No. 10-11202
In the
United States Court of Appeals
for the Fifth Circuit
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NETSPHERE, INC. Et Al,
Plaintiffs
v.
JEFFREY BARON,
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY,
Defendant-Appellee
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Appeal of Order Appointing Receiver in Settled Lawsuit
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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
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From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
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EMERGENCY MOTION FOR LIMITED STAY, DISSOLUTION OR
OTHERWISE TO ALLOW JEFF BARON TO DEFEND HIS
INTEREST IN THE SERVERS.COM DOMAIN IN THE ONDOVA
BANKRUPTCY PROCEEDINGS
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Case: 10-11202 Document: 00511655466 Page: 1 Date Filed: 11/04/2011
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Cons. w/ No. 11-10289
NETSPHERE, INC., ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant- Appellant
v.
DANIEL J SHERMAN, Appellee
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Cons. w/ No. 11-10290
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, ET AL, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C., Non-Party Appellants
v.
PETER S. VOGEL, Appellee
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Cons. w/ No. 11-10390
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant Appellant
v.
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
v.
ONDOVA LIMITED COMPANY, Defendant Appellee
v.
PETER S. VOGEL, Appellee
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Cons. w/ No. 11-10501
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.,
Appellant
v.
PETER S. VOGEL; DANIEL J. SHERMAN, Appellees
Case: 10-11202 Document: 00511655466 Page: 2 Date Filed: 11/04/2011
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Interlocutory Appeals of
Orders in Receivership on Appeal
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From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
Hon. Judge William R. Furgeson Presiding
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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/Appellant: JEFFREY BARON
b. Defendant/Appellee: 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
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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 Vogel: Gardere Wynne Sewell LLP
(1) Barry Golden
(2) Peter L. Loh
1601 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone (214) 999-3000
Facsimile (214) 999-4667
bgolden@gardere.com
c. For Appellee Sherman:
Munsch Hardt Kopf & Harr, P.C.
(1) Raymond J. Urbanik, Esq.
(2) Lee J. Pannier, Esq.
3800 Lincoln Plaza / 500 N. Akard Street
Dallas, Texas 75201-6659
Telephone: (214) 855-7500
Facsimile: (214) 855-7584
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
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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
(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
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(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
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 APPELLANT
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TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PERSONS........................................................................... 2
TABLE OF CONTENTS ................................................................................................................ 6
BACKGROUND.............................................................................................................................. 8
The Emke-Vogel Connection ...................................................................................8
The Emke Settlement...............................................................................................8
Baron Prevented From Protecting his Property Rights .............................................9
Vogel Working Against Receivership Estates.........................................................10
Background of Sherman-Vogel and the Receivership.............................................12
STANDARD IN GRANTING STAY PENDING APPEAL........................................................ 16
ARGUMENT & AUTHORITY.................................................................................................... 17
A. LIKELIHOOD OF SUCCESS ON APPEAL LEGAL ANALYSIS....................... 17
THE RECEIVERSHIP ORDER IS UNCONSTITUTIONAL................................17
THE RECEIVERSHIP ORDER IS NOT AUTHORIZED IN EQUITY.................19
THE POST-APPEAL LEGAL JUSTIFICATIONS OFFERED FOR THE
RECEIVERSHIP ARE LEGALLY GROUNDLESS..............................................19
B. IRREPARABLE INJURY.................................................................................................. 22
C. NO SUBSTANTIAL HARM TO OTHER PARTIES................................................... 23
D. PUBLIC INTEREST........................................................................................................... 23
CONCLUSION.............................................................................................................................. 24
PRAYER......................................................................................................................................... 24
TABLE OF AUTHORITIES ........................................................................................................ 27
CERTIFICATE OF SERVICE..................................................................................................... 29
CERTIFICATE OF NOTICE....................................................................................................... 29
Case: 10-11202 Document: 00511655466 Page: 7 Date Filed: 11/04/2011
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TO THE HONORABLE JUSTICES OF THE FIFTH CIRCUIT COURT OF
APPEALS:
COMES NOW JEFFREY BARON, Appellant, and moves for an emergency
order issued by Monday, November 7, allowing Baron to retain counsel of his
choice and to file an objection to the sale of the domain name servers.com in the
Ondova bankruptcy proceedings
1
. All Baron seeks by this motion is the
opportunity to exercise his right as a citizen of the United States to be heard in
court to defend his legal rights in the domain name servers.com.
Sherman, the chapter 11 trustee in the Ondova bankruptcy, has filed a
negative-notice motion to sell the servers.com domain. See Exhibit B. Unless
Baron is allowed to object by Monday, November 7, he will be unable to stop the
approval and sale of the name, and the purchaser of the name will cut off his rights.
This motion does not seek to take anything out of the receivership res, but rather,
the emergency relief requested is necessary to protect a substantial
receivership asset from liquidation and loss and involves no cost to the
receivership estate.
This Honorable Court has stayed the District Court below from liquidating
or distributing any further receivership assets. Vogel, the receiver, and Sherman
have therefore moved over to the Bankruptcy Court (which has not been stayed), in
an attempt to end run the stay imposed on the District Court and liquidate
Barons recently vested interest in servers.com via the bankruptcy proceedings.
1
Northern District of Texas (Dallas) bankruptcy case 09-34784-sgj11.
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BACKGROUND
The Emke-Vogel Connection
In 2003 a dispute arose between Mike Emke and Ondova (f/d/b/a Compana)
over the domain servers.com. Emke claimed he owned the name. Peter Vogels
law firm, Gardere, represented Emke in the dispute, and was attorney of record for
Emke in at least two Federal suits spanning almost half a decade.
2
Then, in July
2009, Judge Furgeson announced that he was going to appoint Vogel as special
master in the lawsuit below. Pressure was placed on Baron and he was intimidated
into believing that if he did not immediately settle his lawsuit with Emke
(involving servers.com), there would be consequences in the lawsuit below
(involving half a million domain names). Accordingly, Baron settled the suit with
Emke on July 6, 2009. Exhibit A. Three days later, the order appointing Vogel as
special master was formally entered in the proceedings below. R. 394.
The Emke Settlement
The Emke settlement transferred most of the rights to servers.com to a
new entity (Servers, Inc., a Nevada corporation). The new corporations stock was
owned 50/50 by Ondova and Emke. No one disputes Ondovas right to ownership
of the Servers, Inc. stock. However, the Emke settlement expressly reserved an
interest in the domain name for Emke and Baron personally. Pursuant to the
agreement, Baron and Emke reserved a security and reverter interest in the
2
Northern District of Texas cases: (1) Compana, LLC v. Emke et al. (3:03-cv-02372-M); and
(2) Compana, LLC v. Emke et al 3:05-cv-00285-L.
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domain name, reverting ownership on the condition that the corporation was ever
placed into receivership. Specifically the Emke settlement agreement (Exhibit A)
provides:
In the event of insolvency, receivership and/or other default of the
jointly owned company, the domain name <servers.com> shall
revert to Jeff Baron and Mike Emke, to be owned jointly and
equally. To this degree, these two principals shall maintain a first
lien and security interest in the domain name superior to any other
investor, equity holder or creditor.
Recently, on October 18, 2011, the Ondova Bankruptcy Court Judge entered
an order placing Servers, Inc. into receivership. Exhibit C. Accordingly, as a
matter of Texas and Nevada state law, Baron and Emke became 50/50 owners of
the domain name servers.com. The domain name has been appraised at
$1,400,000.00 to $4,200,000.0 in value. Accordingly, Barons legal interest in 50%
of the domain name is substantial valued between $700,000.00 and
$2,100,000.00.
Baron Prevented From Protecting his Property Rights
Baron, however, has been prohibited by the receivership order (challenged in
this appeal) from exercising any of his legal rights. Sherman argues that Vogel (as
receiver) holds all of Barons rights. See Exhibit D. Yet, Vogel and his firm
Gardere, have a clear conflict of interest litigating against Garderes former client
with respect to a matter for which Gardere represented that client against Ondova
and Baron. Vogel, moreover, has taken positions that are clearly not in Barons
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interest nor reasonably calculated to protect Barons interest. Rather, Vogel has
actively attempted to orchestrate fabricated incidents to prove that Baron is
despicable (Vogels term).
3
Vogel Working Against Receivership Estates
Vogel has failed to take actions to protect receivership assets or to fulfill the
duties normally associated with a receiver, such as defending arbitration claims
against receivership assets, or filing tax returns and paying federal taxes for the
multiple receivership entities under Vogels receivership, etc.
4
This is also
illustrated by Vogels filings in the Bankruptcy Court, as shown by the following
example: Prior to the global settlement, Sherman claimed ownership of about a
dozen domains. That ownership was contested, and Barons counsel sent a letter
confirming that the domains listed in a letter (in which Sherman claimed
ownership of the domains) were the domains considered to be in dispute. Vogel
initially claimed these domains were owned by Ondova. Novo Point LLCs Cook
Island manager hired counsel to move to have the domains turned over to the
receivership. In that motion it was clearly established that Ondova did not have
3
See, e.g., 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 Vogels orchestrated attempt to falsely make it
appear that Baron was harassing, intimidating, and obstructing) (at pdf page 14, et.seq.); and
SR. v5 pp102-110 (the emails with Vogels offices digital IDs proving the affair was an
orchestrated set-up by Vogel).
4
See Document 00511604732 filed on 9/16/2011 in case 10-11202 (Failure to pay any taxes or
file any tax returns) and Document 00511618411 Filed 09/29/2011 in Case 10-11202 (Refusal to
defend Domain Name arbitration disputes).
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title to the names, and that title to those domain names was transferred to Novo
Point LLC in the global settlement. See Exhibit E.
At the hearing related to that motion, it was admitted on the record that
Sherman and Vogel had agreed that all of the domains except one (mondial.com)
were the property of Novo Point, and would be turned over to Novo Point.
Exhibit F. However, instead of enforcing the rights of Novo Pointeven as were
expressly agreed on the record, Vogel subsequently filed a motion making it look
(falsely) like Barons counsel had agreed that the disputed names belonged to
Ondova. See Exhibit G. First, Vogel attached an affidavit that the whois
information showed Ondova as the owner of Petfinders.com. However, the
whois information of nearly all of Ondovas domains listed Ondova as the owner
as a privacy protection feature for the actual owner. ICANN (the international
internet organization that regulates domain names) prohibits a registrar (such as
Ondova) from registering its own names. It would have been impossible for
Ondova to be both owner and registrar.
In any case, Ondova had quitclaimed all of its domain name inventory to
Blue Horizon in 2005. Exhibit E. Blue Horizon then quitclaimed those names to
Novo Point in the global settlement agreement. All of this Vogel hides from the
Court. Instead, Vogel pastes a giant header 12 Domains that are registered and
owned by Compana to mock up an e-mail from Gerrit Pronske to make it look
like it is confirming that fact, when the Pronske letter is actually confirming the
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oppositethat the 12 names are disputed names. See Exhibit G. In short, Vogel
mocked up a letter to create false evidence against the position and rights of the
receivership parties, in an effort to support Shermans sale of Petfinders.com in a
private, non-auction sale for $25,000.00.
5
Background of Sherman-Vogel and the Receivership
In September 2010 the Ondova bankruptcy estate had some $2,000,000.00 in
cash and only around $900,000.00 in claims ie., more than a million dollar
cash surplus. This was achieved when Baron agreed for Ondova to take all of the
settlement proceeds in the global settlement because he was promised by the
Ondova chapter 11 trustee (Sherman) that:
[I]f I were going to be entering into this settlement agreement,
that once the creditors were paid, that there would be a
significant amount of money that was left over, that would come
back, that would stay, you know, in a company that I would have
at the end of the day. I was told that obviously if you look at
the settlement agreement, I individually am not getting any, a
penny from it myself. the settlement agreement was that
Ondova was going to be able to walk away out of the bankruptcy,
after it paid its creditors, with a large amount of cash, and we
were thinking maybe even a million dollars.
Barons testimony before the Bankruptcy Court on 9/15/2010.
Doc 470, Page 95 in Ondova Bankruptcy (case no. 09-34784-sgj11).
Sherman should have immediately closed the Ondova bankruptcy in
September 2010 when there was the MILLION DOLLARS CASH surplus.
Shermans counsel let the truth slip out in the District Court, admitting The
5
Petfinders.com has been appraised at $2,000,000.00 to $6,000,000.00.
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negotiation was to pay the debts and give the keys back to Mr. Baron. But that
didn't happen. R. 4598:11-12. Instead, Sherman kept the bankruptcy open and ran
up over $300,000.00 in additional attorney fees.
Baron eventually objected. Within three business days of Barons objection,
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).
Sherman notably did not act on his own, but filed his motion seeking to appoint
Vogel as receiver over Baron only after secret consultations with Vogel.
6
After
consulting with Vogel, Sherman filed the receivership motion 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.
7
What the Bankruptcy Judge
actually stated was:
I am thinking very, very carefully about doing a Report &
Recommendation to Judge Will Furgeson that he appoint a receiver
over Mr. Baron and his assets pursuant to 28 U.S.C., 20 Section 754
and 1692 so that a receiver can seize assets and perform the
obligations of Jeff Baron under the settlement agreement.
Ondova Bankruptcy Doc 470 at 58.
However, by November 2010 when Sherman and Vogel had Vogel
appointed ex parte as receiver over Baron, Baron had already fully performed all
of his settlement agreement obligations.
8
Thus, Sherman did not allege Baron was
6
SR. v5 p238.<