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INNOVATIVE SUED BY PHONE BOOK PRODUCTION FIRM

May 16, 2002 – The company that produced Innovative Telephone's 2002 phone directory, Pacific West Yellow Pages, has filed suit in the U.S. District Court's Eastern District of California charging that Innovative didn't pay its bill and then canceled its contract.
According to court documents, the Sacramento-based company was to receive 38 percent of the advertising revenues from the phone book plus expenses based on an April 25, 2001, contract. Payments were to be made monthly. But to date, court papers state, Pacific West has yet to collect a dime.
Pacific West says that after it asked repeatedly for the money, Innovative canceled the contract on Feb. 21, claiming Pacific West failed to comply with the contract because it didn't deliver the phone books in a timely fashion.
Traditionally, telephone books in the Virgin Islands have been distributed in early January. This year' s book came out much later.
The complaint alleges that "any and all delays in the delivery of the telephone books occurred as a result of failure of performance by the defendant." Pacific West cites late changes in the book cover and Innovative's failure to provide payment for mailing costs as causes for the delay.
The complaint states that Pacific West also had a contract to develop an Internet phone book for Innovative and that it has been unable to collect the $180,000 it invested in that project. The complaint names Innovative's president and chief executive, Samuel Ebbesen, along with 20 other people referred to as "Doe's" as defendants. It claims that each of these people was responsible in some manner for Innovative's failure to pay its bill.
Pacific West's complaint charges that Innovative had no intention of allowing Pacific West to fulfill its contract but instead intended to learn from the California company how to publish its own telephone book.
In fact, Innovative subscribers got a letter in the mail this week, signed by Ebbesen, informing them that Innovative intends to publish its own directory from now on. "We are doing this because we believe you, our valued customers, deserve the highest quality directory, delivered on time," Ebbesen wrote in the letter.
The letter claims that self-publishing the directory will create new jobs and ensure high standards of excellence. Sales representatives will be out soliciting ads for the 2003 directory in the next few weeks.
Ebbesen said that directory will be out next January. Neither Ebbesen nor Pacific West's founder, Moe Shafiee, returned calls requesting comment. However, late Thursday afternoon, Innovative Telephone sent out a release with "Vitelco" in large letters across the top that stated that Ebbesen "takes strong exception" to the California company's "allegations that Innovative failed to perform in a contractual agreement."
An August 2001 story in the Sacramento Business Journal described the deal as a "once-in-a-lifetime" and "lucrative" opportunity for Pacific West worth $4 million a year. Shafiee said the deal required a substantial capital investment on the part of Pacific West and that it funded the move by selling its four Greater Sacramento telephone directories.
It also quotes Shafiee as saying that the Virgin Islands' "culture is so laid-back there, it's unbelievable."
Pacific West is seeking $4.4 million for defamation, punitive damages and legal fees. It also is asking $432,000 in compensatory damages for Innovative's failure to pay its bill for the print version of the telephone book plus an additional $88,000 each month for the rest of this year. And it wants interest on unpaid bills dating back to April 25, 2001.
The company hopes to collect $104,500 in losses plus $12,500 a month for the years 2003 through 2005 plus interest for Innovative's canceling the contract to publish an Internet telephone book.
The "Vitelco" release also cited Ebbesen's disagreement with assertions made by Pacific West Yellow Pages in an article published Wednesday in The Avis. "Ebbesen said that problems between Innovative and Pacific West will be decided in court and that he is confident that Innovative will prevail," the release stated.

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