Allegations of dishonesty, intimidation and theft are at the heart of a lawsuit filed Tuesday on behalf of the longtime operators of The Original Saugus Cafe, alleging a series of efforts to steal the business out from under them by their landlords.
The lawsuit alleges the operating family, the Mercados, were bullied, threatened and had people lying about their business while their landlord was making a series of moves to steal their business out from under them.
At stake is the intellectual property behind the oldest restaurant in Los Angeles County, a diner that dates back to 1887.
Everything was going fine for the Mercados until a little after Aug. 1, according to Yesenia “Jesse” Mercado, speaking on behalf of her family last week.
Her father — whom she considered, like herself, she said, a bit naive on certain aspects of the business — worked hard to purchase the business with a coworker in 1998, after the previous owner ran into serious debt.
She wasn’t surprised by the handshake deal for years between Alfredo Mercado and Hank Arklin, the longtime property owner; they both got along great.
After Hank Arklin’s death, everything changed, according to the lawsuit.
Louise Arklin, Harry’s widow, directed Larry Goodman “to manage and work directly with plaintiff,” according to the complaint.
When reached for comment Tuesday, Goodman said he did not have time to talk. Previously, he said the Mercados have no claim to the business, which he said is owned by the Arklins’ company, North Valley Construction.
According to the lawsuit, Goodman asked the family about their intentions for the business.
Jesse Mercado said the family wasn’t really looking to sell, but they might be interested in “the right buyer and offer.”
Then the family was asked to sign a new lease. Goodman’s intention all along was to take the business, the lawsuit alleges.
“On or about Aug. 15, 2025, Goodman met with plaintiff and instructed plaintiff that in order for plaintiff to remain in the property as a tenant after the passing of Mr. Arklin, he was forced to sign a formal rental agreement. Plaintiff, under duress, signed the formal rental agreement as he did not want to be forcibly removed from the premises now that Mr. Arklin had passed,” according to the lawsuit.
After the lease was signed, per the lawsuit, the plaintiffs were told the rental premises in the lease included “a restaurant, bar, parking areas, kitchen, storage areas, kitchen equipment, booths, counters, stools, chairs, registers, utensils, pots, plates, cutlery” at 25861 Railroad Ave., the restaurant’s address.
Neither Arklin nor Goodman compensated the restaurant operators for the plates, TVs or other items that were put into the lease, according to the lawsuit, which also states that Alfredo Mercado signed it under fear of eviction.
Alfredo Mercado also was under the impression that he would not be evicted if he had signed the lease.
Not long after Mercado signed the lease, Goodman applied to the trademark and patent office Aug. 30 for the name The Original Saugus Cafe, an approval process that usually takes about 12 months.
Despite the trademark attempt and alleged hostilities, according to the lawsuit, the family sought to find a buyer for the restaurant.
The complaint states that when Goodman found out about their efforts, he made the family sign another addendum, which is attached in the lawsuit, denying them any ability to film on the property or bring in any investors.
Around the same time, according to the lawsuit, Goodman et al began to tell patrons and the community at large that the business was closing.
“This was false,” according to the lawsuit. “What plaintiff did express to defendants that if Goodman failed to stop harassing plaintiff, plaintiff could not manage, operate or run its business as it had been run from 1998 to Hank’s death and begged Goodman and Arklin to stop. Plaintiff begged defendants to stop for the sake of himself, his business, his family, his staff and his patrons.”
The lawsuit states the family never had any plans to leave the restaurant, if not for the defendants’ actions, which culminated in a verbal order to leave the premises because the locks were being changed.
“Defendants couldn’t wait any longer to forcibly remove plaintiff and in or around Dec. 29, 2025, verbally told plaintiff to vacate the property as the locks would be changed on or about Jan. 5, 2026,” according to the lawsuit.
“Plaintiff finally obtained legal advice and immediately sent and served a cease-and-desist letter to defendants,” according to the lawsuit filed Tuesday by local attorney Steffanie Stelnick on behalf of her clients.
“Defendants ignored plaintiffs’ written demand to cease and desist and present an offer to purchase the name and business on Jan. 5, 2026, and have locked plaintiff out of his business, ceased its operations and property and ruined any and all good will of plaintiff,” according to the complaint. “As of the date of this filing plaintiff has no access to its property, its business or any money to purchase said property or business.”
