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., Gleb Klioner, Marta Klioner ("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. On July 27, 2009, I granted motions for summary judgment by Touretsky and the Choir and by the Klioners and Miami Sun. I also granted a Rule 11 motion for sanctions against plaintiff's attorney, James F. Woods, Esq., by Touretsky. Now before the Court is a motion for reconsideration of the grant of Rule 11 sanctions against plaintiff's counsel. For the reasons stated herein, the motion for reconsideration is denied.
Familiarity with the facts of the underlying dispute is assumed. See Gelfman Int'l Enters. v. Miami Sun Int'l Corp., 2009 U.S. Dist. LEXIS 64274 (E.D.N.Y. July 27, 2009). Only the facts relevant to this motion are set forth below.
Plaintiff is in the business of promoting entertainment acts. In 2004, plaintiff and defendant Marta Klioner spoke about bringing defendants Touretsky and his Choir to the United States for a series of performances in five cities in January of 2005. Plaintiff has alleged that the parties agreed that plaintiff would plan and promote the tour, all costs incurred by any party would be refunded, and after that any proceeds would be split evenly between plaintiff and Klioner. Plaintiff allegedly expended significant funds in planning and promoting the tour which were not refunded, and defendants allegedly failed to pay plaintiff its share of the profits.
Neither Mark Gelfman nor Aliki Gelfman, the owners of plaintiff Gelfman International, spoke to Touretsky or the Choir directly about the Tour before it commenced, as all arrangements were made through Klioner and Miami Sun. 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. Aliki Gelfman made one call to Touretsky's Moscow office prior to the Tour, but it did not concern terms of the contract, nor did she speak with Touretsky during the call. 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.
Plaintiff commenced this action on August 11, 2005. Plaintiff alleged claims against all defendants, including Touretsky and the Choir, of breach of contract, fraud, and conversion. 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 all claims against Touretsky and the Choir, and dismissed the second and third claims against the Klioners and Miami Sun. 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. In particular, I noted that plaintiff's claim that Klioner acted as an agent of Touretsky and bound him to the contract failed on the ground that the existence of apparent agency authority must be traceable to the principal and cannot be established based solely on the unauthorized representations of the agent. See In the Matter of the Arbitration between Herlofsen Management A/S and Ministry of Supply, Kingdom of Jordon, 765 F.Supp 78, 88 (S.D.N.Y. 1991). Without a showing of direct contact between Touretsky and plaintiff, plaintiff's agency theory failed. Having dismissed the claims on these grounds, I granted plaintiff leave to amend the complaint on the condition that it do so within the bounds of Rule 11.
On March 9, 2006, plaintiff amended the complaint to include several factual allegations that Touretsky knew of the contract and ratified it. On December 12, 2006, the case was referred to mediation, which was unsuccessful. On January 5, 2009, the Klioners and Miami Sun filed a motion for summary judgment and for leave to amend their answer. Also on January 5, Touretsky filed a motion for summary judgment and mailed to plaintiff a copy of a motion for Rule 11 sanctions, which asserted that plaintiff had amended its complaint to make allegations against Touretsky that were entirely lacking in factual foundation and could not have been made on a good faith basis, thereby prolonging Touretsky's involvement in the litigation by several years. When plaintiff did not withdraw its claims against Touretsky within the 21-day time limit proscribed by Rule 11(c),*fn1 Touretsky filed the Rule 11 motion with the court. Plaintiff did not seek an extension of time in which to withdraw its claims against Touretsky with regards to the Rule 11 motion, nor did it make any indication that it wished to withdraw the claims against Touretsky. On March 10, 2009, plaintiff filed a cross motion for leave to amend the complaint to include the names of Mark Gelfman and Aliki Gelfman as plaintiffs, because Gelfman International is a defunct company and does not have standing to pursue a lawsuit.
Plaintiff filed a brief opposition to Touretsky's Rule 11 motion, which did not address the allegations in the motion. Instead, it stated that plaintiff was a well respected company in the industry, that Touretsky had previously used Klioner's services as a business agent, and that it is the standard custom and business practice of the industry for a business agent such as Klioner to bind an artist such as Touretsky. Plaintiff reiterated that it invested a large sum of money in the tour in reliance on Touretsky's actions and Klioner's statements, and that the money was not repaid.
On July 27, 2009, I granted the motions for summary judgment, leave to amend the complaint, and Rule 11 sanctions. In my discussion of Rule 11 sanctions, I determined that plaintiff's counsel had violated Rule 11 by filing an amended complaint containing allegations against Touretsky that were wholly unsupported by the facts, which constituted a violation of the requirement of Rule 11(b)(3) that the factual contentions in a complaint have evidentiary support.*fn2 I found that the testimony given by Mark Gelfman and Aliki Gelfman in their depositions, which were taken in November 2007 and October 2008, respectively, clearly showed that there was no factual basis for the allegations in the complaint that the Gelfmans had direct contact with Touretsky and the Choir prior to the tour and that Touretsky had knowledge of and had agreed to the terms of the contract. Instead, the Gelfmans continued to assert that Touretsky knew of the contract because he was in contact with Marta Klioner, who they considered to be his agent, an argument that I had specifically rejected in my opinion granting the motion to dismiss in 2006. Accordingly, the allegations against Touretsky in the amended complaint concerning Touretsky's direct contact with plaintiff were baseless.
I concluded that counsel was subject to sanctions for failing to conduct a reasonable inquiry into the validity of the amended complaint before it was signed. I declined to grant Touretsky's motion to sanction plaintiff under Rule 11, on the ground that it was plausible that Mark and Aliki Gelfman misunderstood the legal requirements for making the claim that Touretsky had direct knowledge of the promotion agreement.*fn3
Counsel to plaintiff timely filed a motion for reconsideration.
I. Standard for Motion for ...