Entertainer T.I. is facing another lawsuit over a debt related to a shuttered downtown Atlanta restaurant.
T.I. and his former business partner Charles Hughes were both involved with Scales 925, an eatery that opened in mid-2015. Not long after opening, lawsuits started rolling in from former employees who claimed they were not properly paid for services rendered. The restaurant closed before hitting the second-year mark. For many of the former employees, the legal issues remain unresolved.
Avery Lee, a former bar manager at the Ivan Allen Boulevard establishment, filed suit in late May because he claims he wasn’t paid a $27,486 default judgment he won against a limited liability company in charge of the restaurant’s management. To get paid for the judgment and escalating legal fees, he is suing T.I., whose real name is Clifford Harris Jr., and Hughes.
But T.I.’s attorney, Albert Chapar Jr., said his client isn’t responsible for the debt because he wasn’t the owner. The restaurant was owned by Venue Restaurant Corporation, in which T.I. held no ownership, Chapar said.
“He was solely an investor and someone whose name was used to promote the restaurant,” Chapar said of T.I. in an email.
Lee argues that T.I. was deeply involved in the business and should be deemed liable, along with Hughes.
The name represents T.I.’s birthday and zodiac sign, the lawsuit says, adding that T.I. made decisions on the chef, the menu and the layout of the restaurant.
Chapar said Scales 925 Atlanta, LLC, the entity Lee won the default judgment against, was a subsidiary of another LLC in which T.I. had part ownership. But that doesn’t make T.I. liable, the attorney said.
T.I. would be “as disappointed as anyone” if employees were shorted, but he wasn’t their employer and can’t be held responsible, Chapar said.
“Many people have ownership interests in legal entities like (LLCs),” he said. “Under law, a person is not responsible for the claimed debts of those businesses solely by virtue of such ownership.”
Through two separate pending lawsuits, fifteen other ex-employees make similar claims to Lee's. Last year, another once-employee was also awarded a default judgment, separately from Lee.
T.I.'s new venture, an Atlanta strip club called V Live, will soon host its one year anniversary.
Hughes’ attorney, Deirdre Stephens-Johnson, did not respond to messages from The Atlanta Journal-Constitution.
Lee's recent lawsuit attempts to "pierce the veil," a legal term that refers to an attempt to recover money that's owed on a debt or judgment from a company's owners rather than from the company itself. LLCs can be owned by interlocking entities, including individuals, corporations, other LLCs, partnerships and trusts.
It can sometimes be tough to identify who owns a business, because regulations don’t always require that a company reveal its ownership structure or the identities of all of its owners in public filings, according to Charlotte Alexander, a Georgia State University assistant professor who specializes in employment law. The regulations aim to strike a balance between transparency and privacy, she said, speaking generally and not about Georgia’s specific LLC requirements.
The owners of an LLC are usually shielded from liability for the company's debts or judgments, she said. However, the option of “piercing the veil” allows judges to determine whether the owners should, in fact, be held liable.
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