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Cohen v. Birrane

United States District Court, D. Delaware

June 23, 2017

JEFFREY COHEN, et al. Plaintiffs,
v.
KATHLEEN BIRRANE, et al., Defendants.

          Jeffrey Cohen, FCI Hazelton, Bruceton Mills, West Virginia. Pro Se Plaintiff.

          MEMORANDUM OPINION

          ANDREWS, U.S. District Judge

         Plaintiff Jeffrey Cohen, an inmate at FCI Hazelton in Bruceton Mills, West Virginia, filed this action personally and as sole shareholder of IDG Companies, LLC, [1]raising claims under 42 U.S.C. § 1983 and supplemental claims under Delaware law pursuant to 28 U.S.C. § 1367. (D.I. 1, 3). He appears pro se and has been granted leave to proceed in forma pauperis. (D.I. 8, 11). Cohen also moves for injunctive relief and requests counsel. (D.I. 4, 9). The Court now proceeds to review and screen the Complaint pursuant to 28 U.S.C. § 1915(e)(2)(B) and § 1915A(a).

         BACKGROUND[2]

         Cohen brings this lawsuit for 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 ("IIC") is a risk retention group founded by Cohen and domiciled in Delaware. Cohen v. Stewart, 2014 WL 2574550, at *1. IDG Companies, LLC ("IDG") is an affiliated company owned by Cohen. Id. After a routine investigation by the Delaware Department of Insurance uncovered concerns about IIC's solvency, the Insurance Commissioner of the State of Delaware, then Karen Weldin Stewart, sought a seizure order from the Delaware Court of Chancery. Id. On May 30, 2013, the Court of Chancery entered a confidential seizure and injunction order that vested Commissioner Stewart with the title to all IIC property. Id. 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 IIC employees became aware of, and concerned about, unauthorized activity in their deferred-compensation accounts. Cohen was the only person with access to the accounts. Id. 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 at 80. On October 7, 2013, Cohen filed an expedited motion to modify or, alternatively, for relief from the order imposing sanctions. Id. The Court of Chancery denied the motion without prejudice. Id. at 81. 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 consent of IIC's board. Cohen v. Stewart, 2014 WL 2574550, at *1. On November 7, 2013, the Court of Chancery entered the order, placed IIC into receivership, and appointed Commissioner Stewart as the receiver.[3]Id.

         Cohen then appealed to the Delaware Supreme Court challenging multiple orders. Cohen v. State ex. rel Stewart, 89 A.3d at 68. "Central to [the] appeal [was] whether the delinquency proceedings [for IIC] violated the constitutional due process rights [of] Jeffrey B. Cohen." Id. 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. Id. at 68-69. The next day, on April 10, 2014, the Court of Chancery entered a liquidation order. Cohen v. Stewart, 2014 WL 2574550, at *1. In the meantime, on December 31, 2013, Cohen had filed a motion for emergency relief in the Court of Chancery. In the Matter of the Liquidation of Indemnity Insurance Corporation, RRG, C.A. No. 8601-CB at BL-549.[4]

         Cohen was indicted and charged in Maryland 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. United States v. Cohen, 2015 WL 4641072 (D. Md. Aug, 3, 2015). On June 5, 2015, he pled guilty to wire fraud, aggravated identity theft, making false statements to an insurance regulator, and obstructing justice. Id. He was sentenced on December 10, 2015, to a term of 240 months imprisonment. See United States v. Cohen, Crim. No. 14-310-GLR (D. Md.) (D.I. 590). An appeal is pending. (4th Cir., No. 15-4780).

         On October 3, 2016, this Court received Plaintiff's Complaint[5] for declaratory and injunctive relief and for damages naming as Defendants Kathleen Birrane, Michael Teichman, Michael Johnson, Greg Bealuk, and possibly[6] Commissioner Stewart.[7] (D.I. 1). The Complaint asserts jurisdiction pursuant to 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1343 (civil rights and elective franchise), and 28 U.S.C. § 1367 (supplemental jurisdiction). (D.I. 1 at p.3).

         Cohen has previously sued Teichman, Johnson, Bealuk, and Stewart for racketeering in the United States District Court for the District of Maryland. See Cohen v. Ins Consultants, No. 14-768 (D.I. 44, ¶ 52 & Count VII) (D. Md.) (filed March 13, 2014). Teichman is a Delaware attorney whose hiring was authorized by Cohen. (D.I. 3 at 9). Bealuk and Johnson are insurance professionals who were hired by the Commissioner to operate IDG while it was in the delinquency proceedings. (Id. at 10). Birrane, a Maryland attorney, represented Bealuk and Johnson in the INS case.

         The instant Complaint refers to acts allegedly taken by Defendants from 2010 through April 2014. Plaintiff raises claims under 42 U.S.C. § 1983 for violations of his right to procedural due process under the Fourth, Fifth, and Fourteenth Amendments of the United States Constitution, as well as supplemental state law claims under Delaware law for negligence, gross negligence, conversion, breach of fiduciary duty, fraud, and conspiracy. (D.I. 3 at pp.21-32).

         SCREENING OF COMPLAINT

         A federal court may properly dismiss an action sua sponte under the screening provisions of 28 U.S.C. § 1915(e)(2)(B) 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. Phillips v. County of Allegheny,515 F.3d 224, 229 (3d Cir. 2008); Erickson v. Pardus,551 U.S. 89, 93 (2007). Because Plaintiff proceeds pro se, his pleading is liberally ...


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