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Justice lawyers say $58 million claims should be held up while federal lawsuit proceeds

Lawyers for Gov. Jim Justice and first lady Cathy Justice are arguing that a$58 million claim should be set aside until a separate lawsuit against their banker is resolved in federal court.

“If confessed judgment is not set aside, it will have sweeping consequences on the Justice family, their businesses and valued employees,” lawyers for the Justices wrote.

Carter Bank & Trust on July 6 filed claims based on recent defaults of The Greenbrier Sporting Club and Oakhurst Club.

The filings are confessions of judgment, written and signed agreements accepting liability in instances of default. In such circumstances, the note may be presented to the court without even notifying the debtor or having a hearing. By signing, a borrower may sacrifice their right to be heard in court.

Jim and Cathy Justice signed the guarantees during a broad, 2020 restructuring of the debt of family-owned companies. That document, which was filed in federal court, shows such guarantees were signed on loans representing millions of dollars in loans covering several Justice properties, with most coming due in October, 2022.

The loans for The Greenbrier Sporting Club and Oakhurst came due June 1. Carter Bank says the Justices owe $36,970,156 on the sporting club and $21,304,934 on the Oakhurst loan. Carter Bank is also asking for interest, late charges and attorneys fees amounting to hundreds of thousands of dollars more.

But the lawyers for the Justices are countering that a federal lawsuit filed against Carter Bank should run its course before any action is taken on the default claims.

Justice and his companies sued the Martinsville, Va.,-based bank in federal court May 31 over the millions of dollars in loans that were coming due the next day. That lawsuit claimed the bank grew restrictive, the financial relationship grew toxic and the bank wouldn’t cooperate on refinancing loans coming due for Greenbrier properties.

Without a full hearing on the federal court claims, the Justice lawyers say, the confessions of judgment couldn’t be fairly assessed.

The Justice lawyers filed a motion to set aside the confessed judgments on July 22. That document was addressed to Ashby Pritchett, the circuit court clerk in Martinsville, Va., where Carter Bank is based.

“Given that any amount owed pursuant to the Confessed Judgment is entirely entwined with the outcome of the West Virginia Action, Carter Bank should not be allowed to enforce the Confessed Judgment until such time as the Justice Plaintiffs’ affirmative claims are fully resolved,” wrote lawyers for the Justices.

Lawyers for Carter Bank have contended the Justices’ federal lawsuit was meant as a delay tactic because of the defaults.

“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.

Governor Justice has said the whole process should play out. He addressed the matter during a briefing last week when reporters asked his reaction to the $58 million claim.

“Absolutely at the end of the day if people will just be still and just wait for the final outcomes you’ll see a situation that will absolutely be the outcome of what your governor has already told you,” Justice said during a briefing last week.

“Just sit back and wait till the final outcomes. It could very well be be that someone wants to take a piece of what’s going on and ignore the whole. The whole is, we issued a lawsuit against this bank for $421 million. The piece of what we’re referring to here is next to nothing compared to the whole.”

The governor’s lawyers, in their recent filing in the Circuit Court of Martinsville, Va., suggested a lot is on the line.

“Before being elected governor, Mr. Justice founded and ran successful coal, farming and hospitality business. These operations employed thousands of individuals and have continuously operated for over 50 years,” they wrote.

“Without a trial on the merits, Carter Bank seeks a personal judgment. This is a drastic and disfavored remedy under the circumstances and Virginia law affords deference to individuals in these circumstances.”

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