United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON MOTION TO WITHDRAW AND MOTION
FOR LEAVE TO FILE ELECTRONICALLY
RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE
order assumes familiarity with the procedural background
outlined in the companion order issued today, see
Dkt #153, and the factual background described in the
court's preliminary injunction order, see B2
Opportunity Fund, LLC v. Trabelsi, 2017 WL 1196645
(D. Mass. Mar. 30, 2017).
for the Trabelsi Defendants has moved to withdraw from the
case, citing a breakdown in communication with his clients.
In a normal situation, the court would grant such a motion
without hesitation. The court has delayed, however, because
of concerns about counsel's filings in this case.
Complaint, B2 alleged that “Shawn Telsi” was
merely an alias for Nissim Trabelsi, and that the Telsi alias
was a critical feature of a stock fraud scheme. In opposing
B2's motion for a temporary restraining order, counsel
submitted an affidavit from Nissim in which he stated that he
changed his name to Shawn Telsi in 1989 when he became a U.S.
citizen. Dkt #10-1, ¶ 2. He also averred that he had
“received and exchanged text messages with Peterson
talking about the difficulties releasing the ten million
shares held by me under my assumed name, that is, Shawn
Telsi.” Id. ¶ 10. The court issued a TRO
based in part on this understanding. See Dkt #29.
Thereafter, counsel filed the Trabelsi Defendants' answer
to the original Complaint, which acknowledged that Nissim
“is a/k/a Shawn Telsi.” Dkt #66, ¶ 8. Once
again, the court relied on this representation, noting in its
order granting B2 a preliminary injunction that
“[Nissim] Trabelsi admitted, first in his briefing on
the TRO and subsequently in his answer to the Complaint, that
he sometimes uses the name Shawn Telsi in
transactions.” B2 Opportunity Fund, 2017 WL
1196645, at *2.
B2 filed its Amended Complaint, however, Nissim apparently
attempted to backtrack. In the answer to the Amended
Complaint, Nissim now “admits that he is a/k/a Shawn
Telsi, however, Defendant states further that he is the
authorized representative of said Shawn Telsi who is from
Israel.” Dkt #112, ¶ 8. Further, among the facts
alleged in his prospective counterclaims is the assertion
that “Nissim had a chain of text messages with [B2 CEO
Peter] Peterson, clearly discussing the difficulties
releasing the 10 million shares held by Shawn Telsi, who is
an Israeli citizen and was one of the original investors. In
fact, Nissim was authorized by Shawn to act on his behalf in
the United States for the investments.” Id.
¶ 10. This assertion cites to Exhibit E of the answer,
which is a completely unrelated form that does nothing to
demonstrate that Shawn Telsi is a real person. Dkt #112-5. No
other exhibit attached to the answer appears relevant to this
assertion. Finally, in opposition to the motions to strike,
counsel filed another affidavit from Nissim stating (insofar
as relevant to this issue) that he has “read the
contents of all of the pleadings and exhibits submitted on my
behalf by my attorney” and that all the statements in
those pleadings “are true to the best of my
knowledge.” Dkt #149-1; #150-1.
Rule of Civil Procedure 11(b)(3) states that each time an
attorney files a document with this court, he warrants that
“the factual contentions have evidentiary
support.” The representations made to this court about
the relationship between Telsi and Nissim are plainly
contradictory. In particular, the assertion that Nissim
personally held the shares “under [his] assumed name,
that is, Shawn Telsi, ” is incompatible with the
assertion that he was acting as the representative of a
separate individual by that name. This apparent dissimulation
on a key point is particularly troubling in light of other
features of the answers. In both answers, virtually every
paragraph professes either a lack of knowledge sufficient to
respond to B2's allegations or states that allegations
which mention documents B2 attached to its Complaint speak
for themselves “and, thus, such allegations are
denied.” This includes many paragraphs making
allegations about Nissim's personal conduct which he
presumably should be able to admit or deny. See,
e.g., Dkt #112, ¶ 37 (response to allegation
describing what shares Nissim held at the time of a stock
exchange agreement); ¶¶ 86-88, 125 (response to
allegations about Nissim's transfer or failure to
transfer shares as contemplated in the agreement); ¶ 162
(response to allegation that Nissim sold shares between
February of 2016 and January of 2017); ¶ 176 (response
to allegation that Nissim sold additional shares after B2
requested a TRO). These statements, too, raise the
possibility of violations of Rule 11(b)(4), which requires
that an attorney verify that “denials of factual
contentions . . . are reasonably based on belief or lack of
light of these filings, counsel for the Trabelsi Defendants
is ordered to show cause no later than July 13, 2017, why
sanctions should not issue against him under Rule 11 or the
court's inherent powers. See Fed. R. Civ. P.
11(c)(3); Chambers v. NASCO, Inc., 501 U.S. 32,
46-47 (1991). Counsel's motion to withdraw will be
granted, but that does not relieve him of the duty to respond
to the show cause order. See Charles Alan Wright et
al., Federal Practice & Procedure § 1337.1
(“Given the fact that violative conduct is sanctionable
at the time the offending papers are filed or improper
representations regarding them are made, the attorney remains
subject to sanctions regardless of his continuing involvement
in or withdrawal from the litigation, thereafter.”).
counsel filed his motion to withdraw, Nissim moved for
permission to file electronically, apparently intending to
proceed pro se for the time being. Although the
court believes this is ill-advised, Nissim is permitted to do
so in his personal capacity. See D. Mass. Local R.
83.5.5(a). However, in light of the contradictory statements
from Nissim already present on the record, he is reminded
that pro se litigants are bound by the Federal Rules
of Civil Procedure (including Rule 11) and the Local Rules.
See Id. 83.5.5(d); FDIC v. Anchor Props.,
13 F.3d 27, 31 (1st Cir. 1994). He also remains obligated to
comply with the preliminary injunction entered against him by
this court. See Dkt #72.
motion will be denied, however, to the extent he seeks to
represent other entities in this suit. Nissim's motion is
purportedly on behalf of three other categories of defendants
previously combined under the Trabelsi Defendant banner and
originally represented by the same counsel: 1) himself in his
capacity as trustee of the Mazzal Trust and The Bany's
Living Trust; 2) his wife, Aliza Trabelsi, both individually
and in her capacity as trustee of The Bany's Living
Trust; and 3) two corporate entities, Mazzal Holding Corp.
and Magnolia Road, LLC.
Local Rules are clear that pro se litigants
“may not represent any other party.” D. Mass.
Local R. 83.5.5(b). In addition, “[a] corporation,
partnership, limited liability company, trust, estate, or
other entity that is not an individual may not appear pro
se, ” except in limited circumstances not
applicable to this case. Id. 83.5.5(c). Nissim
therefore cannot represent any of the other entities listed
on his motion, but may represent only himself in his personal
capacity. The other entities - Mazzal Trust, The Bany's
Living Trust, Mazzal Holding Corp., and Magnolia Road, LLC -
will have thirty days to retain counsel to represent their
interests in this proceeding. Aliza Trabelsi should, within
thirty days, either retain counsel or express her intention
to proceed pro se in her individual capacity only
(not as trustee of The Bany's Living Trust).
foregoing reasons, counsel's motion to withdraw (Dkt
#127) is GRANTED, but he is ordered to SHOW
CAUSE why he should not be subject to sanctions under
Rule 11 or this court's inherent power by July 13, 2017.
Nissim's motion for leave to file electronically (Dkt
#145) is GRANTED INPART AND DENIED IN
PART. Nissim may represent himself individually only.
The artificial entities - Mazzal Trust, The Bany's Living
Trust, Mazzal Holding Corp., and Magnolia Road, LLC - must be
represented by new counsel no later than July 31, 2017. ...