Seeing Red: Partners battle over a Wash. Ave. eatery's ownership

Mortgage broker Kirk Apazeller says he is the rightful owner of Red, the six-month-old eatery on Washington Avenue. So does landscaper Derek Onstott. Apazeller says he designed the place, drawing inspiration from a handful of coffee-table books on cool club and restaurant designs. Onstott tells the same story.

A year ago the native southern Illinoisans — Apazeller, 34, and Onstott, 29 — envisioned Red as both restaurant and lounge, with a DJ booth, a baby grand piano and a shimmering, candy apple-colored bar. They hoped the place would make a name for what they termed "eclectic American cuisine with an Eastern European flair." Now the former bar buddies are locking each other out of the restaurant in what's become an increasingly bitter battle that has both of them seeing red.

Amid allegations of violence, drug abuse and corporate mismanagement, Apazeller and Onstott have each gone to court claiming ownership of the venture, and each has asked a judge to halt the other from interfering. As of 2 p.m., February 25, Red was closed until further notice. One of the men had the keys; the other had the security-alarm code. "He's depleted my morale, my finances and my staff," says Apazeller. "This thing is a tornado," says Onstott in a separate conversation.

Mark Andresen

Red opened last September to enthusiastic food reviews from both the Post-Dispatch and Riverfront Times. Its dark and sexy décor — not to mention the red bustiers worn by the female wait staff — drew many partying night owls. By both partners' accounts, Red did gangbusters business in the beginning. Then the tide turned.

Onstott says Apazeller was the problem. "I thought he had a following of people, but it was the wrong crowd," he complains. "He wanted a nightclub with DJs. I wanted an upscale restaurant lounge with $30 steaks. Your diners don't want to hear techno while they're eating their $30 steak."

Apazeller says it was Onstott who scared away patrons. In a petition for a temporary restraining order filed in St. Louis Circuit Court in December, Apazeller stated that Onstott brandished a loaded gun to Red's employees and customers, threatened physical violence against an employee and stole food and liquor. He also said that Onstott bought and sold illegal drugs on the premises. In an accompanying affidavit, Apazeller reported that Onstott "has entered the kitchen with a handful of cocaine and asked for a plastic baggy."

Onstott vigorously denies each accusation. "He made all that stuff up because a judge is not going to sign a restraining order if he just says, 'Derek threatened to beat me up.' With guns and drugs, a judge can't say no, because if something happened afterward, it would be the judge's fault."

Apazeller has also stated in court papers that Onstott threatened his life numerous times, to which Onstott responds: "Like I told Kirk, 'That's bullshit.'"

St. Louis Circuit Court Judge John Garvey granted Apazeller a temporary restraining order which bars Onstott from coming within 1,000 feet of Red and from approaching Apazeller. But Onstott appealed to the judge, alleging that Red had not paid sales taxes, payroll taxes or rent, and complained that Apazeller moved more than $25,000 of restaurant assets into a new bank account that Onstott couldn't access. Judge Garvey subsequently appointed an arbitrator to inspect the books and ordered Apazeller to post a $325,000 bond. Apazeller couldn't come up with enough money for the bond and dropped the case on January 28.

That same day, St. Louis police arrested Onstott for allegedly destroying property at Red. According to the misdemeanor charge, he kicked in the restaurant's glass door the night before.

On January 30, Onstott was released on bond and proceeded to file his own lawsuit, asking for a restraining order against Apazeller. Onstott alleged Apazeller gave away Red's food and alcohol, purchased and sold narcotics at Red, and allowed the bar's employees to do drugs and booze before, during and after work. "One hundred percent absolutely false," counters Apazeller.

Whatever the nasty allegations, the crux of the court dispute comes down to one basic question: Who owns the restaurant?

During a recent interview Onstott displays an operating agreement for Red's LLC, Contemporary Foods, which identifies him as majority owner, with an 80 percent stake. Onstott says he sunk $720,000 into starting Red and that he offered Apazeller a 20 percent share without any money down. Onstott claims he obtained his cash after selling an auto business in his native Belleville.

"Neither Derek nor Kirk is any choir boy," allows Patty Wilcox, Onstott's attorney. "But there's no dispute that Derek put the money in, and for Kirk to lock him out is pretty ridiculous."

In a separate conversation, Apazeller acknowledges Onstott's investment but says the promissory note amounted to $325,000 and that only $125,000 has been deposited into Red's account. Apazeller says he put in $10,000 and shows documents indicating he incorporated Contemporary Foods as the sole member. He offers up the restaurant lease, executed with Contemporary Foods and signed by him, as well as the liquor license, which he acquired. "We don't believe Derek's [document] is a true operating agreement," sums up Apazeller's attorney, Jeff Witt. "All of Derek's paperwork is at issue."

Next Page »