JON THOMPSON, ED GATLIN, AND EMPIRE EXPRESS, INC. v. J. T. DAVIS AND BARBARA DAVIS (Tenn. Ct. App. September 8, 2009)
This is an action for contribution. The two individual plaintiffs and the defendant formed a limited liability company for the purpose of owning and operating an arena football team. To fund the team, the three investors took out two loans in their individual names. The business was a losing venture, and eventually the team was sold. The proceeds of the sale were used to pay all of the business's debts except the remaining liability on the two personal loans. The two plaintiffs paid the balance of the loans out of their personal funds.
The plaintiffs then filed the instant lawsuit against the defendant for contribution, alleging that he was jointly and severally liable for his pro rata share of the debt. The defendant conceded that he owed a small part of the debt, but argued that his liability should be reduced by the amounts distributed to the plaintiffs by the business. The defendant contended that the funds distributed to the plaintiffs should have been applied to the business debt. After a bench trial, the trial court held in favor of the plaintiffs. The trial court rejected the defendant's claim that his debt should be offset, finding that the distributions made to the plaintiffs constituted a repayment of loans, not a distribution of capital. It also awarded the plaintiffs attorney's fees. The defendant now appeals. We affirm the decision of the trial court in all respects.
Opinion may be found at: