Cohen v. Gruber

          MEMORANDUM OPINION

          ELLEN L. HOLLANDER UNITED STATES DISTRICT JUDGE

         Jeffrey Cohen, the self represented plaintiff, filed a “Complaint For Equitable Relief” against Harry Mason Gruber, in his capacity as Assistant United States Attorney, and Cam Costello, in his capacity as Special Agent, United States Department of Treasury. ECF 1. Cohen, a federal prisoner, appended to the suit his own Declaration (ECF 1-1) and several other exhibits. He subsequently filed a “First Amended Complaint For Equitable Relief, ” without the exhibits, naming only Gruber as a defendant. ECF 21.^[1]

         Suit is predicated on the Administrative Procedure Act, 5 U.S.C. §§ 7-01 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201. It is rooted in the criminal prosecution of Cohen in this court in the case of United States v. Cohen, GLR-14-0310.^[2] Cohen “seeks injunctive relief to restrict public officers to their lawful and ethical obligations.” ECF 21 at 1, ¶ 1.

         The suit is best understood in conjunction with the history of the underlying insurance fraud case, United States v. Cohen, GLR-14-0310. Cohen, who represented himself during some of the criminal proceedings, proceeded to trial in June 2014. During the trial, he decided to plead guilty. On June 5, 2015, Cohen entered pleas of guilty to charges of wire fraud, aggravated identity theft, making false statements to insurance regulators, and obstruction of justice. See ECF 389; ECF 385 (Plea Agreement). Cohen subsequently sought to withdraw his guilty plea (ECF 408), which was denied. ECF 523; ECF 526.

         On December 14, 2015, Judge Quarles sentenced Cohen to a total term of imprisonment of 444 months. ECF 594. The convictions and sentence were affirmed on appeal. See United States v. Cohen, 888 F.3d 667 (4th Cir. 2018). Since then, Cohen has feverishly sought to challenge his criminal convictions and sentence. Indeed, this suit constitutes Cohen's tenth civil attack on his criminal prosecution. See Cohen v. Rosenstein, et al., Civil Action No. 14-03726 (D. Md.); Cohen v. Rosenstein, et al., Civil Action No. 14-3996 (D. Md.); Cohen v. Rosenstein, et al., Civil Action No. 15-263 (D. Md.); Cohen v. United States, Civil Action No. 15-1006 (D. Md.); Cohen v. Hurson, et al., Civil Action No. 15-986 (D. Md.); Cohen v. Rosenstein, et al., Civil Action No. 16-1346 (D. Md.); Cohen v. Quarles, Civil Action No. 16-2943 (D. Md.); Cohen v. Gruber, et al., Civil Action No. 17-216 (D. Md.); Cohen v. Gruber, et al., Civil Action No. 16-172 (N.D. W.Va.); and In re: Jeffrey Brian Cohen, GLR-14-0310 (D. Md.).^[3]

         In this case, plaintiff alleges that Gruber misrepresented to the court that Cohen's insurance company “fraudulently denied coverage to insureds.” ECF 21, ¶ 26; see also GLR-14-0310, ECF 627. According to Cohen, the alleged misrepresentations violated the Department of Justice's ethics regulations. ECF 21, ¶¶ 6-12.

         Gruber and Costello moved to dismiss the original Complaint. ECF 17.^[4] After Cohen amended his suit, Gruber filed a motion to dismiss the Amended Complaint (ECF 23), supported by a memorandum (ECF 23-1) (collectively, the “Motion”). He argues, inter alia, that “Cohen cannot use a civil action to collaterally attack his criminal conviction or the rulings made in his criminal case, and neither the Declaratory Judgement Act nor the [Administrative Procedure Act] provide for a cause of action under these facts.” ECF 23-1 at 2.^[5]

         Cohen opposes the Motion. ECF 27. The opposition includes a renewed request for appointment of counsel. Gruber replied. ECF 29.

         Plaintiff has also filed a motion for preliminary injunction (ECF 22); a supplement to his Amended Complaint (ECF 26); a motion to amend his amended complaint (ECF 32); and a motion for sanctions. ECF 33. In an Order of April 25, 2019 (ECF 35), the court denied ECF 22, ECF 32, and ECF 33.

         No hearing is necessary to resolve the Motion. Local Rule 105.6. For the reasons that follow, the motion to dismiss filed by Gruber and Costello (ECF 17) shall be denied as moot; I shall deny Cohen's First Supplemental Complaint for Equitable Relief (ECF 26), without prejudice; I shall deny Cohen's renewed request for counsel (ECF 27); and I shall grant Gruber's Motion (ECF 23), thereby dismissing the Amended Complaint.

         I. Factual and Procedural Background^[6]

         Cohen was president and chairman of an entity named Indemnity Insurance Corporation RRG, and had controlled its predecessor, Indemnity Insurance Corporation of DC, RRG (collectively “IIC”). IIC marketed and sold general liability and other types of insurance to individuals and businesses in the entertainment industry and was required to submit quarterly and yearly financial statements to insurance regulators. As noted by the appellate court, insurance regulators are responsible for protecting policyholders and the public through their oversight of the insurance industry and by making certain that insurers such as IIC are able to perform their coverage obligations.

         For more than five years, Cohen engaged in a scheme to defraud IIC policyholders and the public by misrepresenting the financial status of IIC, creating false and fraudulent financial documents, including bank statements, letters of credit, reinsurance documents, financial statements, and account balances, and by sending misleading and fraudulent representations to auditing firms and others seeking and securing favorable opinions on the financial standing of IIC. Cohen then touted IIC's false financial standing and inflated ratings to current and potential policyholders and, as a result of the scheme, received more than $100, 000, 000 in insurance premiums paid to IIC.

         On June 24, 2014, Cohen was indicted by a federal grand jury in Baltimore. During the investigation, federal agents discovered that Cohen had purchased such items as a long-range tactical rifle, ammunition, and a night vision device; had researched homemade bombs; purchased ammonium nitrate; and made audio recordings about plans to attack public officials. As a result, Cohen has been in federal custody since his arrest in June 2014.

         In a third and final superseding indictment, Cohen was charged with wire transmission of false and misleading communications in furtherance of his fraud scheme and of fraudulently using the identities of other persons to lend credibility to false financial documents. As noted by the Fourth Circuit, “[t]o conceal the actual financial condition of IIC, Cohen presented fraudulent financial statements to insurance regulators in both Delaware and the District of Columbia.” Cohen, 888 F.3d at 672. And, “[a]s his fraud scheme began to unravel, Cohen threatened witnesses in an endeavor to obstruct their communications of his wrongdoing to the authorities.” Id. The indictment “exposed Cohen to the forfeiture of more than $100, 000, 000.” Id.

         In this case, Cohen seeks injunctive relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, and the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (“APA”). He alleges that Gruber, the prosecutor, made misrepresentations in Cohen's criminal case about the losses caused by Cohen's crimes. Cohen attached a “Declaration” to his original Complaint, presenting his version of the facts of the criminal case. ECF 1-6 (Decl. of Cohen).

         Essentially, relying on Cohen's version of facts as set forth in his Declaration, Cohen asks this court to conclude that Cohen is guilty of a limited number of crimes to which he pleaded guilty (and which he believed would carry a potential prison term of less than six months), but that his criminal culpability does not extend to the large amount of losses claimed by the government and as set forth in his Presentence Report. And, he maintains that Gruber deliberately misrepresented the losses, which led to his disproportionately long sentence.

         As indicated, Gruber and Costello moved to dismiss the original Complaint. ECF 17. Cohen did not oppose the motion. Instead, he filed a Motion for Preliminary Injunction (ECF 22) and an Amended Complaint, in which he did not name Costello. ECF 21; ECF 21-1. Thereafter, Gruber moved to dismiss the Amended Complaint (ECF 23) and, on February 19, 2019, Cohen filed an opposition. ECF 27.

         On March 11, 2019, Cohen moved to supplement his Amended Complaint to add as defendants Maryland United States Attorney Robert K. Hur and Assistant United States Attorney Joyce K. McDonald. See ECF 26; ECF 31.^[7] And, on March 18, 2019, he moved for leave to file a second amended complaint. ECF 32.

         In the supplemental pleading, Cohen alleged that Hur and McDonald, together with Gruber, violated the APA and the Declaratory Judgment Act through false court submissions filed in connection with Cohen's motion to vacate his convictions and sentences. ECF 26. The motion to vacate, filed in Cohen v. United States, Civil Action GLR-18-2661 (D. Md.), is pending before another judge of this Court. See Id. (ECF 685, ECF 711, ECF 738). In this case, additional statements by the named prosecutors in written responses to Cohen's motion to vacate, and alleged to be untrue, were raised in Cohen's “First Supplemental Complaint for Equitable Relief.” ECF 31.

         II. Non-Dispositive Motions

         A. Amendment of Pleadings Pursuant to Federal Rule of Civil Procedure 15(a), “[a] party may amend its pleading once as a matter of course within 21 days after serving it, or if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed.R.Civ.P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). But, Rule 15 provides that “[t]he court should freely give leave when justice so requires.” Id.

         Where the proposed amendment to the complaint appears to be a futility, the court has discretion to deny leave to amend. Futility is apparent if the proposed amended complaint fails to state a claim under the applicable rules and accompanying standards. “[A] district court may deny leave if amending the complaint would be futile-that is, if the proposed amended complaint fails to satisfy the requirements of the federal rules.” Katyle v. Penn Nat. Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (citing United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)).

         Although leave to amend should be freely given, leave to amend may also be denied where the proposed amendment would be prejudicial to the opposing party or the moving party has acted in bad faith. See Equal Rights Ctr. v. Niles Bolton Assoc., 602 F.3d 597, 603 (4th Cir. 2010). A proposed amendment is prejudicial to the opposing party if it is belated and would change the nature of the litigation. Id. at 604; see also Deasy v. Hill, 833 F.2d 38, 42 (4th Cir. 1987). Furthermore, the court may not address new claims raised in opposition to a dispositive motion, because it is not an appropriate vehicle for amending the complaint. See Whitten v. Apria Healthcare Grp., Inc., No. PWG-14-3193, 2015 WL 2227928, at *7 (D. Md. May 11, 2015).

         “[A]n amended pleading ordinarily supersedes the original and renders it of no legal effect.” Young v. City of Mount Ranier, 238 F.3d 567, 572 (4th Cir. 2001) (citing 6 Charles Alan Wright, Arthur Miller & Mary Kay Kane, Federal Practice & Procedure § 1476 (2d ed. 1990)) (“A pleading that has been amended . . . supersedes the pleading it modifies . . .”). Cohen's Amended Complaint (ECF 21), which alleges prosecutorial overreach during sentencing, was not filed within the time-frame permitted under Rule 15(a). Defendants, however, appear to have waived any procedural irregularity regarding the amendment by filing a second motion to ...