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Kremen v. Cohen


June 28, 2007


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


Stephen Michael Cohen ("Cohen"), proceeding in propria persona, moves to intervene in this action pursuant to Fed.R.Civ.P. 24 as a defendant and to consolidate this action with an action originally filed in the Northern District of California in 1998. Plaintiff Gary Kremen ("Kremen") opposes the motion. Defendants have not filed an opposition nor a statement of non-opposition. Pursuant to Local Rule 7.1(d)(1), this matter is appropriate for decision without oral argument. For the reasons set forth below, the motion to intervene is denied and the motion to consolidate is denied as moot.


On June 28, 2005 Kremen commenced this diversity action alleging Defendants engaged in fraudulent transfers and fraudulent conduct when they received real and personal property transferred from Cohen. Defendant Jhuliana Cohen is the daughter of Cohen and defendant Rosa Montano Cohen is the former wife of Cohen. (Second Amended Complaint ("SAC"), ¶ 3). Plaintiff alleges complete diversity of citizenship as all Defendants are citizens of Mexico and he a citizen of California.

Plaintiff's claims relate to an April 2001 judgment entered in favor of Kremen and against Cohen in the amount of $65 million in the Northern District of California, for conversion of the domain name Judge Ware granted Plaintiff's motion for summary judgment and for preliminary injunction. Cohen was ordered to transfer the domain name back to Kremen. Judge Ware found that Cohen had forged documents transferring the domain name to himself. Among other things, the preliminary injunction also required Cohen to repatriate $25,000,000 that he had sent to offshore accounts and to sign waivers for the release of tax returns, bank account records, and FOIA waivers. (RJN, Ex. 1).

On February 12, 2001 Cohen was held in civil contempt for refusal to comply with the court's orders. The court found that Cohen failed to comply with four separate court orders. On March 2, 2001 Cohen was again held in civil contempt for violating orders of the court and a warrant issued for Cohen's arrest. Judge Ware found that Cohen willfully violated the court order by, among other things, failing to return $25 million to the United States, transferring over $1.1 million in bank funds to foreign accounts, and writing certified checks in the amount of $1 million. (RJN Exh. 4).

In March 2001 Cohen fled to Mexico. He was subsequently detained by the Mexican authorities and, on October 27, 2005, Cohen was deported to the United States by the Mexican authorities pursuant to the arrest warrant issued by Judge Ware. Cohen remained in custody for 14 months for violation of the court's contempt orders. During his incarceration, Cohen refused to provide evidence of his assets and stated that he did not know how to locate his personal documents and could not recollect what happed to his offshore accounts. At a represented hearing on June 19, 2006, Judge Ware found that Cohen's claim that he had no knowledge about certain financial transactions to be a deliberate misrepresentation made "in an effort to disguise his financial transactions and not to purge himself of his contempt." (RJN, Exh. 6 at pp. 21-22). Cohen was released from custody on December 5, 2006 when Plaintiff Kremen was unable to provide sufficient evidentiary support concerning four specific alleged improper transfers of funds. (Cohen Exh. B at p.7:4-13).

In the present action, Kremen alleges that Cohen transferred real and personal property to Defendants in an attempt to avoid paying on the $65 million judgment. Kremen alleges that Defendants made purchases on credit cards that were paid by Cohen and that Cohen transferred funds from offshore banks to Mexico where he used the funds to purchase interests in various businesses which were held in Defendants' names. (SAC ¶17). Plaintiff alleges that the funds were transferred with the intent to prevent him from collecting his judgment and learning about the existence of the funds.

On November 1, 2005 this court denied defendant Juliana and Rosa Cohen's motion to dismiss. Thereafter, default was entered by the Clerk of Court against these defendants on January 12, 2006. Plaintiff has not moved for entry of default judgment against these defendants.

Cohen now moves to intervene in this action pursuant to Fed.R.Civ.P. 24 and to consolidate this action with the action pending before Judge Ware in the Northern District of California. Plaintiff opposes both motions.


Cohen moves to intervene in this action both as a matter of right pursuant to Rule 24(a) and for permissive joinder pursuant to Rule 24(b). Whether intervention is sought as a "matter of right" or as "permissive," such relief may only be granted "upon timely application." Fed.R.Civ.P. 24(a), (b); Empire Blue Cross & Blue Shield v. Janet Greeson's A Place for Us, Inc., 62 F.3d 1217 (9th Cir. 1995). Timeliness is a threshold determination directed to the court's sound discretion. NAACP v. New York, 413 U.S. 345, 366 (1973).


In determining timeliness, the court considers the following three factors: (1) the stage of the proceedings at the time the applicant seeks to intervene; (2) prejudice to the existing parties from the applicant's delay in moving to intervene; and (3) any reason for and the length of delay in seeking to intervene. United States v. State of Washington, 86 F.3d 1499, 1502 (9th Cir. 1996).

Here, substantial activity has occurred in this case since the filing of the original complaint almost two years ago on June 28, 2005. Plaintiff has filed a second amended complaint, the court ruled on a motion to dismiss filed by Rosa and Jhuliana Cohen, defendant Jack Brownfield has been dismissed as a party, discovery is on-going, discovery motions have been ruled upon, and default has been entered as to defendants Rosa and Jhuliana Cohen. Plaintiff would also be prejudiced by continued delay, the need for additional discovery, the filing of additional motions, the need to modify litigation strategies, and the need to reopen matters previously adjudicated..*fn1 These factors weigh against a finding of timeliness.

With respect to the reasons for and the length of delay, Cohen represents that he "just learned about this action and immediately filed his motions." (Motion at p.9:21-22). The court concludes otherwise. Plaintiff has come forward with three of Cohen's e-mails dated September 26, 2005, September 28, 2005, and October 9, 2005 wherein Cohen discussed the complaint and motions in the present action. (Dillon Decl. ¶21; Exhs. 1-3). The first e-mail, sent to Chris Jester, attached a copy of the motion to dismiss filed by Rosa and Jhuliana Cohen. The second e-mail, sent to former defendant Brownfield, attached a copy of Plaintiff's First Amended Complaint. The third e-mail, sent to former defendant Brownfield, attached and transmitted an ex parte motion for an extension of time. Apparently, Cohen drafted, or at least reviewed, the ex parte motion prior to its filing on October 14, 2005. (Docket No. 28). As Cohen has been aware of and participated in this action behind the scenes since at least September 2005, Cohen's statement that he just learned about the present action and filed his motion "immediately" upon learning of the existence of this action is, on the present record, materially false and misleading.*fn2 The excessive delay in moving to intervene and the resulting prejudice to Plaintiff, standing alone, call for a denial of Cohen's application to intervene. Where, however, the excessive delay and prejudice considerations are combined with Cohen's material misrepresentation to the court on the timing issue, the case against Cohen's application to intervene is insurmountable. As Cohen fails to satisfy the threshold issue of timeliness, the court does not reach the merits of Rule 24(a) or (b) intervention.

In sum, the motion to intervene is denied. The motion to consolidate is also denied as moot.


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