Hotel Laguna lawsuit moves to state court: now includes 31 defendants


Andersen Hotels moved its legal battle from Federal Court to the State Superior Court in search of restitution after the company’s more than 30-year operation of Hotel Laguna and lease with Merritt Farms ended.

The lawsuit, filed Dec 28, maintains that Merritt Farms failed to comply with the terms of its lease with Andersen Hotels, which gave the Laguna corporation right of first refusal if the property owner decided to sell its premises. 

State lawsuit includes a total of 31 defendants

According to Andersen Hotels’ lawsuit, the corporation learned early in 2017 that Merritt Farms had agreed to a 99-year lease with Kimbark LLC, its principals Joe Hanauer, Greg MacGilllivray and James “Walkie” Ray, all named as defendants in the lawsuit.

Andersen Hotels claims a 99-year lease is equivalent to a sale and that the deal was specifically structured to avoid the plaintiff’s right of first refusal. 

Andersen Hotels’ lease expired on Dec 31.

Kimbark Group LLC maintains that the lawsuit is without merit.

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Photo by Mary Hurlbut

Hotel Laguna

The lawsuit filed with the State also includes Does 1 – 25 as defendants, to be named at a later date, and Earl Merritt.

Among the nine causes for action, the lawsuit claims that terms of the 99-year-lease were concealed from the plaintiff, blocking the opportunity to evaluate whether to exercise the right-of-first-refusal.

Also, Merritt’s alleged failure to maintain fire sprinkler, electrical fuses and electrical panels was blamed for a costly fire at the hotel in 2016 and potential loss of insurance. 

Andersen’s suit further claims that named defendants and Does 6 – 10 were active participants in conduct designed to interfere with its relationship with Majestic Realty Co., a development and management company, with whom, Andersen Hotels said, they had signed a deal to renovate the hotel, thereby providing a prospective economic advantage. 

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Hotel Laguna has been a familiar structure in Laguna for many years

According to the lawsuit, Merritt Farms instructed the defendants Does 6 – 10 to undercut Andersen’s relationship with Majestic and contract directly with Majestic. 

Majestic is not one of the named defendants. 

Kimbark Group LLC issues statement in response to lawsuit

Kimbark Group LLC issued a statement via attorney Janet E. Humphrey. 

The statement reads in part: “Instead of attempting to remedy the deficiencies in its federal complaint against Kimbark Group LLC as per the judge’s ruling, on December 28, 2017 Andersen Hotels filed a similar, unwarranted complaint in the Superior Court of the State of California, County of Orange Justice Center…

…As with the federal action, Kimbark Group LLC, formed by Joe Hanauer, Greg MacGillivray and James “Walkie” Ray, and its attorneys Songstad Randall Coffee & Humphrey LLP, continue to assert that the recently filed state action is without merit and will fight the allegations in court. Kimbark is continuing to work with E.W. Merritt Farms to obtain an agreement to operate the hotel.”

The name “Hotel Laguna” is also at issue

Controversy has risen over the use of the name Hotel Laguna, which Andersen claims is trademarked.

In the ninth Cause for Action, the suit asks the court to order the defendants and all in participation be enjoined from using the name while a decision is pending and permanently thereafter anywhere in the United States.

If the injunction is made permanent, the suit requests an order for defendants to deliver to the Andersen attorney anything with the name Hotel Laguna on it.

Damages to be established, according to proof at trial, are also requested as part of the lawsuit, along with contractual attorneys’ fees.

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