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Cohen v. Tinsley

United States District Court, E.D. Pennsylvania

April 5, 2017

JEFFREY COHEN, Personally and as Sole Shareholder of RB ENTERTAINMENT VENTURES, LLC, Plaintiffs,
v.
JOHN TINSLEY and REGULATORY INSURANCE SERVICES, INC., Defendants.

          MEMORANDUM OPINION

          EDWARD G. SMITH, J.

         A pro se plaintiff, proceeding on behalf of himself and his limited liability company, has filed an application to proceed in forma pauperis and this purported independent action under Rule 60(d) of the Federal Rules of Civil Procedure. The plaintiffs seek to have the court vacate an order entered in the United States District Court for the District of Maryland in which the District of Maryland dismissed their action for improper venue. Although the court will grant the individual plaintiff leave to proceed in forma pauperis, the court will dismiss this purported independent action because he (1) had the opportunity to present his claims in the District of Maryland or the Fourth Circuit Court of Appeals but apparently chose not to do so, and (2) failed to demonstrate that he is entitled to relief to prevent a grave miscarriage of justice if the District of Maryland's order remains in effect.

         I. PROCEDURAL BACKGROUND

         The pro se plaintiff, Jeffrey Cohen (“Cohen”), asserts that he is the founder of Indemnity Insurance Corporation RRG (“IIC”), which provides “coverage to a niche segment of the entertainment industry, mainly providing coverage to nightclubs, bars, restaurants, bands, and special events.” Motion for Relief of J. Pursuant to FRCP Rule 60(d) (“Mot.”) at 2-1.[1] Cohen is also the sole owner and shareholder of RB Entertainment Ventures, LLC (“RB”), the 99% owner of IIC. Id. In 2012, the Department of Insurance of the State of Delaware (the “Department”) used the named defendants, John Tinsley (“Tinsley”) and Regulatory Insurance Services, Inc. (“RIS”), to conduct a “target[ed] financial examination of a particular transaction with IIC.” Id. at 2-2. Tinsley is the president and principal of RIS. Id.

         As part of their investigation, the defendants sent agents to IIC offices in Maryland for several weeks. Id. The plaintiffs contend that the Department should not have used the defendants to conduct the investigation because Delaware law prohibits the Department from using for-profit contractors. Id. Cohen attempted to bring this issue to light, but apparently did so to no avail. Id. at 2-2, 2-3.

         Through an affidavit prepared by the defendants, they informed the Department that IIC was “financially impaired.” Id. at 2-3. This resulted in the Department seizing control of IIC pursuant to proceedings in the Delaware Court of Chancery. Id. The defendants were able to remove Cohen from control of IIC, and the Delaware court declined to allow the plaintiffs to participate in delinquency proceedings related to IIC. Id. at 2-4. Eventually, the Department filed a petition for liquidation, which the Delaware court granted. Id. at 2-3 & n.1. IIC was liquidated in April 2014. Id. at 2-5. The plaintiffs claim that as part of the liquidation, the defendants were required to file semiannual reports with the court. Id. The plaintiffs assert that the defendants have not filed any such reports. Id.

         Apparently, while the Department was involved in the delinquency and eventual liquidation of IIC, counsel for the Delaware Insurance Commissioner referred Cohen to the United States Attorney's Office in Baltimore. Id. at 2-6. In June 2014, federal agents arrested Cohen pursuant to an indictment charging him with fraudulent conduct related to IIC. Id. In December 2015, Cohen pleaded guilty to several charges and he is currently serving a sentence of 444 months incarceration. Id. Cohen has appealed from his judgment of sentence in the criminal matter to the Fourth Circuit Court of Appeals. Id.

         Cohen filed a civil action on behalf of the plaintiffs in the United States District Court for the District of Maryland, which was docketed at Civil Action No. 16-3169 and assigned to the Honorable William M. Nickerson.[2] Id. at 1. In addition to having filed a complaint, the plaintiffs filed a motion for a preliminary injunction and sought leave to proceed in forma pauperis. See Cohen, et al. v. Tinsley, et al., No. 16-cv-3169, Doc. Nos. 1-4. On October 5, 2016, less than a month after the plaintiffs commenced the action, Judge Nickerson entered a memorandum and order in which the court granted the application to proceed in forma pauperis and dismissed the action without prejudice. See Memorandum (“Mem.”), Cohen, et al. v. Tinsley, et al., No. 16-cv-3169, Doc. No. 5; Order, Cohen, et al. v. Tinsley, et al., No. 16-cv-3169, Doc. No. 6.

         In dismissing the action, Judge Nickerson concluded that venue was improper under 28 U.S.C. § 1391(b) because the events described in the complaint occurred in Delaware and the named defendants resided in Pennsylvania. See Mem. at 2-3, Cohen v. Tinsley, et al., No. 16-cv-3169, Doc. No. 5. Judge Nickerson also concluded that due to the “considerable uncertainty as to whether the appropriate venue is a Delaware state court or a different federal district court” dismissal rather than transfer under 28 U.S.C. § 1406(a) was warranted. Id. at 3.

         On October 31, 2016, this court's clerk of court docketed this purported independent action seeking relief under Rule 60(d) of the Federal Rules of Civil Procedure.[3] Doc. No. 1. Because the plaintiffs failed to pay the filing and administrative fees or file an application to proceed in forma pauperis, the court entered an order on December 22, 2016, in which the court required the plaintiffs to either pay the filing and administrative fees or submit a completed application to proceed in forma pauperis within 30 days of the date of the order. Doc. No. 2. Cohen filed an application to proceed in forma pauperis with an account statement that the clerk of court docketed on January 23, 2017. Doc. No. 3. Unfortunately, the plaintiff did not include the required certification by a prison official and did not get a certified copy of his prison account statement. As such, the court entered an order on February 2, 2017, which required the plaintiffs to either pay the filing fee and administrative fee or file a completed in forma pauperis application that included the necessary certification and certified prison account statement within 30 days of the date of the order. Doc. No. 4. In response to the court's order, Cohen filed another application to proceed in forma pauperis (the “IFP Application”) that the clerk of court docketed on March 6, 2017.

         II. DISCUSSION

         A. The IFP Application

         Regarding applications to proceed in forma pauperis, the court notes that

any court of the United States may authorize the commencement, prosecution or defense of any suit, action or proceeding, civil or criminal, or appeal therein, without prepayment of fees or security therefor, by a person who submits an affidavit that includes a statement of all assets such prisoner possesses that the person is unable to pay such fees or give security therefor.

28 U.S.C. § 1915(a).[4] This statute

“is designed to ensure that indigent litigants have meaningful access to the federal courts.” Neitzke v. Williams,490 U.S. 319, 324, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). Specifically, Congress enacted the statute to ensure that administrative court costs and filing fees, both of which must be paid by everyone else who files a lawsuit, would not prevent indigent persons from pursuing meaningful litigation. Deutsch[ v. United States, 67 F.3d 1080, 1084 (3d Cir. 1995)]. Toward this end, § 1915(a) allows a litigant to commence a civil or criminal action in federal court in forma pauperis by ...

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