The Failure to Document Investment Dooms Venture

Posted by William J. Piercy on

Gardner v. Marcum, 292 Ga. App. 369 (2008).  Seeking funding to record and promote their music, musicians Gardner and Steele entered into discussions toward the possible investment of $150,000 from Marcum.  Although the details of the transaction were never finalized, Marcum provided $50,000 in a check made payable to DG Productions, LLC, with a notation in the memo line indicating “1/3 investment on Dan Gardner”.  The parties were unable to come to a final agreement on the terms of the investment.

Marcum subsequently demanded the return of the $50,000, which he characterized as an “advance” and filed suit.  Defendants countered that Marcum had agreed to invest $150,000, that he breached that obligation by not paying the remaining $100,000 and that the initial $50,000 was spent by DG Productions for marketing and production costs.

The Court found that because the material terms of the transaction were never finalized, that no contract had been reached and that the parties’ agreement to agree was unenforceable.  Although the Court found DG Productions liable to Marcum for the $50,000, it refused to hold Gardner and Steele individually liable without a specific finding by the trial court that they had engaged in conduct which would warrant the piercing of the corporate veil.  The Court, therefore, remanded the case for further proceedings on whether Gardner and Steele should also be individually liable.