The bank being sued by Gov. Jim Justice and his family contends that happened because the Justice businesses had loans coming due and were trying to delay.
Lawyers for Carter Bank & Trust of Martinsville, Va., make that claim in two recent court filings. The filings are actually aimed at having the lawsuit dismissed — or at least to have the venue moved from federal court in southern West Virginia to western Virginia, where most of the business entities and individuals are.
The introductions to those filings are dismissive of the motivations behind the lawsuits.
“Plaintiffs filed this case purely as a delay tactic against the repayments of loans they owe to Defendant Carter Bank,” wrote lawyers for the bank including Booth Goodwin, a former U.S. attorney who was Justice’s Democratic Primary opponent in the 2016 governor’s race.
Carter Bank contends that over the years its representatives worked repeatedly and cooperatively with the Justice companies to restructure or extend various loans, but “early in 2021 Carter Bank advised the Plaintiffs that it would not renew or extend two loans due to mature by their own terms on June 1, 2021.”
The two loans coming due amounted to $57 million, one of the filings specified.
On Memorial Day, the day before the loans matured, the Justice companies filed a federal lawsuit claiming their longstanding banking relationship with Carter Banks had become too restrictive and toxic, including a claim that Carter Bank had induced the family operation into technical defaults.
Justice’s companies’ federal suit alleged a deteriorating relationship with the bank culminated with a standoff over refinancing Greenbrier properties earlier this year.
The lawsuit described tension with Carter Banks coming to a head over eight recent weeks because of the Justice family’s desire to partner with another lender to refinance loans that Carter held. The Justice companies alleged being stonewalled.
“What we were trying to do was pay Carter Bank off, pay Carter Bank off for a large, large, large percentage of the loans we had with Carter Bank,” Governor Justice said at a briefing earlier this summer.
The filings by Carter Bank contend the financial institution had continued to work with the Justice companies in good faith, meeting with lawyers and extending forbearance agreements.
The bank agrees that the relationship with the Justice companies began in 2001 and that by the end of 2011 the bank had loaned the companies more than $170 million.
By the end of 2016, that amount loaned had grown to more than $775 million.
The Justices contend the relationship with the bank changed in 2017 after the death of founder Worth Carter.
Carter Bank expresses those events somewhat differently.
“Beginning approximately five years ago, Carter Bank began to seek to reduce its credit exposure to the Justice Entities and repeatedly so informed the Justice entities of its desire to do so,” wrote lawyers for the financial institution.
“During the ensuing years, contrary to the allegations in the complaint, Carter Bank worked cooperatively and repeatedly with the Justice entities to restructure and/or extend various of the loans made to the Justice entities, as well as occasionally advance new credit.”
In normal course, those agreements included loan agreements, promissory notes, guaranties, modification of deeds of trust, security agreements, subordination agreements and other loan documents that are likely to now be used as evidence in the court case, lawyers for Carter Bank suggested.
“The individual plaintiffs also repeatedly executed personal guaranties,” noted the lawyers for Carter Bank.
Justice and his companies are also in a federal court battle with a separate financial company, the international Greensill. The Wall Street Journal first reported that Justice personally guaranteed $700 million in loans from Greensill, which collapsed this spring.
The Journal reported that Greensill packaged such loans and sold them to investment funds managed by the financial services company Credit Suisse, which is now pressing to recover lost investments. Justice’s Bluestone Resources, which Credit Suisse has named as one of three major borrowers from the Greensill funds, is suing Greensill.