Daniel William Cook and Yolanda T. Cook

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
Daniel William Cook
and Yolanda T. Cook,
Debtors. No. 7 - 04-17704 - SA
MEMORANDUM OPINION ON DEBTOR’S AMENDED
MOTION TO RECONSIDER DISMISSAL OF SANCTIONS
MOTIONS AGAINST WELLS FARGO BANK AND GARRETT
This matter is before the Court on the Debtor Daniel William
Cook’s Amended Motion to Reconsider Dismissal of Sanctions
Motions against Wells Fargo Bank and Garrett (doc 902)(“Motion”)
and his accompanying affidavit (doc 899). Mr. Cook is self-	1
represented. For the reasons set forth below, the Motion will be
denied.2
BACKGROUND
Pre-conversion, and after appointment of a Chapter 11
Trustee (order, doc 366, 7/19/06), Debtor and one of his
related/controlled corporations filed motions against Wells Fargo
Bank and Scott Garrett, Pamela Garrett and the Garrett Trust
This memorandum opinion was prepared some months ago, but	1
its finalization and issuance are coming about only now because
the Court refrained from working on and issuing the decision
during the pendency of Debtor’s Motion to Have the Hon. James
Starzynski Disqualify Himself Pursuant to 28 U.S.C. §455 and
Bankruptcy Rule 5004 for His Predetermination of the Action, His
Appearance of Partiality and for His Deep-Seated Favoritism
Towards Wells Fargo Bank (“Motion to Recuse”) (doc 906), filed
May 23, 2011 and then withdrawn July 22, 2011 (doc 918).
The Court has subject matter and personal jurisdiction	2
pursuant to 28 U.S.C. §§1334 and 157(b); this is a core
proceeding pursuant to 28 U.S.C. §157(b)(2)(A); and these
are findings of fact and conclusions of law as may be required by
F.R.B.P. 7052.
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 1 of 29

(“Garrett”) (docs 619, 12/11/07; joinder 629, 12/19/07) seeking
damages for willful violation of the automatic stay. The Court
denied the motion at the preliminary hearing, finding that the
actions complained of did not violate the automatic stay.
(Order, doc 642, 1/23/08). The Court raised but did not address
issues of standing of a debtor-out-of-possession or creditor to
pursue sanctions for a stay violation.
Debtors moved to reconsider (doc 645, 1/25/08) and the Court
entered an order that it would reconsider the matter upon
submission of briefs and completion of an evidentiary hearing
(doc 669, 2/12/08). In the meantime, several of Debtors’
majority owned/controlled corporations filed a Second Motion for
sanctions for violation of the automatic stay (doc 651, 1/28/08).
They alleged substantially the same matters raised in the first
sanctions motion: the state court action. The Court denied this
Motion (order, doc 672, 2/13/08) as both an improper attempt to
enjoin the state court from proceeding against non-debtor parties
and because it appeared that Wells Fargo was not asserting any
claims against either Debtors’ or the estate’s property.
Wells Fargo filed a Motion for Relief from Stay (doc 679,
2/19/08). Then, the Entities filed a third motion for sanctions
for stay violations (doc 696, 2/26/08). Debtors joined (doc 722,
3/17/08). The third motion is addressed only to Garrett and
Page -2-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 2 of 29

seeks an order “granting [the Entities] judgment and the estate	3
judgment” for willful stay violations (doc 696, p.1). The motion
reiterates all prior claimed stay violations and then argues that
the Garrett Group filed a derivative action in 2003 (pre-
petition) which was amended to name Wells Fargo as a defendant.
The Entities claim that a continued prosecution of this
derivative action violated the automatic stay because the
derivative suit was property of Hydroscope Group, Inc. that had
been “assigned” to Cook . (Id., p.5 ¶ 16). It also alleges a	4
nefarious conspiracy between the Garrett Group and Wells Fargo
that is an attempt to deprive the estate of assets.
On March 20, 2008, the Court converted the Chapter 11 case
to Chapter 7. Doc 726.
After a hearing, the Court granted Wells Fargo’s stay
motion, ordering that the automatic stay was both annulled and
The Entities do not explain how they would be entitled	3
individually to damages for a third-party’s violation of the stay
in someone else’s bankruptcy. It is fundamental that damages for
a stay violation wound redound to either a debtor for personal
damages or the estate for damages to the estate.
This is a situation of the fox guarding the henhouse. This	4
transfer, effectively, would have given Cook the right to sue
himself for harm he allegedly inflicted on Hydroscope. “One
suspects that if managers can devise any opportunity to avoid
bringing a claim that would amount to reputational
self-immolation, they will seize it.” Official Committee of
Unsecured Creditors of Cybergenics v. Chinery (In re Cybergenics
Corp.), 330 F.3d 548, 573 (3 Cir. 2003)(analyzing a situation	rd
in which if a trustee is not appointed, debtors’ management is
unlikely to pursue fraudulent transfers that it made.)
Page -3-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 3 of 29

modified. (Order, doc 740, 4/21/08). Debtors moved to
reconsider (doc 743, 4/29/08). The Court denied the motion to
reconsider, finding that the order was clear on its face.
(Order, doc 819, 10/08/08).
On September 15, 2008, the Court issued a Memorandum Opinion
on the Motions for Sanctions for Violation of the Stay (doc 798).
The Court ruled: “The only property at stake in the state court
foreclosure case belongs to either the Corporate Entities or the
estate. The Court therefore concludes that neither the Debtors
nor the Corporate Entities have standing to challenge actions
taken in that case as a violation of the automatic stay.” The
Court then denied the third motion for sanctions (order, doc 799,
9/15/08) and the substantive request to reconsider the second
order denying sanctions (order, doc 800, 9/15/08).
The United States District Court had a pending adversary
proceeding in which the Bankruptcy Court had suggested
abstention. Debtors then, between July 17, 2009 and October 29,
2009 filed more motions for sanctions for violations of the
automatic stay in the District Court case. The District Court
referred them back to this Court, and this was the subject of the
Memorandum Opinion (doc 884) from which the Orders issued that
Debtor requests be reconsidered.
In a Memorandum Opinion (doc 884) entered on April 6, 2011,
the Court cited three reasons to deny the motions. It
Page -4-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 4 of 29

implemented the denials in two separate Orders (doc 885 for
Garretts and doc 886 for Wells Fargo).
First, the Court found that Debtor lacked standing to file
motions for violation of the automatic stay that allegedly
damaged the bankruptcy estate. The Court disagreed with Debtor’s
theory that the causes of action for stay violation were
abandoned when the trustee filed a “Notice of Abandonment”,
ruling that Section 544 requires either an order or the closing
of the case to effect abandonment. Because there was neither an
order nor had the case closed, no property had been abandoned.
The Court also found that furthermore, even if the case had
closed, a cause of action for violation of the automatic stay is
not “scheduled” property that is abandoned at closing; rather,
under Section 544 it remains estate property.
Second, the Court reviewed the history of alleged automatic
stay violations in this case. The Court both terminated and
annulled the automatic stay (order, doc 740, 4/22/08).
Nevertheless, the Court reviewed the action that was the alleged
violation of the stay and found that there was no violation
because 1) the action taken was against non-debtors by a creditor
seeking foreclosure of those non-debtor’s property and therefore
not protected by the automatic stay, and 2) the action taken with
respect to estate property was a defensive measure in response to
Page -5-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 5 of 29

claims originated by the Debtor, also not protected by the
automatic stay.
Third, the Court found that the state court had entered
final judgment and under the Rooker/Feldman doctrine the
bankruptcy court cannot act as a state appellate court. All this
Court could do would be to apply New Mexico collateral estoppel
rules to the state court judgment, which made specific findings
that the action was not against the Debtors nor against their
property.5
THE MOTION FOR RECONSIDERATION
The main objection raised by Debtor is that this Court
“fail[ed] to not [sic] address the estates’ [sic] ownership of
the cause [sic – should be “causes”; doc 898, p.1] of action
belonging to the estate that wree [sic] destroyed on February 18,
2009 as noted in the two Motions for Sanctions.” Doc 898, p.2.
The Debtor then cites three grounds for reconsideration: 1)
Debtor has standing because “[a]ll assets of the estate were
previously abandoned with this Court’s expressed consent followed
by the Court’s implied consent and endorsement”; 2) contrary to
the Memorandum Opinion, the automatic stay was never terminated,
and 3) Rooker/Feldman and collateral estoppel do not apply
Notwithstanding that ruling, the Court does not consider	5
that it is in all instances precluded from ruling differently
from a nonbankruptcy court concerning property over which it has
exclusive jurisdiction by virtue of a bankruptcy filing.
However, that was the ruling in this instance.
Page -6-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 6 of 29

because the state court final orders were entered in violation of
the automatic stay.
Debtor quotes from Servants of the Paraclete v. Does, 204
F.3d 1005, 1012 (10 Cir. 2000):	th
Grounds warranting a motion to reconsider include (1)
an intervening change in the controlling law, (2) new
evidence previously unavailable, and (3) the need to
correct clear error or prevent manifest injustice.
Thus, a motion for reconsideration is appropriate where
the court has misapprehended the facts, a party's
position, or the controlling law.
(Citation omitted.) Debtor argues that his Motion is supported
by sections (2) and (3). Debtor’s quote omits the last sentence
of the paragraph: “It is not appropriate to revisit issues
already addressed or advance arguments that could have been
raised in prior briefing.”
The Court has reviewed page 4 of the Motion several times
and finds it not understandable. First, Debtor states that on
April 19, 2010 District Court Judge Judith Herrera “confirmed
this Court’s implicit confirmation of the Trustees [sic] correct
abandonment on July 1, 2009 of all estate property.” This Court
has not implicitly or explicitly confirmed that the Trustee
abandoned anything on July 1, 2009. In contrast, on April 15,
2009, in the Amended Memorandum Opinion on Abandonment (doc 836)
this Court stated:
Under 11 U.S.C. § 554, there are three methods by
which the property in a debtor's estate can be
abandoned. See, e.g., Miller v. Pacific Shore Funding,
287 B.R. 47, 51 (D. Md. 2002). First, after notice and
Page -7-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 7 of 29

hearing, the estate may abandon any property that is
“burdensome” to the estate or is of little value. Id.
§ 554(a). Second, on motion by a party, the court may
order the abandonment of certain properties. Id. §
554(b). Third, once a bankruptcy case is closed, any
assets that have been properly scheduled, but not
otherwise administered, are abandoned by operation of
law. Id. § 554(c).
In this case there was no abandonment under §
554(a). The Trustee did not send out a notice of
proposed abandonment to those parties requesting
notice. Without effective notice under § 554(a) there
can be no abandonment. Morlan v. Universal Guaranty
Life Insurance Co., 298 F.3d 609, 618 (7th Cir. 2002)
(Attempted abandonment by trustee failed when trustee
did not comply with the statute. “The requirements are
exacting.”); Sierra Switchboard Co. v. Westinghouse
Electric Corp., 789 F.2d 705, 709 (9 Cir. 1986) (Even	th
if Trustee intends to abandon, it is ineffective
without notice to creditors.); Jones v. Cendant
Mortgage Corp. (In re Jones), 396 B.R. 638, 647 (Bankr.
W.D. Pa. 2008)(“De facto abandonment cannot occur in
bankruptcy.”) (Citation omitted.); Cemco, Inc. v.
Howard Nat’l Corp. (In re Howard Nat’l Corp.), 70 B.R.
278, 282 (N.D. Ill. 1987)(Bankruptcy Rule 6007 requires
reasonable notice to be given to all creditors.); First
Carolina Financial Corp. v. Trustee of Estate of Caron
(In re Caron), 50 B.R. 27, 29 (Bankr. N.D. Ga. 1984)
(Consent of debtor, creditor and trustee does not
obviate need for notice.)
In this case there was also no abandonment under §
554(b). The Court has not made findings that any
property was burdensome to the estate or of
inconsequential value and benefit to the estate, and
has entered no orders abandoning property. See Vu v.
Kendall (In re Vu), 245 B.R. 644, 647 (9 Cir. BAP	th
2000). The case has not been closed, so § 554(c) is
inapplicable.
(doc 836, pp. 4-5). Except for several notices filed after this
Memorandum Opinion, the next document filed in the case was the
Trustee’s “Abandonment of Property” (doc 844). Anyone with even
a cursory familiarity with the Memorandum Opinion on Abandonment
would realize that the Trustee’s filing accomplished nothing
Page -8-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 8 of 29

other than to state his intent to abandon property effective as
of the closing of the case. Abandonment requires a court order
or the closing of a case. Whatever Judge Herrera did was not a
bankruptcy court order and in any event took place in a
completely unrelated proceeding that deals with the aftermath of
the foreclosure of Debtor’s former residence. Next, Debtor makes
some reference to this Court saying “okay” at a hearing on
October 2, 2008. “Okay” is not a court order either and no	6
amount of stubborn repetition motivated by a desperate need for
reality to be otherwise can change that.
Page 4 of the Motion then seems to suggest that the
Bankruptcy Court did not have jurisdiction over the main
bankruptcy case during the pendency of the recommendation to the
District Court that it adopt Proposed Findings of Fact and
Conclusions of Law in adversary 04-1240 and order abstention.
The Court has listened to that portion of the October 2,	6
2008 hearing to which Debtor refers. Chris Pierce, attorney for
the Garrets, was discussing scheduling issues related to 1) the
issue of Hydroscope Group, Hydroscope Inc., USA, Hydroscope
Canada Inc. and CBM Group, Inc.’s (“Entities”) collective
objection to the Trustee’s withdrawal of a Report of No
Distribution, with the Entities’ seeking a declaration that the
Report of No Distribution had effectively abandoned the assets;
with 2) the Debtor’s Motion to Compel Abandonment (doc 786). Mr.
Pierce suggested that the Court should rule on the first issue
first, because if the Court decided the first issue in the
Entities’ favor there would be no need for a ruling on the second
issue because the assets would already be abandoned. The Court
said “okay” and then turned to Mr. Montoya for his input. He
stated that if the Entities prevailed, he would file a Notice of
Abandonment. Again, the Court said “okay.” Clearly both “okays”
meant “I understand” only and not “I approve and so order.”
Page -9-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 9 of 29

Debtor cites no legal authority for this proposition. In fact,
as the District Court noted when it referred these motions back
to the Bankruptcy Court, the automatic reference of bankruptcy
cases to the Bankruptcy Court had not been withdrawn in this
case. Therefore, all administrative matters, e.g., stay motions,
sanctions motions, discovery motions, etc., properly remained
before the Bankruptcy Court. See Fed.R.Bankr.P. 5011(c):
The filing of a motion for withdrawal of a case or
proceeding or for abstention pursuant to 28 U.S.C. §
1334(c) shall not stay the administration of the case
or any proceeding therein before the bankruptcy judge
except that the bankruptcy judge may stay, on such
terms and conditions as are proper, proceedings pending
disposition of the motion.
Page 4 of the Motion also states “Additionally, no order of
this Court ever terminated the Automatic Stay.” This is utterly
wrong. See docket 740 (Order Granting Stay Relief, filed
4/21/08, which ordered:
The automatic stay is both annulled ... and modified,
with respect to any property in which either the estate
or the Debtors claim an interest, such that any party
is entitled to seek, or to continue to seek, whatever
state law or other remedies it wishes with respect to
the property, including but not limited to
adjudications of liability, lien rights and amounts
owed.);
docket 741 (Minutes of 4/17/08 hearing at which automatic stay
was modified and annulled); docket 773 (Order Reiterating,
Clarifying and Expanding As Needed April 21, 2008 Order Granting
Stay Relief and Other Relief, filed 08/05/08); docket 819 (Order
Page -10-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 10 of 29

Denying Motion for Reconsideration of Order Granting Relief from
Stay, filed 10/08/08).
It is true that this Court has never ruled on whether there
was a stay violation before the modification and annullment. Nor
would it have been proper to do so. The only motions for
sanctions, before the ones involved here, were filed by the
Debtor in Possession and the Entities before the case converted
from Chapter 11 to Chapter 7. Upon conversion, Debtor and the
Entities lost standing to pursue stay violations . After	7 8
Article III of the Constitution restricts federal court	7
jurisdiction to “Cases” and “Controversies.” Summer v. Earth
Island Institute, 129 S.Ct. 1142, 1148 (2009). The doctrine of
standing requires federal courts to satisfy themselves that the
plaintiff has alleged such a personal stake in the outcome of the
controversy as to warrant his invocation of federal-court
jurisdiction. Id. at 1149. (Citation omitted. Emphasis in
original.) Standing under Article III requires that an injury be
concrete, particularized, and actual or imminent; fairly
traceable to the challenged action; and redressable by a
favorable ruling. Monsanto Co. v. Geertson Seed Farms, 130 S.Ct.
2743, 2752 (2010)(Citation omitted.) In this case, Debtor lacks
standing because he cannot recover anything unless the unsecured
creditors are paid in full. Creditors will not be paid in this
no-asset case. Therefore, Debtor has no injury the court can
redress with a favorable ruling. He has no interest in the
outcome of any alleged stay violations. He had standing as a
debtor-in-possession, but lost it when the when the trustee was
appointed and when the case converted.
Debtor apparently does not understand (or refuses to	8
understand) the Court’s repeated statements that once the case
converted to Chapter 7 only the Chapter 7 Trustee had standing to
pursue estate causes of action. See, e.g. Mark Bell Furniture
Warehouse, Inc.; v. D.M. Reid Assoc., Ltd. (In re Mark Bell
Furniture Warehouse, Inc.), 992 F.2d 7, 9-10 (1st Cir.
1993)(Federal courts are duty bound to inquire into standing.
Standing requires personal injury traceable to the allegedly
(continued...)
Page -11-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 11 of 29

(...continued)	8
unlawful conduct. A Chapter 7 Trustee, not the Chapter 7 debtor,
is responsible for collecting all property of the estate and
reducing it to money. If a Chapter 7 estate is insolvent, the
debtor lacks standing to challenge bankruptcy court judgments
unless they directly affect the scope of the debtor’s
discharge.)(Note: Debtors have alleged that the estate is
administratively insolvent. See Doc 786 (Debtors’ Motion to
Compel Abandonment). Therefore, Debtors have acknowledged that,
under no conditions, will they receive anything from the estate
after paying creditors in full. Therefore, nothing they do or
say should influence anything in the case. In other words, their
concerns at this point become irrelevant.); Perkins v. Teachers’
Retirement System of Illinois (In re Perkins), 902 F.2d 1254,
1257-58 (7th Cir. 1990):
Section 704(1) authorizes and obligates the
trustee to collect and reduce to money the property of
the estate for which such trustee serves. 11 U.S.C. §
704(1). See also 11 U.S.C. § 323 (the trustee is the
representative of the estate and has the capacity to
sue and be sued). The authority to collect the
debtor's assets is vested exclusively in the trustee.
Koch Refining v. Farmers Union Central Exchange, Inc.,
831 F.2d 1339, 1342 (7th Cir. 1987); Begier v. Price
Waterhouse, 81 B.R. 303, 304 (E.D. Pa. 1987); Goldberg
v. Weichert ( In re Timberline Energy, Inc.), 70 B.R.
450, 452-53 (Bankr. N.D. N.Y. 1987); National
Equipment & Mold. Corp. v. Apollo Tire Co., Inc., (In
re National Equipment & Mold. Corp.), 60 B.R. 133, 135
(Bankr. N.D. Ohio 1986); Durham v. Yancey (In re
Yancey), 46 B.R. 621, 623 (Bankr. E.D. Pa. 1985). A
trustee may be divested of this exclusive authority
only in narrow circumstances. When (a) the trustee
unjustifiably refuses a demand to pursue the action;
(b) the creditor establishes a colorable claim or cause
of action; and (c) the creditor seeks and obtains leave
from the bankruptcy court to prosecute the action for
and in the name of the trustee, then may an individual
creditor or creditors' committee prosecute an action
originally vested in the trustee. Louisiana World
Esposition v. Federal Insurance Company, 858 F.2d 233,
247 & n. 14 (5th Cir. 1988); Koch Refining, 831 F.2d at
1346-47 & n. 9.
None of these prerequisites were met prior to the
filing of the motion by the Roukas. When a third party
(continued...)
Page -12-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 12 of 29

(...continued)	8
tries to assert an action still vested in the trustee,
the court should dismiss the action. Pierson & Gaylan
v. Creel & Atwood ( In re Consolidated Bancshares,
Inc.), 785 F.2d 1249, 1253-54 (5th Cir. 1986); Mitchell
Excavators, Inc. v. Mitchell, 734 F.2d 129, 131-32 (2nd
Cir. 1984).
Similarly, in this case neither the Debtors nor the Entities
established that the trustee unjustifiably refused a demand to
pursue actions for violation of the automatic stay. Neither did
they prove to this Court that their claims were “colorable”; at
every preliminary hearing on the numerous stay violation motions
the Court initially found that the actions complained of simply
were not stay violations. Although the Court ultimately denied
all of the motions as being brought by parties with no standing,
the Court remains convinced that no stay violations occurred.
Finally, neither Debtor nor his Entities sought permission from
this Court to pursue the stay violations in the Trustee’s name
for the benefit of the creditors and estate. In fact, the
motions they filed sought damages on their own behalf to the
exclusion of the creditor body. See Third motion for sanctions,
(doc 696, p.1) and n.1, supra.; Ardese v. DCT, Inc. (In re
Ardese), 2006 WL 3757916 at *3-4 (E.D. Ok. 2006)(Section
541(a)(1) creates a bankruptcy estate comprised of “all legal or
equitable interests of the debtor in property as of the
commencement of the case.” Section 541(a)(7) provides for
inclusion of “any interest in property that the estate acquires
after commencement of the case.” A plaintiff may assert only his
own rights and interests. The Bankruptcy Code provides that the
bankruptcy trustee is the representative of the estate and it
also grants the trustee the capacity to sue and be sued. This
implies that only the trustee can assert causes of action
belonging to the bankruptcy estate. Chapter 7 debtors generally
lack standing.); Zavala v. Wells Fargo Bank, N.A. (In re Zavala),
444 B.R. 181, 189 (Bankr. E.D. Cal. 2011)(In federal court, one
may not proceed with theoretical arguments or purport to advance
the rights of other persons. To qualify as a party with
standing, the litigant must show an invasion of a legally
protected interest that is concrete and particularized and actual
or imminent. The Bankruptcy Code’s automatic stay provisions
protect either the debtor or the estate. The stay provisions do
not grant debtors “co-trustee” powers to control property of the
estate. “ The Debtors may not assert rights of the bankruptcy
estate against third-parties, such as the alleged claim for
violating the automatic stay as it applies to property of the
(continued...)
Page -13-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 13 of 29

conversion, the Chapter 7 Trustee did not pursue the motions and
affirmatively stated that he would not. Therefore, there was
never a hearing on alleged violations. The Court cannot rule
without evidence. Furthermore, without anyone with standing
requesting relief any opinion the Court would have issued on the
motions would have been an improper advisory opinion as well as
based on absolutely no evidence.
One fact is crystal clear. The stay was modified and
annulled on April 17, 2008. After April 17, 2008 there could be
no violation of the automatic stay. Anything after that date is
not relevant. The orders on which Debtors seeks reconsideration
argue that on February 18, 2009 the state court entered a
judgment adverse to the Debtors and/or the Entities. Nothing on
February 18, 2009 could have violated a stay that was modified
and annulled two years earlier. And, under Federal law, Debtor
absolutely lacks standing to assert anything on behalf of an
(...continued)	8
estate. The Debtors do not have standing to assert the violation
of the automatic stay alleged in the Complaint.”; Securities
Investor Protection Corp. v. Madoff (In re Madoff), 443 B.R. 295,
311 (Bankr. S.D. N.Y. 2011)(Third parties violate the automatic
stay when they assert causes of action belonging to the estate
under sections 362 and 541 because the trustee has the exclusive
standing to prosecute those actions.); In re Young 439 B.R. 211,
217 (Bankr. M.D. Fla. 2010)(The trustee is the only person with
standing to collect and administer property of the estate for the
benefit of the creditors.); Estate of B.J. McAdams, Inc. v.
Ralston Purina Co. (In re B.J. McAdams, Inc.), 154 B.R. 809, 811
(N.D. Ga. 1993)(Upon appointment, a chapter 7 trustee is the sole
representative of the estate and the debtor thereafter lacks
standing to pursue estate claims.)
Page -14-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 14 of 29

estate which has not paid creditors in full. Despite Debtor’s
proclamations that he believes he is a fiduciary for the
Entities’ creditors, he is not. He received a discharge. He no
longer has any obligations toward those creditors. And, his
claim of fiduciary duty is belied by the fact that the related
Entities have filed for judgments for themselves, not for the
estate. Finally, there is nothing in the Bankruptcy Code that
allows a discharged debtor to assume powers over property of the
estate in an attempt to recover for creditors.
Before turning to the facts that Debtor claims the Court
misapprehended, the Court will remind the Debtor of two things
about the automatic stay that he overlooks. First, the automatic
stay does not protect anyone except the debtor or property of the
debtor or of the estate. Memorandum Opinion on Sanctions for
Violation of the Automatic Stay, doc 798, p.4. See also
Memorandum Opinion, doc 884, p.14 (“It is well-established that
stays pursuant to § 362(a) are limited to debtors and do not
encompass non-bankruptcy co-defendants.”)(Citation omitted.)
Second, the automatic stay does not prevent a debtor’s defendants
from asserting their defenses to a debtor’s claim. Id. p.14-15
(Citations omitted.)
Debtor states thirty-five paragraphs of facts which he
claims the Court misapprehended. The Court has reviewed them
thoroughly and finds that they are all either 1) not in fact
Page -15-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 15 of 29

misapprehended, 2) irrelevant, or 3) conclusory and based on an
incorrect understanding of the law. The Court will not copy the
facts into this Memorandum Opinion, but they are deemed
incorporated by reference.
Fact 1 asserts that the claims against Wells Fargo that were
dismissed on February 18, 2009 were estate claims. This is
irrelevant because claims by the Debtor against Wells Fargo were
not subject to the automatic stay. Furthermore, the stay had
been terminated and annulled about two years previously.
Fact 2 asserts again that the claims against Wells Fargo and
also the claims against Garrett were pre-petition individual
claims that were scheduled. Again, irrelevant because they are
claims by a debtor, not against a debtor.
Fact 3 asserts that various Entities (but not HCAN)
transferred claims to the Debtors prepetition. Irrelevant.
Fact 4 asserts that Debtor asserted these claims in
Adversary No. 04-1240-S. This is true, but irrelevant. This
Court found that that adversary was duplicative of a pending
state court case (in which the Debtor was in a precarious
position and therefore seeking a more favorable forum).
Facts 5, 6 and 7 are an irrelevant recitation of the content
of three adversary pleadings dealing with abstention.
Fact 8 reiterates that the February 18, 2009 state court
summary judgment destroyed the estate owned causes of action.
Page -16-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 16 of 29

Irrelevant because these were debtor claims, not claims against a
debtor. Also, this was two years after the stay was annulled and
terminated.
Fact 9 and 10 should be read together. The Garrett Trust
filed a complaint in state court asserting derivatively the
claims of Hydroscope Group against Wells Fargo Bank, which were
some of the claims owned by the estate. These claims were also
dismissed in the February 18, 2009 state court order. First, the
fact that an individual shareholder files a derivative suit is
not definitively an appropriation of corporate property.
A shareholder ordinarily cannot, as an individual
as distinguished from a representative of the
corporation, sue directors or other corporate officers
for mismanagement, misappropriation, corporate waste,
negligence or the like on a cause of action belonging
to the corporation. The remedial rights of minority
shareholders with respect to wrongs committed against
the corporation by the officers and directors in the
management of corporate affairs are derivative rights,
and any action taken by the shareholders to redress
such wrongs must be for the benefit of the corporation.
The policy supporting the rule forbidding direct
shareholder suits against management is most compelling
when the plaintiff is similarly situated to other
shareholders, suffers the same injury, and retains the
same opportunity to be made whole by a corporate
recovery from the wrongdoer. For example, where the
shareholder's claim is that he or she has been injured
by a fall in the price of the corporation's stock, the
claim is probably derivative in nature. The exception
to the rule forbidding direct shareholder suits against
management is most compelling where the alleged wrong
unfairly affected the minority shareholders but did not
work an injury either to the corporation or its
majority shareholders. Such an example would be when
the board of directors takes an action that has the
purpose and effect of reducing the voting power of the
minority, nonmanagement stockholders.
Page -17-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 17 of 29

A claim of stock dilution and a corresponding
reduction in a stockholder's voting power is an
individual claim.
12B Fletcher Cyclopedia of the Law of Corporations § 5924
(footnotes omitted.) Garrett filed three adversaries in
connection with Debtors’ bankruptcy: 06-1135, 08-1074 and 08-
1089. The Court has taken judicial notice of the complaints, not
for the truth of their contents, but to review the allegations
made by the plaintiff.
In 06-1135, the Garretts allege, among other things, that
Debtor sold Garrett 900,000 shares of common stock in Hydroscope
for $2,000,000 in a private offering. Garrett alleges that
Debtors were the majority owners of Hydroscope and that they
misrepresented that Hydroscope owned stock of various other
corporations that had unencumbered assets, and that proceeds from
his stock purchase would be used to pay off Wells Fargo Bank and
that Garrett would be a board member. Garrett was made a board
member, but then removed in less than one year by Debtors who
told him that they were the majority shareholders and could act
unilaterally. Afterwards, Debtors refused to disclose financial
information regarding Hydroscope or Wells Fargo’s loan, and then
illegally issued $2,000,000 of preferred stock to themselves that
subordinated Garrett’s holdings. Debtors then sought merger
opportunities and attempted to force minority shareholders to
sell their stock back to them for pennies on the dollar.
Page -18-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 18 of 29

In 08-1074, the Garretts seek a determination that their
claims are not dischargeable under Sections 523(a)(2)(A),
523(a)(4) and 523(a)(6). The facts alleged are similar to those
in 06-1135.
In 08-1089, the Garretts sought an injunction against the
Debtors to prevent them from implementing a Creditor and
Shareholder Rights Plan for Hydroscope that proposed to, or
purportedly had, issued an additional 9,000,000 shares of
Hydroscope to another corporation formed or controlled by the
Debtors for the express purpose of diluting Garrett’s interests.
This adversary was dismissed on the Plaintiff’s motion after they
were granted an injunction by the state district court based on
the same allegations.
From the allegations in these three adversaries, it is quite
clear to the Court that any action filed by Garrett in the state
court was personal to him, and not an appropriation of
Hydroscope’s rights which were purportedly assigned to the
Debtors. Furthermore, fact 10 demonstrates that, even if this
had been a misappropriation of estate assets, there were no
damages. The asserted claims were dismissed out on summary
judgment on February 18, 2009. If the claims had no merit, the
estate had no damages when they were dismissed.
Fact 11 states that, as Debtor understands it, Wells Fargo
and Garrett agreed the claims dismissed in February 2009 were
Page -19-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 19 of 29

protected by the automatic stay. It is not relevant what the
creditors agreed to or what Debtor believes they agreed to. The
fact is that claims brought by a debtor are not subject to the
automatic stay.
Fact 12 states that the claims dismissed on February 18,
2009 were the same claims under consideration by the United
States District Court until it decided to abstain in March 19,
2009. First, the District Court was definitely not considering
the “claims”. It was considering only whether to adopt the
Bankruptcy Court’s recommendation to abstain. Second, the stay
had been lifted and annulled two years earlier.
Fact 13 states that at a hearing on February 18, 2009, the
attorney for Wells Fargo argued that Debtor could not defend his
property interests. Fact 13 does not state what the outcome of
this argument was. However, as noted in the Memorandum Opinion,
doc 885, p. 15-16, the state court made specific findings that
Wells Fargo did not sue the Cooks and that Wells Fargo’s summary
judgment motion did not seek a recovery against the Cooks or any
assets owned by the Cooks. (quoting Debtor’s motion for
sanctions, doc 847, exhibit 8). Therefore, it is totally unclear
to this Court what property interests Debtor might have been
defending if he were neither sued nor was the bank attempting
recovery of his property. Obviously, Debtor is upset because the
state court allowed foreclosure on assets in corporations he
Page -20-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 20 of 29

controlled or owned, but the automatic stay does not extend to
such corporations.
Fact 14 states that Wells Fargo’s attorney told the state
court judge that the claims being dismissed were estate claims
against the bank. That may be true, but the automatic stay does
not prohibit that. Furthermore, the stay had been lifted and
annulled two years earlier.
Fact 15 states that Debtor tried to tell the state court
judge that the claims were protected by the automatic stay. They
were not.
Fact 16 states that “The claims of HCAN alleged to be owned
by the estate were destroyed by the entry of the Summary Judgment
Order of February 18, 2009, as HCAN’s claims have the same
factual nexus as the other claims dismissed the same day.”
First, Fact 3 discussed above asserts that various Entities (but
not HCAN) transferred claims to the Debtors prepetition.
(Emphasis added.) If the claims were not transferred, the	9
Confusion such as this has permeated this case. Debtors	9
set up corporation after subsidiary/related corporation from
Nevada to Canada, no doubt properly documented with all corporate
formalities followed, but were not forthcoming to their creditors
about which owned what or what transferred from where to where.
Early in the case the Debtors proved that certain allegedly very
valuable patents had been transferred from one corporation to the
Debtors individually by their assumption of that corporations’
debts and the payment of $0.89, as documented on the smallest
size Post-It note. In retrospect, the Debtors’ assumption of the
corporation’s debts, made on the verge of bankruptcy, provided
little if any consideration for the valuable transfers. Many of
(continued...)
Page -21-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 21 of 29

automatic stay does not protect non-debtors. If the claims were
transferred, they were claims by a debtor and not protected by
the automatic stay. Whether HCAN’s claims were incidentally
diminished in value by the state court ruling is really none of
this Court’s concern.
Fact 17 states that the state court judge asked Wells Fargo
why it had not included the Debtors’ exempt property in its
summary judgment motion. This may be true, but no transcript was
provided. It is also irrelevant. Creditors generally may pursue
debt collection in any order they choose.
Fact 18 states that, in response to the question in fact 17,
Wells Fargo’s attorney told the judge that they would be able to
foreclose later. This is a true statement. The automatic stay
was lifted and annulled two years earlier as to all parties and
all property.
Fact 19 alleges that Wells Fargo’s judgment destroyed the
Debtor’s exempt property. It is unclear what Debtor means. If
Debtor means Wells Fargo had a right to foreclose, i.e. a lien,
the lien was never avoided in the bankruptcy case, nor could it
be. See Section 522(c)(2) (Exempt property is not liable during
or after the case for any prepetition debt, except a debt secured
by a lien that is not avoidable or void) and section 522(f) (A
(...continued)	9
the state lawsuits and adversary proceedings have attempted to
unscramble the resulting mess with virtually no progress.
Page -22-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 22 of 29

debtor may avoid judicial liens and nonpossessory, nonpurchase-
money security interests in household goods, tools of the trade
and health aids. There is no provision for a chapter 7 debtor to
avoid a voluntarily granted lien.) If Debtor means that the
value of his exemption decreased because Wells Fargo foreclosed
on property of the Entities, that is too tenuous and speculative
to state a claim.
Fact 20 states that the Debtors committed to repay the debts
of the Entities, and cannot do so now that the claims were
destroyed by the summary judgment. This is not relevant. The
stay does not protect actions brought by the Debtor. The
automatic stay was also terminated two years previously.
Facts 21 to 31 all try to convince the Court that the assets
really were abandoned earlier in the case despite the Court’s
Memorandum Opinion and Order that quite specifically rule
otherwise (docs 838, 839). For example, fact 21 states that all
creditors were noticed of possible abandonment of assets at least
three times and that only the Trustee, Garretts and Wells Fargo
objected. For one thing, this is not true; the Trustee did not
notice his proposed abandonments. Furthermore, three objections
are more than sufficient to prevent the abandonment. The point
is, no orders abandoning property were entered . Other facts	10
A notice to creditors of the proposed abandonment is not,	10
in itself, sufficient. The purpose of notice is to give
(continued...)
Page -23-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 23 of 29

claim that the Court said “okay” in response to the parties
discussion of the timeline in which the Court should rule on the
various pending matters. This issue was addressed above, and
“okay” is not a court order.
Fact 32 states that the Trustee asked if certain adversaries
would be dropped if he would abandon property. This is not
relevant, nor does it constitute a court order.
Fact 33 deals with a response by some unidentified person to
the Trustee’s question in fact 32, and is also irrelevant.
Fact 34 claims that both the Trustee and Debtors’ attorney
told the Debtors that all property had been abandoned and that it
qualified under Section 554(a). It is not relevant what the
Debtors were told. Abandonment procedures must be strictly
followed to protect the creditors overall. No order or case
closing means no abandonment.
Fact 35 states that Debtor is a plaintiff in an adversary
proceeding (mentioned above) whose reference was withdrawn by the
District Court (the Honorable Judith Herrera) and is currently
pending against his former mortgage company. This is also not
relevant. The fact that the District Court withdrew the
(...continued)	10
creditors the opportunity to object. If there are objections,
the Court must have a hearing and enter an Order. In this case
there were three objections and no order.
Page -24-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 24 of 29

reference for a single, unrelated matter has no impact on the
rest of the case.
ADDITIONAL COMMENT
In a gratuitous section of Debtor’s Motion starting at page
11 Debtor relates that he has filed a RICO lawsuit against his
creditors and their attorneys, alleging that the original Trustee
Linda Bloom accepted bribes to make certain misrepresentations to
this Court. If the Debtor has any evidence to support this
extraordinarily grave charge he should provide it to the United
States Attorney immediately.
In this section he also states that the Entities’ creditors
believe the Court has become biased and has urged the attorneys
to “churn” the estate for three years. On the facts of this
case, this statement demonstrates a fundamental lack of
knowledge. This case is a no asset case and always has been.
With no assets, there is nothing worth churning the estate for
and never has been anything to churn.
SUGGESTION
“Has the Court’s objectivity been compromised?” Motion, doc
898 p.12. “There is an expressed concern [amongst the Entities’
creditors] the Court may have lost its ability to be objective in
the remaining matter before this Court. It is respectfully
requested the Court address this concern[.]” Id., p.17.
Page -25-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 25 of 29

Federal Rule of Bankruptcy Procedure 5004 governs
disqualification of a bankruptcy judge. The rule provides that:
(a) Disqualification of Judge. A bankruptcy judge shall
be governed by 28 USC § 455, and disqualified from
presiding over the proceeding or contested matter in
which the disqualifying circumstance arises or, if
appropriate, shall be disqualified from presiding over
the case.
Fed. R. Bankr.P. 5004(a). Section 455 of the United States Code
states, in relevant part, that:
(a) Any justice, judge, or magistrate [judge] of the
United States shall disqualify himself in any
proceeding in which his impartiality might reasonably
be questioned.
(b) He shall also disqualify himself in the following
circumstances:
(1) Where he has personal bias or prejudice
concerning a party, or personal knowledge of
disputed evidentiary facts concerning the
proceeding; ....
28 U.S.C. § 455(a).
While 28 U.S.C. § 455 imposes a duty on the Court
to recuse where any of the statutory grounds exist,
there is a corresponding duty not to do so if cause for
recusal has not been shown. In re Computer Dynamics,
Inc., 253 B.R. 693, 698 (E.D. Va. 2000) (“[A] judge is
equally obliged not to recuse himself when there is no
necessity, as he is to recuse himself when there is.”);
Armstrong v. Potter (In re Potter), 2002 WL 31802978 n.
1 (10th Cir. BAP 2002) (“A judge's duty to hear cases
is not so ephemeral that it dissipates at the first
sight of any potential bias or partiality toward one of
the litigants.”); In re Womack, 253 B.R. 245, 246
(Bankr. E.D. Ark.2000) (“Although the Court has a duty
to recuse where any of [the § 455] factors exist, there
is a concomitant duty not to recuse on unsupported,
irrational or tenuous speculation.”). As Justice (then
Judge) Breyer explained in In re Allied–Signal, Inc.,
891 F.2d 967, 970 (1st Cir. 1989), courts must exercise
great care in considering motions for recusal so as to
Page -26-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 26 of 29

discourage their use for purposes of judge shopping or
delay:
When considering disqualification, the district
court is not to use the standard of mere ...
suspicion ... that is because the disqualification
decision must reflect not only the need to secure
public confidence through proceedings that appear
impartial, but also the need to prevent parties
from too easily obtaining the disqualification of
a judge, thereby potentially manipulating the
system for strategic reasons, perhaps to obtain a
judge more to their liking.
See also In re Nat'l Union Fire Ins. Co., 839 F.2d
1226, 1229 (7th Cir. 1988) (“Judges have an obligation
to litigants and their colleagues not to remove
themselves needlessly, because a change of umpire in
mid-contest may require a great deal of work to be
redone ... and facilitate judge-shopping.” (citation
omitted)); United States v. Pungitore, 15 F.Supp.2d
705, 715 n. 4 (E.D. Pa. 1998) (“A liberal recusal
policy would encourage judge shopping.”); Scott v.
Pryor ( In re Chandler's Cove Inn, Ltd.), 74 B.R. 772,
773 (Bankr. E.D. N.Y. 1987) (“[R]ecusal motions which
are too liberally granted are tantamount to unilateral
‘judge shopping’ and may be used for a delaying tactic,
for their disposition requires a serious investment of
judicial time and thought.”).
In re Haas, 292 B.R. 167, 175-76 (Bankr. S.D. Ohio 2003).
“Judicial rulings alone almost never constitute a valid
basis for a bias or partiality motion.” Liteky v. United States,
510 U.S. 540, 555 (1994).
The judge who presides at a trial may, upon completion
of the evidence, be exceedingly ill disposed towards
the defendant, who has been shown to be a thoroughly
reprehensible person. But the judge is not thereby
recusable for bias or prejudice, since his knowledge
and the opinion it produced were properly and
necessarily acquired in the course of the proceedings,
and are indeed sometimes (as in a bench trial)
necessary to completion of the judge's task. As Judge
Jerome Frank pithily put it: “Impartiality is not
gullibility. Disinterestedness does not mean
child-like innocence. If the judge did not form
Page -27-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 27 of 29

judgments of the actors in those court-house dramas
called trials, he could never render decisions.” In re
J.P. Linahan, Inc., 138 F.2d 650, 654 (CA2 1943). Also
not subject to deprecatory characterization as “bias”
or “prejudice” are opinions held by judges as a result
of what they learned in earlier proceedings. It has
long been regarded as normal and proper for a judge to
sit in the same case upon its remand, and to sit in
successive trials involving the same defendant.
Id. at 550-51.
As noted above in footnote 1, after filing this motion,
Debtor filed and then withdrew his Motion to Recuse (doc 906;
withdrawn by doc 918). If Debtor believes he can refile that
motion consistent with Bankruptcy Rule 9011, he is free and
welcome to do so.
That said, the Court also hastens to assure Debtor that the
Court does not view Debtor as a “thoroughly [or even less than
thoroughly] reprehensible person”. The Court does view the
Debtor as a self-admitted “pragmatic anal engineer with strong
religious convictions” who not too long ago was possessed,	11
directly or indirectly, of considerable assets, including a
lovely home and very promising technology and business
opportunities arising from his creativity and hard work, and who
since then has suffered not only the loss of that property but
the far more massive personal losses of a spouse that he
obviously deeply loved as well as of other family members. Thus
By quoting Debtor’s candid description of himself, the	11
Court of course is not deprecating Debtor.
Page -28-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 28 of 29

the Court sees a litigant driven by grief and a sense of what
might have been, unable to let reality intrude and dictate an end
to the litigation and to begin to find closure. The Court’s
sympathy for Debtor’s situation of course cannot create facts or
law where none otherwise exist.
CONCLUSION
For the reasons stated herein, the Court will enter an Order
Denying Debtor’s Amended Motion for Reconsideration.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: August 9, 2011
Copies to:
Daniel William Cook
920 Galeras Street NW
Albuquerque, NM 87120
Michelle K. Ostrye
PO Box 1945
Albuquerque, NM 87103
Jay D. Hertz
PO Box 1945
Albuquerque, NM 87103
Catherine F. Davis
PO Box 94750
Albuquerque, NM 87199-4750
Philip J. Montoya
Trustee
PO Box 159
Albuquerque, NM 87103
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Chris W Pierce
PO Box 30088
Albuquerque, NM 87190-0088
Julie J Vargas
PO Box 30088
Albuquerque, NM 87190-0088
William R Keleher
PO Box 2168
Albuquerque, NM 87103-2168
Page -29-
Case 04-17704-nlj7 Doc 922 Filed 08/09/11 Entered 08/09/11 14:54:07 Page 29 of 29