A group of people who loaned Chad Harding money to buy Gatens-Harding Funeral Home are trying to remove him from the Poca-based business, arguing he's defaulted on payments.
Harding, who is facing allegations made by an insurance company that he sold and cashed in on pre-need funeral contracts to 111 people who weren't actually dead, denies that the payments are in default. On Monday, Putnam Circuit Judge Joseph Reeder granted his petition to temporarily stop a meeting, which had been set for this week, to name his replacement.
In 2004, Harding entered into agreements and promissory notes to buy the 97 percent equity interest that he didn't previously own in the funeral home.
In January, Mack Johnson, who owns the Leonard Johnson Funeral Home, advised Harding that he had purchased the aforementioned notes and other interests in the Gatens-Harding Funeral Home from Harding's lenders and believed Harding was in default of the loans, according to Harding's petition and Reeder's order, which were both filed in Putnam Circuit Court.
Johnson then advised he was declaring the entire principal and interest of the loans due and payable. As of Jan. 26, Harding owed about $103,000 on one agreement and about $190,000 on another, the documents state.
Harding is arguing that he's not in default and there must be an accounting error.
Johnson and his lenders had scheduled a meeting for last Tuesday at Barlow Bonsall Funeral Home in Charleston for the purpose of "selecting a Managing Member and/or Funeral Home Director for the Company and to discuss the future management of the Company's properties and business," the documents filed state.
In granting his petition, Reeder required Harding to post a $15,000 bond to secure it as payment in case Hardings' lenders "are found to be wrongfully enjoined or restrained in this matter," the judge wrote. A hearing is scheduled for April 8 in front of Reeder in which Harding will attempt to prove he's not in default.
Harding is represented by Scott Depot attorney Jeff Woods, who couldn't be reached Thursday for comment.
Harding is also being represented by Woods in a lawsuit field against him in federal court last year by Iowa-based Homesteaders Life Company, in which he's alleged to have cashed in on pre-need funeral arrangement contracts valued at more than $900,000 before the individual in the contract died.
Pre-need funeral arrangements are sold by funeral homes as part of group life insurance plans, which are designed to fund the funeral services for those enrolled. In the event of death, the insurance company distributes money to the funeral home to cover the costs of services and arrangements.
U.S. District Chief Judge Robert Chambers in January granted a pre-judgment motion filed by attorneys for the insurance company and put an attachment on Harding's assets, which would allow the insurance company to sell them if the company wins its lawsuit.
In an extraordinary move in March, Chambers ruled that, during an eight year period, the people Harding cashed in on funeral benefits for weren't yet dead. That ruling came after Woods failed to respond to discovery requests made by the insurance company in the case.
West Virginia Attorney General Patrick Morrisey's office is also suing Gatens-Harding, alleging it violated the state's Consumer Credit and Protection Act as well as the state Funeral Contracts Act.
Last summer, Morrisey's office conducted an audit of the pre-need funeral contracts held by the funeral home and determined at least 108 West Virginians were affected, noting that none of the contract beneficiaries were deceased at the time the funeral home made death claims to its insurance company.
Reach Kate White at kate.white@wvgazettemail.com, 304-348-1723 or follow @KateLWhite on Twitter.