Questions Remain Following District Court Ruling on Caneel Bay Resort

By Amy Roberts | Virgin Islands Source |

A District Court’s ruling on Monday to restore the ownership of the Caneel Bay Resort to the National Park Service came as a pleasant surprise to many.

“I am thrilled and so grateful to the judge for bringing this lawsuit to a sensible conclusion,” said community activist Pam Gaffin.

Bystanders attending an evening Earth Day event cheered as news of the court’s ruling was shared.

However, the V.I. District Court’s decision may not have ended a long-running dispute brought on by EHI Acquisitions, the company that sought to take title to the land and its improvements after operating the luxury hotel since 2004.

“We are disappointed in the court’s decision, but as the attorney stated, EHI will be appealing,” said Patrick Kidd, director of marketing for Caneel Bay Resort.

On Friday evening, Penelope “Penny” Del Bene, superintendent of the Virgin Islands National Park, told the Source, “We intend to work immediately toward transitioning the property to the National Park Service management, in keeping with the court’s decision and Laurance Rockefeller’s vision for Caneel Bay.”

This week, guards working for EHI are still securing Caneel Bay Resort’s entrance gate and allowing access only to two businesses that currently operate on the premises – ZoZo’s Restaurant and the Caneel Bay Beach Club at Honeymoon Bay. (The rest of the resort has been shuttered since 2017 when it was largely destroyed by hurricanes.)

Retired attorney David DiGiacomo, who has been involved in a number of issues regarding Caneel Bay, said he thought the Third Circuit Judge Cheryl Ann Krause “did a great job in addressing the legal issues,” and applauded her use of the word “absurd” to describe some of the contentions made by attorneys for EHI. “I don’t think [they] will have any success with an appeal,” he added.

DiGiacomo said EHI could bring a separate case forward for damages relating to the decision, but this could lead to EHI having to address important unanswered questions; for example how much insurance money did EHI receive following the hurricanes, and why wasn’t the property returned in good condition as was mandated by the Retained Use Estate – which served as CBI/EHI’s lease agreement?

In Monday’s court order, DiGiacomo states, “Title to the resort’s land remains with the United States, and title to the improvements thereon shall be conveyed and transferred to the Department of the Interior forthwith. There shouldn’t be any bargaining. Gary Engle (the managing partner of CBI/EHI) should follow the rule of law and withdraw from the property now.”

Tonia Lovejoy, executive director of the Friends of the Virgin Islands National Park, said many questions remain regarding the 150-acre property nestled within the Virgin Islands National Park.

“I believe we still have a very challenging road ahead, and the future of Caneel Bay is certainly not clear – only clearer now that the Park Service/Department of Interior have been empowered to act according to their mandates on behalf of the citizens of the United States,” said Lovejoy.

“The Friends will continue to have the same position which is to push for transparency around environmental cleanup, and with the communities that live in and around the park,” she continued.

In 2020, DiGiacomo stated his intent to file a lawsuit against CBI Acquisitions, LLC, and others because of reports of contamination on the property. (CBI and its sister company, EHI, held the lease to operate the buildings and facilities at Caneel Bay Resort until Monday’s decision.)

Since early 2024, some efforts to remove asbestos have taken place, but DiGiacomo said he is concerned that the extent of the contamination has not yet been fully understood.

Park officials have stated that $6 million has been set aside to pay for clean-up, DiGiacomo said. “But who knows what more they will find as they dig up a dump site at Honeymoon Beach, demolish the storm-damaged buildings, and excavate underground pipes?”

Before EHI filed its lawsuit for quiet title, the National Park Service initiated a three-year-long public process to plan for the future of the property to take effect when EHI’s lease expired on Oct. 1, 2023.

In July 2023, the Park Service announced its decision to move forward on the plan “to re-establish resort-style services for overnight use” over an option “to minimally restore the site to allow for safe access by visitors through existing roads and trails, including safe access to beaches.”

The plan chosen calls for the construction of an environmentally sustainable resort with up to 166 overnight units, the same number that was available at the Caneel Bay Resort before it closed because of storm damage.

The NPS’s plans to move forward on a bidding process to select a resort developer came to a halt as the result of EHI’s lawsuit for quiet title.

Now that the case has been concluded pending appeal, a number of questions have arisen regarding the Park Service’s decision to rebuild a resort.

DiGiacomo said he thought the decision to rebuild the resort was premature given that a full assessment of the cost of the cleanup remains unknown. “Who would want to invest in the property without knowing this?”

“I foresee another decade before there is any progress,” said community activist Lorelei Monsanto. Monsanto and others have said that the NPS’s process to determine the future of the Caneel property was flawed.

“The people on St. John chose something other than what the NPS chose. The people voted to leave it largely undeveloped with the use of its beaches for the public’s enjoyment,” Monsanto continued.

“I imagine there will be more of a demand for public input,” said Lovejoy. “For now, we need to focus on the fact that the V.I. National Park is on an upward trajectory.”