Conflicts persist in an ongoing civil dispute over the control of operations and management at multiple Laguna Beach properties between well-known real estate investor Mohammad Honarkar and a group of investors, MOM Entities, who claim to have bailed out Honarkar from foreclosure two years ago.
As part of the bailout, Honarkar contributed all his assets to the group of investors represented by Cohen Law Group, which includes properties such as Hotel Laguna, the Art-A-Fair building, Cliff Village LLC, Terra Laguna Beach, several vacation homes and the 14West hotel.
On May 2, an altercation among security guards at Hotel Laguna and 14West caused the city to issue a nuisance abatement order, closing the businesses until the properties were deemed safe for the public. A similar incident happened at 14West, as both groups claim ownership over the management of the properties.
However, a new incident on July 24 between MOM Entities and Honarker employees – the same day both parties appeared at a court hearing – prompted Mahender Makhijani of MOM Entities and his attorney Marc Cohen to address the Laguna Beach City Council during its regular meeting the following day. During public comment, both Makhijani and Cohen expressed frustration with the city’s lack of involvement in the dispute.
According to Cohen, after the court indicated it might issue a preliminary injunction, Honarkar’s employees began to remove documents, files and computers belonging to the MOM group at Honarkar’s office, located at 775 Laguna Canyon Road.
“They had themselves barricaded in the building with two-by-fours. It was crazy stuff,” Cohen said. “The police were called, and Officer Schmidt arrived, who seems to be working under the direction of the city manager. The police didn’t help. They did nothing. My clients are getting upset, and they’re probably going to sue the city.”
Makhijani asked councilmembers not to interfere with property owners’ rights.
“The position certain city people and city staff have taken baffles me,” he said at the council meeting. “At one end, they’re saying they want to remain neutral and not interfere, and at the same time, Michael Kulchin, an agent for my company, is threatened with being arrested by a police officer for stopping someone from stealing documents and critical data…the city’s behavior is on a suicide trip to go bankrupt. You’re creating unnecessary liability for no reason. It doesn’t have to be this way. If you truly want to stay neutral, stay neutral.”
Honarker’s lawyers contend that while both parties were in court on July 24, representatives from the MOM group broke into Honarker’s office and stole documents, files, computers and other objects while employees were inside.
“Not only did Defendants steal computers and other equipment without regard to these employees’ private information, Defendants broke open a hold in the wall of the building – all while Defendants’ counsel stood before the Court and represented that Defendants wanted to work together with Mr. Honarkar to find a mutually agreeable path forward,” a July 25 temporary restraining order application by Honarker’s lawyers stated.
Attorney Aaron M. May of Halpern May Ybarra Gelberg Law Group said Mr. Honarkar was appalled by the events that took place at his offices last week.
“He has sought redress in court to prevent Mr. Makhijani and his associates from accessing his offices and the materials that were taken,” May wrote in an email to the Indy. “We are optimistic that the court will intervene quickly to protect Mr. Honarkar’s property and his rights.”
Meanwhile, some property tenants, business owners and employees at the Hive – a row of restaurants and other businesses next to the Sawdust Festival along Laguna Canyon Road – report the dispute is negatively affecting them. An influx of new security guards patrolling the area has made them feel intimidated and harassed.
“There are no uniforms, no professionalism, and if you ask them why they’re here, they respond, ‘I don’t know,'” a restaurant owner at Laguna Canyon Road said. “My property manager says he can’t do anything and to call the police. The police say they can’t help because it’s a civil matter. It used to be very peaceful here, but now it’s stressful. Security is everywhere. Our guests ask what’s going on. Two or three days ago, it looked like a war zone.”
The City of Laguna Beach has declined to comment on the matter.
As of Aug. 2, Orange County Superior Court has denied MOM Entities’ request for a preliminary injunction after neither party could reach an agreement by July 28. However, the court has also rejected Honarker’s request for an appointment of a receiver, a neutral third party appointed by a judge to manage property and business matters while the lawsuits are in progress.
“The court encourages the parties to continue a dialogue in an attempt to take incremental steps to stabilize their relationship and preserve their joint venture during the pendency of this and the related case,” the Aug. 2 court document stated.
The court has moved up Honarker’s request for arbitration to Sept. 25.