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Gelfman International Enterprises v. Miami Sun International Corp.

June 27, 2009

GELFMAN INTERNATIONAL ENTERPRISES, PLAINTIFF,
v.
MIAMI SUN INTERNATIONAL CORP., MARTA KLIONER, AND GLEB KLIONER, DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff, Gelfman International Enterprises ("Gelfman International"), commenced this action against defendants Miami Sun International Corp. ("Miami Sun"), Gleb Klioner, Marta Klioner, Michael Touretsky ("Touretsky"), and the Choir of Michael Touretsky a/k/a Moscow Jewish Choir (the "Choir") (collectively, "defendants") on August 11, 2005. The amended complaint sets forth claims for relief based on breach of contract, quantum meruit, promissory estoppel, unjust enrichment and for an accounting of the monies in contention. Now before this court are (1) a motion for summary judgment by defendants Marta Klioner, Gleb Klioner and Miami Sun; (2) a motion to file an amended answer by defendants Marta Klioner, Gleb Klioner and Miami Sun; (3) plaintiff's motion to file a second amended complaint; (4) a motion for summary judgment by defendants Michael Touretsky and the Choir; and (5) a motion for sanctions pursuant to Rule 11 against the plaintiff and plaintiff's counsel by defendants Michael Touretsky and the Choir. For the reasons set forth below, the motions by defendants Marta Klioner, Gleb Klioner, and Miami Sun to amend their answer and for summary judgment are granted. The motion by defendants Touretsky and the Choir for summary judgment is granted. The motion by Touretsky and the Choir for Rule 11 sanctions is granted against plaintiffs' counsel and denied against plaintiffs. The motion by plaintiff for leave to file a second amended complaint is granted.

BACKGROUND

The following facts are taken from the Amended Complaint, the parties' affidavits and the exhibits attached thereto, and defendants' Local Rule 56.1 statements of undisputed facts.*fn1

1. The Parties

Gelfman International is owned and operated by Mark Gelfman, and is managed by Aliki Gelfman. Gelfman International was incorporated in Maryland with its principal place of business in King's County, New York. On October 7, 2002, Gelfman International forfeited its corporate charter to the Department of Assets and Taxation of the State of Maryland, for failure to file a property return for 2001.*fn2 Affidavit of Oscar Michelen, January 2, 2009, Ex. I (Certificate from the Maryland Department of Assessment and Taxation). As of June 3, 2009, Gelfman International remained in forfeiture with the State of Maryland.*fn3

Defendants Marta Klioner and Gleb Klioner are citizens of Florida.

Defendant Miami Sun is a Florida corporation with its principal place of business in Florida, and is a citizen of Florida. Miami Sun is owned and operated by Marta Klioner and Gleb Klioner. Marta Klioner and Gleb Klioner are both officers of Miami Sun.

Defendant Choir is a foreign business existing under the laws of Russia and is a citizen of Russia.

Defendant Michael Touretsky is the producer of the Choir and a citizen of Russia.

2. The Contract and Tour

Gelfman International has been in the business of promoting and planning entertainment events around the world for the last fifteen years. Amended Complaint at ¶¶ 22-23 ("Compl."), Deposition of Mark Gelfman at 12 ("Gelfman Dep."). In June of 2004, Marta Klioner spoke with Gelfman International about planning and promoting a series of choir performances by Touretsky and his Choir,*fn4 having stated to Gelfman International that she was their representative and agent.*fn5 Compl. at ¶¶ 24, 25, 27. Mark Gelfman had known both the Klioners professionally and personally for several years. Id. at ¶ 26. It was agreed that Touretsky and the Choir would perform in five cities: San Francisco, Los Angeles, Chicago, Boston and Atlantic City (collectively, the "Tour") between January 22 and January 29, 2005. Compl. at ¶ 38.

The parties dispute the nature of the agreement regarding participation in the work of the tour and sharing of its profits.*fn6 According to plaintiff, it was agreed that plaintiff would plan and promote each of the five events and assume responsibility for promotion and production expenses. Id. at ¶¶ 36, 37. Proceeds from the tour, defined as total box office receipts, would be divided as follows: initially all tour expenses would be reimbursed to the party that had incurred them; the balance remaining (the "net" proceeds) would be divided equally, with Gelfman International receiving fifty percent and Miami Sun receiving fifty percent. Gelfman Dep. at 161. Touretsky and the Choir would not share in the profits but would instead be paid their fee out of Marta Klioner's half of the proceeds. Aliki Gelfman Dep. at 143-43. Plaintiff alleges that Marta Klioner stated that Touretsky and the Choir agreed to the proposal.*fn7 Compl. at ¶¶ 36, 64.

According to Marta Klioner, plaintiff's involvement in the Tour was limited to the ticket sales and promotion of the performance at the Taj Mahal venue in Atlantic City. Klioner Dep. at 71, 143, 150-52. Gelfman International was to receive an 8% commission on sales. Id. at 142-43. If the ticket sales reached a certain number, Gelfman International would receive a bonus of $25,000. Id. at 143. There was no further agreement for promotion, payment, or profit sharing. Id. at 152.*fn8

Neither Mark Gelfman nor Aliki Gelfman, acting on behalf of plaintiff Gelfman International, spoke to Touretsky or the Choir directly about the Tour before it commenced. Gelfman Dep. at 116; Aliki Gelfman Dep. at 138-39. Instead, all arrangements were made with Marta Klioner and Miami Sun. Gelfman Dep. at 94, 96. The Gelfmans relied on statements by Marta Klioner regarding Touretsky's agreement to the terms of the contract, and testified that they had no direct knowledge as to whether Touretsky knew about Gelfman International's involvement in the Tour.*fn9 Id. at 116, 222; Aliki Gelfman Dep. at 157. Aliki Gelfman made one call to Touretsky's Moscow office prior to the Tour, but it did not concern terms of the contract. Gelfman Dep. at 141-42. Mark Gelfman and Aliki Gelfman testified that Marta Klioner attempted to prevent them from contacting Touretsky directly in preparation for the Tour. Gelfman Dep. at 221; Aliki Gelfman Dep. at 34. The first time Touretsky became aware of Gelfman International's involvement in the Tour was after the Tour was over, when a letter was sent to Touretsky's Moscow office. Gelfman Dep. at 132.

Plaintiff alleges that, after the tour was completed, defendants took possession of the box office receipts from four of the five performances, without reimbursing plaintiff for expenses or distributing plaintiff's share of the profits. Compl. at ¶ 81. However, the proceeds of the largest venue (Atlantic City's Taj Mahal) were retained by plaintiff. Aliki Dep. at 72-73.

Touretsky and the Choir were paid a set fee of $150,000 for their services. Touretsky 56.1 Stmt. ¶ 3; Deposition of Marta Klioner at 125.

3. Procedural History

Plaintiff commenced this action on August 11, 2005.

Defendants thereafter made a motion to dismiss and to change venue. In my February 9, 2006 opinion, I denied the motion to change venue, dismissed two claims, and dismissed the claims against Touretsky and the Choir. I found that plaintiff had asserted no fact that could suggest that Touretsky or the Choir were aware of plaintiff's role in planning the Tour or of the contract, and therefore they could not be deemed to have ratified the contract or to have incurred liability to plaintiff on a theory that they benefitted from plaintiff's actions. On March 9, 2006, plaintiff amended the complaint to include several specific allegations that Touretsky knew of the contract and ratified it.*fn10 On December 12, 2006, the case was referred to mediation.

On March 15, 2007, the parties reported to the Magistrate Judge that mediation had successfully narrowed the issues, but that the litigation would continue. On January 5, 2009, the Klioners and Miami Sun filed a motion for summary judgment and for leave to amend their answer, and Touretsky filed a motion for summary judgment and motion for Rule 11 sanctions. On March 10, 2009, plaintiff filed a cross motion for leave to amend the complaint.

DISCUSSION*fn11

I. Lack of Capacity

Defendants Marta Klioner, Gleb Klioner and Miami Sun (for the purposes of this section, "defendants") argue that summary judgment should be granted in their favor because plaintiff forfeited its corporate status in Maryland and therefore lacked the capacity to file a law suit. Defendants did not include in their answer to the complaint an affirmative defense of lack of capacity to sue. Defendants now move pursuant to Federal Rule of Civil Procedure 15(a) to amend their pleading to include this defense. Plaintiff does not challenge the ...


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