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MURPHY'S LAWRESTUARATEUR'S NEST EGG MAY BE SCRAMBLED BY FINE PRINT

A handshake used to be enough for Lou Mastela. During more than 30 years in the restaurant business, Mastela ordered thousands of dollars of groceries and liquor, hired staff, paid bills and built his businesses on a foundation of good intentions.

Legal niceties--things like contracts, leases and other paperwork--he left to the lawyers. When they said sign, he signed whatever paper they put in front of him.

For better than three decades, Mastela prospered, ultimately settling with his wife into a comfortable Scottsdale home which he figured would be their retirement nest egg.

But because he casually signed one document too many, Mastela says, he has lost his restaurant and may soon lose his home.

After running Scottsdale's Glass Door restaurant for 18 years, Mastela says he was forced out of the business last year by Michael L. Murphy, an attorney Mastela says he trusted because Murphy is the son of one of the three men who helped start the Glass Door in 1974.

Now the younger Murphy is trying to take Mastela's house to cover back payments he claims Mastela owes for the Glass Door. The house is the only asset Mastela says he has to tide over himself and his ailing wife, Elaine, in old age.

Mastela claims he has been betrayed. "I did a stupid thing. Now Murphy has manipulated the whole thing. Murphy wanted the business," says the bulky, white-haired 59-year-old.

But Murphy says it's not his fault if Mastela did not understand some of the legal papers he signed. Murphy says the only bone of contention is just how much money Mastela owes. He plans to sell Mastela's house to cover that amount.

A Maricopa County superior court judge is expected to decide soon whether the Mastelas must forfeit all they have invested in their home to satisfy Murphy's demands.

Mastela says it's a hard way for a man approaching retirement age to learn that legal papers count more than years of trust, and that the son of his onetime business associate would treat him so coldly.

"I didn't think anything like this could happen," Mastela says of Murphy. "But he legally stole my business."
Murphy is reluctant to discuss the situation, except to say that Mastela should have known what he was getting into.

The business began amicably enough in 1974, when Mastela was managing the Trader Vic's restaurant in Scottsdale. Michael Murphy's late father, prominent Phoenix attorney John A. Murphy, and two other investors approached Mastela and asked if he wanted to open his own restaurant.

The deal, Mastela says, called for the elder Murphy and his two partners to form a company and construct a building on East Main Street in Scottsdale. Mastela and two partners he brought along with him from Trader Vic's formed the Glass Door Corporation and rented the building from Murphy's company.

The elder Murphy handled all the paperwork for the deal, Mastela says, and the arrangement couldn't have gone more smoothly. Over time the restaurant established itself as a lawyer-and-stockbroker kind of place, catering to a professional crowd on expense-account lunches during the day, and trying to draw the same folks back to the piano bar at night.

"It was pretty successful because it was what people in the 1970s and 1980s wanted," Mastela says. "When the old man [John Murphy] was alive, he used to come in for dinner a lot, and things were hunky-dory."
Although technically there were two companies--the one that owned the building and the restaurant itself--the lines between them often merged, Mastela says. At different times, John Murphy and two of his sons, Michael and John Jr., served as officers of the Glass Door Corporation.

"It was a close-knit deal," Mastela says. "They did everything for us. We put a lot of trust in them."
When the restaurant's first ten-year lease expired in 1984, Mastela says, he signed another one, confident that the Glass Door had established itself as a going business.

But in the late 1980s, Mastela says, the recession hit, tax laws were changed to limit tax deductions for meals, and trendier restaurants were opening in Tempe and Mesa. Customers weren't as willing to drive to Scottsdale anymore, and receipts began to fall off.

After a slow summer in 1990, court records show, the Glass Door was $28,000 behind in its rent to PP&L Investments, the company that owned the building. By that time, Mastela says, John Murphy, one of his original partners, had died. The third partner had sold his shares and left the state, and Michael Murphy was the controlling partner in PP&L.

Mastela went to see the younger Murphy and asked for some leniency. Murphy agreed to an accommodation.

Murphy presented Mastela with a Deed of Trust and Promissory Note, by which Mastela pledged to put up his house as collateral on the $28,000, Mastela says. Or so he thought.

"It was just walking down and signing papers," Mastela says. "We didn't think anything of it."
But when the summer of 1991 also proved to be slow, Mastela learned that he had signed away much more than he intended. In October of last year, he says, the restaurant was 28 days late with its rent coming off the summer business doldrums.

"On October 29th, the chef went to work and tried to get in, and the locks were changed," Mastela says.

Murphy, acting as general partner of PP&L, took over the restaurant. He formed a new company, with his brother-in-law as president, and reopened the Glass Door within two days.

The menus, staff and name all remained the same. The only thing missing from the old Glass Door was Lou Mastela.

Murphy then initiated efforts to force a trustee's sale of Mastela's house. But he wasn't after just the $28,000 Mastela believed the promissory note secured.

Citing a paragraph of the promissory note that Mastela says he scarcely noticed when he signed, Murphy argued that Mastela had pledged his house for all debts the resturant owed PP&L. Most significantly, that included rents through the end of the lease period.

Suddenly Mastela found himself owing PP&L well over $100,000, and the amount continued to increase with each passing month as the old Glass Door Corporation--even though it no longer ran the restaurant--failed to pay rent on the building.

By now Murphy estimates that Mastela owes the company about $185,000, and he is asking a judge to let him sell Mastela's home to pay off the debt.

Mastela says he's been rooked, and that he would never have signed the note if he knew he might lose everything he owned. He claims that Murphy told him the note only applied to the $28,000.

"I placed a lot of faith where I shouldn't have placed any," Mastela says.
Murphy says Mastela is wrong. At the time, the Glass Door had its own attorney, Francis Duckworth, who should have reviewed the documents and explained them to Mastela, Murphy says.

"I just refer you to the document itself. Read the document. It's crystal clear," Murphy says. "If he misread it or didn't understand it, well. . . ."
Jim Muehlberger, an attorney with Snell & Wilmer who is trying to help Mastela save something from his home investment, says his client "relied on" Murphy to tell him what he was signing.

"Lou trusted the guy," Muehlberger says.
That trust, Mastela says, may leave him with nothing. He and his wife have about $150,000 in equity in their house, he says. Their plan was to sell the home when he retired, Mastela says, and move to Oregon so his wife could escape the allergies that afflict her in the desert.

But if Murphy is awarded all the money he is seeking, Mastela says, there will be nothing left for his retirement.

Since he was locked out of the restaurant, Mastela has taken a job as food and beverage manager at a Scottsdale senior citizen's community. He's making about $37,000 a year, he says, hardly enough for a 59-year-old to start building his nest egg anew.

Mastela points out that Murphy has had even worse luck than he did with the restaurant. Within months, the company Murphy formed to take over the Glass Door filed for bankruptcy, and is still operating the business under court protection.

"If he [Murphy] had not done what he did, everybody would gave gotten paid eventually," Mastela says. Mastela says he has repeatedly offered to pay Murphy the $28,000, which Mastela readily acknowledges he owes. Now he's just hoping there might be something left when the legal process gets through with him.

"Legally, my position isn't great," Mastela says. "I'm gonna get beat out of something. But I've gotta kick myself in the butt and say, 'Be optimistic.' I've always been an optimistic person. Though in this case, that's probably stupid.

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David Pasztor