The short version
Compass Coffee co-founder Harrison Suarez is suing co-founder Michael Haft, Haft’s father Robert Haft, and the company in federal court in Washington, DC (Suarez v. Compass Coffee LLC, No. 1:25-cv-00089). Suarez alleges the defendants refused to buy back his ownership stake at fair market value as the company’s operating agreement required, and he brings fraud and racketeering claims the Hafts deny. With the company’s assets sold out of bankruptcy in 2026, the case shows why a buyout clause needs machinery that works even when the owners stop cooperating.
Key takeaways
- Harrison Suarez alleges he had a contractual right to sell his Compass Coffee units back to the company at fair market value, and that the defendants blocked the valuation; Michael Haft denies the claims.
- The operating agreement, as quoted in the complaint, leaves the choice of valuation firm to the founders and sets no deadline or tie-breaker.
- The agreement chooses Delaware law, even though Compass Coffee is based in Washington, DC.
- In November 2025 the court allowed Suarez’s racketeering and fraud claims to proceed.
- Compass Coffee sold substantially all of its assets to Caffè Nero in 2026 after filing for Chapter 11.
What is the Compass Coffee founders’ lawsuit about?
Harrison Suarez says that when he was pushed out of Compass Coffee, he had a contractual right to sell his ownership units back to the company at fair market value, a classic LLC member dispute, and that the company and the Hafts never allowed that process to happen.
Suarez and Michael Haft became friends while serving in the United States Marine Corps and founded Compass Coffee in Washington, DC in 2014. According to the complaint, filed January 13, 2025 in the U.S. District Court for the District of Columbia, Suarez held 114,305 units, a 10.96% stake, when he gave written notice in November 2021 that he was exercising his right to have the company repurchase them (¶¶ 105–106).
The complaint alleges that the only valuation done for the repurchase was an April 2022 draft report by the Haft family’s own accounting firm, which put Suarez’s units at less than the $200,000 he had invested, even though, Suarez says, the defendants had represented during 2020 to 2022 that the company was worth more than $75 million (¶ 11). Michael Haft has publicly denied the claims, calling them “utterly untrue.”
In November 2025, the court allowed Suarez’s racketeering and fraud claims to proceed and dismissed Robert Haft from the breach of contract claim because he was not a party to the operating agreement. Suarez has demanded a jury trial.
| Date | Event | Source |
|---|---|---|
| 2014 | Suarez and Haft found Compass Coffee in Washington, DC | Complaint |
| November 2021 | Suarez gives written notice exercising his repurchase right | Complaint ¶ 106 |
| April 2022 | Draft valuation by the Haft family’s accounting firm | Complaint ¶ 11 |
| January 13, 2025 | Suarez files suit in the U.S. District Court for the District of Columbia | Docket No. 1:25-cv-00089 |
| November 2025 | Court lets the racketeering and fraud claims proceed; Robert Haft dismissed from the contract claim | Bloomberg Law |
| January 6, 2026 | Compass Coffee files for Chapter 11 bankruptcy | Bankr. D.D.C. No. 26-00005 |
| March 2026 | Sale of substantially all assets to Caffè Nero closes | Bisnow |
| August 2026 | Compass Coffee asks the bankruptcy court to dismiss its case | Bisnow |
What does the Compass Coffee operating agreement say about buying out a founder?
The complaint quotes a clause that gives each founder the right to sell his units back to the company at fair market value, set by a valuation firm the founders select and the company pays for, with no discounts for a minority or closely held stake.
The clause is Section VI.10 of the company’s Fifth Amended and Restated Limited Liability Company Agreement, titled “Repurchase of Founder Units.” As quoted in the complaint (¶¶ 102–105), it provides:
| Term | What the operating agreement says, as quoted in the complaint |
|---|---|
| Who may sell | Each founder, Michael Haft and Harrison Suarez, “for any reason” |
| When | Within 120 days from the effective date of termination |
| Price | “Fair Market Value,” defined as the value in an arm’s length transaction between “an informed and willing seller and an informed and willing purchaser” |
| Who sets the value | “a valuation firm (or accountant, or accounting firm) selected by the Founders, and paid for by the Company” |
| Discounts | None: “without any liquidity discounts, minority discounts, or lack of marketability” |
| Closing | Within 30 days after Fair Market Value is determined; payment by wire, with no deferral |
| Governing law | Delaware (Section XI.4) |
Why didn’t the buyout clause prevent a lawsuit?
A buyout clause only works if its machinery runs even when the owners stop cooperating, and as quoted in the complaint, this one leaves the choice of valuation firm to the founders without saying what happens if they never agree on one.
In an ownership and buyout dispute like this one, Suarez alleges that the defendants “prevented an independent valuation firm (or accountant, or accounting firm) … from determining the Fair Market Value” of his units and refused to complete the repurchase (¶ 10). Whatever the court ultimately finds about that allegation, the clause as quoted gives no default if the founders deadlock. That gap is common, and it is easy to close when the agreement is drafted:
| Missing piece | How an operating agreement can supply it |
|---|---|
| A deadline to choose the appraiser | A fixed number of days after the buyout notice |
| A tie-breaker | Each side names an appraiser, and the two appraisers choose a third |
| A fallback appraiser | A named firm, or a court or arbitral body that appoints one if the deadline passes |
| A consequence for delay | The cooperating side’s appraisal controls if the other side does not participate |
Which state’s law governs the dispute?
Delaware’s law governs the interpretation of the operating agreement, according to the complaint, even though the company is based in Washington, DC.
The complaint says the parties agreed in Section XI.4 that Delaware law governs the application and interpretation of the operating agreement (¶ 105). Delaware’s Limited Liability Company Act states that its policy is “to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements,” and that an LLC agreement “may not eliminate the implied contractual covenant of good faith and fair dealing.” 6 Del. C. § 18-1101(b), (c). For owners, the practical point is that the words of the operating agreement carry great weight, which is why what the agreement leaves out matters so much.
What are the allegations about COVID-19 relief funds?
Suarez alleges that federal COVID-19 relief money was used for purposes the program did not allow, including prepaying loans the Hafts had made to the company and an approximately $2.1 million bitcoin investment; Michael Haft denies the claims.
According to the complaint, which also alleges breaches of fiduciary duty, Restaurant Revitalization Fund grant money was used in October 2021 to prepay $2 million of convertible notes to the Hafts before they were due, and in November 2021 to make “an approximately $2.1 million investment in a bitcoin play through MicroStrategy” (¶¶ 78, 80). These are allegations, and Haft has called the claims “utterly untrue.” Allegations like these change the character of a business dispute: they move it from a disagreement over price toward claims of fraud, which is part of why this case is in federal court with racketeering counts.
What happened to Compass Coffee in bankruptcy?
Compass Coffee filed for Chapter 11 bankruptcy on January 6, 2026, sold substantially all of its assets to Caffè Nero for about $4.8 million, and then asked the bankruptcy court to dismiss its case because it did not have the funds to propose a plan.
Restaurant Dive reported that Compass owed about $11.7 million to creditors and investors when it filed. In August 2026, Compass told the court that it “does not have sufficient funds to formulate and prosecute a plan.” With the company’s assets sold, the claims against the individual defendants take on more importance for Suarez.
What should co-founders put in an LLC operating agreement?
Co-founders should agree, while the relationship is strong, on how ownership is divided, how and when an owner can be bought out, how the price is set and by whom, how decisions are made, and what duties the managers owe.
| Topic | What the agreement should settle |
|---|---|
| Ownership | Each owner’s percentage, and how it changes with new capital |
| Buyout rights | Who can force or request a buyout, and on what events |
| Valuation | The method, the appraiser, the deadline and the tie-breaker |
| Voting rights | Which decisions need a majority, a supermajority, or unanimity |
| Fiduciary duties | The duties managers owe, and any limits the governing law allows |
The Compass Coffee saga offers a lesson that has little to do with coffee. Trust may be enough to start a business, but it is no substitute for a well-drafted operating agreement, and even a well-drafted buyout clause needs a way to work when one side will not cooperate. Ownership, buyout rights, valuation, voting rights and fiduciary duties are easy to overlook when the relationship is strong. They become critical when it is not. When a partnership sours, no amount of goodwill can keep a business breakup from percolating into a federal case.
What does the Compass Coffee case mean for LLC owners in Washington, DC and Maryland?
For owners of a DC, Virginia, or Maryland LLC, the case is a reminder to read three parts of the operating agreement now, before a dispute: the buyout clause, the valuation process, and the governing-law clause.
| Part of the agreement | What the Compass Coffee case shows |
|---|---|
| Buyout clause | A right to be bought out is only as good as the process for carrying it out |
| Valuation process | Leaving the appraiser choice to the owners, with no deadline or tie-breaker, invites a stalemate |
| Governing law | A DC company’s agreement chose Delaware law, so Delaware’s LLC Act shapes how the agreement is read |
| Records of company funds | Allegations about how relief money was used moved a buyout dispute toward fraud and racketeering claims |
When co-owners cannot agree on a buyout, the options can include enforcing the agreement in court, negotiating an exit, or dissolving the business. Disputes between partners raise many of the same questions.
Key terms in the Compass Coffee case
Business divorce: the separation of the owners of a closely held business through a buyout, a sale, a dissolution, or litigation over one of those outcomes.
Founder repurchase (buyout) clause: a provision in an operating agreement that lets a founder sell his ownership units back to the company, usually at a price set by a stated valuation method. At Compass Coffee, it is Section VI.10.
Fair Market Value: as the Compass Coffee agreement defines it, quoted in the complaint, “the value that would be obtained in an arm’s length transaction between an informed and willing seller and an informed and willing purchaser, each with an adequate understanding of the facts.”
Governing-law clause: a contract term choosing which state’s law decides questions about the agreement. Compass Coffee’s chooses Delaware.
Civil RICO: the civil remedy under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–1968. A person injured in business or property by a violation “shall recover threefold the damages he sustains.” 18 U.S.C. § 1964(c).
LLC and ownership disputes in Washington, DC and Maryland
Waxman Litigation represents business owners in LLC member, partnership, shareholder, and ownership disputes in Washington, DC, Maryland, Virginia, and New York. Learn more about the firm’s LLC member dispute and ownership dispute work, or contact the firm at (301) 901-3109.
Related
- LLC member disputes
- Ownership and buyout disputes
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- Breach of fiduciary duty
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Sources
- Complaint, Suarez v. Compass Coffee LLC, No. 1:25-cv-00089 (D.D.C. filed January 13, 2025)
- “Compass Coffee CEO fails to ditch co-founder’s fraud allegations,” Bloomberg Law, November 4, 2025
- “Four surprising moments in the Compass Coffee lawsuit,” Washingtonian, January 15, 2025
- Compass Coffee bankruptcy, Restaurant Dive, January 7, 2026
- “Compass Coffee says it lacks cash for bankruptcy plan, seeks to toss case,” Bisnow, August 7, 2026
- Delaware Limited Liability Company Act, 6 Del. C. § 18-1101
- 18 U.S.C. § 1964, civil remedies (Racketeer Influenced and Corrupt Organizations Act)
