Fifth Circuit Reply brief filed by Baron and schepps

  
Civil Action No. 3:12-cv-00367-F (O) 
____________________________________________________________________________
 
IN THE UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF TEXAS 
____________________________________________________________________________
 
JEFF BARON, 
Appellant, 
v. 
CHAPTER 11 TRUSTEE DANIEL J. SHERMAN 
Appellee 
____________________________________________________________________________
 
 
Appeal from the United States Bankruptcy Court 
For the Northern District of Texas, Dallas Division 
Bankruptcy Petition No. 09-34784-sgj11 
____________________________________________________________________________
 
 
APPELLANT’S REPLY BRIEF 
____________________________________________________________________________ 
 
 
Respectfully submitted, 
 
/s/ Gary N. Schepps
 
Gary N. Schepps 
Texas State Bar No. 00791608 
Drawer 670804  
Dallas, Texas 75367  
(972) 200-0000 - Telephone 
(214) 347-4031 - Facsimile 
Email: legal@schepps.net 
 
COUNSEL FOR APPELLANT 
 
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ii 
TABLE OF CONTENTS 
TABLE OF CONTENTS .................................................................................................ii
 
TABLE OF AUTHORITIES ........................................................................................ iii 
REPLY ISSUES PRESENTED .......................................................................................1 
ARGUMENT AND AUTHORITIES ..............................................................................1 
REPLY ISSUE 1. BARON HAS STANDING. .......................................................................1 
REPLY ISSUE 2. THE ‘RECEIVERSHIP ORDER’ IS VOID...............................................2 
CONCLUSION.................................................................................................................3 
CERTIFICATE OF SERVICE.......................................................................................3 
 
 
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iii 
TABLE OF AUTHORITIES 
 
Armstrong v. Manzo,  
380 U.S. 545, 552 (1965)..................................................................................................................... 2 
Boddie v. Connecticut,  
401 U.S. 371, 379 (1971)..................................................................................................................... 2 
Cochrane v. WF Potts Son & Co.,  
47 F.2d 1026, 1029 (5th Cir. 1931) ..................................................................................................... 2 
Gannett Co. v. DePasquale,  
443 U.S. 368, 412 (1979)..................................................................................................................... 2 
Goss v. Lopez,  
419 U.S. 565, 579 (1975)..................................................................................................................... 2 
In re Coho Energy Inc.,  
395 F.3d 198, 203 (5th Cir. 2004) ....................................................................................................... 1 
Landy v. Federal Deposit Insurance Corporation,  
486 F.2d 139 (3rd Cir. 1973) ............................................................................................................... 1 
Pennoyer v. Neff,  
95 U.S. 714, 737 (1878)....................................................................................................................... 2 
Phillips v. Vandygriff,  
711 F.2d 1217, 1227 (5th Cir. 1983) ................................................................................................... 2 
Registration Control Systems v. Compusystems, Inc.,  
922 F.2d 805, 807 (Federal Cir. 1990) ................................................................................................ 2 
Securities & Exchg. Com'n v. Spence & Green Chemical,  
612 F.2d 896, 903 (5th Cir. 1980) ....................................................................................................... 1 
World-Wide Volkswagen Corp. v. Woodson,  
444 U.S. 286, 291 (1980)..................................................................................................................... 2 
  
 
 
 
 
  
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REPLY ISSUES PRESENTED 
REPLY ISSUE 1. Baron has standing. 
REPLY ISSUE 2. The ‘receivership order’ is void. 
 
ARGUMENT AND AUTHORITIES 
REPLY ISSUE 1. Baron has standing. 
Jeff Baron is clearly “directly and adversely affected pecuniarily by the order of the 
bankruptcy court” and therefore has standing to appeal. In re Coho Energy Inc., 395 F.3d 
198, 203 (5th Cir. 2004).  The District Court in the ‘receivership’ proceedings expressly 
ordered that the undersigned counsel was authorized to represent Baron in the District Court, 
for “all purposes”.   Here, Baron seeks to protect an asset that Vogel, as receiver, refused and 
failed to defend.  Even in statutory SEC receivership cases (which the instant receivership is 
not) the Fifth Circuit has recognized the right of 'some sort' of derivative action to enforce 
the rights of a company that the receiver has failed or refused to protect.  See e.g., Securities 
& Exchg. Com'n v. Spence & Green Chemical, 612 F.2d 896, 903 (5th Cir. 1980), citing with 
approval Landy v  .Federal Deposit Insurance Corporation, 486 F.2d 139 (3rd Cir. 1973).  
Notably, as discussed below, as a legal matter Baron’s rights were not seized by the 
‘receiver’ because the receivership order is void for lack of Due Process and want of subject 
matter jurisdiction and is therefore is incapable of binding persons or property in any other 
tribunal, Pennoyer v. Neff, 95 US 714, 722-723 (1878). 
 
  
 
 
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REPLY ISSUE 2. The ‘receivership order’ is void. 
An ex parte order such as the ‘receivership order’ that was signed without a motion on 
file to support it, and without notice, opportunity to be heard, sworn affidavits, or bond to 
protect the rights of those adversely affected by the order, etc., is an order fundamentally 
devoid of  due process and void as a matter of law.   As a matter of well-established law, 
failure to afford a party the opportunity to be heard on a motion seeking relief against them 
is fundamentally inconsistent with the notion of due process, and orders issued without such 
an opportunity are void.  See e.g., Armstrong v. Manzo, 380 U.S. 545, 552 (1965); Goss v. 
Lopez, 419 U.S. 565, 579 (1975); Boddie v. Connecticut, 401 U.S. 371, 379 (1971); Phillips 
v. Vandygriff, 711 F.2d 1217, 1227 (5th Cir. 1983); Registration Control Systems v. 
Compusystems, Inc., 922 F.2d 805, 807 (Federal Cir. 1990).  Thus, the Supreme Court has 
described secret judicial proceedings as “a menace to liberty”. Gannett Co. v. DePasquale, 
443 U.S. 368, 412 (1979).   Because the ‘receivership order’ was signed in secret, off-the-
record proceedings before a motion requesting the order was filed and failed to provide the 
most basic aspects of Due Process, the order is void ab initio and subject to collateral attack 
in the Bankruptcy Proceedings. See e.g., 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”).  
The ‘receivership order’ is also void for lack of subject matter jurisdiction. The 
district court lacked subject matter jurisdiction to enter the receivership order because no 
claim for relief regarding the property ordered into receivership was pled before that court. 
Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931) (absent pleadings 
asserting a  claim in and to the property subject of the receivership, an order appointing a 
receiver over that property is “absolutely void in the strictest sense of the term”). 
         
 
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CONCLUSION 
The Bankruptcy Court’s order should be reversed. 
 
 
 
Respectfully submitted, 
 
/s/ Gary N. Schepps
 
Gary N. Schepps 
Texas State Bar No. 00791608 
Drawer 670804  
Dallas, Texas 75367  
(972) 200-0000 - Telephone 
(214) 347-4031 - Facsimile 
Email: legal@schepps.net 
 
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. 
 
CERTIFIED BY:  /s/ Gary N. Schepps
 
  Gary N. Schepps 
COUNSEL FOR APPELLANTS 
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