Mission Beach Cafe, a popular brunch spot at 14th and Guerrero streets, announced its likely closure on Friday.

“Regretfully, this is probably it for Mission Beach Cafe,” states a note plastered to its door, attributing the presumed permanent shuttering to a mandated closure by the Department of Public Health that day.

Left unmentioned was a recent eviction, years of wage violations resulting in a $1.3 million default judgment, bankruptcy filings, unpaid mortgage payments, an expired business license, and fines levied by the Office of Labor Standards and Enforcement — all against Mission Beach Cafe LLC and its owner, Bill Clarke.

Even as he filed for bankruptcy and a court ordered his company to pay his former employees following a litany of labor violations, Clarke was planning to expand his business ventures to a space on Valencia Street.

“It’s mind-boggling,” said Hina Shah, a lawyer with the Golden Gate University School of Law Women’s Employment Rights Clinic, who represents former Mission Beach Cafe employees along with Legal Aid at Work. “The fact that he’s putting money into opening a new business and, at the same time, violating basic stuff like paying workers on time — it’s a bit perplexing.”

Clarke said that the employees’ lawsuit is “old news” and the parties settled for less than what the court ordered. “There is no point in bringing up something that is this old,” he wrote in an email. “There are more current pressing issues as to MBC survival which I don’t have time to address right now since we are in the middle of it.”

News of this “settlement” came as a surprise, however, to the lawyers representing Clarke’s former employees. They claim their clients have not yet received a penny. And may never.

Clarke did not respond to questions regarding his bankruptcy filings, his operation of a business without a license — for years — or his plans for Valencia Street. 

Crab arancini at Mission Beach Cafe.

Nine Mission Beach Cafe employees — six servers, a barista, a busser, and a sous chef — sued Clarke in March 2017 (more employees subsequently joined the suit). They complained that he issued paychecks without sufficient funds, failed to pay minimum wage for all hours worked, did not pay employees on time, did not pay overtime, did not allow workers proper lunch breaks, and purportedly charged restaurant customers San Francisco Health Care Security Ordinance-related fees earmarked for employee healthcare — but did not apply that money to employee healthcare. 

“When [the employees] attempt to cash their checks, they are frequently informed that [Clarke’s] account does not contain sufficient funds and after often forced to return to the back again — sometimes several times — before they can cash their paychecks,” the lawsuit states.

Subsequently, in October 2017, Clarke’s property at 198 Guerrero St. was foreclosed upon. Clarke was not able to pay his mortgage on the property and it was set to be auctioned off later that month. Clarke filed for Chapter 13 bankruptcy a day before the auction, which prevented it from happening.

The court eventually allowed Clarke to sell the property to Erich Pearson, the CEO of SPARC, a cannabis store, for $3.13 million. The deal closed in November 2018 and the money is currently being held in Clarke’s bankruptcy estate.

The employees are at the bottom of the list for receiving that money, said Anna Kirsch, a lawyer with the Golden Gate University School of Law Women’s Employment Rights Clinic, who is also representing the employees. (At the top of the list are banks from whom Clarke borrowed millions to buy 198 Guerrero, according to court documents, as well as the IRS and the California Franchise Tax Board.) 

Chocolate cake Mission Beach Cafe.

During all this, in September 2018, the court returned a default judgment against Clarke’s company, Mission Beach LLC, ordering it to pay $1.3 million in unpaid wages, sick pay, lawyers’ fees, and waiting times and fees for labor violations.

Included in that figure was restitution for violations discovered by the San Francisco Office of Labor Standards. Those fines were a result of an investigation the office kicked off two years prior; it determined in October 2017 that Clarke owed the plaintiffs and other Mission Beach employees more than $114,000 for violations of San Francisco’s Health Care Security Ordinance, which mandates employers pay certain amounts toward employee healthcare costs.

Ben Weber, a spokesman for the city’s OLSE, said the investigation is ongoing. He declined to state why.

Kirsch said that, per the bankruptcy proceedings, Clarke is now required to pay only $228,000 — but “to my knowledge [the former employees] have not received anything,” she said. “We don’t think we’re going to get any money.” 

She emphasized that this is not, as Clarke characterized it, a “settlement.”

Matthew Metzger, Clarke’s bankruptcy attorney, said that whatever compensation the employees may receive will be determined by the court-appointed trustee for Clarke’s bankruptcy estate. “They will administer the estate and determine what assets they can liquidate and which claims to allow,” he said. “They’ll present that to the court for the court to ultimately make a decision.”

During all of this, Clarke was operating Mission Beach Cafe without a valid business license.

The burger at Mission Beach Cafe.

According to a spokesperson with the California Franchise Tax Board, the agency suspended Clarke’s license in September 2014 for delinquent tax balances, including penalties, fees, and interest. He currently owes $48,619.67.

More recently, Mission Beach Cafe was served with an eviction notice, ordering it vacate June 12.

“Unfortunately, the owner of Mission Beach Cafe has consistently failed to pay his water and garbage bills and has also stopped paying rent, the current landlord, Pearson, said in a statement in a June 6 SFist article. “My heart goes out to the talented staff who have been mistreated over the years as well as the community who loved this cafe. Our goal is to identify a responsible tenant as quickly as possible to operate a new community-serving cafe.”

In an apparent coup de grâce, Mission Beach Cafe was temporarily shut down in January for a host of health-code violations, including a rodent infestation. Those violations were apparently not properly remedied, as Mission Beach Cafe was served a notice of closure by the Department of Public Health on Friday.

It remains unclear why Clarke has fallen into such financial distress. “We have been trying to figure out the root of that,” Kirsch said. “Clearly there’s this gross mismanagement. But why that’s happening is unclear.”

The turbulence did not deter Clarke from pursuing a venture at 694 Valencia, the former home of Luna Park. Months after he filed for bankruptcy, he told Mission Local via email that he was planning to renovate the space — a resource-intensive project that would see “every pipe, wire, air shaft, etc.” replaced.

“With that said,” wrote Clarke, “the process is exorcising old demons and paving the way for a very special place I am designing for the community… a sister to Mission Beach, but with 12 years of experience behind us.”