SAN DIEGO — Fabulous Inns of America, embroiled in yet another internal controversy, late Friday was denied a temporary restraining order to prevent the company's largest shareholder from accumulating additional stock.
As a result, Chula Vista investor Frank Ferreira, who claims to own about 30% of the Mission Valley hotel company's stock, can now purchase additional shares, if he chooses.
San Diego Superior Court Judge Douglas Woodworth refused to grant management's request that Ferreira not add to his holdings. A request for a preliminary injunction on Ferreira's ability to acquire more stock will be heard Sept. 29. The injunction is part of the company's lawsuit, filed Thursday, against Ferreira, accusing him of insider trading and of improperly trying to take control of the company.
Meanwhile, the state 4th District Court of Appeal on Friday turned down Ferreira's bid to reimpose a previous injunction that limited Fabulous Inns management's ability to spend corporate funds.
Ferreira had sought an emergency ruling to reinstate the injunction, which was lifted last month after an out-of-court settlement between current executives and an ousted management group.
Ferreira, a plaintiff with current management against the ousted group in the two-year legal tug-of-war, objected to the settlement and refused to sign it. San Diego Superior Court Judge G. Dennis Adams approved the settlement anyway, and Ferreira has taken his protest to the appellate court.
Ferreira's appeal will be heard Wednesday.
Last month, Ferreira was incorrectly quoted by The Times as saying that the ousted group admitted in the settlement agreement to "several million dollars in damages." Only some of the ousted group admitted to the damages, according to Ferreira. The exact terms of the settlement agreement are under court-ordered seal.
Ferreira's split with current management--led by former dissidents Jeff Krinsk, now chairman, and David Yardley, now Fabulous Inns president--could well continue.
Management has accused Ferreira of buying stock "off-market" and of trying to obtain "absolute control" of the company.