A Pulaski County resident has sued the owner and operator of a Saline County news website over fraud allegations that the defendant denied in a filing last week.
Curtis Arnold and Saline River Media LLC filed the suit against Grant Merrill, who owns www.saline247.com and Air Services LLC.
Arnold and Merrill had agreed in 2011 to form Saline River Media LLC and to purchase a radio station, KEWI-AM, for $65,000, according to the Nov. 10 lawsuit. Merrill was named a managing partner.
The partnership included an ownership interest by state Sen. Jeremy Hutchinson, a Little Rock Republican.
Arnold contends in the lawsuit that "within months of beginning operations," Merrill began writing hot checks on behalf of the company, mixed his money with the company's money, failed to pay the company's bills and taxes, and indebted the company.
Merrill had assured Arnold that the station would operate on an FM signal, and after delays, Merrill "repeatedly gave misleading and inaccurate excuses," the suit said.
Merrill also borrowed $31,000 and granted Arnold a lien on company equipment that already had a lien placed on it, the suit states.
After learning of the company debt, Arnold and other partners agreed that Merrill could keep www.saline247.com and $5,000 if he disclosed all of the company's debts and liabilities, the suit said.
According to the lawsuit, Arnold asked the court to issue an order forcing Merrill to reimburse more than $100,000 that was used for undesignated purposes. Arnold is also asking for damages consisting of loss of profits, attorney fees and other costs.
"The misrepresentations made by the Defendant were intentional, willful and malicious and were calculated to induce Arnold into investing his money with Defendant," the lawsuit states.
"The Defendant has breached the covenant of good faith and fair dealing by intentionally and/or negligently misrepresenting or omitting to disclose material facts that would have been pertinent to Arnold's decisions to enter into transactions with the Defendant."
In a response filed with the court Friday, Merrill denied the allegations.
"He has admitted that he may not have handled all of that completely right," Merrill's attorney, Ethan Nobles, said Friday of the company's payroll taxes. "It was never something that couldn't be fixed, but he never got the chance to fix anything."
Since they parted ways, Arnold and Hutchinson have partnered with Michael Wilkins to form another limited liability company that owns the radio station and operates the website ESPNWPS.com, Nobles said. Wilkins is the new managing partner, Nobles said.
Merrill has continued to operate the saline247.com website, which posts local news and streams Benton School District football and basketball games.
Now, the three men are waging a legal battle against Merrill to shut the website down, Nobles said. The driving force: speculation that the school district will award "an exclusive agreement" to stream its athletic events, he said.
"In an attempt to secure that agreement for ESPNWPS.com, Counter-Respondents [Arnold and Saline River Media LLC] and Cross-Defendants [Hutchinson and Wilkins] have maliciously published unfavorable and untrue statements about Counter-Claimants [Merrill and Air Services LLC] via their social media channels and in public forums," Merrill's Friday response states.
Merrill is claiming defamation of character and is seeking damages in his own lawsuit, according to his response. Nobles said comments included hints that Merrill's website would soon "go under," and were made to potential and current advertisers.
Merrill also contends that his removal as managing partner was a "direct result" of Wilkins' "goal of controlling KEWI."
Attorney Jonathan Camp -- who Nobles said is representing Arnold, Hutchinson and Wilkins -- did not respond to an email for comment late Friday. When reached in November by email after multiple attempts to reach him by phone were unsuccessful, Camp declined to comment because of "pending litigation" and "client confidentiality concerns."
"The complaint speaks for itself," he said in the November email response.
Nobles plans to file a motion to dismiss the suit.
"I don't see that they have any plaintiffs withstanding or that the time is right to file this," he said. "I think [the motion has] got a very good chance of succeeding."
Nobles said Arnold never lent any money in his own name but did so through Arkansas Tech Angels LLC. Because of that, Arnold cannot sue, Nobles added.
The Arkansas secretary of state's website lists Saline River Media's status as "revoked." Merrill's attorney said the status would also disqualify the company as a plaintiff in the suit.
Nobles said the parties were also bound to resolve any disputes by mediation before taking legal action under Merrill's contract. The parties had not attempted mediation, he said.
Metro on 12/22/2014