its venue changed to federal court in western Virginia.

“The Defendants intend to move to dismiss this case on both procedural and substantive grounds,” they wrote.

Carter Bank contends that the Justices have signed “dozens and dozens of notes, guaranties, loan agreements, releases and other contracts over a multi-year period” with forum-selection clauses requiring claims between the parties to be litigated in the Western District of Virginia, where Carter Bank & Trust and many of the Justice businesses are based.

Goodwin and Fenwick wrote that Carter Bank has “a number of weighty and substantive” arguments “attacking the substance — or lack thereof — of the Plaintiff’s claims.”

Goodwin and Finwick are asking to first make the case about venue to U.S. District Judge Frank Volk — before making the other arguments.

“The Defendants respectfully submit that the procedural issues are threshold questions that should be answered before addressing the substantive issues in Plaintiffs’ complaint,” they wrote.

In a statement to shareholders earlier this month, Carter Bank said it intends to collect on all of the Justice debt.

“Beginning approximately five years ago, Carter Bank began to reduce its credit exposure to the Justice Entities and repeatedly informed the Justice Entities of the bank’s goal of reducing its credit exposure to the Justice Entities. During the ensuing years and from time to time as matters arose, Carter Bank worked cooperatively with the Justice Entities in restructuring and/or extending various of these loans,” the bank wrote.

“In addition, on more than a half dozen occasions, the Justice Entities executed, in connection with such restructurings and/or extensions, agreements reaffirming the legality, validity and binding nature in accordance with their respective terms of their loan obligations to Carter Bank and releasing Carter Bank from any and all claims and causes of action the Justice Entities might have. The most recent of these release and reaffirmation agreements was executed less than a year ago.”

The Justice companies contend new leaders at the bank instituted more and more restrictions in recent years, tightening cash flow for the family businesses.

“Carter Bank is no longer a ‘lifetime financial partner,’ as it proclaims and as it had acted prior to Worth Carter’s death but a determined, self-proclaimed adversary,” wrote lawyers for multiple businesses owned by the governor and his family.

A separate Justice lawsuit against another lender, Greensill Capital, indicates $700 million in debt with that company. Greensill filed for bankruptcy this spring and set off reverberations throughout the financial world.

Credit Suisse, which managed investment funds that bought loans bundled by Greensill, is now pressing to recover lost investments and has has named Justice’s Bluestone Resources as one of three major borrowers from the Greensill funds.

A recent filing by lawyers for Justice indicated the parties had agreed to pause litigation actions “to allow the parties to engage in preliminary settlement discussions.” But that standstill agreement expired May 28, and plaintiffs attorneys served notice to Greensill and its former executives that the lawsuit would continue moving ahead.

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