With two days left until a retained use agreement with the U.S. government expires, a federal judge ordered officials overseeing Caneel Bay Resort to leave the area untouched, pending further court action.
Since 2022, a development company, EHI Acquisitions, has been suing the United States of America over the issue of Caneel Bay ownership rights. A trial is scheduled to begin Oct. 16.
Prior to Thursday’s order, the legal team for EHI and the U.S. Attorney’s Office asked Chief District Judge Robert Molloy to take action before the agreement — established in 1982 — expires on Sept. 30.
The big pronouncement coming from Molloy’s latest ruling favored EHI, the plaintiff. He told the government not to “take any action to manage or dispossess (the) Plaintiff of the property at issue until further order of the court.”
In the presentation of its redevelopment plan to the public, officials at the Virgin Islands National Park offered two possible scenarios for managing the Caneel Bay property after the agreement expired. One was called the “No-Action Alternative”; the second one envisioned the creation of an overnight accommodation created on a portion of the property, managed by the park, along with enhanced public access, recreational opportunities and resource protection.
U.S. Attorney for the Virgin Islands, Delia Smith, asked the judge to issue a summary judgment based on the statements and evidence already presented to the court. The government also asked that all filing deadlines left until Oct. 16 be put on hold.
Molloy granted the motion to stay the remaining deadlines; he declared EHI’s request for a final pretrial conference was no longer relevant. Consideration of a pre-trial order on how to manage the trial would wait, the judge said.
Caneel Bay Resort became one of the territory’s longest-operating destination resorts when it opened in 1956. It closed temporarily to recover from damages brought by Hurricane Marilyn in 1995, but the wreckage brought by back-to-back hurricanes Irma and Maria in September 2017 left resort operators — CBI Acquisitions, LLC — with a dilemma about future reconstruction.
At that time, the retained use agreement that allowed CBIA to operate Caneel on a rent-free basis was set to expire in 2023. The leaseholder then asked to be released from its obligation, giving EHI a chance to step in through a competitive bid process.
Now EHI claims through its lawyers that the U.S. government’s rights to the 150 acres under the resort are no longer valid. Developers are asking the court to award the property to them.
But in one of the government’s most recent filings with the court, the U.S. attorney expressed concern that any decision made by the court without including CBIA would lead to further uncertainty about the resort’s future.