Court Rebuffs Hotel Laguna Lawsuit

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Artist Walter Visolay paints a farewell message on a shop tenant of Hotel Laguna. The current hotel operator's lease ends Dec. 31, though the landlord says hotel operations will not be interrupted.
Artist Walter Visolay paints a farewell message on a shop tenant of Hotel Laguna. The current hotel operator’s lease ends Dec. 31, though the landlord says hotel operations will not be interrupted.

A federal judge ruled this week to dismiss in part a lawsuit by the operator of Hotel Laguna against its landlord and three local investors that seek control of the historic property in downtown Laguna Beach.

U.S. District Judge Josephine L. Staton ruled on Wednesday, Dec. 13, to dismiss three claims in the suit by Andersen Hotels related to federal trademark rights as “factually insufficient.”

The judge granted Andersen Hotels 21 days to refile its suit and demonstrate the validity of its trademark claims, which are within the court’s jurisdiction. The judge declined to consider the suit’s other breach-of-contract claims, which could be contested in state court.

“We do intend to proceed with those claims,” said attorney Proud Usahacharoenporn, representing Georgia Andersen, whose family has operated Hotel Laguna under a lease since 1981. She declined to say whether an amended suit would be filed in federal court or whether Andersen’s claims would be pursued in a new lawsuit in state court.

Attorney Janet H. Humprey said in a statement Thursday, Dec. 14, that the decision “encouraged” principals of Kimbark Group LLC, developers Joe Hanauer and James “Walkie” Ray and filmmaker Greg MacGillivray. Merritt Farms of Porterville owns the hotel property as well as several nearby ocean-front parcels in the same Main Beach-to-Legion Street block.

The three have yet to publicly disclose their plans, though in November Merritt said talks are underway with an unidentified operator to avoid an interruption in service at the hotel. Andersen Hotel’s lawsuit alleges Merritt entered into a 99-year lease with Kimbark in January.

While Hotel Laguna employees received layoff notices, effective Friday, Dec. 15, some agreed to stay on through Dec. 31, when Andersen’s lease expires, Usahacharoenporn said.

“The landlord still tells us they don’t have an agreement with an operator,” the attorney said. “This has been the problem since Day 1; we aren’t getting the whole story.”

Settlement negotiations over the furniture and fixtures and compensation for good will and the liquor license have not progressed, Usahacharoenporn said. “We’re stuck on the price,” she said.

Usually in distressed situations, such as a bank foreclosure of a hotel property, specialists in hotel takeovers come in and make a change overnight, said a local hotel consultant, who declined to be identified. Typically, the new operator hires many of the former employees, who are asked to re-apply for their jobs, he said.

He described the situation confronting Hotel Laguna as an “unusual transition.”

“Expect to see changes only after Dec. 31,” he said.

 

 

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