Objection re Assessment of Former Attorney Claims Doc 443

Plaintiffs. §
§ Civil Action No. 3-09CV0988-F
v. §
Defendants. §
COMES NOW JEFF BARON, Appellant, and makes this response discussing
some of the fundamental legal issues, and offering an overview of some claims in
order of significance of amount claimed, and jointly moves this Court to grant leave
to file the included motion for relief to require the receiver to produce the documents
which have been requested and promised but not delivered, provide funding for Jeff
Baron to hire expert witnesses to offer evidence as to the reasonableness and
necessity of the claimed fees, to provide funding for the employment of trial counsel
and legal assistants to assist in investigating and responding to the claims, to provide
funding for legal research on westlaw and lexis, to allow discovery including for
disclosures, document production and depositions, and to allow sufficient time to
review the materials and respond appropriately to the number of civil attorneys
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working on the matters on behalf of Jeff Baron.
1. Receivership of a persons property is different from receivership of a
human being.
The Thirteenth Amendment prohibits slavery or involuntary servitude as a
civil punishment. Involuntary servitude occurs when one no longer possess the
liberties and privileges of a freeman, including by legal coercion. Slaughter-House
Cases, 83 US 36, 90 (1873)(dissent); US v. Kozminski, 821 F. 2d 1186, 1192 (6th
Cir. 1987). The Supreme Court ruled in Plessy v. Ferguson, 163 U.S. 537, 555
“The Thirteenth Amendment does not permit the withholding or the
deprivation of any right necessarily inhering in freedom. It not only
struck down the institution of slavery as previously existing in the
United States, but it prevents the imposition of any burdens or
disabilities that constitute badges of slavery or servitude. It decreed
universal civil freedom in this country.”
Your honor’s goal is not to place Jeff Baron personally into your honor’s
servitude. Rather your honors goal was to seize Jeffs property. The difference is
fundamental for handling your honors goal of resolving the former attorney claims.
A receivers authority under the bounds of a court’s equity (and inherent)
power is limited to taking into his possession every kind of property which may be
taken in execution”. Booth v. Clark, 58 U.S. 322, 331 (1855)(emphasis).
Accordingly, the Fifth Circuit has held Where a final decree involving the
disposition of property is appropriately asked, the court, in its discretion, may
appoint a receiver to preserve and protect the property pending its final disposition”)
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Tucker v. Baker, 214 F.2d 627, 631 (5th Cir. 1954) (emphasis).
Accordingly, claims against the person Jeff Baron are not, and cannot be
included in a receivership. Claims against Jeff are not his property.
The receiver is no more authorized under the law to affect Jeffs rights with
respect to claims against him, than the receiver is authorized to marry Jeff off, or
divorce him if he were married. If Jeff were married, he would possesses the legal
right to divorce. The receiver obviously could not exercise that right on Jeffs
Similarly, the receiver cannot exercise any right on Jeffs behalf personally. A
receiver can take only Jeffs property, and (if the receivership is lawful and
authorized under the law and within the jurisdiction of the court), can exercise all
the rights auxiliary to ownership of that property.
Thus, if the receiver has taken property that has a mortgage, or liens filed
against the property, with the Courts approval the receiver can pay, or settle those
equitable ownership claims in the property res itself. The same is true whether the
property is real estate, or a corporation.
2. Jeff is a citizen, a human being, not a corporation.
Jeff is a person, not property. By contrast, a corporation is property. When a
corporation is seized from its owner, a receiver can be authorized to settle any and
all claims made against the corporation. That is because the claims are claims
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against a corporation which is property.
The law allows rights to be asserted by or
against the property which is a corporation. Control of the corporation therefore
involves control of the rights to be asserted by or against that corporation. Thus, for
example, a receiver could bind a corporation to a 99 year lease. By contrast, a
receiver has no power to bind Jeff, or any other human being to anything.
For this reason, there is no legal authority allowing a receiver of an
individual’s property to settle claims against that individual.
3. The authority relied upon by the receiver does not support the receivers
The receiver errs in its interpretation of Santibanez v. Wier McMahon & Co.,
105 F.3d 234,241 (5th Cir. 1997) as holding receivership may be an appropriate
remedy . . . to subject equitable assets to the payment of . . . claim[s]”. As a general
rule of law, an appellate court’s ruling cannot be interpreted by cutting out selected
words and phrases to create an opposite meaning to that expressed by the appellate
Notably, Novo Point and Quantec have appeared before your honor, and clearly, as a matter of
personal jurisdiction, this court has seized in receivership the companies’ local property. The
owner of those companies, SouthPac, has never made any appearance, has not been served with
process, and has not been named as a party in any pleading filed with this court. Accordingly,
your honor has not acquired personal jurisdiction over SouthPac, and as a matter of lack of
personal jurisdiction cannot take possession of SouthPac’s property. Thus, if the concept of the
requirement of personal jurisdiction is respected, while the companies’ property has been seized,
SouthPac’s property interest and ownership of those companies has not. That situation is very
different from when a corporation is itself taken as the receivership res.
With respect to the companies, if well established law is respected, is long well settled that a
District Court does not have jurisdiction over res which is not located within the district. Booth v.
Clark, 58 U.S. 322, 335 (1855); Sterrett v. Second National Bank, 248 U. S. 73,77; e.g.,
Guaranty Trust Co. of New York v. Fentress, 61 F. 2d 329, 332 (7th Cir.1932). Accordingly, the
domain name registrations in Australia fall well outside the jurisdiction of the court’s receiver.
Again, by contrast a corporation is property. Where a receiver holds a corporation as
receivership res, the receiver can exercise all rights in and to that property.
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The Fifth Circuit in Santibanez held opposite to the position taken by the
receiver. The Fifth Circuit held in Santibanez:
“[R]eceivers may be appointed ‘to preserve property pending final
determination of its distribution in supplementary proceedings in aid of
execution.’ 7 Moore et al., 66.05]1 ] (citing Haase v. Chapman, 308
F.Supp. 399 (W.D.Mo.1969)). In addition, ‘receivership may be an
appropriate remedy for a judgment creditor who seeks to set aside
allegedly fraudulent conveyances by the judgment debtor, or who has
had execution issued and returned unsatisfied, or who proceeds through
supplementary proceedings pursuant to Rule 69, or who seeks to
subject equitable assets to the payment of his judgment, or who
otherwise is attempting to have the debtor's property preserved from
dissipation until his claim can be satisfied.’ 12 Wright & Miller2983
(citing Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 43 S.Ct. 454, 67
L.Ed. 763 (1923))”
Santibanez, 105 F. 3d 241 (emphasis).
Obviously, the holding in Santibanez, is very different, and in fact opposite,
from the cut and paste variation erroneously relied upon by the receiver
(“receivership may be an appropriate remedy . . . to subject equitable assets to the
payment of . . . claim[s]”). The distinction between a judgment creditor and a
simple creditor is the distinction that makes all the difference. As the case relied
upon in Santibanez, Pusey & Jones, explains, an unsecured creditor may not use
receivership to collect its debt:
[A]n unsecured simple contract creditor has, in the absence of
statute, no substantive right, legal or equitable, in or to the property
of his debtor. This is true, whatever the nature of the property; and,
although the debtor is a corporation and insolvent. The only substantive
right of a simple contract creditor is to have his debt paid in due course.
His adjective right is, ordinarily, at law. He has no right whatsoever in
equity until he has exhausted his legal remedy. After execution upon a
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judgment recovered at law has been returned unsatisfied he may proceed
in equity by a creditor's bill.”
Pusey & Jones Co. v. Hanssen, 261 U.S. at 497.
As explained in Pusey & Jones, an unsecured creditor has no right
whatsoever in equity until he has exhausted his legal remedy”. The receiver’s string
cites following Santibanez, establish clearly that receivership is a remedy in equity.
Accordingly, the receiver has conclusively established that as a matter of long
established law receivership is an equitable remedy to which unsecured creditors
have no right whatsoever. The attorney claimants are just as clearly simple,
unsecured alleged creditors.
The receiver similarly errs in its interpretation of United States v. Arizona
Fuels Corp., 739 F.2d 455, 458-60 (9th Cir. 1984). The receiver errs first, in
omitting the context cut from center of the quote cited. The court in Arizona Fuels
held “Although precedents are few and far between, the traditional rule is that
summary proceedings are appropriate and proper to protect equity receivership
assets. A receiver may proceed summarily to recover money belonging to the
receivership by petition to the appointing court for an order to show cause
against a possessor not a party to the original action. Receivership courts have
the general power to use summary procedure in allowing, disallowing, and
subordinating the claims of creditors.” Id. at 458 (citations omitted). The actual
holding of Arizona Fuels is that [S]ummary proceedings are appropriate to
determine right to possession, although not ultimate rights to title or
ownership.Id. at 459 (emphasis).
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The holding in Arizona Fuels is clear. The claim that can adjudicated is a
claim to an equitable ownership interest in the res of the receivership property itself.
The court in Arizona Fuels held that where “The district court's order determined the
Receiver's right to possession of the funds, based on adjudication of the right to
setoff, without determining the validity of Tenneco's claims as a creditor of
Arizona Fuels. We hold that summary proceedings were appropriate and proper for
this purpose.” Id.
The attorney’s claims are personal claims in law. The attorneys are claiming
to be simple creditors. The claims are not against the receivership res. Therefore
there is no power to adjudicate the claims within the framework of the receivership.
The attorneys are not seeking merely the right to possess funds pending
determination of their claims as creditors, the attorneys are seeking the ultimate
determination of the validity of their claims as creditors. Pursuant to the law, as
explained and held in the key case relied upon by the receiver, the attorneys claims
cannot be adjudicated by summary proceedings.
Notably, if the receivership is dissolved, Jeff can ask the attorneys to
participate in the State Bar fee arbitration process and sit down before the State Bar
fee committee to resolve the disputes. If the Court desires assurance that if
recovered the fees will be collectable, Jeff and the companies can post security for a
stay pending appeal, including a security interest in the domain names the receiver
would like to sell (and others if the Court desires), so that the attorneys will be
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The assessment lists only evidence of claims. The receiver took no apparent
steps to investigate or determine the substantive merit of the claims. Accordingly,
the 'assessment' that the claims should be paid is no assessment. There is a large gap
between claims being made, and the validity of the claims. The receiver took no
steps to cross that gap.
The assessment is unreliable because the receiver is biased and did not take
reasonable steps to make the assessments. The Receiver is aggressively antagonistic
and adversarial toward Mr. Baron and has manufactured evidence that was then
falsely represented to the Court attacking the conduct and character of Jeff and his
counsel. Accordingly, the opinion and work of the receiver cannot be trusted.
(Doc#440 and 440-1 detailing the receivers actions are incorporated herein by
There are also other examples of the receivers gross bias and failure to
investigate in any reasonable meaning of the word ‘investigate’. For example, the
two million dollars provided by Jeff to Ms. Schurig to hold in trust that is now
‘gone’. The receiver explains that:
(1) Approximately $450,000.00 was distributed to Mr. Baron for his taxes.
However, Mr. Baron has no knowledge or record of such half million
dollar distribution to him. The receiver has provided no check, or wire
transfer information, and yet declares that Mr. Baron engaged in ill
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informed and disingenuous statements” with respect to Ms. Schurig. In
2009 Schurig did not distribute $450k to Baron, by check, cash in a
briefcase, or wire transfer. Rather The Beckum Group sent to Schurig
approximately that sum (upon belief) (in addition to the $2 Million).
That additional sum is also unaccounted for. Since the amount Ms.
Schurig is believed to have received was listed as a disbursement, the
discrepancy is almost one million dollars just for this item alone.
(2) $425,106.00 was distributed to Friedman & Feiger. But as this Court
is well aware, that money was from Ondova's receivables, not from Ms.
Schurig. Here is another near half million dollars unaccounted for. Yet
the receiver demanded no documentation, performed no actual
investigation, and accepts the assertion that Friedman & Feiger were
paid an additional $425,106.00 from Jeffs $2 Million he left with Ms.
Schurig in trust.
(3) $600,000.00 is claimed for registration fees to Ondova. But, this
money was not authorized by Jeff. If the claim is truthful (no
documentation has been provided), the registration fees were not due or
owing by Jeff. Any registration fee payments should have come from
the companys funds, not the $2 Million Jeff placed with Schurig to
hold for him in trust. Accordingly, as trustee for Jeff's money, that
$600,000.00 should properly and promptly have been placed into
receivership funds. The receiver, has not operated as a true receiver,
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and took no action to do that.
(4) $750,000.00 was claimed paid in trustee, protector, and trust attorneys’
fees. Current protector costs re $500.00 per year, and trustees fees
should not exceed $5,000.00 annually. The near million dollar 'expense'
is not legitimate. Apparently Schurig claims in a cloaked 'disclosure' to
have paid’ herself this money as 'trust attorney'. Accordingly, Schurig
admits to having taken money from the trust, asserting it to be an
attorney's fee. Since she was a trustee and acting as fiduciary for the
money, a transaction with herself is clearly not arms-length and is
presumed to be invalid. Since attorneys were hired and paid substantial
fees, how Schurig justifies a near million dollar fee is unclear. In any
case, as a self-dealing transaction between a trustee and himself is
invalid as a matter of law, that money should have been taken back by
the receiver.
(5) Similarly, there is a claim that funds remaining in the hands of
Asiatrust, or in accounts owned by any of the companies owned by
Asiatrust, were turned over to either Southpac as Successor Trustee of
The Village Trust or to agents of the companies designated on Sept.
30,2010. Apparently were not received. The receiver did no
investigation, no accounting of those funds was demanded nor
provided. Since all the asserted companies which claim to have
transferred the money to SouthPac are receivership parties, the
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accounting of these funds should be a simple matter. Yet the receiver
performed none.
Jeff moves the Court to require the receiver to produce the documents which
have been requested and promised but not delivered, provide funding for Jeff Baron
to hire expert witnesses to offer evidence as to the reasonableness and necessity of
the claimed fees, to provide funding for the employment of trial counsel and legal
assistants to assist in investigating and responding to the claims, to provide funding
for legal research on westlaw and lexis, to allow discovery including for disclosures,
document production and depositions, and to allow sufficient time to review the
materials and respond appropriate to the number of civil attorneys working on the
matters on behalf of Jeff Baron. Without this relief there is a failure of due process,
and Jeff cannot reasonably defend or respond to the claims.
Attached and incorporated herein are specific requests made of the receiver
with respect to Jeff responding to the claims. Although the receiver promised to
provide the files requested, the receiver has failed to do so.
Jeffs only civil attorney this Court has allowed to represent him, is the
appellate lawyer below signed. Jeff had been represented by an AV rated trial
counsel, but the Court allowed him to be fired by the receiver. Oddly, that attorney
is listed as a claimant’ since the receiver seized all of Jeffs assets and the attorney
was therefore not paid. Because this Court has ordered that the undersigned counsel
must work without payment, for the past four months the undersigned has been
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forced to work over 65 hours a week reviewing, researching and responding to a
mountain of paperwork generated by two teams of attorneys working literally 24
hours a day. The overwhelming work load without pay, has forced counsel to turn
away and defer other work, and go without material income for four months.
Obviously, counsel has had to drastically reduce office expenses and rely upon
savings for his livelihood and office expenses. Accordingly, without funding
allowed on this case, legal research on westlaw, etc., the hiring of legal assistance,
the hiring of expert witnesses, etc. is not possible. The reasonableness of attorneys
fees requires expert opinion. Without the ability to hire an expert witness to provide
such an opinion, it is impossible for Jeff to put up a defense as would be sufficient if
such experts could be retained. As an attorney the undersigned can clearly see
much of the work billed is grossly duplicative and not reasonable. Many of the
attorneys owe Jeff a refund for overpayment. However, trial counsel is not
competent as a witness, and without an expert witness Jeff cannot defend himself on
these grounds.
It is notable, the claimant attorneys have been paid by Jeff nearly two million
dollars for less work than the undersigned has provided by court order on this case—
for which this Court has paid no money. But after four months of work without any
payment for fees or expenses on a case requiring more than 65 hours a week of
response work by a single individual to large firms billing frenzies, counsel does
not have the resources to be able to properly respond or defend against the 20 cases
listed as ‘claims’.
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In summary, Jeff has been denied a fair, reasonable, and equitable opportunity
to investigate and object to the claims, including as follows:
1. Attorneys fees claims are contract claims. It should be easy to take the
retainer agreement, compare it to the work and the billing, and get a fair
impression as to the claim generally. Attorneys have an ethical and fiduciary
duty to provide clear written contract terms and monthly billings and reports.
Failure to due so and to breach an attorney’s fiduciary duty to a client, pursuant
to Texas law results in fee forfeiture. Counsel for Mr. Baron asked-- in writing
for the receiver to provide for each claim (A) the retainer contracts or
engagement letters, (B) the billing sent to the client, (C) the demand letters sent
to the client, and (D) any responses. The receiver has refused to do this and most
of the retainer contracts have been withheld. Notably, for those few produced,
the bulk of the work billed (where billing has been produced) does not match the
scope of work retained for. Notably, what 'seems' or doesn't seem to counsel is
not relevant. Expert opinion is needed to present an objection or response, and
without any funds to hire an expert, we have none to offer.
2. Jeff has been denied competent legal counsel expert in handling
attorney fee disputes. All of Jeff's assets were seized, so that he would have no
money to hire an attorney. He was also directed not to spend any money on an
attorney. The court ordered that Mr. Baron be represented by (1) a state court
criminal defense attorney with serious medical issues and upon information and
belief under the influence of prescription psychotropic drugs, that has zero
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experience in handling civil matters in the federal court; and (2) an appellate
lawyer who is a solo practitioner that associates with additional counsel on a per
case basis, but who has been overloaded with working over 65 hours a week on
the trial matters in this case Said counsel has been forced to work without any
associated counsel, without additional staff, without expenses for west law
research, etc. Moreover, while in theory a client might be able to find an attorney
to provide work on a contingency fee basis, because of two factors, no attorney
has been willing to get near this case. First, attorneys are scared that the court
will make them unpaid attorneys for all purposes as has been done with Mr.
Schepps, and they will be trapped in a case for months or years without pay.
Secondly, it looks like there may be zero assets left because the court is playing
favorites, and picking and choosing who gets preferential treatment with Jeff's
assets. Accordingly, no attorney has been willing to accept work on this case.
Attorneys adverse to Jeff have been paid hundreds of thousands of dollars of
Jeffs money. Attorneys representing Jeff have been allowed no money for fees
or expenses.
3. Jeff has been denied the basic information and documentation
necessary even to begin to respond and object. Very specific and simple requests
for information were made of the receiver. (Attached as Exhibit A). The receiver
agreed to provide the information, but has failed to do so. The information is
material. Without that material, it is not possible for Jeff to reasonably object or
respond to the claims in a reasonable manner.
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4. Jeff has been denied the opportunity to hire experts to investigate and
offer opinions as to the reasonableness and necessity of the fee demands.
Without this basic evidence, Jeff cannot reasonable defend or object to these
5. Jeff has been denied a reasonable opportunity to investigate and
respond. Jeff's only civil attorney is a solo practitioner. Between the demands of
the appeal and the flood of work run up by the receiver, even at working 65
hours a week or more, counsel has not had the time, as a literal matter, to
investigate each of the claims. There are over twenty claims. Each claim
involves its own factual issues, and requires research into the fiduciary duties and
violations involved. For a single attorney to handle the cases, if only a single
week was spent researching, investigating, and preparing a defense to each claim,
it would require six months of work dedicated fully to that project.
Notably, Jeff Baron object to this process, and demands a jury trial for each
and every claim against him, as his constitutional right.
Issues relating to claims over $10,000.00 are briefly addressed:
(1) Some claims such as Pronske and Patel and Bickel & Brewer
include fees for work not performed for Jeff or any receivership
entity, such as for ‘collection’ or making motions for substantial
contribution in the bankruptcy court. Texas law does not provide
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for the recovery of such fees. Additionally no showing has been
made providing for the collection of any additional fees.
(2) Many claimants appear to have no written contract, and have not
complied with Texas law that is mandatory and prerequisite for an
attorneys entitlement to payment of fees. These appear to include
Pronske and Patel, Carrington, Coleman, Sloman & Blumenthal,
LLP , Schurig Jetel Beckett Tackett, Gary G. Lyon, Dean
Ferguson, Robert J. Garrey, David L. Pacione, Jones, Otjen &
Davis, and Mateer & Shaffer, LLP.
(3) Powers and Taylor admit being paid, and appear to owe Jeff
$7,500.00 remaining unused on an initial $10,000.00 retainer.
They are seeking fees for a contingency, but their contract is
explicit and the contingency was not reached. They lost the
lawsuit they handled, they did not win it.
(4) Some attorneys are not entitled to recover any fees through a
‘claims’ procedure, they agreed to seek any fees only via
arbitration. Those attorneys appear to include Bickel & Brewer,
and Broome.
(5) For many attorneys the work billed does not match the scope of
the retainer. Pursuant to Texas law, an attorney’s representation
and right to payment is limited by the scope of the attorney client-
contract. Firms not entitled to fees beyond the scope of the work
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agreed to be paid for include Fee, Smith, Sharp & Vitullo, and
Schurig Jetel Beckett Tackett.
(6) Lyons claim is concerning he produced a written agreement that
provides You (Lyon) will not bill any further amounts, and I will
not pay you any amounts (except as identified in #1 and #2 above)
unless you perform work specifically instructed by me in writing
and we reach a further agreement regarding payment.” Since none
of the now claimed work was authorized in writing as required by
the contract, Lyon is not entitled to any payment. Lyon also
appears to have reached an agreement on fees, and is owed under
(7) Some attorneys are not licensed, or not licensed in Texas and are
not entitled pursuant to state law for charging for state court and
state law work in Texas. In fact, the attempt to charge such fees is
criminal. Lyon apparently is not licensed in Texas and neither is
Michael B. Nelson. Other attorneys may also not be licensed, no
budget has been allowed for an investigator.
(8) Dean Ferguson admitted under oath that he never reached an
agreement” with Jeff to pay the $300 per hour he is now
demanding. He testified that he worked 45 days and was paid for
22 days, leaving only 23 days of work unpaid. He sent a bill for
$20,000.00 and now demands over $70,000.00 for his 23 days of
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work. The fee is unreasonable and unconscionable and the fee
demand violates his ethical duties such that Jeff is entitled to fee
forfeiture of all sums paid to Ferguson.
(9) In addition to Dean Ferguson, several attorneys appear to have
engaged in ethical violations requiring forfeiture of the fee they
are demanding as well as the fee they have already been paid.
These attorneys include Dean Ferguson, Pronske and Patel,
Garrey, Schurig, Broome, and perhaps others as well.
(10) In total, the work charged is grossly duplicative and over billed.
Expert opinion is required to provide further detain, Jeff has been
denied expenses to hire an expert.
(11) Broome’s contract was expressly limited to $10,000.00 per month.
Broome worked at most 2 months and one week. Broome admits
he was paid $18,000.00. Accordingly, the maximum possible
claim would be $4,000.00 not the $28,000.00 he claims.
Demanding excess fees from a client is an ethical violation in
Texas resulting in fee forfeiture both of the excess fee demanded,
and the original fee paid.
(12) Sidney B. Chesnins fee is not and never was objected to. He was
fired by the receiver, and the receiver in bad faith has not paid
(13) Jeff was not a client of Hitchcock Evert, LLP. There fees appear
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to have been capped by a supplemental agreement so that they are
owed no money.
(14) Other issues are reserved for evidentiary and oral argument.
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
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
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