Cook v. Wells Fargo Bank N.A.

• Decision Date: 06 July 2015
• Docket Number: NO. 31,419,31,419
• Parties: DANIEL W. COOK, Petitioner-Appellant, v. WELLS FARGO BANK N.A., SUCCESSOR TO WELLS FARGO BANK NEW MEXICO, N.A., Respondent-Appellee.
• Court: Court of Appeals of New Mexico

DANIEL W. COOK, Petitioner-Appellant, v. WELLS FARGO BANK N.A., SUCCESSOR TO WELLS FARGO BANK NEW MEXICO, N.A., Respondent-Appellee.

NO. 31,419

COURT OF APPEALS OF THE STATE OF NEW MEXICO

July 6, 2015

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Alan Malott, District Judge

Daniel W. Cook

Albuquerque, NM 87120

Pro Se Appellant

Sutin, Thayer & Browne, P.C.

Michelle K. Ostrye

Andrew J. Simons

Albuquerque, NM 87103

Jay D. Hertz

Albuquerque, NM 87111

for Appellee

MEMORANDUM OPINION

KENNEDY, Judge.

I. INTRODUCTION

{1} In 1997, Hydroscope Group, Inc. (HGroup) borrowed over $1.5 million from Wells Fargo. Daniel Cook (Cook) is the president, CEO, and chairman of HGroup. HGroup defaulted on its debt to Wells Fargo. Cook entered into subsequent agreements with Wells Fargo, on behalf of HGroup, pledging additional collateral in order to persuade Wells Fargo to forbear from collecting on the debt. In 2003, an HGroup stockholder who was disgruntled with what he alleged was Cook's corporate mismanagement of HGroup, filed a derivative suit against Cook and other HGroup board members, and named Wells Fargo as an additional defendant because of its status as HGroup's creditor. Cook brought suit against Wells Fargo in 2005. The cases were consolidated, and in 2009 the district court granted summary judgment for Wells Fargo, awarding judgment on the debt, granting foreclosure on collateral and the dismissal of all claims against it.

{2} Cook appeals the district court's entry of nine different orders. Four of those orders deal with summary judgment: one attacks the judgment itself, one attacks Wells Fargo's motion for summary judgment, and two seek reassessment of the district court's orders denying attacks on the order granting Wells Fargo's summary judgmentmotion. The remaining five orders deal with the district court's sanctioning of Cook's duplicative filing methods, which unnecessarily prolonged this litigation. After trudging through the procedural quagmire of this case, we join the list of courts that have ruled against Cook. Although Cook asserts the district court committed numerous errors, he repeatedly fails to adequately demonstrate any reversible error under applicable appellate standards. Thus, we affirm.

II. BACKGROUND

{3} The parties being aware of the facts and this being a memorandum opinion, we limit ourselves to a basic outline of the underlying debts and litigation, and present additional facts for each issue as necessary.

A. Debts and Defaults

{4} When HGroup entered into a credit agreement with Wells Fargo for a $1.5 million revolving credit line, it pledged various collateral to secure the loan.¹ In addition, Wells Fargo secured guarantees on that loan from Cook personally,Hydroscope Inc., USA (HUSA),² and four other companies.³ Cook signed the credit agreement seven times: on behalf of the debtor company, the guaranteeing companies, and his personal guarantee. HGroup subsequently defaulted on the debt owed to Wells Fargo.

{5} As a result of HGroup's default, HGroup pledged more collateral, this time promising IP and patents from another one of its wholly owned subsidiaries, Hydroscope Canada Inc. (HCAN). In exchange, Wells Fargo agreed to forbear from collecting on HGroup's debt for a time. HGroup again defaulted on its debts to Wells Fargo, and Wells Fargo again agreed to extend its forbearance. In this second forbearance agreement, HGroup and Cook conceded the validity of its debts, stipulated that Wells Fargo had breached no duty to them and had fully performed all its obligations, and released any claims they may have had against Wells Fargo. HGroup defaulted again, and Wells Fargo made no further agreements to forbear.

B. Litigation

{6} This litigation started in 2003 as a derivative suit against Cook and HGroup's board members. Wells Fargo, named as an additional defendant because of its status as HGroup's creditor, counterclaimed against HGroup, HUSA, and HCAN. InOctober 2004, Cook filed for personal bankruptcy.⁴ Cook brought suit against Wells Fargo in November 2005. In his complaint, Cook asserted four claims: (1) breach of contract; (2) misrepresentation; (3) aiding and abetting a breach of fiduciary duty; (4) violation of the Unfair Practices Act. The district court consolidated the two cases. CBM Group, Inc. (CBM)⁵ was eventually joined as a party because it bought the patents in 2005 that HCAN pledged to Wells Fargo in 2002 as collateral in the forbearance agreement.⁶

III. DISCUSSION

{7} In reviewing the nine orders that Cook appeals, we first analyze whether the district court properly granted summary judgment for Wells Fargo, as well as the orders associated with the summary judgment proceedings. Next, we address the district court's dismissal of Cook's "cross-complaint and counter claims" that he filed after the district court granted summary judgment. Finally, we look at a preliminary injunction, and orders enforcing that injunction, that the district court issued in response to Cook's vexatious litigation strategy.

A. Summary Judgment

{8} Wells Fargo filed a motion for summary judgment in December, 2006. In its motion, Wells Fargo requested judgment against HGroup, HUSA, HCAN, and CBM allowing it to collect on its debts and foreclose on the collateral pledged by those entities. Wells Fargo also requested the dismissal of all claims asserted against it, both in the derivative suit and in Cook's complaint. Wells Fargo's summary judgment motion specifically excluded Cook from its request for relief, and did not seek to recover on either Cook's personal liability for his personal loan⁷ or his personal liability as guarantor securing HGroup's debt.⁸

{9} The district court held several hearings on the motions.⁹ An automatic bankruptcy stay was in place during the first and second hearing because of Cook's personal bankruptcy. Accordingly, the district court declined to enter a written order on Wells Fargo's motion for summary judgment until the stay was lifted orterminated. It did, however, make oral rulings. During the first hearing, the district court expressed an intention to grant Wells Fargo's motion. The next hearing addressed the appropriate form the proposed orders would take. The corporate entities ultimately agreed with Wells Fargo on the form and content of both orders, but the district court again declined to issue an order on Wells Fargo's motion. After the second summary judgment hearing, the bankruptcy court annulled the automatic stay, allowing state court proceedings to take place with respect to "any property in which either the estate or the Debtors claim an interest." The bankruptcy court also modified the stay so that any party could seek, or continue to seek, whatever legal remedies it desired in state court.

{10} As a result of the bankruptcy court's annulment, Cook represented himself during the third hearing. The district court gave HGroup, HUSA, and HCAN (collectively, Hydroscope entities), as well as Cook, an opportunity to submit further briefing on Wells Fargo's summary judgment motion. In doing so, the district court reasoned that, although it was required to look to the pleadings in deciding the motion, Cook had filed no responsive pleading to the motion and the Hydroscope entities had only joined CBM's motions.

{11} Finally, during the last summary judgment hearing, at which Cook again represented himself, the district court concluded that no genuine issues of material factexisted to preclude granting summary judgment for Wells Fargo. The district court reasoned that there was evidence that loans were made pursuant to an agreement to pay them back, and nothing disputed that repayment of the loans was due and were in default. It explained that "[t]he only defense that was presented . . . was whether there was consideration" for the first forbearance agreement. The district court concluded that there was no genuine issue of material fact as to the existence of debt and default thereon. In its written order granting summary judgment for Wells Fargo, entered the same day as the hearing, the district court awarded Wells Fargo judgment against HGroup,¹⁰ HCAN,¹¹ HUSA,¹² and CBM.¹³ It also dismissed all claims that Cook asserted against Wells Fargo.

1. Standard of Review

{12} Where, on appeal from the grant of summary judgment, no material issues of fact are in dispute and an appeal presents only a question of law, we apply de novo review. City of Albuquerque v. BPLW Architects & Eng'rs, Inc., 2009-NMCA-081, ¶ 7, 146 N.M. 717, 213 P.3d 1146. Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Self v. United Parcel Service, Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. A genuine issue of fact "would allow a hypothetical fair-minded factfinder to return a verdict favorable to the non-movant on that particular issue." Romero v. Philip Morris, Inc., 2009-NMCA-022, ¶ 12, 145 N.M. 658, 203 P.3d 873, rev'd on other grounds by 2010-NMSC-035, 148 N.M. 713, 242 P.3d 280. "The movant need only make a prima facie showing that he is entitled to summary judgment. Upon the movant making a prima facie showing, the burden shifts to the party opposing the motion to demonstrate the existence of specific evidentiary facts which would require trial on the merits." Roth v. Thompson, 1992-NMSC-011, ¶ 17, 113 N.M. 331, 825 P.2d 1241 (citation omitted).

{13} The non-moving party may not merely rely upon allegations or arguments, Dow v. Chilili Coop. Ass'n, 1986-NMSC-084, ¶ 13, 105 N.M. 52, 728 P.2d 462, but instead "must...