Island Laundries’ False Claims May Deter Developers from Subbase Projects, GVI Warns in Filing

Government Eviction Dispute Threatens Major USVI Port Development Project

An escalating legal battle between the Virgin Islands government and Island Laundries Ltd. has complicated ambitious redevelopment plans for the Subbase area of St. Thomas, exposing what local media describes as decades of lease violations, uncollected fees, and inadequate government oversight.

The dispute, which began as a straightforward eviction case, now threatens to delay a significant Virgin Islands Port Authority (VIPA) development project that would create an additional cruise ship berth alongside a tourist-oriented resort and commercial center in the Subbase area. The project represents a major public-private partnership between VIPA, Royal Caribbean Group, and Cruise Terminals International.

At the center of the controversy are two government-owned parcels of land, including Parcel No. 164 Submarine Base, which was recently transferred to VIPA through legislation passed last year specifically to facilitate the development. The second disputed parcel, No. 116 Submarine Base, was not included in the transfer but remains central to the legal conflict.

The timing of the dispute has proved particularly problematic. The government filed a motion to amend its complaint against Island Laundries just one day before VIPA, Royal Caribbean Group, and Cruise Terminals International signed their development agreement during a public ceremony at the Austin “Babe” Monsanto Marine Terminal in Crown Bay on December 17, 2025.

Legal proceedings took a significant turn in November 2025 when Magistrate Judge Paula Norkaitis transferred the case to the Civil Division, finding that Island Laundries had raised a “colorable claim” to possession of the property. In her ruling, Norkaitis noted the dispute raised “too many unanswered questions” that required procedures unavailable in the Magistrate Division.

The government’s amended complaint dramatically expands the scope of the case beyond eviction to include claims for declaratory judgment, recovery of real property, trespass, public nuisance, and slander of title. The government contends that Island Laundries’ continued occupation of the property directly interferes with the planned redevelopment.

“Island Laundries’ false claims have or will cause the government of the Virgin Islands actual pecuniary loss in the form of diminished interest of developers and future tenants,” the complaint states, adding that these claims “were intentionally posed to impair the government’s anticipated transfer of the premises” to VIPA and the subsequent redevelopment.

The government specifically challenges Island Laundries’ assertion that it maintains an equitable interest in the property based on improvements allegedly made in 1989 under a lease that expired in 2014. According to the government, any obligation to reimburse the company for improvements would have arisen when the lease expired, and the claim is now void as the improvements have been fully amortized under standard accounting and tax rules.

The amended complaint also introduces new defendants, including Island Laundries’ president Leah Webster and her mother, Lorna Webster, while adding allegations of trespass and public nuisance. The government claims Island Laundries used toxic solvents in its dry-cleaning operations and improperly handled hazardous waste at the site over the years.

Previous reporting by local media outlet WTJX indicated that Island Laundries was cited by the Environmental Protection Agency in 2005 for violations related to the handling, storage, and disposal of hazardous waste, following an inspection conducted in 2004.

Leah Webster responded to these allegations in a statement, noting that the government conducted an eight-hour special inspection of the entire Island Laundries facility on December 12, 2025. “Island Laundries has not been made aware of any violations, either written or otherwise, requiring abatement as a result of that special inspection,” Webster said, adding that no other entities had identified issues requiring remediation.

The legal proceedings have faced additional complications, with Island Laundries only recently filing a motion requesting a 10-day extension to respond to the government’s amended complaint. Further complicating matters, Superior Court Judge Denise Francois recused herself from the case last month, citing Island Laundries as her former client.

As the case continues to unfold, the future of the Subbase redevelopment project—a significant economic initiative for the U.S. Virgin Islands—remains uncertain, highlighting the complex intersection of private business interests, government property management, and large-scale tourism development in the territory.