Reply to Doc 222, Sherman Response to Strike Filed by Gary Schepps

REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE - Page 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., § Civil Action No. 3-09CV0988-F
MANILA INDUSTRIES, INC., and §
MUNISH KRISHAN,  §
Plaintiffs.  §
§
v.  §
§
JEFFREY BARON, and §
ONDOVA LIMITED COMPANY, §
Defendants. §
REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE 
TO THE HONORABLE ROYAL FURGESON, U.S. DISTRICT COURT JUDGE:
COMES  NOW,  Jeffrey  Baron,  Appellant,  and  respectfully  replies  to  Mr. 
Sherman’s  response  to  [DOC  222],  (Mr.  Sherman’s  Response  to  Mr.  Baron’s 
motion to strike the bankruptcy court’s report and recommendation and to vacate 
the order adopting same).
I. LACK OF SUBJECT MATTER JURISDICTION CANNOT BE WAIVED
1. Subject matter jurisdiction is never waived. Mansfield C. & L. M. R. Co. 
v. Swan, 111 U. S. 379, 382 (1884).  As Justice Harlan explained, “the presumption 
. . . is that the court below was without jurisdiction” unless “the contrary appears 
affirmatively from the record.” King Bridge Co. v. Otoe County, 120 U. S. 225, 
226 (1887) (“[T]he rule, springing from the nature and limits of the judicial power 
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REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE - Page 2
of the United States, is inflexible and without exception, which requires this court, 
of its own motion, to deny its own jurisdiction, and, in the exercise of its appellate 
power,  that  of  all  other  courts  of  the  United  States,  in  all  cases  where  such 
jurisdiction does not affirmatively appear in the record on which, in the exercise of 
that  power,  it  is  called  to  act.”).  The  facts  supporting  jurisdiction  must  appear 
affirmatively from the record. Id.   
2. Other  than  a  misplaced  hope  that  the  defect  could  be  waived,  Mr. 
Sherman  has  no  response  to  the  bankruptcy  court’s  lack  of  subject  matter 
jurisdiction over the subject matter of the report.
II. BANKRUPTCY RULE 9033 APPLIES TO ALL NON-CORE 
PROCEEDINGS
3. Two courts cannot exercise concurrent jurisdiction over the same matter.  
Accordingly,  the  only  way  for  the  district  court  to  act  as  a  ‘supervisor’  of  the 
bankruptcy court (to use this Court’s terminology),  is either by withdrawing the 
reference  (in  which  case  the  bankruptcy  court  is  divested  of  jurisdiction)  or  by 
appellate  review  from  the bankruptcy  court,  (in  which case  the  requirements  of 
Rule 9033 must apply).
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REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE - Page 3
III. YET ANOTHER ‘SUA SPONTE’ BYPASS SUGGESTED BY MR. 
SHERMAN
4. Mr. Sherman is now a serial offender in seeking to rely on purported “sua 
sponte” actions of the district court as a means to circumvent the law and rules of 
procedure.
5. The  bankruptcy  court's  report  was  either  a  motion  to  withdraw  its 
reference or it wasn't.  If it wasn't, it was dressed up in a false wrapper, and Mr. 
Sherman's argument fails.  If it was, the Federal and local rules were circumvented, 
and the report must be stricken.
6. The  Bankruptcy  Rules  require  that  a  motion  to  withdraw  reference  be 
made in the bankruptcy proceeding.  The Bankruptcy Rules do not provide for the 
bankruptcy  court  to  act  in  he  absence  of  such  motion.  28  U.S.C.  157(d)  (“The 
district court may withdraw, in whole or in part, any case or proceeding referred 
under this section, on its own motion or on timely motion of any party, for cause 
shown.”)(emphasis).  Even the case cited by Mr. Sherman, In re Moody, 64 B.R. 
594 (Bankr. S.D.  Tex. 1986) involves a  motion.   Notably, pursuant to  the rules 
promulgated  by  Congress,  either  the  district  court  or  any  party  may  make  the 
motion.  No provision allows the bankruptcy judge to do so.  In any case, a motion 
is required, and there is a specific rule for the handling of the motion.  
7. In the Northern District of Texas, withdrawal of reference is governed by 
local rule 5011-1.  Local Rule  5011-1 ‘Withdrawal of Reference’ requires that “a) 
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REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE - Page 4
Procedure. A motion to withdraw the reference of a case or a proceeding in a case 
shall be directed to the district court, but shall be filed with the Bankruptcy 
Clerk.  A  status  conference  on  the  motion  shall  be  held  by  the  bankruptcy 
judge  with  notice  to  all  parties  involved  in  a  contested  matter  or  adversary 
proceeding of which the reference is proposed to be withdrawn.”  Moreover, the 
bankruptcy and local rules lay out the appropriate method for a bankruptcy court to 
communicate to a district court regarding the withdrawal of reference.  Suffice to 
say the bankruptcy court’s report violates almost every requirement mandated by 
law. See e.g., L.B.R. 5011-1.
8. Bankruptcy Rule 5011 expressly requires that a motion for withdrawal of 
a case or proceeding shall be heard by a district judge.  Accordingly, if the order 
adopting the bankruptcy court’s report was an order on withdrawal, a hearing was 
mandated.   Having been issued without a hearing, the order of withdrawal should 
be vacated.
9. Similarly, Mr. Sherman offers no rule or authority to excuse the Court's 
failure to allow 14 days to object to the report before adopting it, especially where 
no notice of a shorter period was provided prior to the report’s adoption.
10.  Finally,  no rule  imposes  a  time  limit  for  which to  move to  vacate  or 
strike filings or orders in an active lawsuit.  The matter is not moot because the 
adopted findings form a principal asserted grounds of the motion for receivership.
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REPLY TO [DOC 222] SHERMAN RESPONSE TO MOTION TO STRIKE - Page 5
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(214) 210-5940
(214) 347-4031 Facsimile
Legal@Schepps.net
APPELLATE COUNSEL FOR 
JEFFREY BARON
CERTIFICATE OF SERVICE
This  is  to  certify  that  this  was  served  on  all  parties  who  receive  notification  
through the Court’s electronic filing system.
/s/ Gary N. Schepps
Gary N. Schepps
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