Cohen v. Navarro
Filing
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MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 5/8/2018. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JEFFREY COHEN,
Plaintiff,
v.
: Civ. No. 17-1352-RGA
HONORABLE TRINIDAD NAVARRO,
Insurance Commissioner of the State
of Delaware, in his capacity as
Receiver for Indemnity Insurance
Corporation, RRG., In Liquidation,
Defendant.
Jeffrey Cohen, FCI Hazelton, Bruceton Mills, West Virginia.
MEMORANDUM OPINION
g,
May
2018
Wilmington, Delaware
Pro Se Plaintiff.
Plaintiff Jeffrey Cohen, an inmate at FCI Hazelton in Bruceton Mills, West
Virginia, filed this combined Rule 60( d) independent action for relief from judgment
based on fraud on the court and complaint for damages and declaratory/injunctive relief
raising 42 U.S.C. § 1983 claims and supplemental state law claims.
(D.I. 1).
appears prose and has been granted leave to proceed in forma pauperis.
He
(D.I. 6).
The Court now proceeds to review and screen the Complaint pursuant to 28 U.S.C.
§ 1915(e)(2)(B) and§ 1915A(a).
I.
BACKGROUND
Cohen brings this lawsuit against Defendant Trinidad Navarro, the current
Insurance Commissioner for the State of Delaware, as the statutory successor to
former Insurance Commissioner Karen Weldin Stewart. 1 (D.I. 1 at~ 5).
Cohen
considers both Commissioner Stewart and Commissioner Navarro as the Insurance
Commissioner for purposes of this action, but Stewart is not a named defendant.
Depending upon the time-frame, in Cohen's view, Defendant can mean either
Commissioner Stewart or Commissioner Navarro. As explained in the Complaint:
Stewart was the Insurance Commissioner at all times relevant to this
Complaint. As the statutory successor to Stewart, Defendant [i.e.,
Navarro] is the automatic successor, as the Receiver of Indemnity
Insurance Corporation, RRG., in Liquidation. Pursuant to Del. C. § 5911,
both Defendant and Stewart are considered the Commissioner of
Insurance for the purpose of this action.
(D.I. 1 at p.3).
1Navarro
was elected in 2016 as the State of Delaware's 25th Insurance
Commissioner and assumed office on January 4, 2017. See https://ballotpedia.org/
Trinidad_Navarro (last visited Jan. 11, 2018).
It is apparent when reading the Complaint, that "Defendant's" alleged actions
were taken by Commissioner Stewart, and Commissioner Navarro is named only
because he is Stewart's successor. The Complaint does not indicate whether the
claims are raised against Navarro in his individual capacity or official capacity, but
states that the action is brought against Commissioner Navarro "in his capacity as
Receiver of Indemnity Insurance Corporation, RRG., In Liquidation." (Id. at p.1 ).
Because Cohen proceeds pro se, the Court will address the claims under both
capacities.
Cohen raises claims relating to a Delaware receivership action currently pending
in the Court of Chancery of the State of Delaware, In the Matter of the Liquidation of
Indemnity Insurance Corporation, RRG, C.A. No. 8601-CB.
Indemnity Insurance
Corporation, RRG ("llC") is a risk retention group founded by Cohen and domiciled in
Delaware. Cohen v. Stewart, 2014 WL 2574550, at *1 (D. Md. June 5, 2014).
Companies, LLC ("IDG") is an affiliated company owned by Cohen.
IDG
Id.
After a routine investigation by the Delaware Department of Insurance uncovered
concerns about llC's solvency, Commissioner Stewart sought a seizure order from the
Court of Chancery of the State of Delaware.
Id.
On May 30, 2013, the Court of
Chancery entered a confidential seizure and injunction order that vested Commissioner
Stewart with title to all llC property.
Id.
The Complaint refers to the affidavit of John
Tinsley, president and principal of Regulatory Insurance Service, Inc., submitted in
support of the May 30, 2013, seizure petition, and relied upon by Defendant through
counsel.
(D.I. 1 at ,-r,-r 23-24, 32(a)-(e)). The Complaint alleges incorrect statements
in Tinsley's affidavit that:
(1) a note receivable from IDC to llC was not collectible
2
which resulted in an instant evaporation of $21 million worth of assets on the llC
balance sheet (id. at ,-r 32(a)); 2 (2) a $5 million cash account at Susquehanna bank was
not an admitted asset of llC (id. at ,-r 32(b)); 3 and (3) llC's policy holder claims were
underreserved in an amount not then determined but later identified as $14 million (id.
at ,-r 31 (e)). 4 On June 17, 2013, the seizure order was enrolled in the Circuit Court for
Baltimore County in the State of Maryland, State of Delaware v. Indemnity Insurance
Corp., RRG, No. 03-C-13006820 (Cir. Ct. Baltimore County, Md).
Id.
On September 13, 2013, three llC employees became aware of, and concerned
about, unauthorized activity in their deferred-compensation accounts.
only person with access to the accounts.
Id.
Cohen was the
The employees contacted the Delaware
Department of Insurance, and Commissioner Stewart froze the three accounts before
they could be emptied.
Id.
On September 25, 2013, the Court of Chancery issued an
order imposing sanctions against Cohen due to actions taken by him during the Court
of Chancery proceedings.
Cohen v. State ex. rel. Stewart, 89 A.3d 65, 80 (Del. 2014).
On October 7, 2013, Cohen filed an expedited motion to modify or, alternatively, for
2The
Complaint alleges that Defendant's counsel testified during Cohen's
criminal matter that the IDC note receivable was performing and paid without fail.
1 at ,-r 67).
(D.I.
3The
Complaint alleges Defendant verified and counsel certified in the Delaware
Court, that the $5 million was an asset of llC. (D.I. 1 at ,-r 72).
4 The
Complaint alleges the $14 million increase proved to be fictional and
designed to deceive the tribunal, llC was accurately reserved at $20.3 million,
Defendant's counsel testified the llC's claims reserves were adjusted to arrive at a total
policyholder claim exposure of $142,836,890, and prosecutors in Cohen's criminal case
used the "unsupported testimony of Defendant's counsel" that llC faced $152 million in
losses. (D.I. 1 at ,-r,-r 53, 54, 56, 57).
3
relief from the order imposing sanctions.
motion without prejudice.
Id. at 81.
Id.
The Court of Chancery denied the
The Court of Chancery entered an additional
sanctions order against Cohen on November 1, 2013, following his continued
contumacious behavior.
Id. at 81-83.
On November 6, 2013, Commissioner Stewart filed a petition for the entry of a
rehabilitation and injunction order with the consent of llC's board.
2014 WL 257 4550, at *1.
Cohen v. Stewart,
On November 7, 2013, the Court of Chancery entered the
order, placed llC into receivership, and appointed Commissioner Stewart as the
receiver. 5 Id.
multiple orders.
Cohen then appealed to the Delaware Supreme Court challenging
Cohen v. State ex. rel Stewart, 89 A.3d at 68.
"Central to [the]
appeal [was] whether the delinquency proceedings [for llC] violated the constitutional
5 0n
March 4, 2014, Cohen filed suit in the United States District Court for the
District of Maryland seeking injunctive relief to recover funds he alleged were unlawfully
and improperly seized as part of the llC receivership because they were outside the
receivership's scope. The motion was denied on June 5, 2014 for failure to show the
likelihood of success on the merits due to want of jurisdiction and on abstention
grounds. Cohen v. Stewart, 2014 WL 257 4550. On March 13, 2014, Cohen
commenced a second action in the United States District Court for the District of
Maryland raising claims related to the Delaware receivership. Cohen v. INS
Consultants, Inc., 2015 WL 847473 (D. Md. Feb. 25, 2015). The matter was dismissed
on February 25, 2015 for want of jurisdiction. Id. at *1. On February 13, 2015, Cohen
commenced a third action in the United States District Court for the District of Maryland
raising claims related to the Delaware receivership. The case was dismissed on April
2, 2015. Cohen v. Bealuk, No. 15-470 (D. Md.) (D.I. 1), aff'd, 624 F. App'x 84 (4th Cir.
2015). On October 3, 2016, Cohen filed an action in this Court raising claims under 42
U.S.C. § 1983 as well as supplemental claims all related to C.A. No. 8601-CB. Cohen
v. Birrane, Civ. No. 16-893-RGA (D. Del.). The case was dismissed on June 23, 2017.
Cohen v. Birrane, 2017 WL 2709566 (D. Del. June 23, 2017). On October 31, 2016,
Cohen filed a purported independent action under Rule 60( d) in the Eastern District of
Pennsylvania, Cohen v. Tinsley, Misc. No. 16-210-EGS (E.D. Pa.), again raising claims
related to C.A. No. 8601-CB. The miscellaneous matter was dismissed on April 5,
2017. Cohen v. Tinsley, 2017 WL 1333370 (E.D. Pa. Apr. 5, 2017).
4
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due process rights of
DJeffrey B.
Cohen."
Id.
Cohen had also filed a filed a motion
for emergency relief in the Court of Chancery on December 31, 2013.
See C.A. No.
8601-CB at BL-549. 6 On April 9, 2014, the Delaware Supreme Court affirmed the
Court of Chancery's rulings and concluded there were no violations of Cohen's right to
due process.
Cohen v. State ex. rel Stewart, 89 A.3d at 68-69.
In the meantime, on July 26, 2013 and January 16, 2014, verified petitions for
liquidation were filed in C.A. No. 8601-CB.
petitions contained false evidence. (Id.
(D.I. 1 at~ 31 ).
at~~
73-79).
Cohen alleges that the
He also alleges that false
testimony and false facts were presented to the Court of Chancery. (Id.
at~~
46-72).
On April 10, 2014, the day after the Delaware Supreme Court had ruled on the Cohen's
due process claims, the Court of Chancery entered the liquidation order.
Stewart, 2014 WL 2574550, at *1.
Cohen v.
Cohen alleges that the Court of Chancery granted
the liquidation petition based on false averments submitted to the tribunal by the
Commissioner and Commissioner's counsel. (D.I. 1 at~~ 73-79).
Cohen refers to a
statement in the Court of Chancery liquidation and injunction Order with bar date, "[t]he
Commissioner has provided the court with evidence sufficient to support the conclusion
that llCRRG is insolvent." (Id.
at~
79; C.A. No. 8601-CB at BL-786 at p.3).
Cohen
appealed the order, but it was dismissed after he failed to prosecute the appeal.
See
Cohen v. State, 100 A.3d 1020, 2014 WL 4384796 (Del. 2014) (table).
6
"BL-549" is how Bloomberg Law designates docket items on court dockets.
5
Cohen was indicted and charged with fifteen counts of wire fraud, five counts of
aggravated identity theft, two counts of money laundering, five counts of making false
statements to an insurance regulator, and four counts of obstructing justice.
States v. Cohen, 2015 WL 4641072 (D. Md. Aug, 3, 2015).
United
On June 5, 2015, he pied
guilty to wire fraud, aggravated identity theft, making false statements to an insurance
regulator, and obstructing justice. Id.
term of 240 months imprisonment.
14-310-GLR (D. Md.) (D.I. 590).
He was sentenced on December 10, 2015, to a
See United States v. Cohen, Crim. No.
Cohen takes exception to a statement made by
Stewart in his criminal matter that "she does not personally participate in the
delinquency proceedings or the operation of companies in receivership." (D.I. 1 at ,-r
23). The Complaint alleges that Cohen's sentence was based upon the false
testimony of Defendant's counsel.
(D.I. 1 at ,-r 58).
Cohen appealed his conviction
and sentence on December 15, 2015. The United States Court of Appeals for the
Fourth Circuit dismissed all contentions of error, except for a Sixth Amendment issue
and an Apprendi issue, and affirmed the district court's ruling on both issues.
See
United States v. Cohen,_ F.3d_, 2018 WL 1936355 (4th Cir. Apr. 25, 2018). 7
On February 15, 2017, Cohen filed a motion for leave to file a third party
complaint in another Delaware action, Indemnity Insurance Corporation v. Cohen, C.A.
No. 8985-CB (Del. Ch.), an action related to C.A. No. 8601-CB. Court of Chancery
C.A. No. 8985-CB raises claims concerning Cohen's alleged misconduct in managing
llC during his tenure as a fiduciary of llC and the validity of his employment agreement.
7
To date, Cohen has not petitioned the United States Supreme Court for a writ of
certiorari.
6
Id. at BL-106. The proposed third party complaint sought to raise claims pursuant to
42 U.S.C. § 1983 for negligence, conversion, breach of fiduciary duty, fraud, and
tortious interference with business relationships against Commissioner Stewart and
Tinsley.
Id.
On April 13, 2017, the Court of Chancery denied the motion on the
grounds that Cohen's proposed third party claims were irrelevant to llC's claims against
Cohen and the motion failed to satisfy Court of Chancery Rule 14(a). Id.
On June 2, 2017, Cohen filed a motion for leave to file a counterclaim against
non-parties Tinsley and Michael Johnson, a Regulatory Insurance Services employee,
that raised substantially the same claims asserted in the proposed third party complaint.
Id. at BL-183.
On August 18, 2017, the Court of Chancery denied the motion for the
proposed counterclaims against non-parties as a transparent attempt to evade the
Court's April 13, 2017 order.
Id. The Court of Chancery reiterated that it would not
permit any claims against non-parties.
Id.
Cohen did not appeal.
During this time, Cohen continued with his filings in C.A. No. 8601-CB. On May
15, 2017, Cohen filed an "independent action for fraud on the court pursuant to Court of
Chancery Rule 60," followed by an August 1, 2017 motion for leave to file an amended
complaint to assert the fraud on the court claim as a separate action.
See C.A. No.
8601-CB at BL-939, BL-961, BL-970. The motion was denied on August 18, 2017, on
the grounds that Cohen is not a party to C.A. No. 8601-CB, and he did not have
standing to file a motion or an independent action under Rule 60(b).
Id. at BL-970.
Cohen did not appeal.
On September 25, 2017, a little over a month after the Court of Chancery denied
the Rule 60 motion in C.A. No. 8601-CB and the motion for leave to file a counterclaim
7
against non-parties in C.A. No. 8985-CB, this Court received Cohen's combined Rule
60(d) independent action for relief from judgment based on fraud on the court and
complaint for damages and declaratory/injunctive relief against Navarro. The
Complaint asserts jurisdiction pursuant to 28 U.S.C. § 1331 (federal question by reason
of 42 U.S.C. § 1983 claims), 28 U.S.C. § 1332 (diversity of citizenship), 28 U.S.C. §
1343 (civil rights and elective franchise), and 28 U.S.C. § 1367 (supplemental
jurisdiction). (D.I. 1 at ,-r 2).
It contains four counts, as follows:
Count I, fraud on the
court (id. at ,-r,-r 84-89); Count II, negligence/gross negligence (id. at ,-r,-r 90-96); Count
Ill, due process violations pursuant to 42 U.S.C. § 1983 (id. at ,-r,-r 97-100); and Count
IV supervisor liability/negligence under 42 U.S.C. § 1983 (id. at ,-r,-r 101-07).
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Cohen alleges Defendant's lawyers, as officers of the court, and certain other
individuals, as agents of Defendant, intentionally fabricated evidence and knowingly
certified false testimony to deceive the Court of Chancery, the court relied upon the
false testimony, and then ruled in favor of Defendant in C.A. No. 8601-CB.
(Id. at ,-r 1).
Cohen states he has attempted to litigate matters and sought relief in multiple
jurisdictions. (Id. at ,-r 80).
He alleges Defendant failed to disclose and produce
evidence in C.A. No. 8601-CB. (Id. at ,-r 81 ).
Cohen alleges he did not have a full and
fair opportunity to litigate the issues regarding the false information relied upon by the
Court of Chancery when it deprived him of certain property interests and erred by
utilizing false information in its decision. (Id. at ,-r 82).
He alleges the fabricated
evidence and subornation of false information submitted to the tribunals was done by
counsel and, thus, not subject to cross examination.
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(Id. at ,-r 83).
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Cohen filed this
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"action to secure a full and fair opportunity for a meaningful adjudication of the merits."
(Id. at
~
82).
Cohen seeks declaratory and injunctive relief, as well as compensatory
damages. The declaratory relief sought, includes, but is not limited to, construing
evidence relied upon by the Court of Chancery in a different manner from the Court of
Chancery; finding Defendant and his attorney submitted false information to the Court
of Chancery and other tribunals; finding the Court of Chancery relied upon false
information and that the false information deprived Cohen of certain property interests;
and finding tribunals were deceived by the acts of Defendant and his attorney.
The
injunctive relief sought includes enjoining further utilization of the alleged false
information submitted by Defendant and his attorney, and for this Court to amend the
April 10, 2014 liquidation order issued by the Court of Chancery to provide relief for
Cohen from alleged erroneous findings.
II.
LEGAL STANDARDS
A federal court may properly dismiss an action sua sponte under the screening
provisions of 28 U.S.C. § 1915(e)(2)(8) and§ 1915A(b) if "the action is frivolous or
malicious, fails to state a claim upon which relief may be granted, or seeks monetary
relief from a defendant who is immune from such relief." Ball v. Famiglio, 726 F.3d
448, 452 (3d Cir. 2013); see also 28 U.S.C. § 1915(e)(2) (in forma pauperis actions); 28
U.S.C. § 1915A (actions in which prisoner seeks redress from a governmental
defendant). The Court must accept all factual allegations in a complaint as true and
take them in the light most favorable to a pro se plaintiff.
I
Phillips v. County of
Allegheny, 515 F.3d 224, 229 (3d Cir. 2008); Erickson v. Pardus, 551 U.S. 89, 93
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(2007). Because Cohen proceeds prose, his pleading is liberally construed and his
complaint, "however inartfully pleaded, must be held to less stringent standards than
formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. at 94 (citations
omitted).
An action is frivolous if it "lacks an arguable basis either in law or in fact."
Neitzke v. Williams, 490 U.S. 319, 325 (1989).
Under 28 U.S.C. § 1915(e)(2)(8)(i) and
§ 1915A(b)( 1), a court may dismiss a complaint as frivolous if it is "based on an
indisputably meritless legal theory" or a "clearly baseless" or "fantastic or delusional"
factual scenario.
Neitzke, 490 U.S. at 327-28; Wilson v. Rackmill, 878 F.2d 772, 774
(3d Cir. 1989).
The legal standard for dismissing a complaint for failure to state a claim pursuant
to§ 1915(e)(2)(8)(ii) and§ 1915A(b)(1) is identical to the legal standard used when
ruling on Rule 12(b)(6) motions.
Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir.
1999). However, before dismissing a complaint or claims for failure to state a claim
upon which relief may be granted pursuant to the screening provisions of 28 U.S.C. §§
1915 and 1915A, the Court must grant Cohen leave to amend his complaint unless
amendment would be inequitable or futile.
See Grayson v. Mayview State Hosp., 293
F.3d 103, 114 (3d Cir. 2002).
Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting the
well-pleaded allegations in the complaint as true and viewing them in the light most
favorable to the plaintiff, a court concludes that those allegations "could not raise a
claim of entitlement to relief." Bell At/. Corp. v. Twombly, 550 U.S. 544, 558 (2007).
"Though 'detailed factual allegations' are not required, a complaint must do more than
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simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a
cause of action."' Davis v. Abington Mem1 Hosp., 765 F.3d 236, 241 (3d Cir. 2014)
(quoting Twombly, 550 U.S. at 555).
In addition, a plaintiff must plead facts sufficient
to show that a claim has substantive plausibility.
See Johnson v. City of Shelby,
_U.S._, 135 S.Ct. 346, 347 (2014). A complaint may not be dismissed, however, for
imperfect statements of the legal theory supporting the claim asserted.
See id. at 346.
When reviewing the sufficiency of a complaint, a court should follow a three-step
process: (1) consider the elements necessary to state a claim; (2) identify allegations
that are merely conclusions and therefore are not well-pleaded factual allegations; and
(3) accept any well-pleaded factual allegations as true and determine whether they
plausibly state a claim.
See Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d
Cir. 2016); Williams v. BASF Catalysts LLC, 765 F.3d 306, 315 (3d Cir. 2014).
Deciding whether a claim is plausible will be a "context-specific task that requires the
reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal,
556 U.S. 662, 679 (2009).
The complaint in this case is not viable in this Court, for multiple reasons.
I do
not address most of them, because to do so would unnecessarily extend the length of
this opinion.
Ill.
DISCUSSION
A.
Abstention
Under the Younger abstention doctrine, a federal district court must abstain
from hearing a federal case which interferes with certain state proceedings.
Younger v. Harris, 401 U.S. 37 (1971).
See
The Court may raise the issue of Younger
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abstention sua sponte.
1994).
O'Neill v. City of Philadelphia, 32 F.3d 785, 786 n.1 (3d Cir.
Under Younger, federal courts are prevented from enjoining pending state
proceedings absent extraordinary circumstances. 8 Middlesex Cnty. Ethics Comm. v.
Garden State Bar Ass'n, 457 U.S. 423, 437 (1982).
Abstention is appropriate only
when: (1) there are ongoing state proceedings that are judicial in nature; (2) the state
proceedings implicate important state interests; and (3) the state proceedings provide
an adequate opportunity to raise the federal claims.
666, 670 (3d Cir. 201 O).
Lazaridis v. Wehmer, 591 F.3d
The doctrine applies to proceedings until all appellate
remedies have been exhausted, unless the matter fal!s within one of the Younger
exceptions. 9 Huffman v. Pursue Ltd., 420 U.S. 592, 608 (1975).
The Court takes judicial notice that the llC Receivership proceedings remain
pending in the Court of Chancery. The relief sought in the Complaint includes
declaratory and injunctive relief that appears to implicate the receivership proceedings.
Cohen seeks the declaration of various facts that were litigated in the Court of
Chancery, including that the "Delaware Court relied upon the false information [thereby]
depriv[ing] Cohen of certain property interests."
(D.I. 1 at 16).
He seeks to "enjoin the
The abstention doctrine as defined in Younger v. Harris, 401 U.S. 37 (1971 ),
provides that federal courts are not to interfere with pending state criminal proceedings.
The Younger doctrine has been extended to civil cases and state administrative
proceedings. Middlesex Cnty. Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423
(1982); Huffman v. Pursue Ltd., 420 U.S. 592 (1975).
8
9
Exceptions to the Younger doctrine exist where irreparable injury is "both great
and immediate," Younger, 401 U.S. at 46, where the state law is "flagrantly and patently
violative of express constitutional prohibitions," id. at 53, or where there is a showing of
"bad faith, harassment, or ... other unusual circumstances that would call for equitable
relief." Id. at 54.
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further utilization of the false information." (Id.)
He requests that this Court "amend"
the Court of Chancery's April 10, 2014, liquidation order.
(Id.)
As to the second element, Delaware has an important state interest in regulating
the insurance industry and protecting the interests of policyholders and creditors from
delinquent insurers.
As to the third element, the Court takes judicial notice of the numerous cases
filed by Cohen in conjunction with the allegations raised in the Complaint.
Cohen has
had many opportunities to appeal decisions of Delaware Courts or to file independent
actions in Delaware Courts.
He appealed in C.A. 8601-CB, resulting in a
comprehensive opinion by the Delaware Supreme Court.
Stewart, 89 A.3d 65 (Del. 2014).
See Cohen v. State ex. rel.
Cohen appealed the April 10, 2014 Court of
Chancery liquidation and injunction Order with bar date in the same case, but he failed
to prosecute the appeal.
Cohen did not appeal the Court of Chancery's April 13, 2017
order in C.A. No. 8985-CB denying him leave to file a third party complaint against
Commissioner Stewart and Tinsley, nor the August 18, 2017 order that denied Cohen
motion for leave to file a counterclaim against non-parties Tinsley and Michael
Johnson. 10 Nor did he appeal the Court of Chancery's August 28, 2017 order in C.A.
No. 8601-CB that denied him leave to file an amended complaint to assert the fraud on
10
Cohen filed a § 1983 claim against Commissioner Stewart in this Court raising
similar claims, Civ. No. 16-893-RGA. The claims against Commissioner Stewart were
dismissed as time-barred. See id. at D.I. 14, 15.
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the court claim as a separate action.
Cohen has not shown or alleged that he was
prevented from appealing those decisions.
Moreover, the Delaware Supreme Court's April 9, 2014 decision, Cohen, 89 A.3d
65, discussed two of the fraud on the court claims Cohen now raises -- the IDG note
receivables, and the $5.1 million cash in an account at Susquehanna Bank. The ruling
stated that Cohen had not denied or substantively contested the fraud allegations in the
Court of Chancery proceedings.
In addition, it discussed the fact that Cohen did not
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appear at a scheduled September 24, 2013 hearing where he could have presented
evidence.
Instead, he submitted an affidavit that addressed the allegations without
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given the opposing side the opportunity to cross-examine him.
Finally, the Court takes judicial notice that Cohen continues with his filings in
C.A. No. 8601-CB.
On February 8, 2018, Cohen filed a Rule 60 independent action for
relief from Court Order based on fraud on the court. See C.A. No. 8601-CB at
BL-1008. The motion is opposed by Commissioner Navarro and it remains pending.
Clearly, Cohen has an adequate opportunity to raise his federal claims in state
court.
Indeed, he has raised many claims in the Delaware Courts and, of course, he
may also raise claims brought under Delaware law in the Delaware State courts.
Laziridis, 591 F.3d at 670.
See
Nothing indicates that the Delaware courts are inadequate
for addressing Cohen's claims.
For these reasons, the Court should abstain under the
Younger abstention doctrine.
B.
Count I, Fraud on the Court
Cohen brings this action, in part, under Rule 60(d) as an independent action for
relief from judgment based upon fraud on the court.
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While the Complaint does not
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provide the specific sub-section of Rule 60(d), it alleges fraud on the court, which falls
under Rule 60(d)(3).
Rule 60(d) gives a court the power to "entertain an independent
action to relieve a party from a judgment, order or proceeding" and/or "set aside a
judgment for fraud on the court."
provided for by Rule 60(d).
Fed. R. Civ. P. 60(d)(1 ), (3).
There is no other relief
Cohen's claims are nothing more than another attack on
the rulings in C.A. No. 8601-CB.
For the reasons that follow, the Court will dismiss
Count I for lack of jurisdiction and/or dismiss it as frivolous as attacking the validity of a
criminal conviction or sentence.
1.
Jurisdiction
Fraud on the court is an equitable remedy allowing a federal court to grant relief
from a federal judgment, not a state judgment.
See Andersen v. Roszkowski, 681 F.
Supp. 1284, 1291 (N.D. Ill. 1988) ("Federal courts have inherent subject-matter
jurisdiction to review federal judgments obtained by fraud on the court."); LaMie v.
Wright, 2014 WL 1686145, at *14 (W.D. Mich. Apr. 29, 2014) ("The federal courts will
not entertain a collateral attack on a state judgment on the basis of 'fraud on the court'
in an action for damages.").
"Only the court that had jurisdiction over the original
judgment ... can provide relief from that judgment through an independent action."
Farris v. Burton, 2016 WL 4015032, at *7 (D. Kan. July 27, 2016) (quoting Atkins v.
Heavy Petroleum Partners, LLC, 635 F. App'x 483, 489 (10th Cir. 2015)); see a/so
United States v. Beggerly, 524 U.S. 38, 45-46 (1998) (an "independent action" for fraud
"may be regarded as ancillary to the prior suit, so that the relief asked may be granted
by the court which made the decree in that suit .... The bill, though an original bill in
the chancery sense of the word, is a continuation of the former suit, on the question of
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the jurisdiction of the [court)"); Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991)
(federal court's inherent power is what "allows a federal court to vacate its own
judgment upon proof that a fraud has been perpetrated upon the court"); Crosby v.
Mills, 413 F.2d 1273, 1275-76 (10th Cir. 1969) (holding that jurisdiction for a fraud on
the court claim is ancillary to the jurisdiction for the original claim); Toucey v. N. Y. Life
Ins. Co., 314 U.S. 118, 136 (1941) (calling the foundation of a line of earlier Supreme
Court cases allowing federal courts to entertain collateral attacks on state court
judgments "very doubtful").
This Court did not have jurisdiction over the original liquidation order.
The
Court of Chancery of the State of Delaware had, and continues to have, jurisdiction
over C.A. No. 8601-CB.
Therefore, only the Court of Chancery, and not this Court, can
provide relief from the judgment through an independent action.
Count I will be
dismissed for want of jurisdiction.
2.
Criminal Conviction and Sentence
On April 25, 2018, the United States Court of Appeals for the Fourth Circuit
decided Cohen's criminal appeal and a judgment order issued the same day.
Under
Sup. Ct. R. 13, Cohen has 90 days after entry of the judgment to petition for a writ of
certiorari to the United States Supreme Court.
Cohen's claim of fraud on the court directly implicates his criminal conviction and
sentence.
In his criminal appellate brief filed in the United States Court of Appeals for
the Fourth Circuit, he claims there was sufficient money available to pay llC's claims
and raises the $14 million in indemnity assets issue, the
IDG note llC held as an
asset issue, and the government's reliance upon the declaration of an attorney for the
receiver issue.
See United States v. Cohen, No. 15-4780 at 0.1. 48-1 at pp. 46, 49, 54
16
(4th Cir.).
Notably, Cohen's criminal appeal brief states that llC was seized by
Delaware authorities in May 2013 after Cohen admitted to faking $5.1 million dollars in
assets.
Id. at p. 46.
This statement contradicts Cohen's claim in this action that the
$5.1 million held at Susquehanna Bank was a valid asset of llC, and his claim that
Tinsley falsely claimed it was not.
Cohen alleges that prosecutors in his criminal case used "the unsupported
testimony" and the judge in the criminal matter sentenced him to 37 years based upon
the "false testimony of Defendant's counsel." (D.I. 1 at~ 58). A ruling in this case
could implicitly call into question the validity of Cohen's conviction or duration of
sentence. To the extent that Cohen attempts to challenge his conviction and/or
sentence, his sole federal remedy for challenging the fact or duration of his confinement
is by way of habeas corpus. Preiser v. Rodriguez, 411 U.S. 475 (1973); see also
Torrence v. Thompson, 435 F. App'x 56 (3d Cir. 2011 ).
Thus, to the extent Cohen is challenging his criminal conviction, there is no
jurisdiction in this Court to hear that challenge.
C.
Count II, Negligence/Gross Negligence, Count Ill, 42 U.S. C. § 1983
Due Process; Count IV, 42 U.S.C. § 1983, Supervisor Liability
The claims in Counts II, Ill, and IV are time-barred.
and gross negligence claims.
Count II raises negligence
Because there are claims of negligence which
proximately caused harm to Cohen, the claims sound in personal injury.
Counts Ill and
IV raise claims under 42 U.S.C. § 1983.
In Delaware, negligence and gross negligence claims are subject to a two-year
limitations period.
See 10 Del. C. § 8119.
Similarly, for purposes of the statute of
limitations, 42 U.S.C. § 1983 claims are characterized as personal injury actions and
are also subject to a two year limitation period.
17
Wilson v. Garcia, 471 U.S. 261, 275
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(1983); see 10 Del. C. § 8119; Johnson v. Cullen, 925 F. Supp. 244, 248 (D. Del. 1996).
In Delaware, personal injury claims accrue at the time of the injury, Nardo v. Guido
DeAscanis & Sons, Inc., 254 A.2d 254, 256 (Del. Super. 1969), while§ 1983 claims
accrue "when the plaintiff knew or should have known of the injury upon which its action
is based," Sameric Corp. v. City of Philadelphia, 142 F.3d 582, 599 (3d Cir. 1998).
The statute of limitations is an affirmative defense that generally must be raised
by the defendant, and it is waived if not properly raised.
See Benak ex rel. Alliance
Premier Growth Fund v. Alliance Capital Mgmt. L.P., 435 F.3d 396, 400 n.14 (3d Cir.
2006); Fassett v. Delta Kappa Epsilon, 807 F.2d 1150, 1167 (3d Cir. 1986). "[W]here
the statute of limitations defense is obvious from the face of the complaint and no
development of the factual record is required to determine whether dismissal is
appropriate, sua sponte dismissal under 28 U.S.C. § 1915 is permissible." Davis v.
Gauby, 408 F. App'x 524, 526 (3d Cir. 2010) (quoting Fogle v. Pierson, 435 F.3d 1252,
1258 (10th Cir. 2006)).
Cohen filed his Complaint on September 13, 2017. 11 The last act complained of
by Cohen in the Complaint occurred on April 10, 2014, when the Court of Chancery
issued its liquidation and injunction order with bar date. Appendix A attached to the
Complaint provides a timeline of events from May 30, 2013 to April 2014 for matters
related to Court of Chancery cases (D.I. 1-1
at~~
11 The
27-24, 31-34) and from July 20, 2015
computation of time for complaints filed by pro se inmates is determined
according to the "mailbox rule." A prisoner's filing is deemed filed as of the date it is
delivered to prison officials for mailing to the Court. See Houston v. Lack, 487 U.S.
266 (1988).
Here, Cohen's Complaint was signed on September 10, 2017, and the cover
letter mailing it to the Clerk of Court is dated September 13, 2017. The envelope is not
post-marked. Therefore, the Complaint was delivered to prison authorities for mailing
on or after September 13, 2017, and I will treat that as the date of filing.
18
through December 2015 for matters related to Cohen's criminal case (id. at ~~ 27, 36,
38, 41, 42, 44, 46-47). Appendix A refers to a "recent filing" (with no date) in C.A. No.
8601-CB, where counsel for Defendant certified llC was "underreserved by $14 million."
(Id.
at~
48). Appendix A sets forth a timeline for allegations relating to being
underreserved.
November 2013 to January 2014, statements that llC is underreserved
by $14 million; August 2015, statements that llC is underreserved by $30 million;
August 19-25, 2015, "claim exposure" is $152 million. (Id. at ml 51-52). As a result,
the Court does not considered the "recent filing" statement in its analysis as Cohen
alleges that the same statement was made more than three years before this lawsuit
was filed.
Moreover, this single act, assuming it was made "recent[ly]" in relation to the
filing of the lawsuit, would be the only act that could remotely be considered as having
been taken by someone while supervised by Commissioner Navarro, who only took
office in January 2017. The single act could not rise to the level of a constitutional
violation.
In determining whether the§ 1983 claims are time-barred, the relevant dates are
those related to actions taken in the Court of Chancery, the last date occurring in April
2014. 12 Hence, it is evident from the face of the Complaint that personal injury and §
1983 claims are barred by the two year limitations period, having been filed over a year
after the expiration of the two-year limitation period. Therefore, the Court will dismiss
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12
As discussed above, acts relating to Cohen's criminal case, including those
allegedly taken by witnesses, challenge his conviction and sentence. Also, Stewart
and other witnesses have absolute witness immunity for statements they made during
the criminal proceeding. See Rehberg v. Paulk, 566 U.S. 356, 367 (2012) ("[A] trial
witness has absolute immunity [from suit under § 1983] with respect to any claim based
on the witness' testimony."); see also Pelino v. Hens-Greco, 693 F. App'x 104, 107 (3d
Cir. 2017) (absolute witness immunity in§ 1983 case).
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Counts II, Ill, and IV as legally frivolous pursuant to 28 U.S.C. § 1915(e)(2)(B)(i) and§
1915A(b )(1 ).
Amendment of these time-barred claims would be futile. 13
To the extent the claims are raised against Navarro in his official capacity as
Insurance Commissioner, seeking monetary damages, he is immune from suit.
The
Eleventh Amendment protects states and their agencies and departments from suit in
federal court.
Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 100
"A state cannot be sued in federal court by citizens of another state or its own
(1984).
citizens, Edelman v. Jordan, 415 U.S. 651, 662-63 (1974), or by citizens of a foreign
state, Hans v. Louisiana, 134 U.S. 1, 10 (1890)." Johnson v. Duncan, _F. App'x_,
2017 WL 4417615 (3d Cir. Oct. 4, 2017).
In addition, a suit against a state official in
his official capacity "is not a suit against the official but rather is a suit against the
official's office" and, as such, is no different than a suit against the State itself.
Will v.
Michigan Dept of State Police, 491 U.S. 58, 71 (1989); McDuffy v. Koval, 226 F. Supp.
2d 541, 550 (D. Del. 2002) (suit against Delaware Insurance Commissioner in his
official capacity is dismissed by reason of Eleventh Amendment immunity).
The Eleventh Amendment does permit suits for prospective injunctive relief
against state officials acting in violation of federal law.
123 (1908).
See Ex parte Young, 209 U.S.
"This standard allows courts to order prospective relief, as well as
measures ancillary to appropriate prospective relief."
437 (2004) (internal citations omitted).
Frew v. Hawkins, 540 U.S. 431,
Cohen does seek prospective injunctive relief
to "enjoin the further utilization of the false information submitted by Defendant and his
13
As noted in my earlier opinion in Cohen v. Birrane, 2017 WL 2709566, at *2-3
(D. Del. June 23, 2017), Cohen filed suit against former Commissioner Stewart for
racketeering as far back as May 2014. Inasmuch as he only purports to sue
Commissioner Navarro as her successor, the earlier lawsuit shows that Cohen knew of
his claims more than three years before he filed the instant lawsuit.
20
counsel" (see D.I. 1 at 16)," but, as discussed above, the Court would therefore need to
abstain as such relief cannot be entertained in light of the Younger abstention doctrine.
The supervisory liability and negligence claims raised under § 1983 fail for lack of
personal involvement and as a matter of law.
Cohen is clear that all acts were taken
by Commissioner Stewart, and not by Commissioner Navarro.
Naming Navarro as a
defendant merely because he is the successor to Stewart is improper given that § 1983
requires proof of personal participation in the alleged unlawful conduct in order to
recover against Navarro.
None of the claims speak to actions taken by Navarro.
It is
well established that claims based solely on the theory of respondeat superior or
supervisor liability are facially deficient.
See Iqbal, 556 U.S. at 676-77; see also Solan
v. Ranck, 326 F. App'x 97, 100-01 (3d Cir. 2009) (holding that "[a] defendant in a civil
rights action must have personal involvement in the alleged wrongs; liability cannot be
predicated solely on the operation of respondeat superior'').
In addition, mere
negligence in and of itself does not rise to the level of a constitutional violation.
Daniels v. Williams, 474 U.S. 327, 330-30 (1986).
See
In light of the foregoing, the Court
will dismiss Counts II, Ill, and IV.
IV.
CONCLUSION
For the above reasons, the Court concludes that suing Commissioner Navarro is
frivolous and cannot be sustained. The Court will:
(1) dismiss Count I for lack of
jurisdiction, and determine that it cannot be pursued in this Court against Commissioner
Navarro or anyone else, and it is therefore legally frivolous pursuant to 28 U.S.C. §
1915(e)(2)(B)(i) and§ 1915A(b)(1 ), and amendment would be futile; and, in the
alternative, abstain under the Younger abstention doctrine; and (2) dismiss Counts II,
Ill, and IV as time-barred, barred by the Eleventh Amendment, and failing to state a
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claim against Commissioner Navarro, and therefore legally frivolous and failing to state
a claim pursuant to 28 U.S.C. § 1915(e)(2)(B)(i)&(ii) and§ 1915A(b)(1). The Court
finds amendment in regard to Commissioner Navarro to be futile, but cannot say that
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there might not be someone else against whom a viable complaint could be filed.
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Commissioner Navarro.
Therefore, leave to amend will be permitted, but not as to Count 1 or as to
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An appropriate order will be entered.
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