United States District Court, D. Delaware
Jeffrey Cohen, FCI Hazelton, Bruceton Mills, West Virginia.
Pro Se Plaintiff.
ANDREWS, U.S. DISTRICT JUDGE.
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). He appears pro se and has been
granted leave to proceed in forma pauperis. (D.I.
6). The Court now proceeds to review and screen the Complaint
pursuant to 28 U.S.C. § 1915(e)(2)(B) and §
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. (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
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 atp.3).
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.
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 ("IIC") 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). IDG Companies, LLC ("IDG") is an
affiliated company owned by Cohen. Id.
routine investigation by the Delaware Department of Insurance
uncovered concerns about IIC'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 IIC 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 ¶¶ 23-24,
32(a)-(e)). The Complaint alleges incorrect statements in
Tinsley's affidavit that: (1) a note receivable from IDC
to IIC was not collectible which resulted in an instant
evaporation of $21 million worth of assets on the IIC balance
sheet (id. at ¶ 32(a)); (2) a $5 million cash
account at Susquehanna bank was not an admitted asset of IIC
(id. at ¶ 32(b)); and (3) IIC's policy holder
claims were underreserved in an amount not then determined
but later identified as $14 million (id. at ¶
31 (e)). 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.
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 65, 80 (Del. 2014). 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.
November 6, 2013, Commissioner Stewart filed a petition for
the entry of a rehabilitation and injunction order with the
consent of HC'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. 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.
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. 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
meantime, on July 26, 2013 and January 16, 2014, verified
petitions for liquidation were filed in C.A. No. 8601 -CB.
(D.I. 1 at ¶ 31). Cohen alleges that the petitions
contained false evidence. (Id. at ¶¶
73-79). 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. Cohen v. Stewart, 2014 WL 2574550, at *1.
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 IICRRG 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).
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.
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). 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 ¶ 23). The Complaint
alleges that Cohen's sentence was based upon the false
testimony of Defendant's counsel. (D.I. 1 at ¶ 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).
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 IIC during his
tenure as a fiduciary of IIC and the validity of his
employment agreement. 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 IIC's
claims against Cohen and the motion failed to satisfy Court
of Chancery Rule 14(a). Id.
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
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.
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 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 ¶ 2). It contains four counts,
as follows: Count I, fraud on the court (id. at
¶¶ 84-89); Count II, negligence/gross negligence
(id. at ¶¶ 90-96); Count III, due process
violations pursuant to 42 U.S.C. § 1983 (id. at
¶¶ 97-100); and Count IV supervisor
liability/negligence under 42 U.S.C. § 1983
(id. at ¶¶ 101-07).
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 ¶ 1).
Cohen states he has attempted to litigate matters and sought
relief in multiple jurisdictions. (Id. at ¶
80). He alleges Defendant failed to disclose and produce
evidence in C.A. No. 8601-CB. (Id. at ¶ 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 ¶ 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. (Id. at ¶ 83).
Cohen filed this "action to secure a full and fair
opportunity for a meaningful adjudication of the
merits." (Id. at ¶ 82).
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
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
Cohen proceeds pro se, his pleading is liberally