Landmark Hotel Laguna likely to close at year’s end

The famed Hotel Laguna is likely to close at the end of the year when its lease expires, the hotel’s attorney said Tuesday.

The news comes as Andersen Hotels Inc., which operates the hotel at 425 S. Coast Hwy.,has sued the property owner, alleging it violated lease terms to make way for a new operator.

Andersen Hotels filed the lawsuit Oct. 12 in U.S. District Court.

Hotel officials sent letters to all employees Oct. 13, informing them of the imminent closure, said Proud Usahacharoenporn, attorney for Andersen Hotels.

Messages left with Andersen Hotels’ president, Georgia Andersen, were not returned.

Filing the lawsuit does not put the end of the current lease on hold, Usahacharoenpron said. The lease expires Dec. 31.

According to court records, the lawsuit lists as defendants the property owner, E.W. Merritt Farms; film director Greg MacGillivray; real estate investor Joe Hanauer; James Ray and Kimbark Group LLC, a Delaware company that does business in California.

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

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

Andersen alleges that Merritt Farms, Kimbark, MacGillivray, Ray and/or Hanauer structured a 99-year lease in an attempt to avoid Andersen’s right of first refusal.

Andersen claims it repeatedly requested information related to the alleged agreement but was ignored.

Further, Andersen alleges, the defendants concealed the requested information knowing the damage it would cause to the hotel’s business, according to the suit.

“There are things we disagree with,” said Sarah Reid, a partner with Merritt Farms, a melon grower based in Porterville.

Reid declined further comment and referred questions to attorney Robert Hillison. Hillison did not return a call seeking further details.

In a statement, MacGillivray said attorneys had advised the defendants that the allegations in the suit are without merit and were preparing a response.

“Conclusions will be made public at the appropriate time,” MacGillivray said. “So, while our plan for guiding this iconic hotel property’s future will prove beneficial for all of Laguna — our primary interest being the preservation of Laguna’s historical buildings and charm — it is premature to discuss the specifics at this point.”

Hanauer said in an email, “Unfortunately, as you might imagine with this lawsuit, there’s not much I can say at this time.”

Usahacharoenporn said Andersen has “always been interested in extending the lease, but since the beginning of the year we have been shut out by the landlord. Part of the problem is [Merritt Farms] has not shared with us what deal is on the table.”

Hotel Laguna is pictured from the beach on Tuesday.

(Don Leach / Staff Photographer )

Hotel Laguna, with its Spanish arches and bell tower, is one of the most recognizable buildings in Laguna Beach.

The hotel dates to the 1880s, when it was first built. The original hotel burned to the ground and was rebuilt in 1888, according to the hotel’s website.

In 1928, the hotel was demolished because of concerns that its board-and-batten construction was a fire hazard. Work started on a more modern establishment, which was dedicated in 1930 and is the hotel people know today.

Through the years it has attracted Hollywood celebrities and other dignitaries.

Claes Andersen purchased the hotel in 1985 and refurbished its exterior and interior.

Andersen Hotels recently had a contract with Majestic Realty Co. to renovate the hotel, according to court records.

bryce.alderton@latimes.com

Twitter: @AldertonBryce

UPDATES:

3:10 p.m. Nov. 7: This article was updated with the information from Hotel Laguna’s attorney that it is likely to close.

This article was originally published at 4:05 p.m. Nov. 6.