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Cohen v. INS Consultants, Inc.

United States District Court, D. Maryland, Northern Division

February 25, 2015

JEFFREY B. COHEN, Plaintiff,
INS CONSULTANTS, INC., et al., Defendants.


WILLIAM D. QUARLES, Jr., District Judge.

Jeffery B. Cohen, pro se, sued INS Consultants and 21 others, for claims relating to a Delaware receivership. Pending are 20 motions, including five motions to dismiss the original complaint, a motion to strike the amended complaint, 12 motions to dismiss the amended complaint, a motion by 18 of the defendants for sanctions against Cohen, and Cohen's motion to stay civil proceedings. No hearing is necessary. Local Rule 105.6 (D. Md. 2011). For the following reasons, the motion to strike will be denied; the motions to dismiss the original complaint will be denied as moot; the motions to dismiss the amended complaint will be granted because the Court lacks subject matter jurisdiction; and Cohen's motion to stay will be denied as moot.

I. Background[1]

A. The Employment Agreement and the Cohen Entities

Indemnity Insurance Corporation, RRG ("IIC") is a risk retention group founded by Cohen and domiciled in Delaware. See Cohen at 68, 70. IIC "shares its offices with at least seventeen Cohen-affiliated entities, which are intertwined, have complicated financial relationships with each other, and share employees and equipment." See id. at 70. IDG Companies, LLC ("IDG") is an affiliated company owned by Cohen, which acted as IIC's "managing general agent."[2] See id. at 68, 70. Before April 2012, IDG and its employees performed the day-to-day operations of IIC. See id. at 70. In April 2012, IDG stopped performing operational services for IIC, and IDG employees were transferred to IIC. See id.

In January 2012, "Cohen executed an employment agreement with himself in which he named himself the President/Chief Executive Officer' of several of his entities and established the terms of his employment with" IIC and IDG. ECF No. 41-1 at 6; see ECF No. 1-2 ("Employment Agreement").[3] "In exchange for his services, Cohen... agreed to pay himself: an annual salary of one million, three hundred thousand dollars ($1, 300, 000.00) for his agency management services; plus an additional amount up to seven hundred thousand dollars ($700, 000.00) for his carrier management services, payable to Cohen upon his request; plus an annual bonus of up to 150% of his total salary, based on the level which the annual net underwriting income target is... [] reached or exceeded.'" ECF No. 41-1 at 6; Employment Agreement at ¶¶ 6.A-6.B.[4] The Employment Agreement was for a ten-year period, during which Cohen could only be terminated "for cause."[5] ECF No. 44 at 13.

B. The DOI Investigation and Receivership

In July 2012, the Delaware Department of Insurance ("DOI") "began a routine regulatory examination" of IIC. See Cohen at 70. After the DOI uncovered concerns about IIC's solvency, DOI Commissioner Karen Stewart applied to the Delaware Court of Chancery for a Seizure Order. See Cohen at 71-74. On May 30, 2013, the Delaware Court of Chancery[6] issued a Confidential Seizure and Injunction Order vesting Commissioner Stewart with the title to all IIC property. See id. at 72. The Seizure Order was enrolled in Maryland. See ECF No. 88 at 6.

On September 10, 2013, the Delaware Court of Chancery amended the Seizure Order after the IIC presented evidence that "Cohen interfered with the Commissioner's investigation and ability to run [IIC] in a variety of ways." See Cohen at 75. On September 13, 2013, three IIC employees became aware of unauthorized activity in their deferred-compensation Fidelity Accounts. See id. at 76-79. Cohen was the only person with access to the accounts, which were held in IDG's name. See id. The stock in the accounts had been sold and converted to cash, and the employees were concerned that Cohen was preparing to withdraw the funds. See id. The employees contacted the Insurance Department, and Commissioner Stewart froze the three accounts before they could be emptied, and the Delaware Court of Chancery ordered sanctions. See id.

In October 2013, Cohen filed suit in Maryland, [7] which violated the amended Seizure Order. See id. at 81-82. On November 1, 2013, the Delaware Court of Chancery ordered additional sanctions. See id.

On November 6, 2013, Commissioner Stewart filed a Petition for the Entry of a Rehabilitation and Injunction Order with consent of IIC's board. See Cohen at 84. On November 7, 2013, the Delaware Court of Chancery entered the Order, placing IIC into receivership and appointing the Commissioner as the receiver. See Cohen at 85-86. On April 10, 2014, after it became clear that attempting to rehabilitate IIC would be futile, the Delaware Court of Chancery issued a Liquidation Order. See ECF No. 74 at 12. "Under the Liquidation Order, the Receiver is required to terminate IIC's insurance business and marshal IIC's assets for liquidation and distribution." See id.

"The Seizure Order, the Rehabilitation Order and the Liquidation Order... each authorized the Commissioner to appoint personnel to examine, oversee and manage the day to day operations" of IIC. ECF No. 41-1 at 6. The Commissioner appointed INS Consultants, Inc. and INS Regulatory Insurance Services, Inc.[8] See id.

Cohen appealed the Court of Chancery's rulings to the Supreme Court of Delaware. See id. Cohen also asserted that the rehabilitation proceedings had deprived him of due process of law. See Cohen at 68-70; 86-87. The Supreme Court of Delaware rejected Cohen's arguments and affirmed the Court of Chancery's rulings. See id. at 70.

C. Procedural History

1. The Original Suits

Between March and April, 2014, Cohen filed three suits in the U.S. District Court for the District of Maryland relating to the receivership. On March 4, 2014, Cohen sued DOI Commissioner Stewart, DOI Deputy Commissioner Eugene Reed, Jr., Deputy Attorney General ("DAG") W. Harding Drane, Jr., and Deputy Attorney General Jessica Willey (collectively, "the DE State Defendants").[9] See Cohen v. Stewart, 14-cv-0611 (D. Md.). On March 13, 2014, Cohen initiated this action against 13 defendants.[10] ECF No. 1. On April 1, 2014, Cohen sued Diane Krause, the managing director of a company that did business with IIC for defamation.[11] See Cohen v. Krause, 14-cv-1004 (D. Md.).

Cohen faced motions to dismiss and/or for summary judgment in all three cases. On May 29, 2014, Cohen filed an amended complaint in this action. ECF No. 44. The amended complaint added Krause, the DE State Defendants, and five new defendants.[12] See id. On June 17, 2014, Cohen moved to voluntarily dismiss the Stewart and Krause actions. Both cases were closed.

2. The Amended Complaint

The amended complaint alleges nine causes of action. Cohen alleges that Commissioner Stewart, Deputy Commissioner Reed, the INS Defendants, and Koehler "willfully conspired, interfered, and violated" Cohen's employment agreement and two leases between Cohen and IIC. ECF No. 44 at 33 (Count I: Breach of Contract). Cohen alleges that Lodowski, Nerney, Wright, and Krause defamed Cohen's character. Id. (Count II: Defamation). Cohen alleges that Arrington, Teichman, Lodowski, Metcalf, and Koehler engaged in deceit and negligent misrepresentation by "knowingly conspire[ing] amongst themselves and intentionally act[ing] to harm [Cohen]." Id. at 34 (Count III). Cohen alleges that Vice Chancellor Laster, Teichman, Arrington, DAG Drane, DAG Willey, Commissioner Stewart, and INS Regulatory Insurance Services violated 42 U.S.C. § 1981, and that Teichman, Arrington, DAG Drane, and DAG Willey violated 42 U.S.C. §§ 1982-83. Id. at 34-35 (Counts IV-V).

Next, Cohen alleges that all of the Defendants violated 42 U.S.C. §§ 1985-86 (Civil Rights Act) and committed RICO violations under 18 U.S.C. § 1962. Id. (Counts VI-VII). Cohen alleges that Van Dorsey, Koehler, DAG Drane, DAG Willey, Commissioner Stewart, Deputy Commissioner Reed, Teichman, and Arrington committed "malicious abuse of process, negligent misrepresentation, and negligent misrepresentation by omission." Id. at 36 (Count VIII). Finally, Cohen alleges that Commissioner Stewart ...

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