Tran

I. BACKGROUND

Anthony Tran and Andre La Forge started a business to design, manufacture, and sell LED horticulture lights. The business venture was identified as Apache Technology, LLC (Apache) in member and operating agreements effective January 4, 2010. Under the agreements, Tran and La Forge were designated as the sole members and managers of Apache. La Forge was to have sole authority concerning Apache’s business activities, and Tran was to have sole authority regarding technology and product development. The venture was to be funded initially with $4,000—$2,400 from La Forge and $1,600 from Tran. Net annual profits and losses were to be shared in proportion to the initial capitalization—60 percent to La Forge and 40 percent to Tran. The members agreed that each would loan equal capital as needed to continue the venture. If either member lacked the necessary capital, he was to sign a promissory note for the amount contributed by the other at the prevailing interest rate. La Forge made several loans to the company; no corresponding promissory notes were executed by Tran. Tran did not provide a $1,600 capital contribution as contemplated by the operating agreement. The parties…