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3 businesses remain open at shuttered Hotel Laguna

3 businesses remain open at shuttered Hotel Laguna
Hotel Laguna, pictured in November, closed to overnight guests on Dec. 31 when its lease expired. The former operator, Andersen Hotels Inc., filed a new lawsuit in Orange County Superior Court in late December against the property owner and a group of Laguna residents. (File Photo)

The famed Hotel Laguna closed its doors to overnight guests on Dec. 31, but three businesses on the property remain open as a legal battle continues between the hotel’s former operator and the property owner.

Noreen Goodman and her roommate spent Monday afternoon painting and rearranging furniture in the International Hair Salon, steps from the front doors of Hotel Laguna at 425 S. Coast Hwy. Brown paper covered the inside of the glass-paneled doors that lead into the hotel, which was established in the 1880s.

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Goodman’s business, along with Narrative Gallery and Laguna Parking Co. Valet Service, remain open despite the hotel’s closure.

E.W. Merritt Farms owns the hotel property and contacted Goodman and other businesses about keeping their doors open despite the hotel’s closure, Jake Shepard, a Merritt Farms family member, wrote in an email Saturday.

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Goodman said business has been slow so far in 2018 but declined further comment.

The hotel’s closure, though, may not be the sole reason for the decrease in customers.

“Most people get their hair done before the holidays,” said Goodman, who has operated in the space for 32 years.

Andersen Hotels Inc., the hotel’s former operator, filed a lawsuit Dec. 28 in Orange County Superior Court against Merritt Farms and a group of Laguna residents, following up one it filed in October.

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Andersen Hotels alleges the defendants violated lease terms to make way for a new operator and ruined Andersen’s business relationship with Majestic Realty Co. to renovate and modernize the hotel, according to court records.

Shepard said the allegations in the new complaint, as well as in the initial suit, are without merit and that Merritt Farms would defend itself in court.

The other defendants include filmmaker Greg MacGillivray, real estate investor Joe Hanauer and James “Walkie” Ray, who formed Kimbark Group LLC, a Delaware company that does business in California.

The latest filing followed U.S. District Judge Josephine Staton’s decision Dec. 13 to dismiss Andersen Hotels’ claims of trademark infringement, service mark dilution and false designation of origin.

Andersen alleged that Merritt Farms and Kimbark used the name Hotel Laguna and advertised themselves as the new owners of the property without Andersen’s consent.

The lease between Andersen and Merritt Farms expired Dec. 31.

Staton ruled the alleged advertisement was not used in connection with the sale of goods or services.

Staton gave Andersen the choice of filing an amended complaint within 21 days of her order to address deficiencies in the federal trademark claims or refile the case in state court.

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Andersen, a family business, operated the hotel for 32 years but learned in January 2017 that Merritt Farms had agreed to lease the hotel and property to Kimbark, MacGillivray, Ray and/or Hanauer.

Andersen’s October lawsuit claims Merritt Farms did not comply with lease terms to give Andersen the right of first refusal should Merritt decide to sell the property or hotel.

Andersen alleges the defendants structured a 99-year lease in an attempt to avoid Andersen’s right of first refusal.

Jane Humphrey, an attorney representing Kimbark, said the allegations are without merit and would be contested in court.

“While our hope was to have a new operator for the hotel in place on Jan. 1, we are working to reach an agreement with Kimbark Group LLC,” Shepard said. “We expect the hotel will reopen when an agreement has been signed.”

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