Dempsey and California lawyer Michael Avenatti released a joint statement Friday, which said their legal dispute has been "fully resolved to the satisfaction of all concerned."
Court documents filed Aug. 20 in Dempsey's King County Superior Court lawsuit against Avenatti said the lawyer initially was the sole owner of Global Baristas LLC. The documents say Dempsey joined Global Baristas a short time later. The ownership group prevailed against other bidders including Starbucks in an auction last January that included more than 40 Puget Sound-area Tully's stores.
In the court papers, Dempsey said his decision to participate in Global Baristas was based, in part, on his understanding that Avenatti was committing sufficient cash to both fund the acquisition and provide working capital to operate the stores. The deal finally closed June 30.
Instead, Dempsey alleged that Avenatti used Global Baristas to borrow $2 million for working capital without telling him.
Avenatti, "with other investors and the management team, will be moving forward with Tully's, a great company with a great product," Avenatti spokeswoman Suzy Quinn said.
The successful Tully's bid from Global Baristas was for about $9.2 million.
The Seattle-based coffee chain filed for chapter 11 bankruptcy last fall after reporting $3.7 million in debts.
The Associated Press contributed to this report.