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Martin Thomas Fraudulent Eighth Fee Application

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
▬▬▬▬▬▬▬▬▬▬▬▬▬▬
PRELIMINARY RESPONSE TO MOTION FOR
FEES FOR MARTIN THOMAS
▬▬▬▬▬▬▬▬▬▬▬▬▬▬
Case: 10-11202 Document: 00511629701 Page: 1 Date Filed: 10/12/2011
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TO THE HONORABLE JUSTICES OF THE FIFTH CIRCUIT COURT OF
APPEALS:
COMES NOW Appellant Jeff Baron, and subject to the Fifth Amendment
objection and motion previously filed in this cause
1
and incorporated herein by
reference, makes this preliminary response with respect to the 10-03-11 MOTION
filed by Appellee Mr. Peter S. Vogel to supplement the record on appeal with The
Receiver's Eighth Application for Reimbursement of Fees Incurred by Martin
Thomas [6917688].
I. ARGUMENT AND AUTHORITY
Background
Thomas failed to present a single itemized billing or explanation of how his
fee is reasonable or ethical. Once the receivership was imposed Thomas refused to
represent Baron, refused to provide him with information about the bankruptcy
proceeding, refused to file any fee objections, refused to appeal any orders, refused
to keep Baron informed about the bankruptcy proceedings, refused to provide
copies of the activity in the bankruptcy proceedings, and feely disclosed Barons
communications without authority. Thomas has refused to provide Baron any
itemized billing, has failed to provide copies of any court proceedings, has refused
repeated requests for information about the case, and has taken no action before the
bankruptcy court for Barons benefit.
1
Document 00511592562 filed in Case 10-11202 on 09/04/2011.
Case: 10-11202 Document: 00511629701 Page: 2 Date Filed: 10/12/2011
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Prior to the imposition of the receivership Thomas was acting, and legally
responsible for acting, as Barons bankruptcy counsel for $5,000.00 per month.
Thomas has admitted in writing that he was paid and had no claim against Baron.
However, Thomas was complacent in falsely representing to the District Court
that Baron had fired Thomas and had filed ethical complaints against him.
The Thomas allegations are fraudulent and the matter is material. Sherman filed
his motion for receivership Falsely representing that the Bankruptcy Judge
ordered that if Baron fired his counsel and proceeded pro se that a
receivership was to be placed over him.
2
That representation, itself, as well as
the grounds asserted for the receivership sought by Sherman were false. Notably,
Sherman did not act on his own and filed his false motion seeking to appoint Vogel
as receiver over Baron after secret consultations with Vogel.
3
Crucially, to show that the falsely represented conditions were met, Sherman
and Vogel had to show that Thomas (who was counsel in the bankruptcy court) was
fired. So an entirely false story was fabricateda false story in which Thomas has
been complicit that Baron filed an ethics complaint against Thomas, didnt pay
him, and thereby caused Thomas to withdraw.
4
The story is false and fabricated.
If an ethics complaint were filed against Thomas it can be produced. This is a fact
that can be objectively verified by the Court with the State Bar. However, no such
2
R. 1576.
3
SR. v5 p238.
4
R. 1576.
Case: 10-11202 Document: 00511629701 Page: 3 Date Filed: 10/12/2011
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event occurred, and the entire allegation is fabricated.
5
Moreover, Thomas
complicity in the false representations made about his client violates his
fundamental ethical duties as an attorney. Thomas apparently violated his ethical
and fiduciary duties in other ways, as well. For example, Shermans motion to
impose the receivership states that Mr. Baron was advised by Mr. Thomas that he
needed to attend in order to raise objections to the Trustee's Motion for Authority
5
The solicitation and fabrication of manufactured allegations against Baron appears to be a
modus operandi of the Sherman-Vogel enterprise. See, e.g., pdf page 14, et.seq., of the
GENERAL RESPONSE TO MOTIONS FOR FEES FOR VOGEL, HIS PARTNERS, AND
OTHER RECEIVER PROFESSIONALS (Document 00511600278 in case 10-11202 filed on
9/12/2011) (describing the fabricated claims solicited and Vogels orchestrated attempt to falsely
make it appear that Baron was harassing, intimidating, and obstructing), and SR. v4 pp102-110
(the smoking gun emails with Vogels offices digital IDs proving the affair was a completely
and 100% a fabricated set-up by Vogel).
The background context is significant, as follows: In September 2010 the Ondova bankruptcy
estate had some $2,000,000.00 in cash and only around $900,000.00 in claims ie., a million
dollar cash surplus. Sherman as Chapter 11 trustee should have immediately closed the
bankruptcy at that point. Instead, Sherman ran up over $300,000.00 in additional attorney fees.
Then, Baron objected and within three business days Sherman and Vogel had Baron placed into
receivership (with Vogel as receiver) ex parte in the district court case where Vogel was
employed as special master. Vogels first act was to withdraw Barons objection to Shermans
attorneys fees in the bankruptcy court. Since then, Sherman and Vogel have run up their fees to
a combined total of FOUR MILLION DOLLARS, and have shown no signs of stopping.
Sherman and Vogel have emptied the cash reserves of Ondova, and have emptied Barons
savings accounts and are seeking now to sell off assets in the bankruptcy and the receivership to
pay their own outstanding claims of around two million dollars in fees. Without the complicity
of Thomas (and Stan Broome), Barons bankruptcy counsel, the entire enterprise could not have
gotten off the ground. That is because the fabricated Thomas claim (falsely alleging that Baron
filed an ethics complaint against Thomas), combined with Broomes fabricated claims for fees,
were the underlying grounds set up by Sherman-Vogel in Shermans receivership motion.
Broome clearly coordinated with Sherman, and filed his motion to withdraw in the Bankruptcy
Court immediately before Sherman filed the motion for receivership in the district court.
Sherman cited as the basis for his motion the fabricated facts of Broomes non-payment and
withdrawal, and the fabricated ethics complaint against Thomas and his withdrawal. R. 4390,
4488. Notably, Broomes claim of non-payment has similarly been shown to be fabricated
the basis of the claim was Broomes representations that his fee contract contained no provision
capping his monthly fees at $10,000.00 per month (the rate at which he was paid), and thus he is
owed tens of thousands of dollars. Broome finally produced his contract and his sworn
statements about his contract were shown to be completely false. See SR. v8 p1212 (the written
contract terms); SR. v5 pp426-430 (Broomes sworn statements about the terms).
Case: 10-11202 Document: 00511629701 Page: 4 Date Filed: 10/12/2011
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to Reject Executory Contracts.
6
As Baron did not share that information, Thomas
clearly violated Barons right to confidentiality with respect to alleged
communications made within the attorney-client relationship. See e.g., Gleason v.
Coman, 693 S.W. 2d 564(Tex.App.Houston [14th Dist.] 1985, writ ref'd n.r.e.).
Since the receivership was imposed, Thomas has taken the position that
Baron has no rights in the Bankruptcy and therefore there is nothingnothing
for Thomas to do with respect to actually representing Baron before the bankruptcy
court. In such a circumstance to attempt to charge a $5,000.00 monthly feefor
doing nothing with respect to representation of the purported client before the
court, exceeds all bounds of reasonableness and the fee request is unethical,
unwarranted, and should not be allowed.
Legal Analysis of the Fee Request
Compensation paid from a receivership estate must be for actual services
provided by to that estate. E.g., Commodity Credit Corporation v. Bell, 107 F.2d
1001, 1001 (5th Cir. 1939). Thomas total fee demands against the receivership
estate have now reached in total some Fifty Thousand Dollars, with $25,000.00 in
fee demands for Thomas currently pending before this Honorable Court.
7
Thomas
6
R. 1576.
7
6-30-11 MOTION filed by Appellee Mr. Peter S. Vogel to supplement the record on appeal
with Receiver's Fourth Application for Reimbursement of Fees Incurred by Martin Thomas
(Pending Before the District Court and Filed with the Fifth Circuit; 07/06/2011 MOTION filed
by Appellee Mr. Peter S. Vogel of Receiver's Fifth Application for Reimbursement of Fees
Incurred by Martin Thomas (Pending Before the District Court and Filed with the Fifth Circuit
Pursuant to District Court Order) [6851310-2]; 8-02-11 MOTION filed by Appellee Mr. Peter S.
Case: 10-11202 Document: 00511629701 Page: 5 Date Filed: 10/12/2011
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has clearly not provided legal services to the estate and is not entitled to
disbursement as fees of any estate assets. Further, no allegation has been made
and no evidence has been offered to sustain a showing that the fee request is
reasonable or necessary. The limitation upon attorneys to charge only a reasonable
legal fee and to charge only for legal services that are actually provided is a legal
and ethical duty imposed by law in Texas. Lee v. Daniels & Daniels, 264 S.W. 3d
273, 280-281 (Tex.App.-San Antonio 2008, pet. denied)(noting [A]ttorneys are
members of an ancient profession with unique privileges and corresponding
responsibilities and rejecting the right of attorney to seek fees where None of
that time was spent engaged in legal services performed or rendered on behalf of
Cummings, his client.). Moreover, when a fee arrangement is implemented
during the course of an attorneys representation of a client, pursuant to established
Texas law, There is a presumption of unfairness or invalidity attaching to the
contract, and the burden of showing its fairness and reasonableness is on the
attorney. Archer v. Griffith, 390 S.W.2d 735, 739 (Tex. 1964). The fee application
for Thomas wholly fails to meet this standard.
Vogel to supplement the record on appeal with Receiver's Sixth Application for Reimbursement
of Fees Incurred by Martin Thomas (Pending Before the District Court) [6872512-2]; 8-31-11
MOTION filed by Appellee Mr. Peter S. Vogel to supplement the record on appeal with
Receiver's Seventh Application for Reimbursement of Fees Incurred by Martin Thomas (Pending
before District Court [6894012-2]; 10-03-11 MOTION filed by Appellee Mr. Peter S. Vogel to
supplement the record on appeal with The Receiver's Eighth Application for Reimbursement of
Fees Incurred by Martin Thomas (pending and filed [6917688-2]
Case: 10-11202 Document: 00511629701 Page: 6 Date Filed: 10/12/2011
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Further, pursuant to Texas law, an attorney is paid (when they actually do
work on behalf of a client providing legal services) not solely based on their work,
but also based on their loyalty to the client. Burrow v. Arce, 997 S.W.2d 229, 237
(Tex. 1999)([N]ot entitled to be paid when he has not provided the loyalty
bargained for). Thomas clearly violated his fiduciary duties in his complicity in
the presentation of entirely false and fabricated claims made against Baron on the
part of Thomas, and in disclosing confidential attorney-client communications with
respect to Baron. E.g. Deutsch v. Hoover, Box & Slovacek, L.L.R, 97 S.W.3d 179,
190 (Tex.App.-Houston [14th Dist.] 2002, no pet.); Upjohn Co. v. United States,
449 US 383, 389 (1981).
The Fifth Amendment Question
Baron repeatedly moved in the District Court to be allowed access to his
own money in order to hire attorneys to represent him. E.g., R. 2720; SR. v2 p384-
390 (Doc 264); SR. v5 p139 (Doc 445). However, the District Court did not allow
Baron to hire counsel. E.g., Doc 316 (SR. v4 p119). Baron has made a similar
motion before this Honorable Court. That motion is pending ruling, and, to this
point, Baron has not been permitted to (1) Earn wages and engage in business
transactions to earn money to pay an attorney; (2) Be allowed access to his own
money held by the receiver to pay an attorney to represent him; nor (3) Hire paid
legal counsel. However, this Honorable Court has held that a civil litigant has a
constitutional right to retain hired counsel. Potashnick v. Port City Const. Co., 609
Case: 10-11202 Document: 00511629701 Page: 7 Date Filed: 10/12/2011
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F.2d 1101, 1104 (5th Cir. 1980). Moreover, this Honorable Court has held that 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). Further,
the Supreme Court has held that a party 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). That basic right was denied Baron by the District Court below,
and is pending ruling by this Honorable Court.
As a fundamental cornerstone of Due Process, the Constitution guarantees
every citizen the right to a meaningful opportunity to be heard in a meaningful
manner. Williams v. McKeithen, 939 F.2d 1100, 1105 (5th Cir. 1991). As a matter
of established law, this means the right to be represented by paid legal counsel.
E.g., Mosley, 634 F. 2d at 946; Powell, 287 U.S. at 53; Chandler v. Fretag, 348
U.S. 3, 10 (1954); Potashnick v. Port City Const. Co., 609 F.2d 1101, 1104 (5th
Cir. 1980). In the instant proceedings, Jeffrey Baron is being denied this
fundamental right. Accordingly the substantive motions pending against Baron
and his property while he is being deprived of his basic constitutional right to pay
an attorney to represent him should be denied. Because the undersigned is a solo
Case: 10-11202 Document: 00511629701 Page: 8 Date Filed: 10/12/2011
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practitioner with no funding for discovery or manpower to perform itemized
review of fee applications, or manpower to attend all of the various bankruptcy
court proceedings, etc., the representation provided Baron is limited in scope to
appellate legal issues. Baron is entitled as a matter of constitutional right to more.
A citizen is entitled to use their own money to hire paid legal counsel to fully
represent them, including conducting discovery, attending hearings, reviewing line
by line items on fee applications, hiring expert witnesses to provide evidence that
fee requests are not reasonable, to investigate the claims against them, etc.
WHEREFORE, Vogels motion should be denied and overruled.
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
APPELLATE COUNSEL FOR
JEFF BARON
Case: 10-11202 Document: 00511629701 Page: 9 Date Filed: 10/12/2011
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CERTIFICATE OF SERVICE
This is to certify that this motion was served this day on all parties who receive
notification through the Courts electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
Case: 10-11202 Document: 00511629701 Page: 10 Date Filed: 10/12/2011


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