High-stakes financial documents signed by Senator Jim Justice and his family are at the core of legal disputes over controlling interest in The Greenbrier Hotel.
The documents that they signed put their personal property, such as residences, at risk while also restricting their ability to push back in court.
An affiliate of TRT Holdings, which owns the Omni Hotel chain, sued the Justices in federal court last week, maintaining that the family’s financial practices endanger the value of the property. The Justices then sued TRT and others in local court, alleging deception.
This is the latest battleground in years of financial conflict over the resort property in White Sulphur Springs.
Justice and his family bought the historic Greenbrier Resort in White Sulphur Springs out of bankruptcy in 2009.
The Greenbrier is a historic 5-star luxury resort that features 710 guest rooms, four golf courses and a private casino, featuring 320 slot machines, 35 table games and a FanDuel Sportsbook.
Carter Bank & Trust of Martinsville, Va., was the major lender, and financial conflict arose between the bank and the Justice family over and over during the past decade. Carter regularly reported that the loans were considered “nonaccrual status,” drawing no interest payments and that the debt had become an anvil.
Late last month, Carter Bank sold the loans to “an unaffiliated third party,” according to a filing with the U.S. Securities and Exchange Commission. The loan principal was $209.48 million, and Carter received $289.48 million in cash in the transaction.
The company that bought the debt was newly formed White Sulphur Springs Holdings under the authority of TRT Holdings, which owned and operated by Dallas billionaire Robert Rowling and his son Blake.
Last week, TRT filed a federal motion to put the historic hotel into receivership. Beyond seeking a receiver, the motion requests a permanent injunction to prevent the Justice family from further interfering with the property or its financial records.
One of the central pieces of the TRT lawsuit is a forbearance agreement, which represents a contract between a lender and a borrower in default, where the lender temporarily pauses or reduces payments and delays legal action like foreclosure or repossession to allow the borrower to resolve financial hardship.
Signing such an agreement allows a grace period but essentially hands the keys to the creditor by admitting full liability and waiving almost all rights to contest a future judgment. It’s a high-risk legal document.
A 91-page forbearance agreement is entered into the first round of evidence in the federal case, dated as effective this past Feb. 28. It was set to expire this week, April 15, unless a default occurred prior to that.
This was the 14th forbearance agreement, indicating it had been written and rewritten that many times over many years.
In this latest version, the forbearance document reveals that the Justice ownership added “intellectual property” to the mix “to induce CBT (Carter Bank & Trust) to enter into this agreement.”
The agreement applies to a long list of individuals and entities — including James C. Justice II (the former governor and senator), his wife Cathy L. Justice and James C. Justice III, who goes by the name Jay, as well as numerous LLCs and corporations — who are “jointly and severally” liable.
That means the creditor can pursue any one of the signers for the entirety of the debt, regardless of their individual share.
TRT maintains that it purchased the rights to confessions of judgment, where borrowers agree in advance to allow a creditor to enter a judgment against them without notice or a hearing if they default on a payment. The confessions of judgement and underlying deeds of trust were originally held by Carter Bank.
Default allows seizure of the collateral listed in the agreement, including the assets of The Greenbrier Hotel, the Greenbrier Sporting Club and other business entities .
The lawsuit identifies the forbearance agreement as the document that sets forth the detail of the judgments and the “interrelated web of companies” that are indebted to TRT’s White Sulphur Springs Holdings.
The core of the federal complaint is the claim that the forbearance agreement is terminated. White Sulphur Springs Holdings relies on the termination status to assert an “immediate right to exercise all rights and remedies” available under the law and the specific terms of the agreement.
That legal strategy relies on specific concessions the Justice family made within the forbearance agreement.
TRT highlights that the Justices acknowledged “defaults had occurred” under the collateral documents when they signed the agreement. And TRT’s federal The complaint relies on the fact that the Justices waived any right to notice of payment default or other defaults regarding their indebtedness.
The lawsuit uses the forbearance agreement to define the “Greenbrier Resort Collateral Documents,” which encumber the real property, personal property, and fixtures comprising the resort.
As the document lays out, the debtors waive their homestead exemptions, which normally protect a portion of a person’s home value from creditors.
The waiver effectively makes their personal residences or the equity within them available as a resource the creditor can pursue to satisfy the judgment because thee assets would otherwise be protected under state law.
In other words, the personal residences of James C. Justice II, Cathy Justice Jay Justice are significantly at risk under the agreement.
Under the terms of the forbearance agreement, the Justices have effectively waived their right to sue or take any legal action regarding the debt and the confessed judgment.
In a “Acceptance/Waiver of Process” section, the Justices “willingly, voluntarily, irrevocably and unconditionally waive any right to commence, join in, prosecute or participate in any suit or other proceeding in a position that is adverse” to the creditor.
That means they are contractually barred from initiating any new litigation to challenge the validity of the debt or the debt collection efforts.
Nevertheless, on Sunday night the Justice family filed a counter-lawsuit seeking to rescind the sale of the loans to White Sulphur Springs Holdings and prevent them from exercising creditor remedies.
The Justice family and their affiliated companies explicitly claim in their lawsuit that deception, fraud and a conspiracy between Carter Bank and TRT’s White Sulphur Springs Holdings render the sale of the loan documents invalid and void.