Thai Chili, Inc. v. Bennett
2013 D.C. App. LEXIS 638
| D.C. | 2013Background
- Two restaurants Thai Chili and Sushi Go Round located in Gallery Place, DC, were run by Managers who clashed with Shareholders over ownership and control.
- Managers alleged a hostile takeover; Shareholders asserted a majority interest based on capitalization contributions.
- Auditor-Master conducted extensive accounting; Master concluded a binding subscription-for-shares agreement allocating a $950,000 capitalization and pro rata ownership.
- Trial court adopted the Master’s findings, ruling Shareholders held a majority (52.63%) over Managers (47.37%).
- Managers challenged the de novo standard under Rule 53 and the trial court’s treatment of the October 16, 2005 meeting transcript and related evidence.
- This appeal verifies Rule 53 review, resolves capital-contribution calculations, and affirms the trial court’s ownership ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court conducted de novo review under Rule 53. | Managers assert failure to de novo review. | Shareholders contend proper de novo review occurred. | Yes; de novo review was conducted. |
| whether there was a binding subscription-for-shares agreement for a $950,000 capital and pro rata ownership | Managers argue broader, non-pro rata or landlord-credit allocations. | Shareholders rely on pro rata based on $950,000 cap. | Court affirmed pro rata ownership based on $950,000 capitalization. |
| Whether Mr. Phongsvirajati’s and Kawano’s contributions were capped at pledged amounts and not unlimited | Managers seek additional credits and non-monetary contributions. | Shareholders limit contributions to agreed amounts. | Credits limited to approved amounts; no excess capitalization credited. |
| Impact of the October 16, 2005 transcript on the master’s findings | Transcript shows increased contributions to managers. | Transcript does not clearly support increased capital shares. | transcript reviewed; findings upheld. |
| Whether the trial court properly resolved credibility and factual issues from the Master’s report | Managers challenge credibility determinations. | Court appropriately reviewed the record de novo and adopted findings. | No clear error; findings adopted. |
Key Cases Cited
- United States v. Raddatz, 447 U.S. 667 (U.S. 1980) (limits on credibility review in magistrate-made findings)
- Peretz v. United States, 501 U.S. 923 (U.S. 1991) (importance of party-identified testimony for de novo review)
- Gomez v. United States, 490 U.S. 858 (U.S. 1989) (courts may review credibility determinations on appeal)
- Hickey v. Bomers, 28 A.3d 1119 (D.C. 2011) (de novo review standard; standard of review in DC appellate cases)
- Chatman v. Lawlor, 831 A.2d 395 (D.C. 2003) (post-trial procedure limits on relief from strategic choices)
- Young v. Delaney, 647 A.2d 784 (D.C. 1994) (trial court’s gatekeeping in applying Master findings)