Baron Corrected Reply to Trustee’s Response to Emerg Motion for Stay Pending Appeal

1 
 
No. 
13-10121
 
(and Consolidated 
Cases)
 
 
 
In 
the
 
United States Court of Appeals for 
the Fifth 
Circuit
 
 
 
No. 
13-10121
 
 
JEFFREY
 
BARON, 
Appellant 
v.
 
DANIEL J. SHERMAN 
Chapter 11 Trustee 
Appellee
 
 
 
Appeal from Order Closing Case 
(Civil Action No. 3:12-cv-00367-F) 
 
On Appeal from  
United States Bankruptcy Court 
Northern District of Texas, Dallas Division  
Bankruptcy Petition No. 09-34784-sgj11 
 
 
 APPELLANT’S CORRECTED REPLY TO TRUSTEE’S 
RESPONSE TO EMERGENCY MOTION FOR STAY 
PENDING APPEAL 
 
  Appellant, Jeffrey Baron, hereby files his Corrected Reply to Appellee’s 
Response to his Emergency Motion for Stay Pending Appeal.
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1
 The sole change in Appellant’s Reply corrects a factual statement concerning the 
timing of the Trustee’s filing of a suggestion of bankruptcy, which is located at the 
bottom of page 2 through the top of page 3. 
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First, the Trustee accurately states that there was a suggestion of bankruptcy 
filed  with  this  Court  by  the  Trustee’s  counsel.    However,  Mr.  Baron  has  a 
substantial Fifth Amendment interest in protecting his assets while he is appealing 
the Order for Relief entered by the Bankruptcy Court.  This is true despite the fact 
that both courts have denied a stay pending appeal of the involuntary bankruptcy 
proceeding.
2
  The  Trustee  urges  the  Court  to  adopt  a  position  that  basically 
deprives  litigants  of  the  right  to  oppose  the  imposition  of  an  involuntary 
bankruptcy and then sell his assets while he is pursuing the judicial process.    This 
violates fundamental principles of due process. 
The Appellee is attempting to create confusion by confusing the two orders 
at issue and the two separate and distinct bankruptcies.    The Appellee accurately 
states that he filed a suggestion of bankruptcy in this Court, but his suggestion of 
bankruptcy  appears  to  have  been  made  as  part  of  a  strategy  to  circumvent  the 
bankruptcy process and sell <servers.com> as part of the Ondova bankruptcy and 
circumvent the Chapter 7 process. 
While  the  instant  appeal  was  pending,  the  Appellee  moved  to  sell  the 
<servers.com>  asset  for  the  second  time
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,  in  violation  of  the  automatic  stay  in 
                                                          
 
2
 Mr. Baron anticipates taking further action regarding the district court’s denial of 
the stay, for reasons set out below. 
3
 Appellee’s motion was  filed on August 14, 2013.  
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Appellant’s  personal involuntary bankruptcy case
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 and undermining this  Court’s 
jurisdiction in the subject matter of this appeal. Approximately one month later,  
the Trustee came to this Court and filed a suggestion of bankruptcy attempting to  
to stay this appeal concerning sale of <servers.com> the very same asset that he 
had just asked the Ondova bankruptcy court to liquidate. Appellee cannot have it 
both ways, taking offensive action against Appellant in the Ondova case and then 
requesting  that  the  appeal  of  such  action  be  stayed  because  Mr.  Baron  is  in  a 
Chapter 7 bankruptcy.    
Further, the Appellee’s argument is misleading in that he incorrectly refers 
to  a  different  order  than  the  order  on  appeal,  suggesting that Appellant did  not 
request a stay.  As set out in Appellant’s motion to this Court, a motion for stay the 
First  Sale  Order,  the  order  on  appeal  in  the  instant  case,  was  requested  in  the 
District Court and was summarily denied (Appendix J).  The District Court gave 
no reason for denying the motion.     
The Appellee avoids discussion of the First Sale Order because the Second 
Sale Order (entered on Appellee’s motion a year after the order on appeal was filed 
in this Court) seeks to modify the order while on appeal, which interferes with the 
jurisdiction of this Court and cannot be allowed.     Indeed, appellate courts can 
                                                          
 
4
 The Ondova bankruptcy is separate and distinct from the personal involuntary 
bankruptcy brought against Baron and pending appeal in the Northern District of 
Texas. 
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hardly allow appeals to be filed and then have the order modified at the request of 
litigants in such a way as to moot an appeal. 
Although  the  stay  motion  in  the  Chapter  7  case  is  irrelevant  to  a 
determination of the instant motion, Appellee apparently suggests that Baron will 
not  obtain  relief  from  the  involuntary  bankruptcy.      In  making  this  assertion, 
however, Appellee falsely states that Appellant “failed to seek a stay of the Order 
For  Relief”  (Response  at  2).    The  Trustee’s  assertion  contradicts  the  facts 
recounted by Judge O’Connor’s in his Order recognizing that a stay was requested 
from the bankruptcy court and his Court.
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In attempting to focus this Court on Appellant’s involuntary bankruptcy, the 
Trustee fails to distinguish the Chapter 7 case from the Ondova bankruptcy case, 
from  which  the  order  in  this  case  was  appealed.    The  Trustee’s  motion  to  sell 
Appellant’s individual property in the Ondova bankruptcy violated the automatic 
stay  in  the  separate,  personal  involuntary  bankruptcy  case.      This  smacks  of 
gamesmanship designed to circumvent the bankruptcy process to sell an asset in 
the  wrong  case  but  simultaneously  undermining  this  Court’s  jurisdiction.    As 
argued in Appellant’s motion, a Section 363 sale denies the parties due process in 
                                                          
 
5
  Appellant has just filed his opening brief in support of reversing the order for 
relief.  The Trustee in Appellant’s involuntary bankruptcy case has not taken any 
action in the instant appeal.  
 
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determining the ownership of an asset.  Ownership must be determined first and 
then a Section 363 sale conducted, if appropriate.  The Court should require the 
Trustee to file the right procedure in the right case.  While Mr. Baron has been 
castigated for alleged “vexatious” litigation tactics, the Trustee’s litigation tactics 
are inappropriate and reveals bad faith. 
Moreover, this Court, in the Netsphere case, did stay the sale of all domain 
names  subject  to  the  receivership  order  indefinitely,  and  the  receivership  order 
applied  to  all  of  Jeff  Baron’s  assets,  including  his  ownership  interest  in 
servers.com. Exhibit G.  See Netsphere, 703 F.3d at 305, 309 (“The receivership 
ordered in this case encompassed all of Baron’s personal property….”).  The Court 
ultimately made the stay on sale of the domain names permanent.  Id. at 314 n.2 
(stay on sale of domain names made “permanent”).   
Finally, the  Trustee’s  argument  regarding on the order denying the stay in 
the  Chapter  7  case  is  irrelevant  to  the  instant  appeal  for  another  reason.    The 
district  court  simply  got  the  basic  facts  wrong.    The  District  Court  incorrectly 
concluded that the district court’s earlier interlocutory May 18, 2011 order in the 
Netsphere case held that the receivership creditors were entitled to over $800,000 
in unpaid fees and was not affected by this Court’s reversal.  3:13-0461, Dkt. 22 at 
11-12.   Simply stated, this Court  held that  these  claimants were  “non-judgment 
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creditors,”  held  “disputed  claims”  not  subject  to  the  equitable  jurisdiction  of  a 
federal court and reversed and vacated this order.  Netsphere, 703 F.3d at 305-306. 
The root problem presented in the involuntary case involves the imposition 
of an involuntary bankruptcy by non-judgment creditors with disputed claims,  that 
were  and  are  collaterally  estopped  by  this  Court’s  decision  in  Netsphere, Inc. v. 
Jeff Baron, et.al., 703 F.3d 296 (2012).  This Court found that these creditors were 
non-judgment creditors.  If the petitioning creditors were non-judgment creditors in 
Netsphere, it strains credulity to  believe that these same non-judgment creditors 
somehow  became  judgment  creditors  that  allows  relief  in  a  federal  bankruptcy 
court.  The filing of the involuntary petition was nothing more than an attempt to 
circumvent this Court’s judgment and mandate in the Netsphere decision. 
Respectfully submitted, 
 
/s/ Stephen R. Cochell 
Stephen R. Cochell 
7026 Old Katy Road, Ste. 259 
Houston Texas 77096 
(713)980-8796 (telephone) 
(713)980-1179 (facsimile) 
 
COUNSEL FOR APPELLANT 
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. 
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CERTIFIED BY:   /s/ Stephen R. Cochell  
          Stephen R. Cochell 
           COUNSEL FOR APPELLANT 
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