TUCSON, Ariz. (BRAIN) — Following what retailer Seton Claggett described as a brutal five-year legal battle with his bank, TriSports.com is closing.
A court ruling forced Claggett into the decision to close his online and brick-and-mortar stores. Claggett founded TriSports.com with his wife, Debbie, in Tucson in 2000. It was a pioneer in online retailing in the triathlon industry, and grew to be one of the largest. The company operates out of a 32,000 square-foot warehouse, headquarters and retail facility in Tucson.
TriSports.com had emerged from bankruptcy in June 2015, for which the Claggetts had filed in June of 2013, but the business has been embroiled in another court case with Bank of the West since 2012.
"Here's the nickel version of a long story with a sad ending, and why we went into bankruptcy in the first place: We borrowed money from a bank on a five-year loan. They called some of it, an equipment line we drew on from October 2011 until June 2012, due within a few months, in October 2012. They threw me into special assets then disengaged and stopped communicating," Claggett said. "Then, they proceeded to sue my wife and me. We counter sued them because the bank lied to us and to QBP and misrepresented us."
The lawsuit continued for more than four and a half years, and finally came to trial in May. A ruling was made late last week.
"The judge acknowledged that there had been breach of contract, breach of good faith and fair dealing and fraud on the part of the bank," he said. "That's what we went to trial for, and the judge said the bank had done all of those things but they did not find causation of how that damaged us."
According to Claggett, TriSports.com's third-party damages expert valued those damages to be between $5 and $8 million, which he said was probably conservative.
"My attorneys did the litigation against the bank on contingency, so they covered all the fees and costs," Claggett said. "So we were all pretty shocked by the ruling. There's always a chance you're not going to win it; we were just hoping for even money and clean slate. But unfortunately, it went the polar opposite of that."
Claggett also said that if the bank hadn't done what it had done, the equipment loan would have been paid off quickly. He owes bankruptcy fees of more than $500,000, other legal fees, and the balance on the original Bank of the West loan, which totals $1.8 million.
Before the case ruling last week, Claggett said Trisports.com was having a good year.
"It wasn't a sales thing, it was a bank issue. Our sales were fine and we were up double digits with our core vendors and were doing extremely well on the bike side," he said. "It's just unfortunate. I started this company with $1,000 and a dream."
On Aug. 22, the Claggetts informed Trisports.com's 24-person staff of the decision to close the business and liquidate. Claggett said he let almost all of them go immediately.
"But everyone is still here working. That's humbling as a business owner, but that's indicative of our company and our culture," Claggett said. "It's an amazing company with some amazing assets and some tangible assets. So you never know. Maybe someone will come and pull us out of the fire."
