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 action as a 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). Plaintiff
appears pro se and has been granted leave to proceed
in forma pauperis. (D.I. 6). The Court dismissed the
original complaint and gave Plaintiff leave to amend. (D.I.
10, 11). An Amended Complaint was filed on May 29, 2018.
(D.I. 13). The Court reviews and screens the Amended
Complaint pursuant to 28 U.S.C. § 1915(e)(2)(B) and
alleges violations of the United States Constitution pursuant
to 42 U.S.C. § 1983, and he raises state law claims. The
Amended Complaint states jurisdiction is proper pursuant to
28 U.S.C. § 1332 (diversity of citizenship) and 28
U.S.C. § 1343 (civil rights). The original complaint named
Delaware's Insurance Commissioner as the sole defendant.
The Amended Complaint names two different defendants, Jeffrey
Miceli and John Tinsley. Count I alleges violations of
Plaintiff's right to procedural due process (D.I. 13 at
¶¶ 58-63); Count II alleges conspiracy
(id. at¶¶ 64-65); Count III alleges unjust
enrichment (id. at ¶¶ 66-67); and Count IV
alleges negligence/gross negligence (id. at
is the founder of Indemnity Insurance Corporation, RRG
("IIC"). (D.I. 13 at¶ 3). He owns 39.6 percent
of IIC personally, and the remaining interest is owned
through Plaintiffs 100 percent ownership interest of RB
Entertainment Ventures, LLC ("RBE") which owned 99
percent of IIC. (D.I. 13 at ¶ 15 and n.2). IIC is a risk
retention group 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 Plaintiff. Id.
is described as a private practice attorney who is
"special counsel to and supervising counsel for the
Delaware Insurance Commissioner." (D.I. 13 at ¶ 4).
He is also described as "a representative of the IIC
Receivership who maintains considerable authority on behalf
of the State of Delaware," who "operates as the
Attorney-in-fact and Attorney-at-law on behalf of IIC and the
is described as the "owner and President of several
private entities that provide regulatory services to various
state insurance departments." He and his firms are
appointed receivers of IIC. "He maintains considerable
authority on behalf of the State of Delaware," and he
has been labeled the "Shadow Commissioner" of
Delaware. (Id. at ¶ 5). The Court notes that
the Delaware Insurance Commissioner describes Tinsley as
Special Deputy - Examinations for the Delaware Department of
Insurance. See https://Captive.delaware.gov/ (last
visited March 18, 2019). It is not clear how current the
website is, as it refers to the former Insurance
uncovering evidence that [Plaintiff] had committed fraud in
his capacity as [IIC's] CEO and that [IIC] might be
insolvent, the Delaware Insurance Commissioner  petitioned
the Court of Chancery for a seizure order." Cohen v.
State ex. rel Stewart, 89 A.3d 65, 68 (Del. 2014). On
May 30, 2013, the Court of Chancery entered a confidential
seizure and injunction order that vested the Commissioner
with title to all IIC property. Cohen v. Stewart,
2014 WL 2574550, at *1 (D. Md. June 5, 2014). On November 6,
2013, the Commissioner filed a petition for the entry of a
rehabilitation and injunction order with the 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 the
Commissioner as the receiver. Id.
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.
Plaintiff had also filed a motion for emergency relief in the
Court of Chancery on December 31, 2013. See C.A. No.
8601 at BL-549. On April 9, 2014, the Delaware Supreme
Court affirmed the Court of Chancery's rulings, holding
that Plaintiff was given notice of the allegations against
him and a fair opportunity to present his side of the
dispute, and concluded there were no violations of his right
to due process. Cohen v. State ex. rel Stewart, 89
A.3d at 68-69.
meantime, on July 26, 2013 and January 16, 2014, verified
petitions for liquidation were filed in C.A. No. 8601.
See In the Matter of the Rehabilitation of Indemnity Ins.
Corp., RRG, 2014 WL 1154057, at *3, *8 (Del. Ch. Mar.
21, 2014). On April 10, 2014, the day after the Delaware
Supreme Court ruled on the Plaintiff's due process
claims, the Court of Chancery entered the liquidation order.
Cohen v. Stewart, 2014 WL 2574550, at *1. Plaintiff
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).
Amended Complaint alleges that Defendants, acting under color
of state law, orchestrated the liquidation of IIC. The IIC
Delaware receivership action is currently pending in the
Court of Chancery of the State of Delaware, In the Matter
of the 8601. The miscellaneous matter was dismissed on
April 5, 2017. Cohen v. Tinsley, 2017 WL 1333370
(E.D. Pa. Apr. 5, 2017). Liquidation of Indemnity
Insurance Corporation, RRG, C.A. No. 8601. Plaintiff is
not a party to C.A. No. 8601, although he has sought to
intervene in the matter. (D.I. 13 at¶ 15). The motion to
intervene was recently denied. In the Matter of the
Liquidation of Indemnity Ins. Corp., RRG, 2018 WL
6431747 (Del. Ch. Dec. 6, 2018).
alleges Defendants, acting under color of law, violated his
right to a full and fair hearing. (D.I. 13 at IV.C). On
August 13, 2013, RB Entertainment Ventures, or RBE, moved to
intervene in C.A. No. 8601 and stated that IIC was not
insolvent. (Id. at ¶ 16). One week later, the
Court of Chancery held a hearing on the motion to intervene.
(Id. at ¶ 17). During the hearing, the Court of
Chancery stated that a future hearing would litigate the
solvency of IIC. (Id.). The Court of Chancery denied
the motion to intervene and "confirmed that RBE did
'not contest the substance of particularized and verified
allegations.'" (Id. at ¶ 18).
Plaintiff alleges the Court's ruling left him with no
ability to conduct discovery or assert evidence to challenge
the averments of the defendants. (Id.). He argues
Defendants convinced the Court of Chancery that evidentiary
hearings were not necessary, that Miceli argued to convince
the Court of Chancery to block all discovery from Plaintiff,
and Defendants' arguments caused the Court of Chancery to
rule that he would not have an opportunity to present
argument or evidence in C.A. No. 8601. (Id.
alleges that when the Court of Chancery ruled that IIC was
insolvent and granted the petition for liquidation, the Court
evaporated his property interests without permitting him to
challenge the averments related to the financial condition of
IIC or his other companies. (Id. at ¶ 22).
Plaintiff filed claims against the receivership as a creditor
and main stakeholder. (Id. at ¶ 23). He alleges
that unnamed counsel for the Receiver asserted on October 18,
2017, that Plaintiff lacked standing to challenge the
Receiver's assertions and had no rights to assert against
the estate. (Id.).
Amended Complaint alleges that Defendants, acting under color
of state law, orchestrated the liquidation of IIC for
financial gain. (Id. at ¶ IV.A., ¶ 8).
Plaintiff alleges Defendants have paid themselves almost $10
million in fees from the cash reserves of his companies,
including IIC. (Id. at ¶ 8). The Amended
Complaint alleges Tinsley submitted testimony in C.A. No.
8601 to the Court of Chancery that IIC was operating in a
"Hazardous Financial Condition," and "Miceli
alleged the same averments through testimony."
(Id. at ¶¶ 9, 11). Plaintiff alleges that
as a result, the Court of Chancery seized and liquidated the
assets of most of Plaintiff's companies including IIC and
IDG. (Id. at ¶ 12.) The Amended Complaint
alleges that Defendants' averments were false and
intentionally misrepresented the facts known to them.
(Id. at IV.B., ¶ 13).
alleges that Defendants orchestrated a plan to fictitiously
overvalue IIC's claim reserves to thwart an opportunity
to successfully save the company. (Id. at IV.D.).
Plaintiff alleges that prior to the receivership, IIC's
claims were managed successfully, and when IIC was taken over
by Defendants for the period ending June 30, 2013, "its
actuary reported that $20.3 million was a 'reasonable
estimate for the Company's unpaid policyholder claim
obligations.'" (Id. at ¶ 26). He
alleges that following the $20.3 million opinion, adversarial
counsel stated that "IIC was properly reserved at $20
million." (Id. at ¶ 27). Plaintiff alleges
that prior to his "banishment," he had entertained
an offer dated June 20, 2013 (D.I. 13 at 33) to sell 49
percent of IIC and IDG for $25 million, but after his
banishment, Defendants controlled the negotiations and
successfully enjoined Plaintiff from communication with the
suitor. (Id. at ¶ 28). Plaintiff alleges
Defendants knew that the deal would resolve all regulatory
concerns and terminate lucrative income streams to them, so
they manufactured evidence to create a concern for the suitor
regarding 110 claim reserves. (Id. at ¶¶
29-35). Plaintiff alleges Defendants used the evidence to
adjust the figures and to create a new actuarial analysis
which they submitted to the Court of Chancery as a reason
that IIC was insolvent. (Id. at ¶¶ 35-36).
Plaintiff alleges that the new actuarial report resulted in
the suitor's withdrawal of its acquisition offer.
(Id. at ¶ 37).
alleges Defendants orchestrated an unlawful reason to support
the liquidation of IIC and to avoid any evidentiary hearings
into their assertions. (Id. at ¶ IV.E.).
Plaintiff alleges, "Defendants coerced [IIC's two]
remaining board members to consent to liquidation because the
[suitor] deal was quashed, [and used] the authorization [to]
submit to the [Court of Chancery] that liquidation was proper
and statutorily called for. (Id. at ¶ 38). He
alleges that Miceli testified in the Court of Chancery that
"consent is to be relied upon," and indicated to
the Court that a hearing was not necessary, based upon the
consent. (Id. at ¶¶ 42-43).
alleges that post-deprivation relief is unavailable and
inadequate. (Id. at IV.F.). Plaintiff filed appeals
in the Delaware Supreme Court, and it affirmed the Court of
Chancery's finding and rulings. (Id. at ¶
45). Plaintiff alleges that the "Court did not take up
the issue regarding the violation of [his] due process rights
regarding the submission of false information by defendants
[and] did [not] make any findings regarding his due process
rights to a full and fair hearing or the deprivation of
certain property interests caused by the conduct of the
defendants." (Id. at ¶ 46). He alleges
that another appeal he filed was dismissed following his
failure to respond to a show cause notice that ...