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State Tax Department files motion to intervene in hotel case

WEST VIRGINIA RECORD

Sunday, November 24, 2024

State Tax Department files motion to intervene in hotel case

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CLARKSBURG – The West Virginia Tax Department has filed a motion to intervene in the 2017 lawsuit filed by U.S. Bank against Mountain Blue Hotel Group.

The tax department is waiting for District Judge Irene Keeley to rule on whether it is allowed to intervene in the dispute between the creditor and the hotel group, which owes $675,000 in taxes that were paid by hotel guests, but never passed on to the state.

In its motion to intervene, the tax department claims the creditor may have converted, or may still be holding, some or all of the funds either by or through an account or accounts under its exclusive control.

“Accordingly, the state should be permitted to intervene as a plaintiff to protect and enforce its rights to recover its property, namely the trust fund taxes that consumers dutifully paid to the defendant but were never forwarded to the state,” the motion states.

The tax department also filed a proposed complaint as part of the motion to intervene. That document alleges that the hotel group and the creditor were unjustly enriched at taxpayers’ expense.

Also filed in March was an opposition to the motion to intervene by the creditor.

U.S. Bank claims that its lawsuit is a straightforward breach of contract case and that the tax department’s proposed action is “wholly unrelated to the plaintiff’s underlying breach of contract suit.”

The creditor claims that the tax department’s motion to intervene should be denied.

“The facts and legal issues in this action and the state’s proposed action do not overlap,” the creditor claims. “The motion should be denied.”

The lawsuit was filed against Mountain Blue in August in U.S. District Court for the Northern District of West Virginia.

The creditor claimed it lent Mountain Blue $15,470,000 on Sept. 7, 2013. The loan was secured by the Hilton Garden Inn in Morgantown.

The creditor claims Mountain Blue defaulted on its loan and owes the principal balance of $14,559,226.84.

U.S. District Court for the Northern District of West Virginia case number: 1:17-cv-00138

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