Owners of historic downtown Modesto post office building set for civil trial Tuesday

04/25/2014 7:52 PM

04/25/2014 9:53 PM

A bitter civil lawsuit between the partners who now own the former El Viejo post office in downtown Modesto is scheduled for trial Tuesday, and various accusations of wrongdoing are flying.

The legal spat involves Peter Janopaul, his sister Mimi Cook and Modesto investor Thomas Hogan. Together in 2011, they formed Finch Fund LLC to buy the landmark federal building.

Hogan and Cook have sued Janopaul, alleging he embezzled and defrauded them of more than $350,000.

Janopaul then countersued Hogan and Cook, claiming they defrauded him in part because they didn’t want to properly fix the 80-year-old building’s seismic, asbestos and lead paint issues.

Settlement negotiations were underway Friday evening, but as of Friday afternoon, both sides were vowing to fight things out in court.

Interior remodeling of the classic structure – which is on the National Register of Historic Places – has begun, and a Modesto law firm expects to move into its main floor this June.

The lawsuits, however, publicized previously private disputes about what the new owners thought should be done with the iconic I Street building, which they had spent more than $1 million to buy.

Janopaul initially was Finch Fund’s managing member, and he had announced plans to turn the 23,770-square-foot structure into a residential complex.

Extolling the virtues of lofts, Janopaul was certain downtown condominiums would be a hit. He previously had converted a dilapidated Denver warehouse into condos, and he did the same with a 71-year-old building in Long Beach. So Janopaul appeared to have the credentials to make his plans work.

In exchange for his experience in rehabilitating historic buildings and for his efforts to complete various aspects of the Modesto project, Janopaul received 30 percent ownership of Finch Fund. The agreement gave Cook and Hogan each 35 percent ownership of that fund, and the two of them contributed all the fund’s money.

Janopaul said troubles emerged when a 2012 inspection found lead paint and asbestos in various parts of the Depression-era building. “Every wall, door and ceiling was covered in lead paint and asbestos was pervasive in the building,” Janopaul told The Modesto Bee on Friday. He said about $800,000 in seismic safety work also was needed.

Janopaul’s attorney, Todd Macaluso, said Hogan and Cook didn’t want to spend the additional money to alleviate those issues, so Janopaul resigned from the project last year. “Janopaul does not want the liability for all the problems with the building,” Macaluso told The Bee.

Hogan is a Modesto lawyer, and he tells a very different story. In an email to The Bee on Friday, he said, “Janopaul’s cross-complaint is rubbish.” Cook and Hogan’s legal complaint alleges Janopaul “engaged in numerous financial improprieties resulting in misappropriation of substantial funds.” It accuses Janopaul of “embezzlement, conversion of funds for personal use, misappropriation, breach of operating agreement, misrepresentation and perpetrating fraud,” which allegedly cost Cook and Hogan more than $350,000.

“That’s an absolute fabrication to cover up what Hogan’s been doing and to get me out of the company,” Janopaul told The Bee. He alleged some of the materials contaminated with asbestos and lead paint were improperly removed from the building last spring.

U.S. Environmental Protection Agency representative Nahal Mogharabi told The Bee the “EPA is aware of allegations concerning the illegal abatement of asbestos and lead paint concerning the former Modesto post office. However, we cannot comment any further.”

The San Joaquin Valley Air Pollution Control District also looked into the allegation. “An anonymous complaint was made in May of last year, and one of our inspectors did a thorough investigation regarding the removal of asbestos-containing floor tiles in that building,” air district spokesman Anthony Presto said. “It was determined the tiles were removed in a manner consistent with federal asbestos regulations and that no violations were found.”

Modesto’s Huff Construction tested for lead and asbestos before starting its renovation of the building in January. Huff project manager Larry Nelson said both lead and asbestos were found, but “we followed the laws very thoroughly” to remove them.

“We did everything by the book,” Nelson assured. He said was not aware of any seismic issues at the post office, but said the 1933 structure “is built like a bomb shelter” with numerous reinforced construction features.

Once the first part of renovations are complete, the law firm McCormick Barstow LLC will take over 8,000 square feet on the main floor. “We’re very pleased with the progress,” said Jeffrey Olson, the legal office’s managing partner. He expects 17 members of his firm to move in this June. “It’s going great.”

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