Nashville at law: Rival managers bury the heavy metal hatchet

Motley Crue litigation ends, dueling Latino newspapers go to court, competing bid made for SouthEast Waffles, and more...
[From our print edition featured in Monday's City Paper]

Email | Print By E. Thomas Wood, Sananda Sahoo and Kyle Swenson

07-27-2009 12:06 AM —

The lead singer of Mötley Crüe and two business managers long associated with the heavy metal band have settled their legal differences, according to a filing entered on July 17 in Nashville's U.S. District Court.

Burt Stein, who heads the Nashville office of the major talent management firm Gold Mountain Entertainment, and Los Angeles-based manager Allen Kovac sued each other at least three times last year in various venues, with Crüe lead singer Vince Neil and the band's operating company named as codefendants with Kovac in some of the cases.

Stein accused the band and its management of trying to cut him out of the percentage of revenues he has shared in for many years, while Kovac argued that Stein had been terminated as Neil's manager and was owed nothing.

The amount of money at stake was not clear from filings in these cases but was clearly substantial. After Mötley Crüe sued another manager in 2007 over alleged misappropriation of funds, case filings indicated that the band's revenues have at times reached $30 million a year.

In his dismissal order, U.S. District Judge William J. Haynes Jr. found that Stein, Neil and Kovac had reached a settlement "of all claims and counterclaims that have been or could have been brought by each against the other." The terms of the settlement are not mentioned.

Sam Lipshie and Colin Carnahan of Bradley Arant Boult Cummings represented Stein. Buck Cole of Greenebaum, Doll & McDonald was local counsel to Neil and Kovac, who were also represented by three lawyers from Miller Barondess LLP in Los Angeles.

The parties issued the following statement last week:

"Mötley Crüe, its lead singer Vince Neil, the band’s manager Allen Kovac and his management company 10th Street Entertainment have reached an out-of-court settlement of the pending litigation in Los Angeles, Nashville and Las Vegas with longtime Vince Neil personal manager and prior Motley Crue co-manager, Burt Stein and his management companies, B Entertainment and Gold Mountain Entertainment Nashville. 

"All parties are pleased that the litigation has been amicably resolved. The parties’ global settlement provides for a complete resolution of the remaining business matters that Mötley Crüe, Vince Neil and Allen Kovac had with Burt Stein, and allows all parties to move forward independently with their respective performing, entertainment and management businesses."

Other legal news of late:

Davidson County Circuit Court

Latino News, Angel Vargas & Jairo Vargas v. Alfonso Nieto d/b/a Tennessee Latino Newspaper. Filed July 21. The Alabama-based publishers of a Spanish-language tabloid that includes a Tennessee edition sue former Nashville sales manager Nieto after he launched a competing newspaper last month. The plaintiffs claim Nieto has "illegally appropriated the name, logo, customers, edition sequence and distribution network of Latino News to his financial advantage."

Efforts to reach Nieto for comment last week were unsuccessful.

Plaintiff's attorney: Marc Walwyn of Walwyn & Walwyn in Madison.

United States District Court

Pension Benefit Guaranty Corp. v. Nortel Networks Inc. Filed June 17. The federal government's pension agency takes on a $514 million shortfall in coverage for the U.S.-based workers and retirees of bankrupt Nortel Networks. The Canadian firm was a major Nashville-area employer, under the name Northern Telecom, during the 1980s and 1990s. It curtailed much of its activity in Tennessee several years ago. However, it is likely that many current and future Nortel retirees live in the Nashville area.

The litigation is something of a formality. Nortel is named only in its capacity as the designated administrator of its retirement income plan. PBGC is seeking to take over as statutory trustee of the pension plan. The agency issued a statement assuring beneficiaries that it will cover what they are owed, up to statutory limits.

United States Bankruptcy Court

SouthEast Waffles LLC. Chapter 11 reorganization plan and accompanying disclosure statement filed July 21. An affiliate of Gaylord Sports Management, an Arizona firm privately owned by Gaylord Entertainment heir E.K. Gaylord II, joins debtor SouthEast Waffles in offering a rival blueprint to the reorg plan Waffle House Inc. submitted to the court earlier this month.

Gaylord's venture includes golfer Phil Mickelson as an investor. Serving as CEO of the unit, GS Acquisitions LLC, is Terry Pefanis, former chief operating officer of Big Idea Inc., which created the VeggieTales kiddie entertainment franchise.

GS Acquisitions says it will pay a total of $20.2 million for the waffle seller's assets, with $4.8 million coming up front and the remainder paid out over time. Unsecured creditors would receive between 35 and 45 percent of their claims.

In filing its own plan on July 6, Waffle House Inc., based in Norcross, Ga., offered to pay about $21.4 million for the assets over the course of ten years, with unsecured creditors due to get back between 25 and 38 percent of their claims. But its initial payment would be only $800,000, a sixth of what the Gaylord team is offering.

The WHI plan and the GS Acquisitions plan include virtually identical provisions concerning the possible liability of longtime SouthEast Waffles CEO Jim Shaub and CFO Becky Sullivan for the financial irregularities that got the company into financial trouble in 2008.

Bill Norton of Bradley Arant Boult Cummings represents GS Acquisitions.

CBuJ Enterprises Inc. Chapter 7 petition filed July 17. Independent record distributor CBuJ lists assets of $69,472 and liabilities of $1.4 million. Major creditors include Bank of America, Regions Bank, Nashville-based Central South Distribution and AIMedia Solutions.

The company had contracts with 44 labels and was responsible for the distribution of 1,300 product titles across the country. The answering machine message on its phone line confirms that it went out of business as of July 17.

Attorney Sam Crocker of Nashville is handling the case.