Trio of lawsuits filed by former organizer of 'Taste of L.A.' fest.

Marty Ellis, former producer of the "Seagram's Taste of L.A." food festivals in Santa Monica, has filed suit against the House of Seagram, the City of Santa Monica and the Los Angeles Business Journal for $4 million each, claiming they are responsible for the demise of his business.

The Taste festival, an annual event since 1986, ended last year in a whirlwind of controversy that included numerous rubber checks written to suppliers, a lawsuit filed by the City of Santa Monica against Martin J. Ellis Co. Inc. alleging fraud and racketeering, a police report filed by Ellis' company regarding alleged embezzlement at the gate, and Seagram's decision not to sponsor any more Taste festivals produced by Ellis.

Ellis' lawsuit against the City of Santa Monica is a counter-claim to the city's earlier suit against him. The city first filed suit last September, to collect $58,000 Ellis owed the Santa Monica Civic Auditorium, where the Taste festivals were held.

In October, Assistant City Attorney Amelia Sherman filed an amended complaint for damages, based on charges of breach of contract (both written and oral), fraud, civil RICO (Racketeer Influenced Corrupt Organizations) violations, non-payment for services provided by the city to Ellis and unpaid business license fees.

In that suit, the city alleged that Ellis made an oral agreement to hold a festival called the Martell French Festival at the auditorium on Sept. 6-8, 1991, including writing a check for $2,000 on a Taste of L.A. account as a deposit. The city turned away others interested in using the auditorium on those dates, only to find that the deposit check bounced and the festival was canceled, according to the suit.

The city also alleges that Ellis purposely wrote bad checks to Taste providers, knowing they would bounce, with an intent to deceive, as part of "a scheme to defraud the city." The city is seeking $189,000 in actual and treble damages, plus punitive damages, attorney fees and costs, said Sherman.

In an interview with the Business Journal last fall, Ellis said he postdated checks for Taste expenses expecting that money would be in the account shortly and denied there was any intent to deceive the city.

In the cross-complaint filed by Martin J. Ellis Co., Ellis alleges that by refusing to allow him to display Seagram's name on an event board, and by generating negative publicity that disrupted Ellis' relationship with sponsors and investors, the city's "meddling actions" caused Ellis to lose Seagram's sponsorship.

At a court hearing on Jan. 27, Ellis' cross-complaint and response to the city's suit were stricken because the corporate status of Martin J. Ellis Co. remains suspended by the state franchise tax board. Under state law, a suspended company has no status to file suit or defend itself against a suit. Ellis was given 30 days to show evidence of reinstatement.

Ellis' attorney, Cara Eisenberg, said Ellis has paid all the fees necessary for his company to be reinstated and is only waiting for the paperwork to be processed.

At the same hearing, the city's amended complaint was stricken for lack of an exhibit, and the City Attorney's office was given 30 days to refile.

Sherman said that when she refiles the amended complaint, she may "tighten up a few things" and add some additional charges regarding bounced checks and payments promised to charities that were never made.

"I have more information now than I did then," Sherman said.

In the lawsuit filed by Martin J. Ellis Co. against the House of Seagram, Ellis alleges that his former sponsor breached its contract with him, breached "the implied covenant of good faith and fair dealing" and intentionally interfered with his company's economic relations with other firms.

Ellis also is seeking an injunction to stop Seagram from producing the festival without him, although a Seagram spokesman said last week that the liquor company has decided not to sponsor a Taste festival this year. Seagram spoke with several people and companies interested in producing the festival, but the company recently decided against a '92 sponsorship.

In the lawsuit, Ellis alleges that Seagram failed to advance its 1992 sponsorship payment because of a dispute over another event, presumably the Martell festival, for which Ellis attached a brochure. The lawsuit states that if Ellis failed to comply with the terms of the Seagram contract, it was due to "bad faith actions" of Seagram that were intended to harm Ellis' company, which became insolvent.

Seagram, when it broke with Ellis last year, said Ellis had breached the contract and had failed to properly manage event finances. A Seagram's spokesman also said the contract with Ellis listed the 1992 festival sponsorship as an option, not an obligation.

Seagram has filed a motion to dismiss the lawsuit based on the suspension of Martin J. Ellis Co.'s corporate status, plus arguments that Ellis' charges are not specific enough. Seagram also has petitioned to have the case moved from Superior Court in Santa Monica to U.S. District Court because the House of Seagram is an unincorporated division of Joseph E. Seagram & Sons, which is based in Indiana.

Seagram's attorney, Myra Pasek with the Los Angeles office of Latham & Watkins, said she has been asked by her client not to discuss the issues in the case, only the public record filings.

In the third lawsuit, filed by Ellis as an individual against the Business Journal in Superior Court in Los Angeles, Ellis alleges that he was libeled by the Business Journal in articles published in September and October of 1991.

The articles concerned the bounced checks, the City of Santa Monica's plans to file legal action charging him with fraud and racketeering, Seagram's decision to drop its sponsorship and other issues related to the Taste controversy.

Ellis alleges that the Business Journal published the articles "either knowing that the information was false or with reckless disregard for whether it was true."

The Business Journal's attorney, Steve Contopulos of Donovan Leisure Newton & Irvine in Los Angeles, said the paper will "vigorously defend" itself against the suit. "We believe the articles were responsibly reported, written and published," Contopulos said.

Each of the lawsuits seeks $4 million in damages, which Eisenberg said represents Ellis' current and future losses from the cancellation of the Seagram's contract and the Taste festival, plus punitive damages and costs.

Eisenberg said Ellis does not hold the three defendant entities collectively responsible for the damages.

"It's not collective," Eisenberg said. "Everyone is sued on a different theory."