Cook v. Baca , 512 F. App'x 810 ( 2013 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT March 7, 2013
Elisabeth A. Shumaker
Clerk of Court
DANIEL W. COOK, individually,
Plaintiff-Appellant,
v. No. 12-2023
(D.C. No. 1:10-CV-01173-JAP-KBM)
THE HONORABLE THEODORE C. (D. N.M.)
BACA, individually and in his official
capacity; WELLS FARGO BANK, N.A.;
WELLS FARGO & COMPANY; JAY D.
HERTZ, Esq.; MICHELLE K. OSTRYE,
Esq., both individually and as counsels
for Wells Fargo Bank, N.A. and Wells
Fargo Company; PENNY T. KNIPPS,
individually and in her capacity as a V.P.
of Wells Fargo Bank, N.A.; SUTIN,
THAYER AND BROWN P.C.; SCOTT
GARRETT, individually; SCOTT AND
PAMELA GARRETT TRUST DATED
JUNE 14, 1999; BID GROUP, INC.;
GARRETT CAPITAL, LLC; JULIE
VARGAS, Esq.; CATHERINE DAVIS,
Esq., both counsels for Scott Garrett, the
Garrett Trust, Garrett Capital, LLC, and
Bid Group, Inc.; HUNT & DAVIS, P.C.,
JOHN DOE and/or JANE DOE,
Defendants-Appellees.
ORDER AND JUDGMENT*
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
(continued)
Before GORSUCH, ANDERSON, and EBEL, Circuit Judges.
Daniel W. Cook, proceeding pro se, appeals from the district court’s orders in
this civil rights case that dismissed his first amended complaint for failure to state a
claim, denied his motion to re-open and for reconsideration, and denied his motion
for leave to amend. We affirm the dismissal of his complaint in part and remand with
instructions to modify a portion of the dismissal from a dismissal with prejudice to a
dismissal without prejudice for lack of subject-matter jurisdiction. We affirm the
remainder of the district court’s orders.
BACKGROUND
In Mr. Cook’s 117-page, pro se, verified first amended complaint (“FAC” or
“complaint”), he alleged numerous violations of his constitutional rights and of
various federal statutes. The FAC is a recent installment in what the bankruptcy
court for the District of New Mexico characterized as
the long, twisted litigation history of Mr. Cook with the various parties
that has proceeded in the New Mexico State District Court, the New
Mexico Court of Appeals, the New Mexico Supreme Court, the
Bankruptcy Court, the District Court, and the Tenth Circuit Court of
Appeals and has included, among other items, requests to enjoin the
state court from ruling, removals, remands, sanctions, an application for
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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a writ of mandamus, motions to reconsider virtually every order entered
by every judge, a motion in the Tenth Circuit for a rehearing en banc,
suits against judges and the adverse parties’ attorneys, and claims of
conspiracy, RICO violations and civil rights deprivations.
In re Cook, No. 7-04-17704-SA, 2012 WL 5408905, at *16 (Bankr. D. N.M Nov. 6,
2012).
In order to lay the groundwork for our ruling, we first provide here a brief
summary of the relevant portions of the FAC. As the parties are familiar with its
contents, we present only an abbreviated summary of its allegations.
1. Background (First Amended Complaint, ¶¶ 1-88)
In its order dismissing the FAC, the district court determined that it asserted
three main types of federal claims: (1) claims for racial discrimination (Counts I
through VI); (2) a claim for violations of Securities and Exchange Commission
(SEC) Rule 10b-5 (Count VII); and (3) claims seeking relief for alleged civil
violations of the Racketeer Influenced Corrupt Organizations Act (RICO) (Claims
X-XIII).1 On appeal, Mr. Cook has abandoned his racial discrimination claims,
RICO claims, and claims against state court judge Theodore C. Baca individually and
for damages. See Aplt. Opening Br. at 5. Accordingly, we find it unnecessary to
discuss in detail the factual underpinnings of these claims. But he also asserts that
some of his claims in Counts I through VI alleged a conspiracy to violate his civil
1
Claims VIII and IX included state-law claims that are not at issue in this
appeal.
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rights and an “alleged failure to prevent wrongs,” id. at 2, that were unrelated to
racial discrimination, see id. at 3.2
Stripped of scurrilous material and invective, the FAC may be summarized as
follows. It begins with a lengthy recitation of difficulties resulting from the alleged
failure to implement a 2001 settlement agreement involving (1) the Cooks,3 (2) their
company Hydroscope Group, Inc. (“Group”) and its subsidiaries; (3) a related
company known as Hydroscope Canada, Inc. (HCAN); (4) Scott Garrett and the
Garrett Trust, prospective investors in the Group; and (5) Wells Fargo.
The origins of the settlement agreement are unclear from Mr. Cook’s
complaint. They are, however, described in some detail as part of the Garrett Trust’s
complaint against Mr. Cook and others filed in New Mexico state court. The record
contains a copy of the Trust’s third amended state court complaint, which describes
its investment in the Group and its dissatisfaction with Mr. Cook’s alleged
misconduct in connection with that investment. R., Vol. 2 at 30-35. The complaint
explains that “[o]n March 30, 2001, at the request of [Mr.] Cook and the Hydroscope
Board of Directors, [the] Garretts and Hydroscope entered into a settlement
agreement which provided for the repurchase of [Mr.] Garrett’s stock.” Id. at 35. As
2
Mr. Cook misleadingly asserts that the district court “misapprehended, ignored
and or overlooked” these claims. Id. In fact, as will be discussed, the district court
addressed the claims on the merits in detail in its order denying his motion for
re-opening and reconsideration.
3
Yolanda Cook, Mr. Cook’s wife, who joined him in the settlement agreement
and his subsequent bankruptcy, is now deceased.
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part of the agreement, Mr. Garrett was to be granted a license for the exclusive use of
the Hydroscope technology in the state of California. Id.
But this technology was pledged to Wells Fargo, which could potentially have
affected Mr. Garrett’s exercise of his rights. Id. at 36. To help deal with this
problem, the parties entered into a Forbearance Agreement, which allegedly required
Wells Fargo to provide Mr. Garrett with a non-disturbance agreement pledging not to
interfere with Mr. Garrett’s exercise of IP rights. Once this was accomplished,
Mr. Garrett was to receive a sublicense of certain IP rights from HCAN. He and his
trust were to then release $50 million in investment funds to the Group.
This non-disturbance agreement was never executed, however, allegedly due
to Wells Fargo’s intransigence concerning the terms of the proposed agreement. As a
result, Wells Fargo
caused there to be no settlement with Garrett et al to be effectuated, it
caused the $50 million investment not to be completed, it caused the
Cooks to lose their home, it caused the Cooks to lose their office
complex, it caused HCAN to sell IP that was allegedly pledged and
facing foreclosure, and it caused the Cooks to file their Chapter 11
[bankruptcy] to seek time to resolve differences and disputes that the
Bank was contractually obligated to [resolve].
R., Vol. 1 at 172 (¶ 58). The FAC also asserts that due to Wells Fargo’s
failure to effectuate the settlement, HCAN could not afford to pay
“maintenance fees” on the IP and was therefore forced to sell the IP before its
rights expired “for lack of payment of maintenance fees to the different patent
offices and or intellectual property agencies worldwide.” Id. (¶ 59). Among
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the purchasers of HCAN’s IP were the Cooks and a business known as CBM
Group, Inc. (“CBM”).
On October 21, 2004, more than three years after the settlement agreement had
been executed, and with no non-disturbance agreement yet in place, the Cooks filed a
Chapter 11 bankruptcy petition. In December 2004, as debtors-in-possession, they
filed an adversary proceeding in bankruptcy court against Wells Fargo. In the
adversary proceeding, the Cooks asserted claims against Wells Fargo allegedly
transferred to them by the Group before their bankruptcy filing.
Wells Fargo objected to the bankruptcy court’s jurisdiction over the adversary
proceeding. The Cooks responded by protectively filing a complaint in New Mexico
state court containing similar claims to those asserted in the adversary proceeding.
Wells Fargo responded with a motion for summary judgment in state court, seeking
to foreclose its interest in some of the IP and to have the Cooks’ “individual and
corporate owned claims transferred to the Cooks individually pre-petition” dismissed.
Id. at 175 (¶ 73). By filing this summary judgment motion, Wells Fargo allegedly
violated the automatic stay in the Cooks’ Chapter 11 bankruptcy.
Wells Fargo also objected to having the Cooks remain debtors-in-possession in
the bankruptcy proceeding. In July 2006, on motion by Wells Fargo, the bankruptcy
court appointed Linda Bloom Chapter 11 trustee for the Cooks’ estate. In March
2008 the court converted the Chapter 11 case to a Chapter 7 case.
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By December 2006, Mr. Cook allegedly had reached an agreement with
Trustee Bloom that would have allowed the bankruptcy estate’s claims against Wells
Fargo and others to be litigated in the state court proceedings, led by Mr. Cook. But
the FAC asserts that Trustee Bloom “mysteriously and without prior notice” to
Mr. Cook’s counsel withdrew her consent to this arrangement on December 18, 2006.
Id. at 177 (¶ 86).
The FAC next describes three illegal fraudulent schemes allegedly perpetrated
against Mr. Cook by the defendants. To the extent these allegations concern his
abandoned RICO claims, they are irrelevant. It appears, however, that they may also
be intended to support his civil rights claims. Accordingly, we briefly describe them.
2. “Scheme One” (Complaint, ¶¶ 89 – 114)
In this first scheme, the defendants filed a “Stipulated Motion to Approve
Compromise of Controversy” (Motion to Approve) with the bankruptcy court.
Id. ¶ 96. As part of the compromise, Wells Fargo agreed to pay Trustee Bloom
$100,000 as a “bribe.” It was a curious sort of bribe, however, for the money
apparently was to be paid to the Cook bankruptcy estate rather than to Trustee Bloom
personally.
Trustee Bloom allegedly agreed to falsely affirm that the Cook bankruptcy
estate was the owner of the IP previously purchased by CBM, to confirm Wells
Fargo’s asserted lien interest in all of the IP, and to consent to lifting of the automatic
stay. With the stay lifted, Wells Fargo agreed to foreclose on all the IP and to give
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the IP to Scott Garrett. Trustee Bloom would then give Mr. Garrett control over the
Cooks’ shares in the Group. Mr. Garrett would elect himself an officer of the Group
and dismiss all of the claims of the Group and its subsidiaries against the defendants,
including himself. Trustee Bloom further agreed to dismiss all of the Cooks’
individually owned claims against Wells Fargo and Mr. Garrett. The net result would
be loss of the IP owned by CBM and the Cook bankruptcy estate and the loss of the
Cooks’ claims against the defendants, without any corresponding benefit to the Cook
bankruptcy estate.
3. “Scheme Two” (Complaint, ¶¶ 115 – 198)
Scheme One was to some degree thwarted after CBM filed an adversary
proceeding in the Cooks’ bankruptcy case. The bankruptcy court held a trial on
CBM’s allegations, which the FAC asserts “did not go well” for the defendants.
Id. at 184 (¶ 112). Failure to achieve their goals in the bankruptcy court allegedly
caused the defendants to hatch what the FAC describes as “Scheme Two.”
Scheme Two involved proceedings in New Mexico state court. The
defendants allegedly made misrepresentations to the state court concerning the
bankruptcy estate’s ownership of CBM’s IP, HCAN’s claims, and the Group and
HUSA’s defenses. On August 27, 2008, the state case was reassigned to the
Honorable Theodore C. Baca, who is named as a defendant in the FAC. The
appointment of Judge Baca coincided with the inception of what the complaint refers
to as “Scheme Three.”
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4. “Scheme Three” (Complaint, ¶¶ 199 – 292)
Judge Baca allegedly “racially discriminated against [Mr.] Cook and denied
[Mr.] Cook his federally protected civil rights,” and the defendants “exploited the
prejudice of Judge Baca in intentionally denying [Mr. Cook] his civil rights,” and/or
“conspired with Judge Baca to deny [Mr. Cook] his civil rights.” Id. at 199 (¶¶ 199,
201-02). Mr. Cook allegedly provided Judge Baca with state court and bankruptcy
court orders “specifically giving the Cooks separate standing [to pursue claims and
defenses pertaining to the IP] and reiterating that grant in the state court action from
that of the Chapter 7 trustee to defend estate property in which the Cooks had an
interest,” and “reminding all that federal jurisdiction over estate owned claims was
still pending before the U.S. District Court.” Id. at 199-220 (¶ 204). He also filed
three motions “[t]o make sure Judge Baca, new to the case, understood the status of
the case.” Id. at 201 (¶ 209).
But at a hearing on February 18, 2009, “Judge Baca without notice to
[Mr.] Cook and without [Mr.] Cook having an opportunity to prepare, first heard a
motion Judge Baca had scheduled to hear on April 7, 2009 and then declared Cook
could not participate in the state court case.” Id. at 202 (¶ 214). Judge Baca then
entered judgment in favor of Wells Fargo, permitting Wells Fargo to foreclose on the
IP and dismissing the claims and defenses asserted by the Group and its subsidiaries,
HCAN, CBM, and the Cooks and their bankruptcy estate. These actions denied
Mr. Cook his fundamental rights to due process and a fair hearing, along with his
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equal civil rights to protect his property interest and “to have equal access to and be
heard in a place of public accommodation,” and his right to a fresh start under the
Bankruptcy Code. Id. (¶ 215).
The FAC further alleges that Judge Baca denied Mr. Cook’s request to enter
formal findings of fact and conclusions of law in support of his orders. Wells Fargo
also filed a motion seeking injunctive relief in the form of filing restrictions against
Mr. Cook. Judge Baca converted the TRO hearing into a hearing on a preliminary
injunction—which resulted in an order of permanent filing restrictions—without
notice to Mr. Cook. In entering the filing restriction order, the FAC asserts,
Judge Baca acted in collusion with and/or in privity with the interests of Wells Fargo
and its attorneys and in collusion with or supported by Garrett et al. and their
attorneys, in depriving Mr. Cook of his constitutional rights.4
After the order of filing restrictions was entered, Mr. Cook sought an
extraordinary writ from the New Mexico Supreme Court. The New Mexico Supreme
Court denied his petition. He then unsuccessfully attempted to remove the state court
action to federal district court. See Garrett v. Cook, 652 F.3d 1249, 1257 (10th Cir.
2011) (upholding award of attorney’s fees and costs to Wells Fargo and Garrett
Group based on untimely and objectively unreasonable notice of removal).
4
The district court dismissed the FAC’s claims against Judge Baca based on
absolute judicial immunity.
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5. Securities Law Claims (Count VII)
The FAC also includes a claim for “fraud, interference in contract [sic] &
violations of securities act & Nevada securities laws . . . and slander of title,
violations of N[ew] M[exico] securities law & unfair trade practices.” R., Vol. 1
at 228. This claim seeks “to clear title to and the exercised control over [sic]
securities for which [sic] are owned by Plaintiff individually, and for which Plaintiff
has the assigned right by [Group and CBM] to pursue actions that diminish and or
affect securities of Group and CBM[.]” Id. at 229 (¶ 384).
The Cooks allegedly claimed certain shares of Group and CBM as exempt
personal property in their Chapter 11 bankruptcy. But Wells Fargo fraudulently
asserted in the bankruptcy proceedings that these shares had been pledged as
collateral to Wells Fargo. Wells Fargo also claims to hold a stock certificate for
1,720,000 shares in Group pledged as collateral, but the FAC asserts that this
certificate was cancelled long ago and that these shares were never actually pledged
to Wells Fargo. Wells Fargo allegedly also wrongfully asserts a security interest in
20,000 of the Cooks preferred shares in Group, and in one share of CBM common
stock.
The FAC asserts that Wells Fargo and Garrett et al. falsely asserted an interest
in these securities in state court proceedings. Through fraudulent misrepresentation,
Wells Fargo and Garrett obtained an injunction in state court preventing Group from
issuing additional shares and preventing CBM from completing its contract involving
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a merger with a publically-traded company, Galtech. Mr. Garrett purchased
restricted shares in Group and transferred these shares to the Garrett Trust without
permission from the Group’s Board of Directors, in violation of the Nevada securities
laws and federal securities statutes.
6. Disposition of Mr. Cook’s Post-Judgment Motions
After the district court dismissed all of Mr. Cook’s federal claims with
prejudice, and declined to exercise jurisdiction over his remaining state law claims,
he filed a motion to re-open and for reconsideration. In response, the district court
expanded on its reasoning in its previous order of dismissal. In particular, it provided
a detailed discussion of its reasons for rejecting Mr. Cook’s non-racially-based
discrimination claims, and explained why the state-court order of filing restrictions
did not deny Mr. Cook access to the courts. The district court also explained that it
had dismissed his claims with prejudice because his claims failed as a matter of law
and it would be futile to grant him leave to amend them.
Mr. Cook also filed a post-judgment motion for leave to amend the FAC, to
which he attached an 87-page proposed second amended complaint. He later filed a
revised proposed second amended complaint, also 87 pages long, purporting to make
several (undisclosed) corrections to the proposed second amended complaint, and a
“notice of errata and correction” again modifying his proposed second amended
complaint, both of which the district court explicitly stated it had considered in ruling
on his motion for leave to amend. R., Vol. 1 at 778. The district court carefully
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analyzed each of the claims in the proposed second amended complaint and
concluded that all of them would be subject to dismissal if the amendment were
allowed, and that the motion to amend should therefore be denied.
ANALYSIS
I. Jurisdictional Issues
The district court disposed of Mr. Cook’s federal claims on the merits,
concluding that they failed to state a claim. The Wells Fargo Defendants contend
that all or part of the complaint should have been dismissed, either under the
Rooker-Feldman doctrine or for lack of standing.
A. Rooker-Feldman Doctrine
In its dismissal order, the district court declined to consider whether the
Rooker-Feldman doctrine applied. Rooker-Feldman, however, “concerns a district
court’s subject-matter jurisdiction,” Lance v. Coffman, 549 U.S. 437, 439 n* (2007),
and must therefore be considered “before proceeding to the merits,” id. at 439.5
“Rooker-Feldman is a jurisdictional prohibition on lower federal courts
exercising appellate jurisdiction over state-court judgments.” Campbell v. City of
Spencer, 682 F.3d 1278, 1281 (10th Cir. 2012). It applies to “cases brought by
state-court losers complaining of injuries caused by state-court judgments rendered
5
But in its order denying leave to amend, the district court concluded that Count
I of the proposed second amended complaint, which asserted a claim that Judge Baca
violated Mr. Cook’s civil due process rights, would be barred by Rooker-Feldman.
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before the district court proceedings commenced and inviting district court review
and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 284 (2005). Rooker-Feldman prohibits “review of the proceedings
already conducted by the [state court] tribunal to determine whether it reached its
result in accordance with law.” Campbell, 682 F.3d at 1283 (internal quotation
marks omitted).
The defendants assert that Rooker-Feldman bars Mr. Cook’s complaints about
the state court’s October 14, 2009, injunctive order of filing restrictions. We need
only address one of Mr. Cook’s replies to this assertion, involving whether the order
of filing restrictions was “final” before he filed his suit in federal court.
“Rooker-Feldman applies only to suits filed after state proceedings are final.”
Guttman v. Khalsa, 446 F.3d 1027, 1032 (10th Cir. 2006). State proceedings
generally become final either after the highest state court has affirmed a judgment or
the time to appeal has expired. See id. at 1032 n.2. Wells Fargo argues that because
the time to appeal from the order of filing restrictions expired 30 days after the date it
entered, that order was “final” for Rooker-Feldman purposes when Mr. Cook filed his
suit in federal court.6
6
Mr. Cook did not appeal the filing restriction order within 30 days of its entry.
See N.M. Rule Ann. 12-201(A)(2) (requiring that notice of appeal be filed “within
thirty (30) days after the judgment or order appealed from is filed in the district court
clerk’s office.”). Instead, he filed a “Verified Petition for Extraordinary Writs and
Request for Stay” on December 14, 2009 with the New Mexico Supreme Court. The
New Mexico Supreme Court denied the petition without comment. Mr. Cook then
(continued)
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We cannot agree with Wells Fargo’s argument. Generally speaking, the right
to appeal in New Mexico state court is restricted to final judgments and decisions.
See N.M. Stat. Ann. § 39-3-2 (1966) (“Within thirty days from the entry of any final
judgment or decision, any interlocutory order or decision which practically disposes
of the merits of the action, or any final order after entry of judgment which affects
substantial rights, in any civil action in the district court, any party aggrieved may
appeal therefrom to the supreme court or to the court of appeals, as appellate
jurisdiction may be vested by law in these courts.” (emphasis added)). Wells Fargo
fails to show that the order of filing restrictions constituted a “final judgment or
decision” within the meaning of this rule, and we have found no authority indicating
that the New Mexico courts would treat it as such. Thus, it does not appear that a
final judgment had been entered in the New Mexico state court litigation at the time
Mr. Cook filed this proceeding. We therefore conclude that the Rooker-Feldman
filed an additional pleading with the New Mexico Supreme Court in which he
requested additional time to file his notice of appeal. It does not appear that
additional time was granted. See Wells Fargo Aplee. Br. at 23 (“[T]he time for
Mr. Cook to appeal the injunction was not tolled and has expired.” (emphasis
added)).
On June 20, 2011, Mr. Cook filed a notice of appeal to the New Mexico Court
of Appeals from various orders entered in the (now apparently final) state court
litigation. Among the state district court orders which he purported to appeal was the
order of filing restrictions of October 14, 2009. See “Appellant’s Docketing
Statement,” Cook v. Wells Fargo Bank, N.A., No. 31419, at 6 (N.M. Ct. App. Aug.
15, 2011) (attached to Wells Fargo Aplee. Br. as “Exhibit A”).
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doctrine does not apply to Mr. Cook’s claims concerning the order of filing
restrictions.7
B. Standing
As standing is also jurisdictional, we must additionally determine whether
Mr. Cook had standing to assert his claims before examining the merits. Wells Fargo
argues that Mr. Cook lacks standing to assert any of the claims contained in the FAC,
because these claims are the property of his bankruptcy estate and can only be
asserted by the Chapter 7 trustee. In addressing this issue, we must also consider
Wells Fargo’s argument that the Tenth Circuit Bankruptcy Appellate Panel (BAP)
has already resolved the issue of standing against Mr. Cook and that the BAP’s
decision concerning standing is entitled to preclusive effect in this appeal.
1. Preclusive Effect of BAP Decision
Mr. Cook appealed to the BAP after the bankruptcy court denied his motions
for sanctions against Wells Fargo and Garrett for alleged violations of the automatic
7
The injunctive order of filing restrictions against Mr. Cook could potentially
be viewed as separately appealable under the “collateral order” exception to the final
judgment rule. See Carrillo v. Rostro, 845 P.2d 130, 136-37 (N.M. 1992)
(recognizing collateral order doctrine). Whether an appealable collateral order
becomes “final” for Rooker-Feldman purposes when entered, after expiration for the
time for taking a collateral appeal from such an order, and even before a final
judgment has entered in the state court action, poses an interesting question. But we
need not address this issue, for we have significant doubt that the New Mexico courts
would classify the order of filing restrictions as an immediately appealable collateral
order. The New Mexico courts apply the collateral order doctrine in only very
limited circumstances. See Williams v. Rio Rancho Pub. Schs., 195 P.3d 879, 882
(N.M. App. 2008).
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stay. In re Cook, Nos. NM-11-082, 04-17704, 2012 WL 1356490, at *1, 3 (10th Cir.
BAP Apr. 19, 2012). The bankruptcy court had determined that “[Mr.] Cook lacked
standing to bring the stay violations motions because causes of action for stay
violations are estate property and can only be asserted by the trustee[.]” Id. at 3. On
appeal, the BAP rejected Mr. Cook’s arguments that (1) the trustee’s notice of
abandonment, filed July 1, 2009, conferred standing on Mr. Cook to seek sanctions
for the alleged stay violations; and (2) he possessed standing to bring the motion in
any event under his claim of exemption and under a Bankruptcy Code provision
concerning damages for violations of the automatic stay, see 11 U.S.C. § 362(k).
Cook, 2012 WL 1356490, at *4-*10. The BAP concluded that “[Mr.] Cook suffered
no injury to a legally protected interest fairly traceable to the Bank’s or Garrett’s
actions” in allegedly violating the stay, and it therefore upheld the bankruptcy court’s
decision denying standing as to those alleged violations. Id. at *10.
A decision concerning standing may be entitled to preclusive effect in a
subsequent proceeding. Brereton v. Bountiful City Corp., 434 F.3d 1213, 1218-19
(10th Cir. 2006). Issue preclusion generally applies when four elements are satisfied:
(1) the issue previously decided is identical with the one presented in
the action in question, (2) the prior action has been finally adjudicated
on the merits, (3) the party against whom the doctrine is invoked was a
party, or in privity with a party, to the prior adjudication, and (4) the
party against whom the doctrine is raised had a full and fair opportunity
to litigate the issue in the prior action.
Park Lane Res. Ltd. Liab. v. U.S. Dep’t of Agric., 378 F.3d 1132, 1136 (10th Cir.
2004) (internal quotation marks omitted).
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Mr. Cook supplies us with no reason to conclude that these elements have not
been satisfied here.8 We therefore conclude that he is collaterally estopped from
asserting that he has standing to assert his claims against the defendants involving
alleged violations of the automatic stay.
2. Other Standing Issues
Mr. Cook’s allegations concerning violations of the automatic stay, however,
comprise only a small part of the wrongs alleged in the FAC. Wells Fargo makes a
much broader standing argument. It contends that all of the causes of action asserted
in the FAC belong to the bankruptcy estate and can therefore only be pursued, if at
all, by the Chapter 7 trustee.
If Wells Fargo is correct in its assertion that all the claims asserted in the FAC
belong to the bankruptcy estate, we agree with its assertion that Mr. Cook lacks
standing to pursue them. See, e.g., Turner v. Cook, 362 F.3d 1219, 1225-26 (9th Cir.
2004) (denying standing to debtor to pursue Fair Debt Collection Practices Act,
RICO, and state law claims, where such claims belonged to the estate and
bankruptcy trustee had been appointed for the estate). See also Cable v. Ivy Tech
8
Mr. Cook has appealed the above-mentioned BAP decision to this court. Cook
v. Wells Fargo Bank, No. 12-2100. Notwithstanding Mr. Cook’s assertions to the
contrary, the pendency of the appeal does not strip the BAP’s decision of preclusive
effect. See 18A Charles Alan Wright, Arthur R. Miller et al., Federal Practice &
Procedure § 4433 (2d ed. 1981) (“[I]t is . . . held in federal courts that the preclusive
effects of a lower court judgment cannot be suspended simply by taking an appeal
that remains undecided.”); Phelps v. Hamilton, 122 F.3d 1309, 1318 (10th Cir. 1997)
(stating general rule).
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State Coll., 200 F.3d 467, 472 (7th Cir. 1999) (“In [Chapter 7] liquidation
proceedings, only the trustee has standing to prosecute or defend a claim belonging to
the estate.”); 11 U.S.C. § 323 (stating trustee is representative of estate, with capacity
to sue and be sued); Fed. R. Bankr. P. 6009 (“With or without court approval, the
trustee or debtor in possession may prosecute or may enter an appearance and defend
any pending action or proceeding by or against the debtor, or commence and
prosecute any action or proceeding in behalf of the estate before any tribunal.”).
The dispute here actually centers on two issues: whether Mr. Cook’s claims
became property of the estate by virtue of his bankruptcy filing, and if so whether the
trustee subsequently abandoned them to Mr. Cook, thus restoring his ability to pursue
them on his own behalf. We consider each of these issues in turn.
Wells Fargo attempts to reduce all of Mr. Cook’s claims “seeking redress for
alleged constitutional and civil rights violations” to an attempt to “reverse the state
court judge’s rejection of Mr. Cook’s contention that Wells Fargo Bank’s security
interest in Hydroscope Canada, Inc’s IP was void because Wells Fargo Bank
allegedly breached a forbearance agreement in 2001.” Wells Fargo Aplee. Br. at 15.
Wells Fargo contends that all of the claims flowing from this alleged injury
asserted in the FAC belong to the estate, because they either (1) had accrued at the
time the Cooks filed their bankruptcy petition; (2) were “sufficiently rooted in the
pre-bankruptcy past” to be considered part of the estate; or (3) accrued post-petition
and involved an injury to the bankruptcy estate. Id.- 19 -
Filing a petition for bankruptcy creates a bankruptcy estate. 11 U.S.C.
§ 541(a). This estate comprises property, broadly defined to include “all legal or
equitable interests of the debtor in property as of the commencement of the case.”
Id. § 541(a)(1) (emphasis added). Under this rule, “[p]re-petition causes of action are
part of the bankruptcy estate and post-petition causes of action are not.” Witko v.
Menotte (In re Witko), 374 F.3d 1040, 1042 (11th Cir. 2004).
Certain claims advanced in the FAC clearly belong to Mr. Cook’s
bankruptcy estate. Claims concerning Wells Fargo’s alleged failure to execute the
non-disturbance agreement, for example, had certainly accrued at the time the Cooks
filed their bankruptcy petition. Other claims, however, are less clearly property of
the estate. The FAC asserts that some of Mr. Cook’s claims involve property that is
exempt or never became part of the bankruptcy estate. Also, the FAC contains
numerous allegations concerning conspiracies against Mr. Cook’s interests that are
based on events occurring after the Cooks filed their petition.
We have noted Wells Fargo’s assertion that these claims should nevertheless
be considered part of Mr. Cook’s bankruptcy estate because they are “sufficiently
rooted in the pre-bankruptcy past.” Property that a debtor acquires after the filing of
bankruptcy will be considered part of the estate if it is “sufficiently rooted in the
pre-bankruptcy past that it should be considered to have accrued to the debtor’s estate
prior to the bankruptcy filing. Segal v. Rochelle, 382 U.S. 375, 380 (1966).
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This doctrine applies, for example, in cases where the debtor obtains a
contingent interest in property prior to the bankruptcy filing that only matures after
the filing. Thus we have held that an employee’s stock appreciation rights were part
of his bankruptcy estate, even though their vesting was contingent on post-petition
events, where the contingent obligation itself arose prior to the bankruptcy filing.
Parks v. Dittmar (In re Dittmar), 618 F.3d 1199, 1207-10 (10th Cir. 2010).
Here, by contrast, the FAC alleges tortious actions by the defendants in
furtherance of conspiracies that allegedly arose after the Cooks filed their
bankruptcy. In particular, the FAC accuses the prior Chapter 7 bankruptcy trustee of
participating in a conspiracy involving misconduct committed in the Cooks’
bankruptcy proceedings. Allegations of the trustee’s participation in the conspiracy
make it particularly incongruous to assert that the trustee, rather than Mr. Cook, was
the only party with standing to assert such claims. Cf. Casey v. Grasso (In re
Riccitelli), 320 B.R. 483, 492 & n.18 (Bankr. D. Mass. 2005) (stating that claim by
debtor as against his own estate was particularly unlikely to be considered property
of the estate).
In any event, these claims plainly arose after the bankruptcy proceedings were
filed. Though, as Wells Fargo argues, the alleged conspiracies involved property that
was the subject of dispute between the parties prior to the bankruptcy filing, the
alleged constitutional injuries did not exist prior to the filing. Simply put, Mr. Cook
alleges harms to his constitutional rights that he suffered post-bankruptcy, not prior
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to or contemporaneous with the bankruptcy filing. See Witko, 374 F.3d at 1043(holding legal malpractice claim against debtor’s attorneys that arose when divorce
proceedings concluded against debtor, which occurred several months after he filed
his bankruptcy petition, was not part of bankruptcy estate). These claims were not
“sufficiently rooted in the pre-bankruptcy past,” and are not part of the estate.
We turn next to Mr. Cook’s counter-argument that none of his claims belongs
to his bankruptcy estate, because the trustee abandoned them to him. A formal
abandonment, including compliance with the notice requirements of the Bankruptcy
Code, is required to vest the right to pursue the estate’s causes of action in the debtor.
See Turner, 362 F.3d at 1226. As we noted previously, the BAP determined that no
such abandonment had occurred in Mr. Cook’s case. Cook, 2012 WL 1356490,
at *6-7. The BAP’s decision on this point is entitled to preclusive effect, and we
therefore reject Mr. Cook’s argument.
3. Conclusion
Mr. Cook’s claims in the FAC are not barred by the Rooker-Feldman doctrine.
But some aspects of his claims asserted in the FAC are barred by his lack of standing.
He lacks standing to assert claims relative to alleged violations of the automatic stay
in bankruptcy, and any other claims that are part of the bankruptcy estate. The
district court should have dismissed these portions of Mr. Cook’s claims without
prejudice for lack of standing. See Brereton, 434 F.3d at 1219-20.
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II. Merits Issues
We turn to Mr. Cook’s challenge to the district court’s determination on the
merits that the FAC did not allege any cognizable federal claims against the
defendants.
This court reviews de novo a district court’s dismissal for failure to state a
claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Khalik v. United Air
Lines, 671 F.3d 1188, 1190-91 (10th Cir. 2012). Accordingly, all well-pleaded
allegations of the complaint are accepted as true and viewed in a light most favorable
to the nonmoving party. Federal Rule of Civil Procedure 8 requires a pleading to
contain a “short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). To survive dismissal under Rule 12(b)(6) for
failure to state a claim, plaintiffs must “nudge[ ] their claims across the line from
conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
While factual assertions are taken as true, legal conclusions are not. A plaintiff is
“not required to set forth a prima facie case for each element, [but] is required to set
forth plausible claims.” Khalik, 671 F.3d at 1193. “A claim has facial plausibility
when the [pleaded] factual content . . . allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Because Mr. Cook filed his complaint pro se, we construe
his pleadings liberally. See Bear v. Patton, 451 F.3d 639, 641 (10th Cir. 2006).
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A. Alleged Violation of Mr. Cook’s Constitutional Rights
Mr. Cook contends that he alleged sufficient facts to state one or more claims
for violation of his constitutional rights. He asserts that the defendants’ actions
deprived him of his right of access to the courts, his right to due process, and his
rights under the First and Fourteenth Amendments. See Aplt. Opening Br. at 7.
Seeking a remedy for these alleged violations, he claims to have stated claims for
relief under 42 U.S.C. §§ 1983 and 1986. See Aplt. Opening Br. at 3, 10.
“To state a claim under § 1983, a plaintiff must allege the violation of a right
secured by the Constitution and laws of the United States, and must show that the
alleged deprivation was committed by a person acting under color of state law.”
West v. Atkins, 487 U.S. 42, 48 (1988). With the exception of Judge Baca, the
defendants Mr. Cook has sued are all private parties. “Private persons may be said to
act under color of state law if they are jointly engaged with state officials in the
challenged action. But private conduct that is not fairly attributable to the State is
simply not actionable under § 1983, however discriminatory or wrongful the conduct
is.” Hall v. Witteman, 584 F.3d 859, 864 (10th Cir. 2009) (internal quotation marks
and citations omitted).
Mr. Cook’s allegations of state action rest on an alleged conspiracy or at least
substantial cooperation between Judge Baca and the other defendants. But “[w]hen a
plaintiff in a § 1983 action attempts to assert the necessary ‘state action’ by
implicating state officials or judges in a conspiracy with private defendants, mere
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conclusory allegations with no supporting factual averments are insufficient; the
pleadings must specifically present facts tending to show agreement and concerted
action.” Hunt v. Bennett, 17 F.3d 1263, 1268 (10th Cir. 1994) (internal quotation
marks omitted). “In fact, [this] standard is even stricter where the state officials
allegedly involved in the conspiracy are immune from suit, as are the state court
judges.” Id. Having reviewed the FAC, we conclude that its conclusory allegations
of a conspiracy fail to demonstrate agreement and concerted action between Judge
Baca and the other defendants to deprive Mr. Cook of his constitutional rights. We
therefore affirm the dismissal of this claim.
Mr. Cook also asserts a claim for “failure to protect” under 42 U.S.C. § 1986.
In order to establish a § 1986 claim, a plaintiff must demonstrate that he was the
subject of a conspiracy under 42 U.S.C. § 1985 from which the defendants failed to
protect him. See Taylor v. Nichols, 558 F.2d 561, 568 (10th Cir. 1977). Mr. Cook
asserts that the FAC pleads a violation of § 1985(3). But § 1985(3) only reaches
conspiracies “motivated by some racial, or perhaps otherwise class-based, invidiously
discriminatory animus.” Tilton v. Richardson, 6 F.3d 683, 686 (10th Cir. 1993)
(internal quotation marks omitted).
Although Mr. Cook has abandoned his allegations of a race-based conspiracy,
he asserts that Judge Baca and the other defendants conspired to violate his
“class-based” rights as a pro-se debtor in bankruptcy. But these allegations fall short
of stating a claim under either § 1985 or § 1986. See, e.g., United Bhd. of Carpenters
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& Joiners of Am. v. Scott, 463 U.S. 825, 837 (1983) (stating § 1985(3) was not
intended “to reach conspiracies motivated by bias towards others on account of their
economic views, status, or activities.”). The district court therefore properly
dismissed his § 1986 claim (along with any corresponding § 1985 claim the FAC
might be construed to raise).
B. Alleged Violation of SEC Rule 10b-5
Count VII of the FAC includes various securities-related claims, including an
alleged violation of SEC Rule 10b-5. We note that Mr. Cook plainly lacks standing
to make some of his assertions connected with this claim, for example when he
claims that “[t]he Cooks, CBM, Group and its subsidiaries, HCAN, the estate and all
creditors of the estate, all interests represented by Plaintiff [sic], suffered substantial
damages by [the defendants’] false allegations of interest in certified securities made
by [Wells Fargo] and by Scott Garrett in state court proceedings.” R., Vol. 1 at 233
(¶ 420) (emphasis added).
To the extent Mr. Cook asserts rights belonging to himself alone, and not part
of his bankruptcy estate, the district court properly dismissed his claims. The district
court concluded that the FAC failed to state a claim for violation of Rule 10b-5,
because it failed to allege that the defendants had made any fraudulent statement or
misrepresentations in connection with the sale of a security. In order to state a claim
for private securities fraud under Rule 10b-5, a plaintiff must allege:
(1) the defendant made an untrue or misleading statement of material
fact, or failed to state a material fact necessary to make statements not
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misleading; (2) the statement complained of was made in connection
with the purchase or sale of securities; (3) the defendant acted with
scienter, that is, with intent to defraud or recklessness; (4) the plaintiff
relied on the misleading statements; and (5) the plaintiff suffered
damages as a result of his reliance.
In re Level 3 Commc’ns, Inc. Sec. Litig., 667 F.3d 1331, 1333 (10th Cir. 2012)
(emphasis added) (internal quotation marks omitted).
Mr. Cook argues that the FAC met this “purchase or sale” pleading
requirement because it contained allegations that misrepresentations by Wells Fargo
and Garrett et al. interfered with CBM’s merger into Galtech as a public entity.
See Aplt. Opening Br. at 11. We will assume that a defendant’s alleged misstatement
that interfered with a prospective merger potentially involving a transfer of shares
was “made in connection with the purchase or sale of securities.” Level 3, 667 F.3d
at 1333. See, e.g., Realmonte v. Reeves, 169 F.3d 1280, 1285 (10th Cir. 1999)
(“When an exchange of shares facilitates the merger of two separate and distinct
corporate entities, that exchange constitutes a ‘purchase or sale’ for purposes of
bringing a Rule 10b-5 action.”). If this assumption is correct, we cannot affirm on
the basis relied upon by the district court.
We detect another fatal deficiency in the FAC’s Rule 10b-5 claim, however.
Nowhere in this claim does the FAC assert that the plaintiff, Mr. Cook, relied on any
of the allegedly misleading statements in connection with a sale or purchase of a
security, or that he “suffered damages as a result of his reliance.” Level 3, 667 F.3d
at 1333. Instead, it alleges that others, including members of the public, relied on the
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alleged misstatements, thus affecting Mr. Cook’s interests. For this reason, the FAC
fails to plead the necessary reliance elements of a 10b-5 claim, and the district court
therefore properly dismissed the claim.
C. Leave to Amend Complaint
Mr. Cook raises two issues concerning his attempts to file an amended
complaint after the district court dismissed the FAC. First, he challenges the district
court’s denial of his general request for leave to amend contained in his motion to
re-open and for reconsideration. Second, he challenges the district court’s failure to
grant his motion for leave to file his proposed second amended complaint. In our
view, these two challenges collapse into one: whether the district court should have
granted his motion for leave to amend to file the 87-page second amended complaint.
In other words, Mr. Cook’s motion for leave to amend, accompanied by a specific
filing of a proposed amended complaint, superseded his earlier, general request that
he be granted leave to amend.9
We ordinarily review the denial of leave to amend for abuse of discretion, but
“[w]hen denial is based on a determination that amendment would be futile, our
review for abuse of discretion includes de novo review of the legal basis for the
9
The district court concluded that the motion for leave to amend was moot
because it had previously denied Mr. Cook’s motion to re-open the case. See R.,
Vol. 2 at 778. It nevertheless addressed the claims in the proposed second amended
complaint. See id. Mr. Cook’s motion for leave to amend could be viewed as
implicitly requesting that the case be reopened in order for the amended complaint to
be filed. We therefore detect no jurisdictional problem arising from mootness here.
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finding of futility.” Hertz v. Luzenac Grp., 576 F.3d 1103, 1117 (10th Cir. 2009)
(internal quotation marks omitted). Here, the district court patiently and thoroughly
examined each of the allegations of Mr. Cook’s proposed second amended complaint,
and determined that if filed, they would be subject to dismissal. R., Vol. 2 at 774-84.
We agree, and affirm the order of the district court denying leave to amend the FAC.
D. Alleged Denial of Access to Courts
Finally, Mr. Cook contends that the district court denied him his First
Amendment right to access to the courts, along with his Fourteenth Amendment right
to equal treatment and due process. He primarily complains about actions of the state
courts and makes only conclusory allegations of violations of his rights by the district
court. His allegations are meritless.
CONCLUSION
The judgment and challenged orders of the district court are affirmed with the
exception of those portions of the order dismissing Mr. Cook’s First Amended
Complaint that should have been entered without prejudice. We remand in part for
further proceedings consistent with this order and judgment modifying those portions
of the dismissal order to a dismissal without prejudice. Mr. Cook’s amended motion
for sanctions is denied.
Entered for the Court
David M. Ebel
Circuit Judge
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