Metro Weekly, a local LGBT magazine, is being sued over an alleged $85,000 printing debt by a company owned by Post-Newsweek Media, Inc., the media conglomerate that owns the Washington Post, according to a lawsuit filed July 8 in D.C. Superior Court. The lawsuit also seeks $1 million in punitive damages.
The lawsuit, which was first reported by the Washington Business Journal in its Aug. 6, 2010 edition (Vol.29 No.15), alleges that the company that owns Metro Weekly, Jansi LLC, and one of Jansi’s two shareholders, Randy Shulman, are responsible for a five-year-old printing debt with the Gaithersburg, Md., printing firm Comprint, a Post-Newsweek affiliate.
In addition to charging Jansi and Shulman with breach of contract for not paying the printing debt, the lawsuit accuses them of fraud for allegedly entering into a licensing agreement with Isosceles Publishing, Inc., the corporation that owned and operated Metro Weekly up until November 2007, for the alleged purpose of evading debts and liabilities.
“Upon information and belief, Mr. Shulman, Jansi, and Isosceles entered into the 2007 License Agreement with the specific intention to evade Isosceles’ creditors while continuing to publish, and reap revenue from, Metro Weekly,” the lawsuit says. “As a direct result of the defendant’s fraud, plaintiff suffered damages in a sum to be proved at trial but expected to exceed $1,000,000,” the lawsuit states in its request for punitive damages.
“We believe the lawsuit filed against Jansi LLC by Post-Newsweek is wholly without merit,” said William McLain, Jansi’s attorney.
McLain said he could not comment on any further details of the case until he files a response to the lawsuit later this month on behalf of Jansi.
“This story is totally premature for publication, and our responsive pleadings will support our claim that the lawsuit is without merit,” he told the Blade.
Although McLain has yet to file Jansi’s response to the lawsuit, Washington Business Journal quoted him as saying Post-Newsweek was not going to recover its money from Jansi because “it’s just not that corporation’s debt.”
Paul Thayer, the attorney representing Post-Newsweek, said he expects Jansi to argue in its response to the lawsuit that the printing debt was incurred by Isosceles Publishing, Inc., rather than Jansi.
Isosceles and Jansi entered into the licensing agreement in November 2007 in which Isoceles “granted to Jansi the exclusive right to publish Metro Weekly in exchange for a licensing fee,” the lawsuit says.
It says that Shulman disclosed in a deposition taken during a 2009 lawsuit filed by Post-Newsweek against Isosceles, in an earlier effort to collect the printing debt, that “each and every Isosceles employee was transferred to, and was exclusively compensated by, Jansi” after the licensing agreement took effect.
A Superior Court judge issued a judgment in Post-Newsweek’s favor on Dec. 11, 2009, ordering Isosceles Publishing to pay the $85,000 printing bill plus “pre-judgment interest at the rate of 6 percent per annum, dating from Feb. 1, 2009 to the date of judgment” along with court costs.
Thayer said Isoceles had yet to make any payments on the debt since the December judgment.
The July lawsuit argues that Jansi LLC and Shulman should be held responsible for the debt because “there has been a near complete intermingling of corporate funds, staff, and property between Isosceles and Jansi LLC.”
“Mr. Shulman has confirmed that one motive for the License Agreement was a desire to continue publishing Metro Weekly without having the publisher responsible for debts incurred by Isosceles,” the latest lawsuit says.
The lawsuit states that Sean Bugg, Shulman’s business partner, is the second of the two shareholders in Jansi LLC. Bugg is not named as a defendant in the lawsuit.
Meanwhile, in a related development, Washington Business Journal reported in the same story that “nearly $656,000 in federal and state tax liens have been filed against Isosceles,” according to data the newspaper said it gathered.
Public records available from the D.C. Recorder of Deeds, which keeps track of tax liens, show that 21 federal, D.C., or unemployment liens have been filed against Isosceles Publishing between 1996 and 2010. Thirteen are listed as a “U.S. Tax Lien.”
It could not be determined from the Recorder of Deeds docket listing of the Isosceles liens whether they are still pending or have been resolved.
McLain declined to comment on the liens.
The lawsuit states that Isosceles entered into a settlement agreement with Post-Newsweek in June 2005 to pay what at the time was a printing debt of $125,000 incurred “over a period of years.” It says that from 2005 to December 2008, Isosceles made payments totaling $40,000.
“Isosceles failed to make any further payments in accordance with the terms of the Settlement Agreement,” the lawsuit says.