An Ingham County judge has dismissed a
libel suit against City Pulse by businessman Paul Vlahakis over a
December 2009 story that reported that he was the county’s second
biggest property tax delinquent.
Vlahakis’ main argument was that City
Pulse had inaccurately reported on its cover that he owed property
taxes. He argued that the taxes were owed by various LLCs, not by him.
But in a written opinion issued
Thursday, Visiting Circuit Judge Richard D. Ball said, “The record in
this case shows the description of plaintiff on the front cover of the
publication, when read with the content of the article, is
substantially true.” City Pulse had argued that the substantial truth
doctrine in libel law should prevail in this case. In libel law, truth
is considered an “absolute defense” against libel claims. The
substantial truth doctrine provides some defense in cases where
published information may not be literally true.
In an earlier ruling on a motion by City
Pulse, Ingham Circuit Judge Joyce Draganchuk indicated that Vlahakis
had operated his LLCs in a way that negated his claim that the taxes
were owed by the LLCs and not him.
“It shall be taken as true in this case
that Plaintiff freely paid and managed the LLCs from his personal
accounts and as an individual,” wrote Draganchuk, who went on medical
leave 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 of
three LLCs that were listed as the owners of property on which $327,288
in taxes were declared delinquent in 2009, according to the Ingham
County treasurer. Most of the money was owed for 101 S. Washington
Square, a high-rise office and retail building on the southeast corner
of Washington and Michigan Avenue. The delinquent taxes were paid in
spring 2010, avoiding foreclosure.
Michigan law prohibits the state from
disclosing the names of members of LLCs. However, Vlahakis had signed
as the agent for the LLCs, calling himself “managing member.” Members
are 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 represented
by Stuart R. Shafer of Lansing, who was assisted by First Amendment
attorney John J. Ronayne III of Plymouth, Mich. Vlahakis was
represented by Andrew P. Abood and Timothy McCarthy of the Abood Law
Firm in East Lansing.
Ball also wrote that Vlahakis was “not
able to identify any actual or economic damages he sustained as a
result of the publication.”
Vlahakis argued that he had been defamed
“per se” and cited common law in contending he was not required to
prove damages other than before a jury. However, Ball cited a U.S.
Supreme Court case that says defamation per se is only “the imputation
of a ‘lack of chastity to any male or female’ or ‘publishing of words
imputing the commission of a criminal offense.’”
Vlahakis claimed City Pulse had placed
him in a “false light,” but Ball said that City Pulse “did not portray
the plaintiff in such a fashion that was ‘unreasonable and highly
objectionable,’” citing a 1995 case Porter v Royal Oak.
Vlahakis also claimed emotional
distress, but Ball wrote that City Pulse’s story did not meet the
standard of “extreme and outrageous conduct,” as defined in a 2005
During pre-trial hearings, Dragonchuk
ordered Vlahakis to pay about $2,000 in sanctions for failing to answer
questions during his deposition. Ball ordered Vlahakis to pay the
sanctions by Oct. 28. They have yet to be paid.
In an unusual twist, Vlahakis moved last
week that the case should be dismissed on the grounds that he had not
paid the sanctions. However, Ball dismissed the case on its merits
before the motion could be heard.