LOS ANGELES (KTLA) -- Tom Cruise's lawyer threatened to sue the National Enquirer after the tabloid published a story claiming the actor is a "monster" who "abused" his wife Katie Holmes, according to The Hollywood Reporter.

Cruise's lawyer Bert Fields sent a letter to American Media, which publishes the tabloid, calling this week's cover story "disgraceful and lurid" and saying it will cost the actor hundreds of millions of dollars in damages, THR said.

The cover story is titled "Inside Tom's House of Horrors" and shows a picture of Cruise yelling above text that reads, "The real Tom is a monster."

The article alleges that Holmes had a "tortured life" with Cruise before filing for divorce last month.

"Your current issue of National Enquirer makes numerous false and defamatory assertions about our client Tom Cruise," Los Angeles-based Fields said in the letter posted on THR's website. "We intend to hold American Media, and everyone who participated in the perpetuation of this scurrilous attack, jointly and severally liable."

Holmes' attorney said on Monday that Tom Cruise and Katie Holmes had reached a settlement.

The divorce agreement gives the actress primary custody of the couple's daughter but allows both sides a say in her religious upbringing, a source familiar with the negotiations said Monday.

"The case has been settled and the agreement has been signed. We are thrilled for Katie and her family and are excited to watch as she embarks on the next chapter of her life," New Jersey divorce lawyer Jonathan Wolfe wrote.

How 6-year-old Suri Cruise will be raised was the only real issue on the table during talks in New York, because a prenuptial agreement governed how much money Holmes would get from the vastly wealthier Cruise, the source said.

Holmes was unconcerned with the financial settlement because, the source said, "she has her own money."

Holmes, raised Roman Catholic, was concerned about the role the Church of Scientology, Cruise's spiritual home, would play in Suri's upbringing and sought terms that would allow her to set limits on its influence, the source said.

The divorce agreement provides Cruise with visitation with his daughter but gives Holmes the lead role in choosing how Suri will be educated, the source said.

"Both parents will have a meaningful relationship with their daughter," the source said.

Cruise's longtime legal representative, Bert Fields, said in a statement that the movie star was "really pleased" that an agreement had been reached.

Even though the couple has a home in California, Holmes filed the divorce in June in New York, which has stiffer public records law.

"This is a personal and private matter for Katie and her family," Holmes's attorney Jonathan Wolfe said in a statement to People Magazine.

"Katie's primary concern remains, as it always has been, her daughter's best interest."

New reports say Cruise controlled Holmes, making every decision in her personal and professional life.

TMZ reports that in 2005, Cruise instructed producers of the movie "Thank You For Smoking" to kill any promotional photos showing Holmes and fellow star Aaron Eckhart kissing.