for such a claim at the time of its action in bankruptcy, Kelly Lumber can not be said to have waived its claim as a matter of law. Therefore, in so far as defendant Pratt's motion for summary judgment against Kelly Lumber is based upon his estoppel argument, the motion is denied.
Finally, defendant Pratt argues that plaintiff Kelly Lumber fails to plead fraud with particularity. As discussed above, this issue was previously decided in favor of plaintiffs, and will not be addressed anew by the court at this juncture.
Because plaintiff Kelly Lumber has pleaded with particularity a claim upon which relief may be granted under 18 U.S.C. § 1964, and questions of fact preclude the court from granting defendant's motion based upon a theory of estoppel, defendant Pratt's motion for summary judgment against Kelly Lumber is denied.
C. Plaintiffs' Rule 11 Motions
Plaintiffs move for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure based on two arguments made by defendant Pratt in his papers.
First, plaintiffs argue that defendant Pratt's contention that Kelly Lumber lacks standing to pursue a RICO claim against defendant because it lacks the consent of its trustee in bankruptcy is "patently frivolous," and reveals a lack of reasonable inquiry by Attorney Matthews. Plaintiffs' Memorandum of Law in Opposition to Summary Judgment, Doc. 107, at 44. The court disagrees. Defendant Pratt candidly admits in his Reply Memorandum of Law, Doc. 108, at 10, that he was mistaken in believing that the trustee in bankruptcy for Kelly Lumber had not consented to the instant RICO claim. Defendant further submits an affidavit by Robert Melillo, Jr., a clerk in Attorney Matthews' office who affirms that Melillo contacted the Bankruptcy Court and was given erroneous information. See Melillo Affidavit, attached to Defendant Pratt's Reply Memorandum of Law, Doc. 108, at PP 3-4. Because the court finds credible this explanation for defendant's misguided argument, the court holds that Attorney Matthews made reasonable inquiry into Kelly Lumber's standing to sue.
Second, plaintiffs argue that defendant should be sanctioned for arguing contrary to the law of the case established in Kovian II, that the plaintiffs pleaded fraud with sufficient particularity. In response defendant argues that General Order # 34 of the Northern District of New York, which requires a RICO complainant to complete a RICO statement in conjunction with its complaint, justifies defendant's argument that the complaint failed to plead fraud with particularity. Defendant further asserts that the court's previous conclusion was erroneous and based upon an incomplete analysis that ignored relevant factors.
The court is not persuaded by either of Attorney Matthews' rationales. General Order # 34 was signed by then-Chief Judge McCurn on November 29, 1992, and therefore has no bearing on proceedings in 1990 which resulted in Kovian II. Further, it is well established under the doctrine of the law of the case that "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." DiLaura v. Power Authority of State of New York, 982 F.2d 73, 76 (2d Cir. 1992) (quotations and citations omitted). The doctrine is discretionary, and does not limit the court's power to reconsider its own decisions prior to final judgment. Id. at 76. Indeed, this district provides a mechanism for parties to request reconsideration of rulings under certain circumstances. Local Rule 10(M) allows parties to move for reconsideration of an order within 10 days of its entry. However, in the instant case defendant's present argument regarding the particularity of plaintiffs' pleading was filed over two and one-half years after entry of Kovian II.
Nonetheless, the court declines in this instance to impose sanctions. Because the record is devoid of evidence that Attorney Matthews raised his arguments in bad faith or for an improper purpose, the court finds that the central goal of Rule 11, namely to deter baseless filings, will not be forwarded by the imposition of sanctions. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393, 110 L. Ed. 2d 359, 110 S. Ct. 2447 (1990). Therefore, plaintiffs' motion for sanctions pursuant to Fed. R. Civ. P. 11 is denied.
In sum, defendant Pratt's motion for summary judgment dismissing the claims against him by plaintiffs Hibjay, Barker and Cheney is denied. Defendant Pratt's motion for summary judgment is also denied with respect to the claims of plaintiff Kelly Lumber. Plaintiffs' motion for sanctions pursuant to Federal Rule of Civil Procedure 11 is denied. No costs or attorney's fees shall be awarded on any of these motions. The parties are directed to continue preparation for trial.
It is So Ordered.
Dated: July 13, 1994
Syracuse, New York
HOWARD G. MUNSON
SENIOR UNITED STATES DISTRICT JUDGE