B2 Opportunity Fund, LLC v. Trabelsi et al

Filing 153

Judge Richard G. Stearns: ORDER entered granting 113 Motion to Strike ; denying 119 Motion for Leave to File Document ; granting 126 Motion to Strike. B2 and Lloyd's motions to strike (Dkt #113, #126) are GRANTED. The Trabelsi Defendants' motion for leave to add Peterson as a party (Dkt #119) is DENIED. (RGS, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 17-10043-RGS
B2 OPPORTUNITY FUND, LLC
v.
NISSIM TRABELSI ET AL.
MEMORANDUM AND ORDER ON
MOTIONS TO STRIKE AND MOTION FOR LEAVE
TO ADD A COUNTERCLAIM DEFENDANT
June 29, 2017
STEARNS, D.J.
A group of defendants in this case (the “Trabelsi Defendants”)1 attempt
to assert counterclaims against plaintiff B2 Opportunity Fund, LLC, as well
as crossclaims against co-defendant C. Parkinson Lloyd, by way of their
answer to plaintiff’s Amended Complaint. B2 and Lloyd have moved to
strike. After the motions to strike were filed, counsel for defendants sought
leave to add a non-party to the case as a defendant on the counterclaims. The

The “Trabelsi Defendants” encompass Nissim Trabelsi individually
and as trustee of Mazzal Trust and The Bany’s Living Trust; his wife, Aliza
Trabelsi, individually and as trustee of The Bany’s Living Trust; Mazzal
Holding Corp.; and Magnolia Road, LLC. All of these defendants are
represented by the same counsel for purposes of this order.
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court will grant the motions to strike and deny the motion for leave to add a
non-party.
BACKGROUND
The court will not recite the factual background to these claims, which
can be found in brevis form in a prior order. See B2 Opportunity Fund, LLC
v. Trabelsi, 2017 WL 1196645 (D. Mass. Mar. 30, 2017). Instead, the court
will focus on the procedural history of this case.
The Trabelsi Defendants sought and received three extensions to file
their initial answer. See Dkt #14, 38, 50, 51, 61, 63. One of those requests
indicated that the Trabelsi Defendants intended to file counterclaims along
with their answer. See Dkt #50 at 2. Counsel filed a fourth request for an
extension after the close of business the day the answer was due, see Dkt #64,
but ultimately filed the answer that day, see Dkt #66. That answer contained
no counterclaims. After co-defendants filed motions to dismiss, B2 amended
its Complaint as of right under Rule 15(a)(1)(B). See Dkt #77. Despite the
fact that the new allegations in the Amended Complaint were chiefly directed
at the co-defendants, the Trabelsi Defendants again sought and received a
total of four extensions to file an answer to the Amended Complaint. See Dkt
#84, 85, 89, 90, 99, 100, 105, 107. In granting the third extension, the court
warned the Trabelsi Defendants that “[n]o further extensions . . . should be
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expected,” Dkt #100, and flatly told the Trabelsi Defendants in granting the
fourth and final extension “[n]o further extensions,” Dkt #107. Nonetheless,
counsel for the Trabelsi Defendants sought a fifth extension, which this court
denied. See Dkt #108, 111. The answer to the Amended Complaint was
finally filed on May 17, two days after the original deadline and one day after
the court denied the extension.
The Trabelsi Defendants’ answer to the Amended Complaint, when
finally filed, contained eight paragraphs of factual allegations supporting six
claims against B2, B2 CEO Peter Peterson (a non-party), and C. Parkinson
Lloyd (a co-defendant). In response, B2 moved to strike the counterclaims
on a variety of grounds. It first argues that any counterclaim was waived
because the Trabelsi Defendants failed to file it with their original answer.
Second, it contends that the failure to timely file the answer in accordance
with the court’s deadlines bars the counterclaims. Third, it suggests that the
Trabelsi Defendants were required to seek leave of court to file the
counterclaims under Federal Rule of Civil Procedure 15(a)(2), and that even
if leave was sought, it should be denied. Fourth, it contends that to the extent
that the counterclaims are directed at Peterson, a non-party to this action,

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the claims are not really counterclaims at all, but efforts to implead a third
party under Federal Rule of Civil Procedure 14.2
After B2 moved to strike, the Trabelsi Defendants moved for leave to
add Peterson as a party, providing no argumentation but citing Rules 13, 14,
and 15(a)(2), as well as Local Rule 15.1. The motion provides only that the
requested relief “is necessary to a fair and equitable understanding of the
merits of the Defendants-in-Counterclaim.”

Dkt #119 at 2.

Shortly

thereafter, Lloyd likewise moved to strike the crossclaims against him,
asserting the same arguments about untimeliness and futility raised by B2.
He also contends that the court lacks personal jurisdiction over him.
DISCUSSION
Untangling this procedural mess is more complex than it need have
been.

The Trabelsi Defendants attempt to assert the counterclaims as

compulsory counterclaims pursuant to Federal Rule of Civil Procedure
13(a)(1)(A). This leads to two interrelated questions. First, have the Trabelsi
Defendants waived their counterclaims against B2 by failing to file them in
response to the original Complaint? Second, if they are not irrevocably

B2 also contends that the Trabelsi Defendants have failed to comply
with Local Rule 15.1(b). The court does not reach this issue.
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waived, do the Trabelsi Defendants require leave of court to assert them in
response to the Amended Complaint?
The first question has a relatively straightforward answer. Although
“[a] pleading must state as a counterclaim any claim that — at the time of its
service — the pleader has against an opposing party,” Fed. R. Civ. P. 13(a)(1),
a party may always seek leave to add an omitted counterclaim. Until 2009,
that fact was embodied in Federal Rule of Civil Procedure 13(f), which
permitted the belated assertion of a counterclaim omitted “through
oversight, inadvertence, or excusable neglect or if justice so requires.” The
Rule was eliminated in 2009, however, because of a lack of clarity about the
relationship between Rule 13(f) and Rule 15. After Rule 13(f)’s abolition,
Rule 15 became “the sole rule governing amendment of a pleading to add a
counterclaim.”

Fed. R. Civ. P. 15 advisory committee’s note to 2009

amendment.
This fact, however, does not resolve the question of whether the
Trabelsi Defendants must have leave of court to belatedly assert their
counterclaims in response to the Amended Complaint, and that issue is
rather surprisingly up in the air. See Bern Unlimited, Inc. v. Burton Corp.,
25 F. Supp. 3d 170, 177-180 (D. Mass. 2014) (describing two common
approaches before setting out on a third course). Here, however, the court
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need not wade into the merits of the varying approaches. Even if the Trabelsi
Defendants might have been able to assert the counterclaims without leave
in response to B2’s Amended Complaint, they forfeited that right by failing
to abide by this court’s deadlines. The motion for leave to add Peterson as a
defendant on the counterclaims likewise supports treating the proposed
counterclaims as requests for leave to amend. The court will therefore
analyze the Trabelsi Defendants’ request to add counterclaims against B2
and Peterson3 under Rule 15(a)(2).
Similar principles govern the proposed crossclaims against Lloyd.
Lloyd does not contest that the crossclaims “arise[] out of the transaction or
occurrence that is the subject matter of the original action.” Fed. R. Civ. P.
13(g). Although the Federal Rules place no time limits on crossclaims, “[t]he
decision whether to allow a crossclaim that meets the test of [Rule 13(g)] is a

Although B2 suggests that the Trabelsi Defendants are attempting to
improperly implead Peterson under Rule 14, Rule 13(h) provides that “Rules
19 and 20 govern the addition of a person as a party to a counterclaim or
crossclaim.” Thus, Peterson’s addition to the case would be governed by the
rules of joinder rather than impleader. Under Rule 19(a)(1)(A), joinder is
required if “in that person’s absence, the court cannot accord complete relief
among existing parties.” Read charitably, the statement that assertion of the
counterclaims “is necessary to a fair and equitable understanding of the
merits of the Defendants-in-Counterclaim,” Dkt #119 at 2, attempts to satisfy
this standard. Because the counterclaims against B2 and Peterson are
identical in substance, however, the court sees no need to analyze them
separately.
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matter of judicial discretion,” guided by the general need to “balance the
interests of judicial economy and the general policy of avoiding multiple suits
relating to the same events against the possibilities of prejudice or surprise
to the other parties.”

Charles Alan Wright et al., Federal Practice &

Procedure § 1431.
The court thus proceeds to the question at hand: should the Trabelsi
Defendants be granted leave to assert their counterclaims against B2 and
Peterson, and their crossclaims against Lloyd? In general, leave to amend is
to be freely granted. Fed. R. Civ. P. 15(a)(2). Yet the court is under no
obligation to grant requests to amend that would be futile because they fail
to state a claim that could survive a motion to dismiss under Rule 12(b)(6).
Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 132 (1st Cir. 2006); see
Travelers Indem. Co. v. Damman & Co., 594 F.3d 238, 243 (3d Cir. 2010)
(applying futility analysis to a proposed crossclaim). That is patently the case
here. Based on eight paragraphs of sparse factual allegations, the Trabelsi
Defendants assert six claims — one against B2 and Peterson (breach of
contract), one against Lloyd (malpractice), and four against B2, Peterson,
and Lloyd collectively (breach of the implied covenant of good faith and fair
dealing,

violations

of

Chapter

93A,

misrepresentation).
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unjust

enrichment,

and

The Trabelsi Defendants’ asserted claims rely on several woefully
deficient allegations. To begin, they are tied to a “contract” which appears to
be a letter of interest describing a putative agreement by which a Nevada
corporation called Mazzal Holdings, Inc., would acquire all of the shares of
three other companies. Dkt #112-1. The only explicitly binding features of
the letter relate to matters such as confidentiality, and the Trabelsi
Defendants make no claims for breach of those provisions. Of course, a
preliminary agreement can amount to a binding contract under certain
circumstances, see Midtown Realty, Inc. v. Hussain, 712 So. 2d 1249, 12511252 (Fla. Dist. Ct. App. 1998)4; Hunneman Real Estate Corp. v. Norwood
Realty, Inc., 54 Mass. App. Ct. 416, 421 (2002), but no facts are alleged to
support the enforceability of the entire letter of interest. In addition, B2 and
Peterson are not directly parties to the agreement, and no information is
provided to explain how they could be bound by it.
Even assuming the letter of interest is a contract binding B2 and
Peterson, the allegations about a breach are conclusory at best. The only
allegation is that B2 and Peterson “breached the contract by forcing Nissim
to sign other agreements and then[] by filing this [suit].” Several counts
repeat the general allegation that Peterson “forced” or “coerced” Nissim into

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The letter of intent contains a Florida choice of law clause.
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making changes to the contract. Precisely how Nissim was “forced” to do
anything is unclear; other than allegations about three emails and three
telephone calls Peterson made “demanding” changes to the agreement,
nothing is pled to support a viable legal claim on any of the Trabelsi
Defendants’ counts. It is not even clear that all three sets of contacts
demanded changes to the same agreement, a mystery deepened by the fact
that none of the exhibits referenced in the proposed claims support the key
allegations. Exhibit B, for example, cited to illustrate the first coercive email
and phone call from Peterson, is a term sheet outlining a stock purchase
agreement and contains no copies of emails or any other documentation
supporting an inference of coercion. Dkt #112-2.
The other theory that the Trabelsi Defendants table in various claims
is that B2 and Peterson misled him by failing to disclose that Peterson was
the subject of a complaint by the Florida Office of Financial Regulation and
that he “was not authorized to act as a financial consultant” or covered by
malpractice insurance. Yet the Trabelsi Defendants plead nothing to explain
why Peterson’s status was material to the deal they negotiated, nor does he
allege that he relied on Peterson’s representations or omissions. See Twin
Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 445 Mass. 411, 423
(2005) (party must rely on a material misrepresentation to make out a claim
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of fraudulent or intentional misrepresentation); Marram v. Kobrick
Offshore Fund, Ltd., 442 Mass. 43, 59 (2004) (“[J]ustifiable reliance is
integral to a claim of negligent misrepresentation.”).
The Trabelsi Defendants’ remaining three claims against B2 and
Peterson merge these strands of allegations, but each fails.

Without

allegations supporting a misleading statement or something more than a
simple breach of contract, the 93A claim is futile. See Marram, 442 Mass. at
62 (“[A] negligent misrepresentation may be so extreme or egregious as to
constitute a violation of” Chapter 93A); Mass. Emprs. Ins. Exchange v.
Propac-Mass, Inc., 420 Mass. 39, 43 (1995) (“[A] breach of contract alone
does not amount to an unfair act or practice under [Chapter 93A]. . . .”). The
claim for breach of the covenant of good faith and fair dealing likewise fails.
The covenant applies to completed agreements, and thus does not cover the
Trabelsi Defendants’ allegation that Peterson and B2 “lured” Nissim into a
deal despite knowing that Peterson was not a financial consultant.
Moreover, without allegations beyond the conclusory assertion that Peterson
“forced Nissim to sign amended Agreements” to supplant the original
contract, no breach of the covenant is shown. See Eigerman v. Putnam Invs.,
Inc., 450 Mass. 281, 287-288 (2007) (covenant exists to protect the
reasonable expectations of the parties to a contract). Finally, the unjust
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enrichment claim is hopeless without further allegations about what, if any,
performance beyond the terms of the alleged contract Peterson and B2
demanded. See Metro. Life Ins. Co. v. Cotter, 464 Mass. 623, 641 (2013).
The claims against Lloyd are likewise futile.5 The covenant of good
faith and fair dealing claim rests on the same faulty allegations as the claims
against B2 and Peterson; there are no facts alleged to support the assertion
that Lloyd, any more than B2 or Peterson, “lured” Trabelsi into a trap, or that
Lloyd was in any way involved in subsequent efforts to thwart the Trabelsi
Defendants’ enjoyment of the contract.

The misrepresentation claims

collapse for the same reason: no facts are alleged to suggest that Trabelsi
relied on any material misstatements or omissions by Lloyd.
Finally, the malpractice claim against Lloyd is baffling. The central
allegation is that Lloyd negligently prepared the alleged contract, that it “did
not accomplish the desired goals,” and that Lloyd should have revised the
contract before advising Nissim to sign it. The “goals” this contract did not
“accomplish” are never identified. This is all the more confusing given that
the Trabelsi Defendants’ claims assert that B2 and Peterson coercively

The court can, for the moment, bypass Lloyd’s argument that the
court lacks personal jurisdiction over him. See Sinochem Int’l Co. v.
Malaysia Int’l Shipping Corp., 549 U.S. 422, 432 (2007); McBee v. Delica
Co., 417 F.3d 107, 127-128 (1st Cir. 2005).
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attempted to alter the terms of the contract. The same allegations undergird
the Chapter 93A claims against Lloyd, and are deficient for the same reasons.
The motions to strike will therefore be granted, and the motion for leave to
add Peterson as a party will be denied.
ORDER
For the foregoing reasons, B2 and Lloyd’s motions to strike (Dkt #113,
#126) are GRANTED. The Trabelsi Defendants’ motion for leave to add
Peterson as a party (Dkt #119) is DENIED.
SO ORDERED.
/s/ Richard G. Stearns
__________________________
UNITED STATES DISTRICT JUDGE

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