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Indemnity Insurance Corp., RRG v. Cohen

Court of Chancery of Delaware

January 18, 2018

Indemnity Insurance Corporation, RRG
v.
Jeffrey Cohen,

          Date Submitted: December 21, 2017

          Michael W. Arrington, Esquire Michael Teichman, Esquire Parkowski, Guerke & Swayze, P.A.

          MORGAN T. ZURN MASTER IN CHANCERY.

         Dear Counsel and Litigant:

         This letter serves as a final report pursuant to Chancellor Bouchard's December 6, 2017, Order appointing me as a special master in these cases. I write for Petitioner Indemnity Insurance Corporation, RRG ("Indemnity"), Respondent Jeffrey B. Cohen ("Cohen"), and the Chancellor, who are familiar with the underlying facts as alleged. This letter addresses some disputes under advisement that I believe can be handled without further conferring, and establishes a framework for conferring on the remaining disputes.

         I. Cohen's Motion for Judicial Notice

         On October 31, 2017, Cohen filed a pro se Motion for Judicial Notice, requesting the Court take judicial notice of numerous filings in related civil and criminal cases, documents filed with state and federal insurance authorities, and actuarial reports.[1] Cohen wishes to use the requested material to attempt to demonstrate Indemnity was capitalized and profitable prior to liquidation, as admitted by Indemnity, its counsel, the Department of Insurance, and others. Indemnity responded on November 29, 2017.[2]

         Delaware Rule of Evidence 201 governs judicial notice of adjudicative facts, or the facts of the particular case, and provides that a "judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." If the accuracy of the subject document's contents is disputed, the Court may take judicial notice to discern when the document was created, what was said therein, or what notice was provided thereby, but may not take judicial notice to establish the truth of its contents and accept those contents as adjudicative facts.[3] This Court also considers the entire document, not just the portion relied upon by a party.[4]

         Delaware Rule of Evidence 202 governs the different issue of judicial notice of law. This Rule is intended to expand and encourage the admissibility of evidence of applicable law.[5] To further the goal of ensuring this Court can take judicial notice of applicable law, Rule 202(d)(1)(B) permits judicial notice of "records of the court in which the action is pending and of any other court of this State or federal court sitting in or for this State." Specifically, this Court may take judicial notice of court filings "for certain limited purposes, such as to understand the nature and grounds for rulings" made by the court in which the documents were filed.[6] Rule 202 does not permit this Court to take judicial notice of such filings for the truth of their contents.[7]

         Recommendations follow for categories of items for which Cohen seeks judicial notice.

         A. Items 1-14: Court Records from Matter of Indem. Ins. Corp., C.A. No. 8601-CB

         In Items 1-14, [8] Cohen asks this Court to take judicial notice of certain statements within certain documents filed in Indemnity's liquidation proceeding (e.g., statements in pleadings, affidavits, and filed accounting reports). Indemnity opposes judicial notice on the grounds that the subject statements contain facts that are disputed both in this action and in the ongoing liquidation proceeding, and that are not capable of accurate and ready determination by resort to sources. Indemnity points out that the liquidation proceeding is still ongoing, and in fact began as a rehabilitation proceeding but shifted to liquidation as the case progressed. In Items 2, 4, 7, and 12, Cohen asks the Court to take judicial notice of certain characteristics of documents filed in the liquidation proceedings (e.g., that they were not withdrawn, or that verifications are qualified upon information and belief).

         Items 1, 3, 5-6, 8-11, and 13-14 are excerpts of documents filed in the liquidation proceeding. Their existence and content are capable of accurate and ready determination by viewing the liquidation proceeding's docket. But, as explained in Rural Metro, where a filing's contents are subject to reasonable dispute, include views and opinions, or could be contested with the aid of discovery, the court cannot take judicial notice under Rule 201 for the purpose of accepting the statements as adjudicative fact.[9] The truth of the matter asserted in these Items is subject to reasonable dispute, and their accuracy or truth is not generally known and is not capable of ready determination. And Rule 202 does not permit this Court to take judicial notice of court records for the truth of their contents.[10]

         Therefore, under Rule 201, I recommend the Court take judicial notice of the fact that Items 1, 3, 5-6, 9-11, and 13-14 were filed and of their contents in their entirety. But I recommend judicial notice stop short of accepting the contents of these Items for the truth asserted. I recommend the Court decline to take judicial notice of Items 2, 4, 7, and 12. The filings' legal import, e.g., whether a verification is effective or whether Indemnity has taken any remedial measures to correct or withdraw assertions in the liquidation proceeding, is neither generally known nor capable of being readily determined.

         Item 8 is a finding of fact made by a Vice Chancellor in a memorandum opinion after numerous evidentiary hearings. Delaware Rule of Evidence 202(a) compels this Court to take judicial notice of the case law of this State. I recommend the Court take judicial notice of the memorandum opinion in its entirety.[11]

         B. Items 15-17 and 29: Indemnity filings with the Delaware Department of Insurance.

         Cohen asks the Court to take judicial notice of certain statements within certain documents regarding Indemnity that were publicly filed with the Delaware Department of Insurance. Cohen also asks the Court to take judicial notice of the fact that some of the documents were not withdrawn or amended. Indemnity argues that the Court may take judicial notice of the existence and filing of these documents, but not to establish the truth of the statements therein.

         Indemnity is correct. "Applying Rule 201, Delaware courts have taken judicial notice of publicly available documents that are 'required by law to be filed, and actually are filed, with federal or state officials.'"[12] But courts cannot take judicial notice of those documents to establish the truth of their contents where there is no ready means of assessing accuracy.[13] Here, the accuracy of statements and data in Indemnity's Department of Insurance filings is not generally known or capable of being readily determined. I recommend the Court take judicial notice of the existence and content of Items 15-17 and 29 in their entirety, but not for the truth of the matter asserted. I also recommend the Court decline to take judicial notice as to whether any item or statement in those Items was withdrawn or amended, as such status is neither generally known nor capable of being readily determined.

         C. Items 18, 19, 28, 31, 32, 33, and 34: Documents related to Cohen's criminal trial and sentencing.

         Cohen asks the Court to take judicial notice of certain statements drawn from sources related to his criminal trial and sentencing. Cohen asserts Item 18 is two lines from the trial transcript; Item 19 is a few lines from the factual stipulation in his plea agreement; Items 28, 31, 32 and 34 are excerpts from exhibits in the criminal trial; and Item 33 is a few lines from a declaration filed in the criminal case.

         As with a civil case, the Court may take judicial notice of the existence and docket of a party's criminal case.[14] Indemnity appropriately concedes that the Court may take judicial notice of Items 19 and 33, but objects to limited admission of the lines Cohen selected, and to judicial notice of those lines for the truth of the matter asserted. As with the civil filings addressed above, I recommend the Court take judicial notice of the existence and contents of Items 19 and 33 in their entirety, but not for the truth of the matter asserted.

         Indemnity appears to challenge Cohen's assertion that Items 31, 32, and 34 were publicly filed as exhibits in his criminal case. Indemnity concludes these Items are not generally known or capable of verification. Indemnity describes Item 28 as "internal" to Indemnity and does not explicitly address its status as an exhibit in the criminal case. These Items, appended as Cohen's Exhibits N, Q, R, and T, contain no exhibit stamp, docket header, or other indication that they were included in the public record of Cohen's criminal trial. Finally, Indemnity objects that Item 18, the transcript statement, is "undesignated" and is not an adjudicative fact for judicial notice. While Cohen cites a federal docket number for the transcript, the page he supplied at Exhibit D contains no filing header to allow me to conclude that the supplied page is in fact in the public record.

         I cannot conclude that the existence or content of Items 18, 28, 31, 32, and 34 are generally known or capable of easy verification based solely on Cohen's disputed representation that they were exhibits in or transcribed from his criminal case. I therefore recommend the Court decline to take judicial notice of these items, without prejudice to Cohen's ability to offer these Items as substantive evidence or impeachment material subject to the rules of evidence.

         D. Items 20 - 27 and 30: Actuarial Reports

         Cohen asks the Court to take judicial notice of portions of actuarial reports for Indemnity from 2009 through 2013. For Items 20-27, Cohen provides no indication that these reports were publicly filed anywhere. For Item 30, Cohen asserts the report "utilizes the audited financial information submitted" to the Delaware Department of Insurance. Indemnity objects on the grounds that the reports are neither generally known nor capable of easy verification. I agree and recommend the Court decline to take judicial notice under Rule 201. The fact that Item 30 "utilized" information that may have been publicly filed with the Department of Insurance does not make it a public filing subject to judicial notice under Rule 201. Cohen may introduce and rely on these reports as substantive or impeachment material pursuant to the Rules of Evidence.

         E. Item 35: Excerpt from a Treatise

         Cohen asks this Court to take judicial notice of a page from Wolfe & Pittenger's treatise, Corporate and Commercial Practice in the Delaware Court of Chancery. The treatise does not contain any adjudicative facts for judicial notice under Rule 201. It is not the type of case law or statute addressed by Rule 202. I recommend the Court decline to take ...


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