Soul of the South Sued for Alleged Breach of Contract

Soul of the South Sued for Alleged Breach of Contract
Soul of the South's Little Rock studios.

A Chicago television station has filed a federal lawsuit alleging that the owners of Soul of the South and its related entities breached a contract to lease broadcasting time for the network’s programming.

The lawsuit, filed by KM LPTV of Chicago-13 LLC, the licensee of WOCK-CD, claims Soul of the South, which is based in Little Rock, owes $1.89 million under the terms of the contract. But Soul of the South says the terms of the contract cited by KM LPTV are not the terms it agreed to.

D. Patterson Gloor, an Illinois attorney for the Chicago station, wrote in court filings that KM LPTV had met its obligations under the contract but had not received required monthly payments. An "escalation" clause in the agreement also entitled the station to compensation for the remainder of the time on the contract, which runs through May 2018.

According to supporting documents filed with the lawsuit, Soul of the South has made $258,767.30 in payments since April 2013 and that the full amount of the contract was $2.15 million.

Among the defendants named in the lawsuit are S.O.S. Media Holdings Inc., the general partner of SSN Funding LP, which is also named, and several SSN affiliates: SSN Networks Inc, which operates the network; Southern Soul Broadcasting Inc., which handles local marketing agreements in some markets; and Rock City Media LLC, which provides production services.

Also named were SSN Media Gateway Inc., which distributes the station’s signal, and Ellis-Wilson LLC, which holds stock in one affiliate and SSN Media Gateway. The lawsuit was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

Soul of the South provides news and entertainment programming that primarily focuses on black American life.

Gloor also alleges in the lawsuit that despite knowing about the S.O.S. Media contract with the station, the other business entities interfered with the agreement by creating other entities to block, move or transfer assets away from the company.

Frank Mercado-Valdes, one of the founders and a former officer of Soul of the South, wrote in an affidavit filed with the court that the "officers and/or former officers" of the companies interfered with the contract by "among other things, inappropriately shifting of funds [sic] and assets to avoid [S.O.S. Media] from meeting its payment obligations to KM LPTV under the contract."

He wrote that the officers "would simply file bankruptcy to avoid having to pay" and that during that time "utilized the Contract with KM LPTV to raise funds from outside sources and in turn placed those funds in entities they controlled."

In an answer to the complaint, Little Rock attorney Peter Kumpe wrote that S.O.S. Media Holdings held a contract with the Chicago station, but that the terms were not what had been negotiated between KM LPTV’s owner, Donald Bae, and Larry Morton, the Soul of the South representative. Kumpe wrote that after terms had been mutually agreed to by email, the contract was sent to another officer at Soul of the South, who had not been a part of the negotiations and was not aware of the mutual agreement on terms before signing the contract.

The two parties mistakenly used the wrong terms in the contract or KM LPTV acted fraudulently by purposely changing the terms, he wrote.

Kumpe argued that Bae wanted all months paid on the contract if it was breached, while S.O.S. Media agreed to a 12-month limit.

"The wrongfully revised agreement allowed Bae to threaten [S.O.S. Media] with huge damages if it refused to honor the Agreement, which would have bankrupted the fledgling [business]. Under duress, [S.O.S. Media] struggled to make payments under the Agreement, and sought voluntary forbearance from Plaintiff," Kumpe wrote.

Kumpe also asked the court to dismiss all of the other defendants besides S.O.S. Media because they were not parties in the contract and there was no factual support to the claim that they induced a breach of the agreement.

Kumpe declined to comment on the case, and Soul of the South CEO Doug McHenry did not immediately return a phone message.

A phone message for KM LPTV’s attorneys was not immediately returned.

A hearing on Kumpe’s motion to dismiss is set for Feb. 25.

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