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May 29, 1997, as a result of Michelsen’s moving the shop to Palm
Springs, LeBloch lent Michelsen $5,000 to use in the business.
On each of the days October 6 and 17 and November 24, 1997, as a
result of Michelsen’s opening of the shop in Carlsbad, LeBloch
lent Michelsen another $10,000. Each loan in 1997 was informal;
the parties thereto (at the time living together as significant
others) understood that Michelsen would repay the loans without
interest in the near future when the shops’ cashflow allowed her
to do so. Michelsen used all $35,000 of the loan proceeds
($5,000 + $10,000 + $10,000 + $10,000) for the benefit of the
Nature’s Touch shops. On December 30, 1997, Michelsen repaid the
entire $35,000.
The Nature’s Touch shops experienced additional cashflow
problems in 1998 that required the borrowing of money. On five
occasions during that year, Michelsen informed LeBloch that NT
needed cash to alleviate a cashflow problem of the shops, and she
asked LeBloch to lend NT the necessary cash. In or around
December 1997, Michelsen (on behalf of NT) had purchased a lot of
inventory for the holiday season, and Michelsen realized in
January 1998, when the bills were coming due on these purchases,
that she would need additional money for the business. Michelsen
(on behalf of NT) was also entering into a permanent lease for
the shop in Carlsbad, and she needed money to pay the first and
last months’ rent for those premises as well as an accompanying
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Last modified: November 10, 2007