Now their battle is going to court. And it's getting ugly.

The trouble began in early 2000. Hoenig, who runs hedge fund Capitalist Pig Asset Management, had just become a columnist for TheStreet.com, the financial news site Cramer co-founded. Hoenig enraged bullish colleagues and subscribers by crowing in his column that his fund had shorted stocks ahead of that spring's market collapse. He was soon fired.

The following August, during a call-in interview on Hoenig's nationally syndicated radio show, Cramer hung up after the host pointed out several of Cramer's worst stock picks. Last September Cramer returned the favor in a column on TheStreet: He attacked Hoenig for advising an investor in March 2002 to hang on to shares of bankrupt Kmart. (The investor, who'd bought the shares for less than $1 and seen them rise significantly, had called in to a Fox News telecast featuring Hoenig.) Cramer warned in his column that stockholders are usually wiped out in bankruptcy reorganizations: "Wouldn't it be great if the truth were otherwise? Wouldn't it be terrific if I could be like Jonathan Hoenig, who on national television urged people to buy Kmart at a buck and change because, well, who the heck knows?"

Hoenig says he demanded a correction, arguing that he never recommended buying Kmart. In late February, after receiving no response, he filed a complaint charging Cramer and TheStreet with defamation. "I'm really sad it had to come to this," he says.

TheStreet general counsel Jordan Goldstein disagrees, saying that Hoenig's attorney sent a letter on January 30 asking for a retraction and cash damages. Before Goldstein could investigate fully, he adds, Hoenig grew impatient and filed the suit.

Late last month the defendants moved to dismiss the case, arguing, among other things, that under Illinois law -- Hoenig filed in Chicago, where he lives -- a statement cannot be deemed libelous if the "gist and sting" of it is partially true. Although Hoenig didn't urge investors to buy Kmart, his recommendation that the caller hold the stock conveyed a similar enough message to render the suit meritless, the defense contends. "We will defend it vigorously," says Goldstein. The motion was still pending late last month.