City Pulse wins libel suit

An Ingham County judge has dismissed alibel suit against City Pulse by businessman Paul Vlahakis over aDecember 2009 story that reported that he was the county’s secondbiggest property tax delinquent.

Vlahakis’ main argument was that CityPulse had inaccurately reported on its cover that he owed propertytaxes. He argued that the taxes were owed by various LLCs, not by him.

But in a written opinion issuedThursday, Visiting Circuit Judge Richard D. Ball said, “The record inthis case shows the description of plaintiff on the front cover of thepublication, when read with the content of the article, issubstantially true.” City Pulse had argued that the substantial truthdoctrine in libel law should prevail in this case. In libel law, truthis considered an “absolute defense” against libel claims. Thesubstantial truth doctrine provides some defense in cases wherepublished information may not be literally true.

In an earlier ruling on a motion by CityPulse, Ingham Circuit Judge Joyce Draganchuk indicated that Vlahakishad operated his LLCs in a way that negated his claim that the taxeswere owed by the LLCs and not him.

“It shall be taken as true in this casethat Plaintiff freely paid and managed the LLCs from his personalaccounts and as an individual,” wrote Draganchuk, who went on medicalleave this fall. Ball, who is a District Court judge in East Lansing,heard arguments on the motion by City Pulse for summary judgment.

Vlahakis was the managing member ofthree LLCs that were listed as the owners of property on which $327,288in taxes were declared delinquent in 2009, according to the InghamCounty treasurer. Most of the money was owed for 101 S. WashingtonSquare, a high-rise office and retail building on the southeast cornerof Washington and Michigan Avenue. The delinquent taxes were paid inspring 2010, avoiding foreclosure.

Michigan law prohibits the state fromdisclosing the names of members of LLCs. However, Vlahakis had signedas the agent for the LLCs, calling himself “managing member.” Membersare owners of an LLC.

In his ruling, Ball said the LLCs “amounted to plaintiff’s alter-ego.”

Vlahakis sued Neal McNamara, City Pulse’s former news editor, who wrote the story, and To The Max LLC, which owns City Pulse.

City Pulse and McNamara were representedby Stuart R. Shafer of Lansing, who was assisted by First Amendmentattorney John J. Ronayne III of Plymouth, Mich. Vlahakis wasrepresented by Andrew P. Abood and Timothy McCarthy of the Abood LawFirm in East Lansing.

Ball also wrote that Vlahakis was “notable to identify any actual or economic damages he sustained as aresult of the publication.”

Vlahakis argued that he had been defamed“per se” and cited common law in contending he was not required toprove damages other than before a jury. However, Ball cited a U.S.Supreme Court case that says defamation per se is only “the imputationof a ‘lack of chastity to any male or female’ or ‘publishing of wordsimputing the commission of a criminal offense.’”

Vlahakis claimed City Pulse had placedhim in a “false light,” but Ball said that City Pulse “did not portraythe plaintiff in such a fashion that was ‘unreasonable and highlyobjectionable,’” citing a 1995 case Porter v Royal Oak.

Vlahakis also claimed emotionaldistress, but Ball wrote that City Pulse’s story did not meet thestandard of “extreme and outrageous conduct,” as defined in a 2005Michigan ruling.

During pre-trial hearings, Dragonchukordered Vlahakis to pay about $2,000 in sanctions for failing to answerquestions during his deposition. Ball ordered Vlahakis to pay thesanctions by Oct. 28. They have yet to be paid.

In an unusual twist, Vlahakis moved lastweek that the case should be dismissed on the grounds that he had notpaid the sanctions. However, Ball dismissed the case on its meritsbefore the motion could be heard.