Justice companies sue to block auction of Greenbrier Sporting Club

Lawyers for the companies owned by Gov. Jim Justice are trying to block a forced auction of the Greenbrier Sporting Club.

The lawyers representing the Greenbrier Sporting Club Development Corp. and the Justice companies filed a complaint in Greenbrier Circuit Court seeking an injunction to halt the auction now scheduled for March 5.

They’ve asked for a jury trial in Greenbrier County, where Justice is a resident and major employer.

Justice’s lawyers contend that sale of the Sporting Club would irreparably harm both the Justice companies and the Greenbrier County community.

“Plaintiffs’ operations are a significant contributor to the local economy, and Plaintiffs are closely intertwined with The Greenbrier resort, which is Greenbrier County’s largest employer. The proposed sale will severely damage not only Plaintiffs but also The Greenbrier, jeopardizing thousands of local jobs,” according to the filing.

The Justice filing is in reaction after public notice by Carter Bank & Trust to auction the Greenbrier Sporting Club on the courthouse steps March 5 to satisfy a multi-million dollar debt from Justice and his family.

The Greenbrier Sporting Club is a private club offering memberships to people who buy real estate surrounding The Greenbrier resort.

Carter Bank & Trust has been moving to collect $300 million in debts that were personally-guaranteed by Justice, his wife Cathy and their son Jay, who runs the family’s coal operations. The debts applied to several branches of the family’s business network, including Greenbrier Hotel Corporation, Greenbrier Golf and Tennis Club and Greenbrier Sporting Club.

Those loans had come due April 15, 2023.

Lawyers for Justice’s companies responded by filing motions to set aside the confessed judgments in the 11 cases. They had argued that restrictions on the loans were so inflexible that Carter Bank was engaging in unfair business practices.

Last month, a circuit judge in Martinsville, Va., dismissed the Justice defense: “The defendants offer sparse analysis as to how these defenses are either adequate or dispositive.”

So the auction is a tangible step toward collecting on the debt.

Justice, in public comments and in court filings, has contended the bank’s practices are unfair. Justice has said his businesses enjoyed a mutually-beneficial and friendly relationship with bank chief Worth Carter until his death. After that, Justice has said, bank representatives have changed their approach to one that is more formal — and which he has described as overly restrictive.

In 2021, the new Justice filing claims, Carter Bank “coerced” the Justice Companies into cross-collateralizing all their Carter Bank loans:

“Under the coerced cross-collateralization arrangement, the collateral that each of the Justice Companies had pledged as security for its own loan with Carter Bank became collateral for all the other Justice Companies’ loans with Carter Bank.

“In this way, the collateral that Plaintiffs had pledged as collateral for their Carter Bank loans became security for a portfolio of loans whose principal balances totaled more than $300 million.”

The situation devolved from there, according to Justice’s filing, when between 2021 and 2023 the Justice Companies attempted to transfer all or part of their banking business from Carter Bank to other lenders on at least four separate occasions.

“On each such occasion, the Justice Companies had a business relationship with another lender who was prepared to pay off all or part of their Carter Bank loans. On each such occasion, Carter Bank blocked or sabotaged the Justice Companies’ attempt to transfer their business from Carter Bank to other lenders,” the Justice company lawyers wrote in the filing.

Carter Bank & Trust, headquartered in Martinsville, Va., generally has not commented in public about the dispute with Justice. Late last month, the bank issued a statement to shareholders, saying it would aggressively go after the debt.

“As with all its customers, Carter Bank expects to be repaid by the Justice Entities in full all amounts due and owing although the timing of such payment in full in these matters is presently indeterminate,” bank officials wrote in a statement to stockholders formally filed with the U.S. Securities and Exchange Commission.

The statement continued by saying, “Carter Bank plans to pursue aggressively all remedies afforded it to collect all amounts due and owing by the Justice Entities.”