MARTINSVILLE — The governor of West Virginia has filed a $421 million lawsuit against Bassett-based Carter Bank & Trust over a decades-old relationship on his business loans.
The suit, filed last Monday in the Southern District of West Virginia and first reported by the West Virginia Metro News, indicates Gov. Jim Justice, a former billionaire coal magnate, had owed as much as $775 million to the bank.
The court documents describe a longtime “gentleman’s agreement” between Justice and Worth Carter, the founder of Carter Bank & Trust, which has seven locations in the Lynchburg region.
Carter died in 2017, and Justice claims that was when the cozy relationship that allowed for growing loans and indefinite extensions on payback arrangements ended.
Forbes magazine reported on Thursday that Justice alleged “that through a ‘tortious scheme’ involving ‘deceptive practices,’ the bank ‘induced a default and laid the groundwork to continue squeezing the plaintiffs.’”
Justice claims he has paid more than half the amount owed since Carter’s death and has been working with an undisclosed financier to refinance the $368 million still owed to Carter Bank & Trust, but the new leaders of the bank “refused to engage at any level in negotiating new terms.”
Litz Van Dyke, chief executive officer of the bank since Carter’s death, and Phyllis Karavatakis, executive vice president for a year before that, were named in the suit.
Carter Bank & Trust officials declined to comment to the Martinsville Bulletin on Friday.
“It is the policy of Carter Bank & Trust not to comment to the press regarding matters in litigation or matters involving customers of the bank, and therefore the bank respectfully declines to comment in response to your inquiries,” Marketing Officer Brooks Taylor wrote by email.
The bank has dozens of branches across Virginia and North Carolina but none in West Virginia.
“The mutually beneficial, trust-backed relationship with the late Worth Carter in helping the Justice Entities weather tough times was unexpectedly replaced with the cold silence of the new Carter Bank,” the suit says.
Forbes once estimated Justice’s worth at $1.8 billion, but the magazine said it had re-evaluated in light of recent court filings, and he has now been removed from the magazine’s billionaire list.
Justice amassed much of his wealth during the days when coal-mining was profitable, and he began borrowing money when it became unprofitable and for 20 years eased into a comfortable, laid-back banking relationship with Carter, the reports said.
Carter helped fund Justice’s purchase of the Greenbrier, a 500-room grand resort in West Virginia that he bought out of bankruptcy.
Depending upon what may have occurred since the lawsuit was filed, that resort may now be in default to Carter Bank & Trust.
Carter Bank is not the first lender Justice has sued. In March, he filed suit against Greensill Capital of the United Kingdom when that agency stopped lending him money. Justice is estimated to owe about $700 million.
“I did personally guarantee the loans,” The Associated Press quoted Justice as saying at a press conference on Tuesday. “The loans have always been personally guaranteed when they flowed from Carter Bank through Greensill to other banks along the way. That’s been the case for a very, very, very long time.”
A declaratory judgment is also being sought relating to loan modifications after Carter’s death that were made by Carter Bank that Justice claims are “unenforceable” and puts the defendants in position where they are not provided a good-faith opportunity to repay the loans, The Register-Herald of Beckley, West Virginia, reported.
The West Virginia Metro News followed up with more details specifically noting the relationship between Justice and Carter Bank really began to sour in the past eight weeks, when Justice began making plans to partner with a new lender and refinance the loans he had with Carter.
“Although the Justice Entities have advised Carter Bank that such replacement financing is available and in the final stages of negotiation, Carter Bank has refused to engage in any discussions,” the lawsuit stated. “Most egregiously, the defendants refused any discussion with the plaintiffs.”
Justice has spent part of his daily briefings as governor addressing the financial turmoil of his businesses this week.
“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,” Justice said, maintaining that his businesses and private affairs are “in good shape.”
“Unfortunately from time to time, you get into disputes, and you either sue somebody or somebody sues you.”
Bill Wyatt is a reporter for the Martinsville Bulletin. He can be reached at 276-638-8801, Ext. 236. Follow him @billdwyatt.