Legal Question in Business Law in California

OK, this is enough information to put the issues in better focus.

It sounds to me as though if this matter were before a court or in arbitration, the main issue might be whether the money received from the investor was truly a gift, in the legal sense of the word, or whether it was given with some expectation, such as, perhaps, an expectation of repayment or of profits or perhaps even of fame and glory.

A finder of fact such as a judge, jury or arbitrator would want to know all the facts and circumstances of the alleged gift. The fact that you seem to think of him as an "investor" suggests that there may be some doubt in your own mind -- investors being people who invest, and givers of gifts are thought of as donors, patrons, benefactors or such. But, what will the evidence show? Did he write checks saying "gift" (or equivalent donative thoughts)? Do the three written notices specifically refer to the prior payments as gifts? If so, you are in pretty good shape to defend against any legal action. The maker of a gift, once it is given to and accepted by the donee, cannot thereafter expect to get it back, nor to receive anything in return (at least in a court of law).

If, however, the facts (i.e., the admissible evidence) shows that the money was given to you with some reservation, some expectation of something in return, then the plot thickens. It is no longer clear-cut that the money given is legally a gift.

The range of evidence that might be introduced by the "investor" to show investment, rather than donative, intent might include (for example) stuff about how he became acquainted with you and your project, whether he is primarily a businessman or a philanthropist, and the tone of any communications between you during happier times. Surely there must be a bunch.

If your "investor" was advancing funds on any basis other than a (legal) gift, he may be a lender. Or, he may be entitled to restitution on a theory of quasi-contract. Or, he may be able to show that a partnership was formed, in which he is one partner and your LLC is the other partner (or possibly you personally might be the other partner or "an" other partner. It is terribly easy for parties doing business with each other to form an unintended, but existing in law and fact, partnership. A court could find a partnership if that is necessary to deliver a fair and just verdict.

The nature and substance of the "bully demands" deserves careful and dispassionate consideration. Is the guy blowing smoke? Does he have a case? Is the about to file a lawsuit? Could he win?

In sum, you might have a winnable case, or the guy might never even file. However, unless you can really show to the court's satisfactoin that the money given you was really a gift, you will have a fight on your hands to counter the plaintiff's claim that you owe him damages, and such a claim could be based on one or more of several theories, any of which the "investor" just might be able to plead and prove.

If you need further assistance, or are sued, please contact me again. Whether the investor turns out to have a great case or no case at all, I can represent you knowledgably and aggressively.