His family was there, but he didn't want it to become a circus because people thought he would be singing. Evidentally, someone in his family told the people producing the show, that he was going to sing. He told them ahead of time that he was not, and would not come if that is what was expected. Someone got sued for promising he would sing, and it wasn't MJ.
No, the guy(?) didn't get sued. The production company sued MJ's Dad, probably, or maybe his Mom and Dad, for saying Michael would sing. I think old Joe thought Michael's mother, or Liz Taylor, could talk him into it.