Fateh v. Rich
| Decision Date | 24 August 1984 |
| Docket Number | No. 83-657.,83-657. |
| Citation | 481 A.2d 464 |
| Parties | Manoocher FATEH, et al., Appellants, v. Seymour RICH, Appellee. |
| Court | D.C. Court of Appeals |
Robert J. Stanford, Washington, D.C., with whom Gregory A. Cotter, Washington, D.C., appeared on brief, for appellants.
Samuel Intrater, Washington, D.C., with whom Neil Intrater and Albert Brick, Washington, D.C., appeared on brief, for appellee.
Before FERREN, TERRY and ROGERS, Associate Judges.
Defendants-appellants, Mr. and Mrs. Fateh, challenge a jury verdict awarding plaintiff-appellee, Mr. Rich, $130,000 because of the Fatehs' failure to honor their contract for the purchase of Rich's restaurant business.1 The Fatehs contend that the trial court erred in failing to strike certain lay opinion testimony offered by Rich on the liability issue, and in refusing to grant a directed verdict for the Fatehs on the damages issue. We conclude that the trial court acted properly in both respects. Accordingly, we affirm.
On September 17, 1980, the Fatehs signed a contract to purchase from Rich a restaurant business known as the Golden Table, located on 23rd Street, N.W., across the street from the State Department. The contract provided that a settlement would take place at an unspecified future date, and that Rich would provide the Fatehs at settlement with: an assignment of the lease for the restaurant premises; a bill of sale for all of the assets, licenses, and trade fixtures used in the business; and "the key and all other indicia of possession." In return, the Fatehs were to pay Rich $330,000. The contract, however, expressly conditioned performance upon approval by the District of Columbia Alcoholic Beverage Control Board (ABC Board) of a transfer of Rich's liquor license to the Fatehs. The contract stated that settlement would not take place until after the liquor license had been transferred. It further provided that if the ABC Board did not approve the transfer within three months, the Fatehs could cancel the contract.
Although the Fatehs agreed to purchase the restaurant, they did not intend to be involved personally in operating the Golden Table. They planned instead to have Mrs. Fateh's brother, Mr. Roshan, watch over the restaurant's day-to-day affairs. In fact, providing employment for Roshan was one of the principal reasons for the Fatehs' buying the restaurant. The Fatehs' attorney, Mr. Mallios, testified that "from the beginning" he was concerned about the extent of Roshan's involvement in the restaurant operations, because Roshan had a criminal record and the ABC Board had a policy against permitting licensees to hire convicted felons as managers. For this reason, Mallios instructed the Fatehs that someone other than Roshan should be employed as manager of the Golden Table.
On November 12, 1980, the ABC Board held a hearing on the transfer of Rich's liquor license to the Fatehs. Mr. Williams, one of the ABC Board members who presided at this hearing, testified at trial. Williams stated that although the Board was told Roshan would have some supervisory role in the future operation of the restaurant, "there was an indication that someone other than the convicted felon would be in charge of the restaurant." At the conclusion of the hearing, the ABC Board agreed to consider the application for a license transfer, but it did not issue a final ruling.
On the day after this hearing, the parties decided to go forward to settlement without waiting for final approval of the liquor license transfer. Although there is conflicting evidence as to which party suggested that settlement proceed ahead of schedule, it is clear that the Fatehs were aware that the Board had not yet approved the transfer.
The parties met on November 13, 1980, and signed a settlement sheet which provided that the Fatehs would give Rich $80,000 in cash and a $250,000 promissory note. The settlement sheet also reflected several minor adjustments involving business expenses that the restaurant had incurred or prepaid during the weeks before settlement. The Fatehs delivered the promissory note to Rich at the time of settlement and assured Rich that their attorney, Mallios, would deliver an $80,000 check as soon as sufficient funds were transferred from New Jersey. The promissory note, bearing interest at a rate of 10% per annum, required the Fatehs to make monthly payments of $4,150.30 beginning sixty days after the settlement date. In addition, the Fatehs executed a security agreement and financing statement giving Rich the right to retake possession and sell the physical assets of the Golden Table in case of default on the note.
Rich, in turn, provided the Fatehs with an assignment of the lease for the Golden Table premises; the Fatehs contracted to assume all the tenant's obligations under the lease. Rich also delivered a bill of sale, with a warranty of title, acknowledging that he "has sold and hereby conveys" all of the tangible and intangible assets of the Golden Table to the Fatehs. Finally, Rich turned over the restaurant's keys to the Fatehs and allowed them to take possession.
Several days after settlement, Mallios gave Rich a check for $80,000 drawn on an account in the name of Mallios' law firm. Before Rich could cash this check, however, Mallios, acting at the direction of the Fatehs, ordered his bank to stop payment. Mallios and the Fatehs took this action in response to a newspaper article published in the Washington Post on November 20, 1980, discussing Roshan's involvement in management of the Golden Table. Mallios described the substance of this article at trial:
The story indicated that a convicted felon, who is an Iranian, and it was pointed out . . . many times in the story that he was an Iranian, was in some way or another connected with the Golden Table Restaurant.
And if I recall, the Iranians were holding Americans hostage at the time, and the article sort of implied[,] are people from the State Department going to come across the street to eat at a restaurant owned by Iranians, when their coworkers are being held prisoner in Iran[?]
In addition to being concerned about the article's effect on the financial prospects for the restaurant, Mallios felt the article would prompt the ABC Board to scrutinize the Fatehs' license transfer application more carefully. Mallios reasoned that because the license transfer was likely to be delayed or even denied, stopping payment on the check was justified. Moreover, in a letter to Rich's attorney dated November 25, 1980, Mallios proposed that "Mr. Rich take over ownership and operation of the restaurant immediately."
Rich's attorney immediately informed Mallios that Rich
. . . flatly rejects your proposal to rescind the sale by having Mr. Rich take over ownership and operation of the restaurant. As you very well know the sale has gone to settlement. . . . We are only awaiting approval of the license transfer by the ABC Board which has the matter under advisement.
Your client's direction to stop payment on their check . . . is a clear breach of the contract and conditions of the sale. We will hold you and your client fully accountable for the breach and all resulting damages.
Thus, while recognizing that the license transfer remained a concern, Rich clearly expressed his understanding that ownership of the restaurant had passed to the Fatehs at settlement and that the Fatehs were obligated to begin performance under the contract. During the following months, Rich consistently maintained that he was entitled to payment of the $80,000 and to monthly payments under the promissory note. Rich's attorney repeatedly communicated this position to Mallios in a series of letters.2
Despite their concerns about the newspaper article and their failure to pay the $80,000 plus the monthly installments, the Fatehs took control of the business. They obtained a restaurant license permitting them to operate the Golden Table, and Roshan — acting on behalf of the Fatehs — took over the functions normally associated with ownership. He hired a new bookkeeper and made other decisions regarding the hiring and firing of employees; took control of the restaurant's daily receipts; made arrangements for purchasing supplies; and paid all the restaurant's bills, including rent, payroll, and other business expenses. Moreover, according to the terms of the contract, "all risks of destruction, loss or damage due to fire or other casualty" shifted from Rich to the Fatehs as of the date of settlement, and a restrictive covenant became effective prohibiting Rich and his family from owning or operating any "high-class restaurant or beverage business" within a ten-block radius of the Golden Table.
Because the liquor license for the Golden Table was still in Rich's name, Rich agreed to help supervise the operation of the restaurant on a part-time basis, making it possible for the restaurant to continue to serve liquor.3 Despite the fact that Rich maintained this limited role in the management of the restaurant, the bookkeeper hired by Roshan testified that Rich made decisions concerning only "very trivial things." Roshan made all of the major decisions and consulted Rich for advice only.
This arrangement continued for approximately six months, without any payment to Rich. Although the ABC Board held a second hearing in February 1981, the Board never approved the transfer of the liquor license to the Fatehs. On April 30, 1981, Roshan left the keys to the Golden Table with his bookkeeper, and — by a letter dated May 4, 1981 — Mallios informed Rich that the Fatehs were abandoning the restaurant. Mallios also informed Rich that, because the liquor license transfer had not yet been approved, he believed the contract of sale was cancelled and the Fatehs owed Rich nothing.
Rich immediately informed the Fatehs that he disputed their interpretation of the contract,...
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