CHARLESTON, W.Va. — A hotel in Morgantown that has been hit with a breach of contract lawsuit of about $15 million is set for sale at auction. The hotel’s current owner is trying to block the sale, though.
Campbell Woods, attorneys for the lender, sent a notice of auction on August 25 to the owners of the Hilton Garden Inn in Morgantown.
The planned auction is an outgrowth of the lawsuit filed in early August by the U.S. National Bank Association. The public auction is set for 4 p.m. Sept. 21.
“You are invited to attend this sale to protect your interest,” the lawyers wrote to Mountain Blue Hotel Group, which owns the hotel.
The hotel would go to the highest bidder. The balance of the purchase price would have to be paid within 30 days.
This is the latest turn in a battle on multiple fronts over the financial condition of the hotel.
Last Friday, Monongalia County Sheriff’s deputies raided the hotel to account for back taxes of $150,000. The sheriff’s staff had a court order over unpaid hotel/motel taxes.
“We went in to levy on the property, whether it be bar products, restaurant products, the furniture. We take all monies and checks in the cash registers and the safe,” Monongalia County Sheriff Perry Palmer said about the raid. “At that time if we do not receive the amount owed, then at a later date the items are sold at a sheriff’s sale.”
Now the entire hotel could be sold.
Lawyers for Mountain Blue, a limited liability corporation headed by developer William Abruzzino, are trying to stop the sale, though.
Last Friday, the same day as the sheriff’s raid, lawyers for Mountain Blue filed a motion for a temporary restraining order on the auction.
“Obviously the sale by virtue of a trustee sale of the defendant’s primary asset, being the hotel located in Morgantown, West Virginia, would cause irreparable harm to the defendant,” wrote lawyers for Mountain Blue.
Mountain Blue says many of the claims against it are speculative in nature. Mountain Blue also says the payment of its mortgage — along with its collateral and loan — has never been in jeopardy.
Mountain Blue says money to satisfy any debts is in a cash management account that’s actually controlled by the plaintiffs. Lawyers for the limited liability corporation say about $400,000 is sitting in the account.
U.S. District Judge Irene Keeley set a hearing on the temporary restraining order motion for 1 p.m. this Thursday.
The plaintiff is ordered to respond by Tuesday.
The lawsuit filed in the Northern District of West Virginia alleges a commercial breach of contract over the original $15,470,000 loan.
The lawsuit alleges the hotel is in danger of default, risking its Hilton franchise fee and barely getting by on meeting payroll.
The lawsuit has gotten more attention because of some of the high-profile investors listed in the federal lawsuit. Senator Joe Manchin and his longtime advisor Larry Puccio are among those listed through their AA Properties LLC partnership, although both have said they are not investors in the hotel.
The investor who signed the loan, Abruzzino, also heads Mountain West LLC, which is involved with a breach of contract lawsuit over Clarksburg and Elkins hotels. Another Abruzzino company, Tara Realty, is involved with the bankruptcy of the Crossings Mall in Elkview.