Uncertainty Clouds Hotel Laguna

The last guests of the historic Hotel Laguna turned in their room keys and its longtime operator turned over the property last week to the landlord, but much else about the iconic downtown property remains uncertain.

A pledge in November for continuity of service by the 32-year hotel property owner has gone unfulfilled. “There is no new operator in place,” Fresno attorney Kimberly Mayhew, who represents Merritt Farms, a Porterville ranch family, said Wednesday, Jan. 3. “We’re in a holding pattern.”

The new closure comes nearly three years after a vacancy darkened another local icon, the still empty historic downtown South Coast Cinema, just a block away from the hotel.

Despite a lease on the 68-room, ocean-front property that expired on Dec. 31, the hotel’s operator, Georgia Andersen, continues to press a claim in court for an unspecified amount of damages.

In a new breach of contract lawsuit filed this time in Orange County Superior Court, a lawyer representing Andersen Hotels Inc. again alleges that Merritt fraudulently concealed a third-party deal that amounted to a sale of the hotel and disregarded an obligation specified in a lease.

The suit pursues a claim against the landlord for a “duty of disclosure,” said attorney Proud Usahacharoenporn, representing Andersen. In the lawsuit, she claimed that Andersen suffered substantial business losses due to uncertainty over the hotel’s future because her requests for information about post-lease arrangements were met with silence. Exact losses would be determined by expert witnesses, she said.

Also named in the suit are real estate developers Joe Hanauer and James “Walkie” Ray, filmmaker Greg MacGillivray, all of whom live locally, and Kimbark LLC.

The suit alleges the trio struck a 99-year lease deal with the Merritts for the hotel, legally equivalent to a sale in order to sidestep the lease terms granting Andersen the right of first refusal on a sale.

Mayhew denied that such a 99-year pact exists between the farm family and Hanauer, Ray and MacGillivray. “They are in discussion to possibly become new tenants, but there never has been an agreement,” she said. No new negotiations are scheduled, she said.

That statement differs somewhat from the position of Kimbark’s lawyer. “Kimbark is continuing to work with E.W. Merritt Farms to obtain an agreement to operate the hotel,” said Costa Mesa attorney Janet E. Humphrey, representing Hanauer and company. Hanauer could not be reached for comment.

In the meantime, lawyers Mayhew and Humphrey both said they will again contest the terms of the new suit, filed Dec. 28.

On Dec. 13, U.S. District Judge Josephine L. Staton dismissed three claims in Andersen’s initial suit, which could have given the court jurisdiction in the matter. The judge ruled that alleged trademark violations lacked a factual basis and allowed Andersen’s attorney time to bolster the suit. The alleged contract violations were not adjudicated.

Instead of amending the complaint in federal court, Andersen’s attorney filed a new claim in state court, but omitted the trademark claim.