No. 10-11202
In the
United States Court of Appeals
for the Fifth Circuit
▬▬▬▬▬▬▬▬▬▬▬
NETSPHERE, INC. Et Al,
Plaintiffs
v.
JEFFREY BARON,
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY,
Defendant-Appellee
▬▬▬▬▬▬▬▬▬▬▬
Appeal of Order Appointing Receiver in Settled Lawsuit
▬▬▬▬▬▬▬▬▬▬▬
----------------------------------------------------------------------------------------
Cons. w/ No. 11-10113
NETSPHERE INC., Et Al, Plaintiffs
v.
JEFFREY BARON, Et Al, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C.,
Appellants
v.
PETER S. VOGEL,
Appellee
▬▬▬▬▬▬▬▬▬▬▬
Appeal of Order Adding Non-Parties Novo Point, LLC
and Quantec, LLC as Receivership Parties
▬▬▬▬▬▬▬▬▬▬▬
From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
EMERGENCY MOTION TO STAY ORDER APPOINTING
RECEIVER OVER JEFFREY BARON PENDING APPEAL TO
PROTECT FIRST AND FIFTH AMENDMENT RIGHTS
____________________________________________________________________________
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CERTIFICATE OF INTERESTED PERSONS
The undersigned counsel of record certifies that the following listed persons and
entities have an interest in the outcome of this case. These representations are made in
order that the judges of this Court may evaluate possible disqualification or recusal.
1. PARTIES
a. Defendant: JEFFREY BARON
b. Defendant: DANIEL J. SHERMAN, Trustee
for ONDOVA LIMITED COMPANY
c. Intervenor: Rasansky, Jeffrey H. and Charla G. Aldous
d. Intervenor: VeriSign, Inc.
e. Plaintiffs: (1) Netsphere Inc
(2) Manila Industries Inc
(3) Munish Krishan
f. Appellants: (1) Novo Point, LLC
(2) Quantec, LLC
g. Appellee: Peter S. Vogel
2. ATTORNEYS
a. For Appellant: Gary N. Schepps
Suite 1200
5400 LBJ Freeway
Dallas, Texas 75240
Telephone: (214) 210-5940
Facsimile: (214) 347-4031
b. For Appellee: Gardere Wynne Sewell LLP
(1) Barry Golden
(2) Peter L. Loh
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1601 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone (214) 999-3000
Facsimile (214) 999-4667
bgolden@gardere.com
c. For Intervenor VeriSign: Dorsey & Whitney (Delaware)
(1) Eric Lopez Schnabel, Esq.
(2) Robert W. Mallard, Esq.
d. For Intervenor Rasansky and Aldous: Aldous Law Firm
(1) Charla G Aldous
d. For Plaintiffs:
(1) John W MacPete, Locke Lord Bissell & Liddell
(2) Douglas D Skierski, Franklin Skierski Lovall Hayward
(3) Franklin Skierski, Franklin Skierski Lovall Hayward
(4) Lovall Hayward , Franklin Skierski Lovall Hayward
(5) Melissa S Hayward, Franklin Skierski Lovall Hayward
(6) George M Tompkins, Tompkins PC
3. OTHER
a. Companies and entities purportedly seized by the receivership:
(1) VillageTrust
(2) Equity Trust Company
(3) IRA 19471
(4) Daystar Trust
(5) Belton Trust
(6) Novo Point, Inc.
(7) Iguana Consulting, Inc.
(8) Quantec, Inc.,
(9) Shiloh LLC
(10) Novquant, LLC
(11) Manassas, LLC
(12) Domain Jamboree, LLC
(13) Genesis, LLC
(14) Nova Point, LLC
(15) Quantec, LLC
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(16) Iguana Consulting, LLC
(17) Diamond Key, LLC
(18) Quasar Services, LLC
(19) Javelina, LLC
(20) HCB, LLC, a Delaware limited liability company
(21) HCB, LLC, a U.S. Virgin Islands limited liability company
(22) Realty Investment Management, LLC, a Delaware limited liability
company
(23) Realty Investment Management, LLC, a U.S. Virgin
(24) Islands limited liability company
(25) Blue Horizon Limited Liability Company
(26) Simple Solutions, LLC
(27) Asiatrust Limited
(28) Southpac Trust Limited
(29) Stowe Protectors, Ltd.
(30) Royal Gable 3129 Trust
b. Receiver / Mediator / Special Master: Peter Vogel
c. Non-party attorneys seeking fees from the receivership res:
1. Garrey, Robert (Robert J. Garrey, P.C.)
2. Pronske and Patel
3. Carrington, Coleman, Sloman & Blumenthal, LLP
4. Aldous Law Firm (Charla G. Aldous)
5. Rasansky Law Firm (Rasansky, Jeffrey H.)
6. Schurig Jetel Beckett Tackett
7. Powers and Taylor (Taylor, Mark)
8. Gary G. Lyon
9. Dean Ferguson
10. Bickel & Brewer
11. Robert J. Garrey
12. Hohmann, Taube & Summers, LLP
13. Michael B. Nelson, Inc.
14. Mateer & Shaffer, LLP (Randy Schaffer)
15. Broome Law Firm, PLLC
16. Fee, Smith, Sharp & Vitullo, LLP (Vitullo, Anthony “Louie”)
17. Jones, Otjen & Davis (Jones, Steven)
18. Hitchcock Evert, LLP
19. David L. Pacione
20. Shaver Law Firm
21. James M. Eckels
22. Joshua E. Cox
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23. Friedman, Larry (Friedman & Feiger)
24. Pacione, David L.
25. Motley, Christy (Nace & Motley)
26. Shaver, Steven R. (Shaver & Ash)
27. Jeffrey Hall
28. Martin Thomas
29. Sidney B. Chesnin
30. Tom Jackson
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANTS
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I. TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PERSONS ........................................................................... 1
I. TABLE OF CONTENTS ............................................................................................................. 5
II. SUMMARY ................................................................................................................................. 6
III. STATEMENT OF THE CASE AND FACTS ......................................................................... 8
Current Developments .............................................................................................. 10
IV. STANDARD IN GRANTING STAY PENDING APPEAL .................................................. 12
V. ARGUMENT & AUTHORITY................................................................................................ 13
A. LIKELIHOOD OF SUCCESS ON APPEAL.................................................................... 13
Appointment of a receiver in this case is not authorized by law.............................. 13
The purpose for which the receiver was sought is also clearly
unconstitutional......................................................................................................... 15
The means of the receivership order is clearly unconstitutional .............................. 16
The application for receivership was grossly defective ........................................... 16
The order appointing receiver was issued without even minimal procedural
due process and should be declared void.................................................................. 18
B. IRREPARABLE INJURY...................................................................................................... 19
Deprivation of constitutional rights is irreparable injury as a matter of law............ 19
No party from which to recover damages ................................................................ 19
C. NO SUBSTANTIAL HARM TO OTHER PARTIES..................................................... 20
D. PUBLIC INTEREST ............................................................................................................... 20
VI. CONCLUSION........................................................................................................................ 21
VII. PRAYER ................................................................................................................................. 21
VIII. TABLE OF AUTHORITIES ............................................................................................... 23
CERTIFICATE OF SERVICE ..................................................................................................... 25
CERTIFICATE OF NOTICE....................................................................................................... 25
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TO THE HONORABLE FIFTH CIRCUIT COURT OF APPEALS:
COMES NOW JEFFREY BARON, Appellant, and pursuant to Federal Rule
of Appellate Procedure 8(a)(2) moves this Honorable Court to stay the District
Court’s Order Appointing Receiver over Mr. Baron and all his assets signed on
November 24, 2010 [Docket #124, and Docket #130, Entered 11/30/2010] in the
District Court below, pending appeal of that order to this Court pursuant to 28
U.S.C. §1292(a)(2). The granting of this motion is appropriate because the
Appellant Jeffrey Baron has substantial likelihood of success on appeal, and is
suffering immediate and irreparable injury from the District Court’s order. If relief
is not granted immediately Mr. Baron will be prohibited from exercising his
Constitutional right to retain counsel with his own money to file motions to protect
his right to freedom of speech and associate which are threatened August 10, and
August 15. Additionally, Mr. Baron’s right to freedom of speech and freedom of
association will be compromised by the disclosure of confidential communications
between Mr. Baron and a media liaison with respect to counsel relating to public
expressions of speech considered by Mr. Baron, and contacts made by the press to
Mr. Baron.
II. SUMMARY
The relevant law is clear and longstanding. There is no basis in law to
appoint a receiver in this case and the law expressly prohibits such an appointment.
The District Court’s order appointing receiver was issued without due process for a
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clearly improper and unconstitutional purpose, and squarely violates the
Constitution of the United States. The relevant law is clear and longstanding:
(1) A district court is not authorized to appoint a receiver to seize
property unless there is claim seeking further disposition of that
property pled before the court. Gordon v. Washington, 295 U.S.
30, 37 (1935); Tucker, 214 F.2d at 631.
(2) A district court is not authorized to appoint a receiver, as a matter
of subject matter jurisdiction, where no pleadings puts the
property subject to the receivership at issue. Cochrane v. WF
Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931).
(3) A district court is not authorized to seize or freeze a party’s assets
when the disposition of these assets is not an issue in the
underlying lawsuit. In re Fredeman Litigation, 843 F.2d 821, 822
(5th Cir. 1988); De Beers Consol. Mines, Ltd. v. United States,
325 U.S. 212, 221-223 (1945).
(4) A district court is not authorized to interfere with a litigant’s
assets in which no lien or equitable interest was claimed Grupo
Mexicano de Desarrollo, SA v. Alliance Bond Fund, Inc., 527 U.S.
308, 310 (1999).
(5) Issuance of an order for prejudgment seizure without prior notice
or hearing, violates Due Process when issued without a showing
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of extraordinary circumstances and the posting of a bond to pay
the damages for wrongful seizure. Connecticut v. Doehr, 501
U.S. 1, 18 (1991).
The damages being inflicted upon Mr. Baron by virtue of the order are very
real, and are irreparable— Mr. Baron’s right to privacy with respect to his
association with press contacts in a relationship basic to Mr. Baron’s right to public
expression is at threat today. Further, Mr. Baron is barred from taking out
newspaper advertisements with his own money. Mr. Baron is also being denied his
right to retain counsel with his own money, and cannot defend himself in seeking
relief from the current intrusion being attempted into his private and
constitutionally protected affairs. The District Court below requires Mr. Baron
to file motions in different district courts around the country if he desires to
protect his rights, but the receivership order prevents Mr. Baron from hiring
legal counsel with his own money. Exhibit AC.
III. STATEMENT OF THE CASE AND FACTS
This motion and appeal arise out of a breach of contract lawsuit filed in the
District Court.
1
In this lawsuit Netsphere sought to enforce an alleged contract
entered into with Jeffrey Baron and Ondova Limited Company. (Exhibit B).
Subsequent to the filing of the lawsuit, Ondova was forced to file for bankruptcy
protection. Thereafter, all claims and controversies in the District Court lawsuit
1
Netsphere, Inc., et.al., v. Jeffrey Baron, and Ondova Limited Company, Civil action no. 3-
09CV0988-F in the Northern District of Texas.
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settled. (Exhibit C).
Jeffrey Baron is not in bankruptcy. Mr. Baron is a defendant in the District
Court lawsuit and the beneficial owner of the equity of Ondova, the company in
bankruptcy. Mr. Baron became concerned that the attorney for the trustee in the
Ondova bankruptcy, Mr. Raymond J. Urbanik, was charging grossly excessive
fees. Mr. Baron filed an objection to Mr. Urbanik’s latest fee application (over
three hundred thousand dollars) in the bankruptcy court. (Exhibit D).
Mr. Urbanik then filed in the District Court breach of contract lawsuit a
motion to appoint a particular receiver over Mr. Baron. Mr. Urbanik sought to
have Mr. Baron stripped of all his possessions and for that receiver to take
possession of Mr. Baron in the nature of a guardianship so that Mr. Baron would be
unable to hire legal counsel. (Exhibit E). Mr. Urbanik cited as the sole necessity
for his motion that “13. Therefore, the appointment of a receiver is necessary
under the circumstances in order to remove Baron from control of his assets
and end his ability to further hire and fire a growing army of attorneys.”
(Exhibit E).
Without providing any notice and the opportunity for Mr. Baron to be heard,
without any supporting affidavits, and without the entry of any findings, the
District Court below entered an order stripping Mr. Baron of all his possessions
and appointed the receiver requested by Mr. Urbanik over Mr. Baron’s person and
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property.
2
(Exhibit F). The receiver then seized all of Mr. Baron’s assets,
appeared in the bankruptcy court asserting to hold all of Mr. Baron’s rights, and
withdrew the objection to Mr. Urbanik’s fee application. (Exhibit G). The
bankruptcy court then sealed Mr. Urbanik’s fee application so that it could not be
examined by the public. (Exhibit H).
Mr. Baron is currently being deprived of most of his civil rights. (Exhibit F).
All his assets, bank accounts, and credit cards have been seized. Mr. Baron is
prohibited from the most basic elements of freedom. For example, Baron has been
prohibited from taking out advertisements in newspapers to tell the world what the
US government (through the US District Court and its receiver) have done to him,
and from hiring legal counsel to represent him. Exhibit AB.
Current Developments
The receiver is now attempting to chill Mr. Baron's right to free speech, and
invade the confidential relationship between Mr. Baron and his media liaison. The
receiver is using his position as receiver and the power of judicial process available
to him to interfere with Mr. Baron’s ability to exercise his First Amendment rights
to free speech—rights Mr. Baron seeks to exercise, in part, to insure accurate
reporting of the actions and conduct of the receiver. The relationship between a
2
The order appointing receiver and seizure actions of the receiver actually go further, seizing the
assets of retirement and spendthrift trusts for which Mr. Baron is the beneficiary, as well as the
assets of the companies owned by the spendthrift trusts. Again, Mr. Baron is not in
bankruptcy and is not a judgment debtor. No party has made any claim to any property right
in any of Mr. Baron’s assets. Rather, the express and only purpose of the motion for receivership
and summary confiscation of all of Mr. Baron’s property was to prevent Mr. Baron from being
able to hire legal counsel. (Exhibit E).
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citizen and a media liaison is by necessity a very personal relationship. Private
material must be discussed in order to determine what material should be
expressed publicly. If the communications not relating to financial concerns and
work product of a media liaison are freely discoverable without any showing of
need or purpose for the discovery, then people will be less likely to freely
communicate and discuss different options and forms of expression that they may
wish to make in the media. In effect, there would not be a private option to
consider and refine speech before its public expression. The right to discuss in
confidence different possible expressions before they are made public, can be
central to effective communication and ultimate expression. The right to have an
expert shape, edit, and develop content before it is expressed publicly should be
recognized as a component of free speech and expression.
The receiver has served both subpoenas and a deposition notice upon
Jennifer Gronwaldt and Hellerman Baretz Communications, and seeks to intrude
upon all private and confidential communications between and about Jeff Baron.
See Exhibit A. Such an intrusion threatens to chill Mr. Baron's First Amendment
rights to free speech. There is no legitimate interest or lawful purpose served by
the receiver's actions with respect to non-financial communications, notes and
other materials of media and media liaisons with whom Mr. Baron has
communicated, other than to increase the amount of the receiver's fees and to chill
Mr. Baron's ability to express himself when media reports are published about him.
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Mr. Baron’s motion to quash the subpoenas has been denied by the district
court below. See Exhibit AC. Mr. Baron is prohibited from using his own money to
hire an attorney to represent him in the districts where the subpoenas have been
served, and therefore cannot enforce his rights unless stay is immediately granted
and he is allowed to hire an attorney to represent him in those districts. Id. The
District Court ordered that motions relating to the receivership be filed with the
Fifth Circuit. [Doc 616].
IV. STANDARD IN GRANTING STAY PENDING APPEAL
The Fifth Circuit has adopted the four standards set out in Virginia
Petroleum Job. Ass'n v. Federal Power Com'n, 259 F.2d 921 (DC Cir. 1958) to
determine whether stay pending appeal should be granted. Belcher v. Birmingham
Trust National Bank, 395 F.2d 685 (5th Cir. 1968). Those factors are: (1) Whether
the movant has made a showing of likelihood of success on the merits; (2) Whether
the movant has made a showing of irreparable injury if the stay is not granted; (3)
Whether the granting of the stay would substantially harm the other parties; and (4)
Whether the granting of the stay would serve the public interest. Id.
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V. ARGUMENT & AUTHORITY
A. LIKELIHOOD OF SUCCESS ON APPEAL
Appointment of a receiver in this case is not authorized by law
As a matter of longstanding Federal law, an unsecured contract creditor
3
has,
in the absence of statute, no substantive right, legal or equitable, in or to the
property of his debtor and may not be granted an order of receivership against the
debtor. Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923).
Mr. Sherman (in whose putative name Mr. Urbanik filed the motion for
receivership) is neither individually nor as trustee a judgment creditor of Jeffrey
Baron. Mr. Sherman neither individually nor as trustee has any ownership interest
in Mr. Baron’s property. Accordingly, as a matter of law Mr. Sherman lacks
standing to bring a motion for appointment of a receiver under Federal law.
Williams Holding Co. v. Pennell, 86 F. 2d 230 (5th Cir. 1936). As Pusey explains
“[A]n unsecured simple contract creditor … has no right whatsoever in equity until
he has exhausted his legal remedy. After execution upon a judgment recovered at
law has been returned unsatisfied he may proceed in equity by a creditor's bill.”
Pusey at 497.
The Fifth Circuit has recognized three grounds under Federal law pursuant
to which a District Court may appoint a receiver: (1) the appointment of a receiver
3
The putative movant for receivership below, Daniel J. Sherman, is not a creditor of Mr.
Baron’s. The opposite, Mr. Baron is a creditor of the bankruptcy estate. Further, with respect to
any actual claims Mr. Sherman or Ondova Limited might have against Mr. Baron (none have
been asserted), the District Court notably lacks subject matter jurisdiction as there is no diversity
of citizenship.
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can be sought “by anyone showing an interest in certain property or a relation to
the party in control or ownership thereof such as to justify conservation of the
property by a court officer”; (2) receivers may be appointed “to preserve property
pending final determination of its distribution in supplementary proceedings in aid
of execution”; and (3) receivership may be an appropriate remedy for a judgment
creditor who: (a) “seeks to set aside allegedly fraudulent conveyances by the
judgment debtor”, (b) “has had execution issued and returned unsatisfied”, (c)
“proceeds through supplementary proceedings pursuant to Rule 69”, (d) “seeks to
subject equitable assets to the payment of his judgment”, or (e) “otherwise is
attempting to have the debtor's property preserved from dissipation until his claim
can be satisfied.” Santibanez v. Wier McMahon & Co., 105 F. 3d 234, 241 (5th Cir.
1997)(emphasis).
The appointment of a receiver to prevent a defendant from hiring legal
counsel is not a grounds recognized by the Fifth Circuit, nor by the Supreme
Court. The appointment of a receiver is subject to close scrutiny by the appellate
court. Tucker v. Baker, 214 F. 2d 627, 631 (5th Cir. 1954). Appointment of a
receiver where there is no claim to the assets seized is strictly prohibited— there is
no occasion for a court to appoint a receiver of property of which it is asked to
make no further disposition. Id. Accordingly, to prevent an individual from being
able to hire an attorney can never be a lawful purpose for the appointment of a
receiver.
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Similarly, the appointment of a receiver can not be used as a means to
provide substantive relief. Kelleam v. Maryland Casualty Co. of Baltimore, 312
U.S. 377, 381 (1941). The Supreme Court has frequently admonished that a
federal court should not appoint a receiver where the appointment is not a remedy
auxiliary to some primary relief which is sought. Id. As explained by this, and the
Supreme Court, Receiverships “are to be watched with jealous eyes lest their
function be perverted.” Id.; Tucker at 631. The appointment of a receiver in order
to force an individual to do something having nothing to do with the property
seized is clearly a perversion of the remedy of Receivership.
The purpose for which the receiver was sought is also clearly
unconstitutional
The Fifth Amendment to the United States Constitution establishes that a
civil litigant has a constitutional right to retain hired counsel. Potashnick v. Port
City Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980). Moreover, “the right to
counsel is one of constitutional dimensions and should thus be freely exercised
without impingement.” Id. at 1118; Mosley v. St. Louis Southwestern Ry., 634 F.2d
942, 946 (5th Cir. 1981). An individual's relationship with his or her attorney
“acts as a critical buffer between the individual and the power of the State.”
Johnson v. City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002). A defendant must
be afforded a fair opportunity to secure counsel “of his own choice” and that
applies “in any case, civil or criminal” as a due process right “in the constitutional
sense”. Powell v. Alabama, 287 U.S. 45, 53-69 (1932).
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The means of the receivership order is clearly unconstitutional
The seizure clause of the Fourth Amendment prohibits the unreasonable
interference with possession of a person’s property. Severance v. Patterson, 566
F.3d 490 (5th Cir. 2009). The seizure ordered by this Court was purely arbitrary—
based on no case law or statute, ordered without a trial on the merits of any claim,
and entered based on no objective guidelines or guiding principles.
The application for receivership was grossly defective
Most Federal courts of appeal have held that a receivership is an
“extraordinary” equitable remedy to be “employed with the utmost caution” and
“granted only in cases of clear necessity.” See e.g., Solis v. Matheson, 563 F.3d
425, 437 (9th Cir. 2009); Rosen v. Siegel, 106 F.3d 28, 34 (2d Cir. 1997); Aviation
Supply Corp. v. R.S.B.I. Aerospace, Inc., 999 F.2d 314, 316 (8th Cir. 1993);
Consolidated Rail Corp. v. Fore River Ry. Co., 861 F.2d 322, 326-27 (1st Cir.
1988).
Accordingly, the circuits that have addressed the issue have held that the
district court has discretion to appoint a receiver “only after evidence has been
presented and findings made showing the necessity of a receivership.” E.g., Solis,
563 F.3d at 438. ,
The Fifth Circuit has noted six factors considered as indicating the need for a
receivership in those circumstances where the appointment of a receiver is
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permitted by Federal law, (e.g., supplementary proceedings in aid of execution,
etc..). Santibanez, 105 F. 3d at 241-242. Those factors are:
(1) A valid claim by the party seeking the appointment;
(2) The probability that fraudulent conduct has occurred or will occur to
frustrate that claim;
(3) Imminent danger that property will be concealed, lost, or diminished in
value;
(4) Inadequacy of legal remedies;
(5) Lack of a less drastic equitable remedy; and
(6) Likelihood that appointing the receiver will do more good than harm.
In addition for failing to allege a lawful grounds for the issuance of an order
appointing receiver, the application for receivership below failed to allege
4
any of
the six factors recognized by the Fifth Circuit. There is no claim against Mr. Baron
by the party seeking the appointment. There is no allegation of fraudulent conduct.
There is no danger of property being concealed or lost. There is no allegation of
inadequacy of legal remedies. There is no allegation that a less drastic equitable
remedy was not available. There is no reference in the application to the harm that
appointing a receiver would do. (Exhibit E).
In sum, the motion for receivership is a legally groundless motion
5
sought
for an unlawful purpose by a party lacking standing as a matter of law. The result
has been the suspension of almost every civil liberty of Mr. Baron, taking all his
4
And the District Court below failed to enter supporting findings as to.
5
Brought in a court lacking subject matter jurisdiction over the non-diverse parties.
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property, suspending his right to contract, his right to privacy, his right to
privileged communications with his attorneys, and, by design, impairing is right to
travel and to hire legal counsel to defend and protect his rights.
The order appointing receiver was issued without even minimal procedural
due process and should be declared void
Where the taking of one's property is so obvious, it needs no extended
argument to conclude that absent notice and a prior hearing the order violates the
fundamental principles of due process. Sniadach v. Family Finance Corp. of Bay
View, 395 U.S. 337, 342 (1969). Even the temporary taking of property that is not
in execution of a final judgment is a “deprivation” as contemplated by the
constitution and “had to be preceded by a fair hearing”. Fuentes v. Shevin, 407 U.S.
67 (1972). Notably, due process requires an evidentiary hearing prior to the
deprivation of some type of property interest even if such a hearing is provided
thereafter. Mathews v. Eldridge, 424 U.S. 319, 333.
The District Court’s order appointing receiver was not preceded by any type
of hearing prior, and was not even supported by affidavit. It is therefore void for
lack of procedural due process. See Pennoyer v. Neff, 95 U.S. 714, 737 (1878)
(“such proceeding is void as not being by due process of law”); World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (“rendered in violation of
due process is void in the rendering”); Margoles v. Johns, 660 F. 2d 291,295 (7th
Cir. 1981)(“void only if the court that rendered it lacked jurisdiction ... or if it acted
in a manner inconsistent with due process of law”). (Exhibit L).
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B. IRREPARABLE INJURY
Deprivation of constitutional rights is irreparable injury as a matter of law
It is well settled that the loss of constitutional freedoms for even minimal
periods of time constitutes irreparable injury. Deerfield Med. Center v. City of
Deerfield Beach, 661 F.2d 328, 338 (5th Cir. 1981). Accordingly, the receivership
order—expressly designed to interfere with Mr. Baron’s constitutional right to hire
legal counsel and to express himself freely though advertisements in public
media— involves irreparable injury as a matter of law. Such violations “mandates
a finding of irreparable injury”. Deerfield at 338.
When a persons’ very right to control assets is stripped from them, a cascade
of constitutional rights are impaired. It is the right to own and control property that
is the cornerstone of a democratic society. For example, suspending an
individual’s right to possess property directly acts to impair their First Amendment
interests by depriving them of access to the primary medium of public
expression—paid advertisements. Such an impairment of an individual’s First
Amendment freedoms, for even minimal periods of time constitutes irreparable
injury. Elrod v. Burns, 427 U.S. 347, 373-4 (1976).
No party from which to recover damages
Mr. Baron is faced with a situation where the wrongful actors carry a mantle
of immunity. E.g. Boullion v. McClanahan, 639 F.2d 213 (5th Cir. 1981). To the
extent that absolute judicial immunity attaches to the actions of Mr. Urbanik in his
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capacity as attorney for a bankruptcy trustee, Mr. Baron has no party from which to
seek redress for his damages.
Since Mr. Baron is the equitable owner of Ondova (the entity ultimately in
who’s name Mr. Urbanik has acted), any recovery against Ondova would just be
taken out of Mr. Baron’s own pocket. Accordingly, as a very real matter the
damages being caused to Mr. Baron, including the ever-increasing costs of the
receiver and the receiver’s attorney, are irreparable.
C. NO SUBSTANTIAL HARM TO OTHER PARTIES
This case has settled. Moreover, no party has a legitimate interest in
denying Mr. Baron his constitutional right to legal counsel of his choice. If such an
interest could be constitutionally served, an injunction prohibiting Mr. Baron from
retaining counsel would serve the same interest, without taking away Mr. Baron’s
constitutional right to own and possess property.
D. PUBLIC INTEREST
There is a compelling public interest in upholding the US Constitution.
Protecting an individual’s rights in his property and his privacy, and his right to
hire legal counsel of his choice, are important public interests served by granting
the relief requested by Mr. Baron. It is frightening to think that if an individual
refuses to pay the excessive demands of an attorney or desires to object to grossly
excessive fees sought by an attorney in a bankruptcy case, that instead of a right to
trial by jury or impartial hearing before a judge, he can (1) have all his assets and
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private documents stripped from him, (2) become a ward of the court– incarcerated
in ‘house arrest’ in one city, (3) lose his right to purchase advertisements and
communicate in private with respect to public expressions of speech, and (4) be
prohibited from hiring legal counsel to protect his rights.
VI. CONCLUSION
The District Court below suspended Mr. Baron’s constitutional right to own,
access, and control his own property, for the purpose of denying Mr. Baron the
ability to retain counsel. Such an order is unlawful and violates the US
Constitution. Mr. Baron is currently prohibited from engaging in business
transactions, from taking out advertisements, from hiring a lawyer, etc. On an
emergency basis Mr. Baron is in need of legal counsel, in order to protect his rights
to associate freely with media contacts and protect his right to free speech.
VII. PRAYER
Wherefore, Jeffrey Baron prays:
(1) That this Honorable Court consider and grant this motion on an
expedited basis, and Stay pending appeal the Order Appointing Receiver over the
person and property of Mr. Baron signed by the District Court below on November
24, 2010 [Docket #124, and Docket #130, Entered 11/30/2010].
(2) Jointly and in the alternative, prayer is made that the receivership be
dissolved or stayed because it serves no articulable purpose authorized by law and
clearly is causing irreparable injury to Jeff Baron as discussed above, with the
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receiver’s intrusion into Mr. Baron’s most basic rights of freedom of speech,
association, and privacy.
(3) Jointly and in the alternative, prayer is made that the receivership be
partially dissolved or stayed so that Mr. Baron be allowed to (A) work freely, (B)
engage in business transactions, (C) receive wages, (D) receive and cash checks,
(E) retain counsel of his choice, (F) associate freely with media liaisons without
interference from a receiver, and to exercise all other rights of a free citizen of the
United States including the right to retain counsel with his own money. If the
Court considers granting this relief and finds need to retain Mr. Baron’s non-
exempt, or even exempt and non-exempt property in receivership, at least a partial
stay or dissolution of the receivership, as prayed for herein, will restore some
fundamental rights to Mr. Baron, such as the right to privacy, the right to work, the
right to unimpaired freedom of speech that has been threatened by the receiver’s
latest actions as discussed above.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5400 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR MOVANT,
JEFFREY BARON
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VIII. TABLE OF AUTHORITIES
FEDERAL CASES
Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 999 F.2d 314, 316 (8th Cir.
1993).................................................................................................................... 16
Belcher v. Birmingham Trust National Bank, 395 F.2d 685 (5th Cir. 1968)......... 12
Boullion v. McClanahan, 639 F.2d 213 (5th Cir. 1981)......................................... 20
Consolidated Rail Corp. v. Fore River Ry. Co., 861 F.2d 322, 326-27 (1st Cir.
1988).................................................................................................................... 16
De Beers Consol. Mines, Ltd. v. United States, 325 U.S. 212, 221-223 (1945).......7
Deerfield Med. Center v. City of Deerfield Beach, 661 F.2d 328, 338 (5th Cir.
1981).................................................................................................................... 19
Desarrollo, SA v. Alliance Bond Fund, Inc., 527 U.S. 308, 310 (1999)...................7
Elrod v. Burns, 427 U.S. 347, 373-4 (1976)........................................................... 19
Fuentes v. Shevin, 407 U.S. 67 (1972) ................................................................... 18
In re Fredeman Litigation, 843 F.2d 821, 822 (5th Cir. 1988)..................................7
Johnson v. City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002) ......................... 15
Kelleam v. Maryland Casualty Co. of Baltimore, 312 U.S. 377, 381 (1941) ........ 15
Margoles v. Johns, 660 F. 2d 291,295 (7th Cir. 1981)........................................... 19
Mathews v. Eldridge, 424 U.S. 319, 333................................................................ 18
Mosley v. St. Louis Southwestern Ry., 634 F.2d 942, 946 (5th Cir. 1981) ........... 15
Pennoyer v. Neff, 95 U.S. 714, 737 (1878) ............................................................ 18
Potashnick v. Port City Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980)............. 15
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Powell v. Alabama, 287 U.S. 45, 53-69 (1932)...................................................... 16
Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923)..................................... 13
Rosen v. Siegel, 106 F.3d 28, 34 (2d Cir. 1997) .................................................... 16
Santibanez v. Wier McMahon & Co., 105 F. 3d 234, 241 (5th Cir. 1997) ...... 14, 17
Severance v. Patterson, 566 F.3d 490 (5th Cir. 2009)............................................ 16
Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 342 (1969) ......... 18
Solis v. Matheson, 563 F.3d 425, 437 (9th Cir. 2009) ........................................... 16
Tucker v. Baker, 214 F. 2d 627, 631 (5th Cir. 1954) ............................................. 14
Virginia Petroleum Job. Ass'n v. Federal Power Com'n, 259 F.2d 921 (DC Cir.
1958).................................................................................................................... 12
Williams Holding Co. v. Pennell, 86 F. 2d 230 (5th Cir. 1936)............................. 13
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980).............. 19
FEDERAL STATUTES
28 U.S.C. §1292(a)(2)................................................................................................6
STATE RULES
Federal Rule of Appellate Procedure 8(a)(2).............................................................6
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CERTIFICATE OF SERVICE
This is to certify that this brief was served this day on all parties who receive
notification through the Court’s electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
CERTIFICATE OF NOTICE
This is to certify that notice of the filing of this request for emergency relief was
provided by telephone to the Clerk of the Fifth Circuit Court of Appeals and to
counsel for the Appellee.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
Case: 10-11202 Document: 00511567728 Page: 26 Date Filed: 08/10/2011
