The Third Circuit Court of Appeals has affirmed a V.I. District Court order that Caneel Bay on St. John belongs to the U.S. government and not EHI Acquisitions, the company that managed the property and its once-tony resort under an agreement with the National Park Service.
In a remarkably brief opinion — one paragraph total — the appellate court’s three-judge panel said Wednesday it could add little to the analysis of Judge Cheryl Ann Krause whose summary judgment last April prompted EHI’s appeal.
Krause, a circuit judge, was assigned to the case in December 2023 after V.I. District Court Chief Judge Robert Molloy was removed without explanation.
At issue in the lawsuit brought by EHI Acquisitions in June 2022 was whether the resort on 150 acres of prime St. John beachfront real estate belonged to EHI, which managed the property under an agreement known as a Retained Use Estate, or to the federal government after the RUE expired on Sept. 30, 2023.
The RUE was created in 1983 by Laurance Rockefeller, who donated some 5,000 acres of land to the National Park Service but reserved the Caneel Bay property for the Jackson Hole Preserve, the family’s land trust. Under the agreement, the preserved land was transferred to the NPS with the understanding the RUE — also known as the 1983 Indenture — would remain in place for 40 years. The resort has been managed by different entities since then, the latest being EHI Acquisitions, an affiliate of CBI Acquisitions.
The question in the District Court case, and that the appeals court pondered when it heard oral arguments May 2 on St. Croix, is whether language in the RUE obligated the federal government to pay EHI for its improvements to the property since 2004; whether it reverted to EHI because the Interior Department rejected its 2019 offer to relinquish the RUE for $70 million after the resort was destroyed by hurricanes Irma and Maria in 2017; or whether it belongs to the NPS free and clear.
Krause was unequivocal in her 20-page Memorandum Opinion and Order granting the United States’ motion for a summary judgment that the language of the 1983 Indenture makes clear that the property and its improvements were to be given back to the government at the expiration of the RUE for a nominal consideration of $1.
Noting that the dispute between EHI and the United States hinged on the meaning of the word “offer” as it is used in the Indenture, she wrote that “Examining the plain language of Paragraph 8 in the context of the whole Indenture, we are convinced that this meaning was entirely philanthropic.”
On Wednesday, the appeals court agreed.
“In her well-reasoned and thorough opinion, Judge Krause explained why EHI is not entitled to relief and why the Defendant was entitled to judgment as a matter of law,” Judge Theodore A. McKee wrote for the panel that included Judges L. Felipe Restrepo and Arianna J. Freeman.
“As Judge Krause detailed, even if the relevant indenture is ambiguous, extrinsic evidence makes the result clear. We can add little to Judge Krause’s analysis and discussion, and we will therefore affirm the District Court’s order substantially for the reasons set forth in that opinion,” McKee concluded.
The Source reached out to Patrick Kidd, Caneel Bay’s marketing director under EHI, the National Park Service on St. John, and the Friends of the Virgin Islands National Park and was still awaiting comment at press time.
St. Croix Source
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