Judge rejects Cal Coast News’ request for a new trial over libel claims

Cal Coast News owner Karen Velie, left, and former Cal Coast News co-owner and current “senior correspondent” Daniel Blackburn, both shown at the March 2017 trial.
Cal Coast News owner Karen Velie, left, and former Cal Coast News co-owner and current “senior correspondent” Daniel Blackburn, both shown at the March 2017 trial. dmiddlecamp@thetribunenews.com

A judge rejected a request from two Cal Coast News writers for a new trial Thursday, nearly two months after a jury awarded an Arroyo Grande businessman $1.1 million in damages for libelous statements made in a 2012 article.

Efforts to collect on that award have been stymied, however, as one writer files for bankruptcy and the whereabouts of the other are unknown.

San Luis Obispo Superior Court Judge Barry LaBarbera, who presided over the nearly three-week libel trial in March, issued his ruling Thursday, the same day Cal Coast News owner Karen Velie and former co-owner Daniel Blackburn were to appear before him for a hearing establishing their financial assets and crafting a payment plan.

On March 17, a jury awarded Charles Tenborg, the former owner of a since-sold Arroyo Grande waste business, $300,000 in damages for pain and suffering, $300,000 for loss of future revenue and $500,000 in punitive damages for the article that accused Tenborg of breaking several laws.

The article has since been removed from the news website, which Velie previously said would continue to operate.

In the motion for a new trial, Cal Coast News’ attorney, David Vogel, wrote that the jury awarded Tenborg an excessive amount because they never received evidence of Velie’s net worth.

Vogel wrote that Velie did not receive the court’s request for financial records because it had “inadvertently not been forwarded to her by counsel when received a month earlier.” Vogel wrote that she has “no assets other than $1,000 in her bank account and Cal Coast News.”

Blackburn provided financial documents during the trial.

The defendants also contested a jury instruction regarding how jurors could consider whether a statement and a photograph included with the article were libelous.

After hearing arguments from Vogel on Thursday, LaBarbera adopted his tentative ruling, in which he wrote that the jury instructions were correct because the article in its totality injured Tenborg’s profession. Furthermore, he wrote that Velie waived her right to challenge the punitive damages award when she failed to provide her financial records.

Following the ruling, LaBarbera stayed Blackburn’s part of the judgment collection after Vogel told him that Blackburn has filed for Chapter 13 bankruptcy protection, in which individuals with regular income develop a repayment plan.

Though attorneys for Tenborg have “served” a notice to appear to CalCoastNews.com/UncoveredSLO.com, LLC through the California Secretary of State, they have been unable to locate Velie despite records showing at least two dozen attempts by process servers at various addresses throughout the county listed for the business and Velie’s family members.

Vogel told LaBarbera that he has not been able to reach Velie and, last he heard from her, she told him he would no longer be representing her in the judgment portion of her case.

A new debtor’s exam — the hearing establishing assets and a payment plan — for the business has been scheduled for June 1. It is unclear if Velie, who owned the website as of March 17, has retained a lawyer to appear on that date.

Velie did not return a voicemail seeking comment Thursday.