Daniel Imperato v. Navigators Insurance Company

Filing

Opinion issued by court as to Appellant Daniel Imperato. Decision: Affirmed in part, Reversed in part, and Remanded. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

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Date Filed: 02/28/2017

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 14-15282
Non-Argument Calendar
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D.C. Docket No. 9:14-cv-80586-KLR

DANIEL IMPERATO,
Plaintiff-Appellant,
versus
NAVIGATORS INSURANCE COMPANY,
Defendant-Appellee.
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Appeal from the United States District Court
for the Southern District of Florida
________________________
(February 28, 2017)
Before HULL, WILSON, and MARTIN, Circuit Judges.
PER CURIAM:

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Daniel Imperato, proceeding pro se, appeals: (1) the district court’s sua
sponte dismissal of his complaint, which alleged a breach of contract claim against
his former insurer, Navigators Insurance Company (“Navigators”); (2) the denial
of his request to proceed in forma pauperis; and (3) the denial of his motion to
recuse the magistrate judge and district court judge. After careful review, we
affirm the district court’s denial of Imperato’s motion to proceed in forma pauperis
and his motion for recusal, but reverse the dismissal of Imperato’s complaint and
remand for further proceedings consistent with this opinion.
I.
In 2012, the Securities and Exchange Commission (“SEC”) brought a civil
action against Imperato and other defendants, including his company, Imperiali.
The SEC alleged that several securities laws had been violated. The district court
granted summary judgment in favor of the SEC, and this Court affirmed that ruling
on appeal. SEC v. Imperiali, Inc., 594 F. App’x 957 (11th Cir. 2014) (per curiam).
The district court’s summary judgment order adopted the magistrate judge’s
Report and Recommendation, which found Imperato
inten[ded] to deceive by knowingly making blatantly false and
deceptive material statements . . . which were subsequently
disseminated to potential investors via the internet [and that] [t]hese
deceptions . . . were all part of Imperato’s scheme to lure investors to
the company, and establish his liability as a primary violator of the
anti-fraud provisions . . . .

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SEC v. Imperiali, Inc., No. 12-80021-CIV, 2013 WL 12080193, at *14 (S.D. Fla.
Sept. 25, 2013).
In May 2014, Imperato filed this action against Navigators seeking
indemnification. He alleged his policy with Navigators “cover[ed] the directors
and officers pertaining to mismanagement and[/]or [SEC] claims.” Imperato
claimed Navigators improperly refused and denied his claims, and as a result,
caused him “irreparable harm and insurmountable damages” and caused Imperiali
to fail.
This action was transferred to the district court judge and magistrate judge
who had presided over Imperato’s SEC action. Imperato moved to recuse them
both under 28 U.S.C. §§ 144 and 455 because of their involvement with the SEC
action and “personal bias and prejudice” against him. The district court denied the
motion.
Imperato then sought leave to proceed in forma pauperis and asked for
volunteer counsel. The motion was denied because Imperato had not filed the
required form along with his motion detailing his financial situation. Imperato
filed another motion to appoint counsel, as well as a “Motion Correction and
Clarification,” but both those motions were not filed on the proper forms and also
lacked any financial information. The magistrate judge found Imperato’s
complaint was “clearly baseless,” pointing to Navigators’s policy that excluded
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losses resulting from Imperato’s “deliberately fraudulent or criminal acts . . . if it is
finally adjudicated that such conduct in fact occurred.” Because the district court
found Imperato was deliberately fraudulent in the SEC action, the magistrate judge
concluded “there [was] no set of facts under which [Imperato] could prevail on a
breach of contract claim.” The magistrate judge recommended Imperato’s
complaint be dismissed with prejudice under 28 U.S.C. § 1915(e)(2), and the
district court adopted that recommendation. This appeal followed.
II.
We review de novo a district court’s sua sponte dismissal for failure to state
a claim under § 1915(e)(2)(B)(ii), viewing the allegations in the complaint as true.
Hughes v. Lott, 350 F.3d 1157, 1159–60 (11th Cir. 2003). A district court’s sua
sponte dismissal for frivolity under § 1915(e)(2)(B)(i) is reviewed for an abuse of
discretion. Id. at 1160.
We review the denial of a petition to proceed in forma pauperis for an abuse
of discretion. Daker v. Comm’r, Ga. Dep’t of Corr., 820 F.3d 1278, 1283 (11th
Cir. 2016). We also review the denial of a motion to recuse for an abuse of
discretion. United States v. Perkins, 787 F.3d 1329, 1342 (11th Cir. 2015).
A.
Imperato first argues the district court erred in dismissing his complaint with
prejudice. The district court relied on § 1915(e) in dismissing Imperato’s
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complaint. Section 1915 governs in forma pauperis proceedings. See 28 U.S.C.
§ 1915. However, while Imperato moved for in forma pauperis status, he was not
actually proceeding in forma pauperis because he paid his filing fee. This Court
has held “[l]ogically, § 1915(e) only applies to cases in which the plaintiff is
proceeding IFP.” Farese v. Scherer, 342 F.3d 1223, 1228 (11th Cir. 2003) (per
curiam). Therefore, the district court could not properly dismiss Imperato’s claim
based on this statute. We reverse the district court’s dismissal of Imperato’s
complaint and remand for further proceedings consistent with this opinion.1
B.
Imperato next argues the district court erred in denying his motion to
proceed in forma pauperis. Federal courts may allow someone who is unable to
afford the costs of litigation to go forward with an action without paying fees when
that person submits a financial affidavit. See 28 U.S.C. § 1915(a)(1). That
affidavit must say “the nature of the action . . . and affiant’s belief that the person
is entitled to redress.” Id. The same statute gives the court discretion to appoint
counsel for that person, even though civil litigants do not have a constitutional
right to counsel. See id. § 1915(e); Bass v. Perrin, 170 F.3d 1312, 1320 (11th Cir.
1999).
1

Nothing in this opinion should be read to mean the district court’s factual analysis was
incorrect. Upon remand, the district court is free to reconsider Navigators’s motion to dismiss
that was denied as moot or consider if sua sponte dismissal under Federal Rule of Civil
Procedure 12(b)(6) would be appropriate. See Am. United Life Ins. Co. v. Martinez, 480 F.3d
1043, 1057, 1069 (11th Cir. 2007).
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The district court properly denied Imperato’s motion to proceed in forma
pauperis because he did not file the required affidavit specified in § 1915(a).
Therefore, the district court did not abuse its discretion.
C.
Finally, Imperato argues the district court erred in denying his motion to
recuse the district court judge and the magistrate judge. A federal judge must
recuse if a party to a proceeding “files a timely and sufficient affidavit that the
judge . . . has a personal bias or prejudice [] against him.” 28 U.S.C. § 144. The
affidavit “must allege facts that would convince a reasonable person that bias
actually exists.” Christo v. Padgett, 223 F.3d 1324, 1333 (11th Cir. 2000). A
federal judge must disqualify from “any proceeding in which his impartiality might
reasonably be questioned” or if the judge “has a personal bias or prejudice
concerning a party.” 28 U.S.C. § 455. To require recusal under this statute, the
movant must show “an objective, fully informed lay observer would entertain
significant doubt about the judge’s impartiality.” Christo, 223 F.3d at 1333.
Imperato has not met his burden. His motion for recusal did not attach an
affidavit and provides no support for his claim of prejudice or bias beyond
conclusory allegations. Imperato’s only factual assertion in the motion is that the
two judges presided over his earlier matters. This Court’s “general rule is that bias
sufficient to disqualify a judge must stem from extrajudicial sources,” unless “a
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judge’s remarks in a judicial context demonstrate such pervasive bias and prejudice
that it constitutes bias against a party.” In re Walker, 532 F.3d 1304, 1310–11
(11th Cir. 2008) (per curiam) (quotation omitted). Imperato did not allege any
extrajudicial bias in his motion, and has not pointed to any improper remark by
either judge showing bias or prejudice. And “[r]ecusal cannot be based on
unsupported, irrational or highly tenuous speculation.” United States v. Cerceda,
188 F.3d 1291, 1293 (11th Cir. 1999) (per curiam) (quotation omitted). Therefore,
the district court did not abuse its discretion.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

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