Metropolitan Entertainment, a New York-based concert promotions, management and label company headed up by John Scher, is suing CMJ, the company behind the New York music festival -- currently underway -- and magazine for loans and interest given to CMJ in 2009 and 2010 which CMJ has allegedly avoided repayment of. The news was first reported in the New York Times.

The suit, originally filed in May by John Scher and Metropolitan Talent, Inc., saw the date of its final court extension lapse last Tuesday, Oct 8. According to court papers, Scher and Metropolitan's negotiations with CMJ began in 2008, leading to an agreement between the companies for Metropolitan to acquire CMJ, which they had valued at $2.4 million. The court filing goes on to claim that Metropolitan lent CMJ funds 27 times, totaling $595,307 along with $178,827 in interest, adding up to $744,134 unpaid by CMJ according to the filing.

The papers allege that CMJ Network Inc., along with Robert and Joanne Haber, sold CMJ Network to a new corporation called CMJ Holdings, a deal which did not include the original loans. The new owners allegedly refused to acknowledge Metropolitan's claim to the money lent.

Speaking to Billboard.biz, Mr. Scher outlined a meeting he had roughly a month after being refused by Mr. Haber to meet with potential investors he had found. "My partner and I went and had a meeting with Keith and three other people. They looked us in the eye and they said 'We've taken over CMJ, and we'd like to work together.' We said "Well there's a little thing about $600,000 or $700,000 you owe us.' He said 'Well you're not gonna get it. You've got a claim against old CMJ.'"

"I thought 'I'm not a lawyer, but that can't be legal.'" From that point, Mr. Scher described to Billboard.biz a deteriorating back-and-forth with CMJ's new owners, leading Metropolitan and Mr. Scher to file their lawsuit this past May. "It's not something where you can just say 'Eh, we made a bad deal," said Mr. Scher.

Regarding the ongoing case, CMJ Holdings CEO Alexis D'Amecourt responded: "We believe the lawsuit is without merit, and to that end CMJ timely filed, and has pending before the court a motion to dismiss the action."

Questions? Comments? Let us know: @billboardbiz

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