A recent lawsuit against the owner of a fire-damaged building in Bolinas may keep the property in its current state for months to come. 

McCauley Construction, which was hired in August 2020 to perform fire remediation on the historic Waterhouse building, claims that after six months of construction, owner Gregg Welsh stopped paying the company for its services and equipment. McCauley filed a lawsuit in Marin County Superior Court on Aug. 31 over an alleged breach of contract.

The suit states that the company discontinued work after a dispute arose and payments stopped, and that Mr. Welsh refuses to pay over $350,000 that he owes. The suit seeks an additional sum for accrued interest, attorney fees, court costs and other relief, and asks the court to approve a lien on the property to mitigate the financial loss. 

If a lien were to be secured, the building could be forced into a sale if Mr. Welsh did not pay off the debt. Profits from such a sale would be used to cover the company’s outstanding bills.

The owner of McCauley Construction, Scott McCauley, said he has not spoken with Mr. Welsh since the dispute occurred several months ago.

In an interview with the Light last week, Mr. Welsh could not describe the nature of the dispute, but he laid out his own complaints. Chiefly, he said McCauley Construction performed unauthorized and unpermitted demolition, and gutted parts of the building that did not require extensive reconstruction. The Seashore Realty office and the Bolinas Book Exchange space only suffered water damage, yet crews took out the floors and walls. The 2 Mile Surf Shop required fire remediation only on one corner of the roof, yet workers removed the entire roof, he said. 

Mr. Welsh claimed that McCauley Construction was unable to produce plans or invoices for the work it performed. He also said the contract he signed with the company and the bank was only for $119,000 worth of labor, and that the bank overpaid McCauley for months. 

The lawsuit states that the company accrued over $600,000 worth of materials, equipment and labor during its six months on the job. 

Mr. Welsh also claimed that the company does not have a contractor’s license and never obtained demolition permits.

But according to the California Department of Consumer Affairs Contractor’s State License Board, McCauley Construction has been a licensed contractor since 1990 and has a contractor’s bond with an insurance company dated July 2020, one month before it was hired by Mr. Welsh. 

In Marin, both demolition and construction permits are required prior to any structural changes. An anonymous complaint was filed with the county code compliance office on Nov. 8, 2020 over suspected construction without a permit. But after reviewing the site, the county inspector found that no demolition or construction had occurred. 

“Even though there were three guys on site at the time, they were just performing fire cleanup. Cleanup to make a building safer does not require a permit,” code compliance officer Cristy Stanley said. The code violation complaint was closed without the need for further action by the county. 

A construction permit is not on record for the company, but Mr. McCauley said he had not yet undertaken new construction by the time work stopped. For a permit to be secured, blueprints must be completed and approved by the county; Mr. McCauley said the architect had not completed construction plans when payments were discontinued earlier this year, so the process of securing permits was halted. 

Fire remediation and staging for a new electrical system were complete when construction stopped in February. The next step was having a civil and electrical engineer plan for the electrical system, Mr. McCauley said. 

The building, an important hub for businesses and residents in Bolinas since the 1960s, now sits in its gutted state. Mr. McCauley said he is continuing to pay for the fence so the site does not pose a hazard to pedestrians.

Mr. Welsh said he plans to bring his own litigation against the company over suspected insurance fraud.

When the building caught fire in the summer of 2020, five residential tenants and seven businesses were displaced, including a hair salon, the real estate office, the surf shop and the book exchange. According to Mr. Welsh, the fire began in an upstairs apartment whose tenant was illegally using it as a commercial kitchen. Mr. Welsh said he had been trying to evict the tenant before the accident.

Construction began in August and was slated to last one year, at which point Mr. Welsh said he would have reached out to the displaced tenants to reinstate their leases. 

Melinda Stone, who directed the book exchange, decried the situation. “This is a true heartbreak for our entire community,” she said.  

A court date is set for Jan. 25, 2022.