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Originally published August 23, 2013 at 9:19 AM | Page modified August 23, 2013 at 7:33 PM

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Dempsey walks away from Tully’s after suing partner

Actor Patrick Dempsey has backed out of his role as part owner and public face of Tully’s Coffee after a short legal battle with his business partner.

Seattle Times business reporter

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Actor Patrick Dempsey has backed out of his role as part owner and public face of Tully’s Coffee after a short legal battle with his business partner.

Dempsey on Aug. 20 sued California attorney Michael Avenatti, his partner in acquiring Tully’s out of bankruptcy, charging the lawyer had not fully financed the coffee chain as promised and had borrowed against Tully’s assets instead.

It appeared early Friday as though the two would patch things up.

Avenatti said the lawsuit was “much ado about nothing” and then issued a news release saying the partners were “happy to announce that late yesterday they tentatively reached an agreement to terminate the litigation.” Dempsey representatives never confirmed that.

Later Friday, Avenatti’s office issued a second statement saying the partnership was dissolved and that Dempsey wished the lawyer and the company “all the best.”

A Dempsey representative, lawyer S. Jerome Mandel of Los Angeles, confirmed the partnership is over.

Tully’s operates about 40 locations in the Puget Sound area.

In Dempsey’s lawsuit in King County Superior Court, the actor revealed that while playing a visible role as buyer, he had agreed to contribute no money to the Tully’s acquisition by their firm, Global Baristas.

“My decision to become a member and manager of Global Baristas was based, in part, on Michael Avenatti’s representation that he would provide both the capital to fund the entire Tully’s acquisition and sufficient working capital to allow Global Baristas to operate the Tully’s Coffee stores once the acquisition was completed,” Dempsey said in the suit.

Instead, he alleged, Avenatti used Global Baristas to borrow $2 million for working capital without telling him. The loan carries an “exorbitant” interest rate of 15 percent annually, the lawsuit says.

In addition, Dempsey said, he was pursuing arbitration “to address several personal claims I have against Michael Avenatti that arise out of or relate to his actions with respect to Global Baristas.” Dempsey learned about the $2 million loan through a business adviser who found in an Internet search that Global Baristas had borrowed the money, according to filings.

The actor and Avenatti bought Tully’s for $9.15 million in a bankruptcy court auction earlier this year. Their bid was upheld by a bankruptcy-court judge who heard other bidders, including Starbucks, spar over whether they were the rightful winners.

The deal closed June 30, five months later than expected.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com. Twitter @AllisonSeattle.

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