Stromberg Motion re Appeal

Mark Stromberg 
State Bar No. 19408830 
STROMBERG STOCK, PLLC 
Two Lincoln Centre 
5420 LBJ Freeway, Suite 300 
Dallas, Texas 75240 
Telephone 972/458-5335 
Facsimile 972/770-2156         
E-mail: mark@strombergstock.com 
 
Attorneys for Jeffrey Baron, Alleged Debtor 
 
 
  UNITED STATES BANKRUPTCY COURT 
  NORTHERN DISTRICT OF TEXAS 
 DALLAS DIVISION 
 
IN RE:  § 
      § 
JEFFREY BARON,   §  Bankr. No. 12-37921-SGJ 
      § 
Alleged Debtor.  §   
______________________________________________________________________________ 
 
JEFFREY BARON’S REQUEST FOR LEAVE TO SEEK LIMITED RELIEF FROM 
ORDER CLARIFYING APPLICATION OF STAY TO CERTAIN APPEALS 
 
Jeffrey Baron (the “Alleged Debtor”), by and through counsel, and pursuant to the Court’s 
Order Clarifying Application of Automatic Stay to Certain Appeals [Doc. 81, the “Order”], and 
Bankruptcy Rule 8003, requests leave of this Court to seek limited relief to file an appeal of this 
Court’s Order: Continuing to April 4, 2013 at 2:30 PM the Joint Status Conference an Hearings 
Set for 3/19/13 at 10:30 AM on various motions filed by the Receiver; Requiring Mandatory, 
Good Faith, in-Person Global Settlement Conferences Among Parties and Lawyers During Next 
Two Weeks; (c) Authorizing Payment of Court Reporter Fees; and (d) Addressing Miscellaneous 
Issues.  A copy of the Order is attached as Exhibit A. 
In support of his request for relief from the Order Clarifying Application of Automatic 
Stay to Certain Appeals, Alleged Debtor provides a summary of the following issues: 
 
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I.  The Order and Issues on Appeal  
Specifically, the Alleged Debtor wishes to appeal from that portion of the Order 
[Dkt. 96] that orders as follows:  
there shall be no wind-down plan considered by the district Court for the 
Receivership at this time for two reasons:   the automatic stay of the Jeff Baron 
involuntary bankruptcy case; and (b) no mandate has been issued by the Fifth 
Circuit with regard to its ruling invalidating the Receivership (which is not final at 
this time).  There will be no hearing on a wind-down of the Receivership unless 
and until both of the following occur:  (a) the automatic stay of the Jeff Baron 
involuntary bankruptcy order is terminated; and (b) a mandate has been issued by 
the Fifth Circuit with regard to its ruling invalidating the Receivership. [Dkt. 96 at 
4]. 
 
The Alleged Debtor does not seek leave to appeal from any other provisions of the subject Order. 
This portion of the Order interferes with the jurisdiction of the Fifth Circuit Court of 
Appeals over the receivership property and the District Court’s ability to coordinate the activities 
of both the involuntary bankruptcy and the receivership.  The order assumes subject matter 
jurisdiction over a petition for involuntary bankruptcy that has been brought on disputed claims.  
Mr. Baron understands that the Bankruptcy court has ruled that the claims are bona fide 
undisputed claims that can be the subject of an involuntary bankruptcy.
1
  The Bankruptcy 
Court’s conclusion was based on the argument that the Compromise Order entered by the 
District Court (Dist. Dkt. 575) was a final, binding order.   As set out below, the order was not 
final or binding. 
Finally, the Bankruptcy Court has entered an order abating the bankruptcy proceeding 
until the Fifth Circuit’s mandate, the timing of which is unknown and potentially lengthy.   The 
District Court has, on at least two occasions, requested that the parties devise a plan to wind 
down the receivership.  Further delay of winding down, or at least discussing a wind down plan 

1
A proposed order has been uploaded for the Court’s consideration as well as an Order Denying 
Alleged Creditor Jeffrey Baron’s Motion to Dismiss.

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will materially delay potential settlement of the case, increase the costs of administration for two 
estates and delay termination of the receivership.  For these reasons, the Alleged Debtor 
respectfully requests the Court grant leave to appeal the order.  Subject to further order of this 
court, the Notice of Appeal is filed contemporaneously with this Motion. 
II.  Res Judicata Should be Applied Against Jeff Baron. 
As set out in pleadings and oral argument on the Creditors’ Motion for Partial Summary 
Judgment, the Alleged Debtor maintains that Judge Furgeson’s order in Docket No. 575 was not 
final as the District Court specifically held: (a) that Mr. Baron had a right to litigate 
counterclaims against all claimants; (b) entered an order stating that funds to be paid under the 
Compromise Order could not be paid until the Fifth Circuit ruled on the appeals; and (c) the 
Order did not state that it was final.   This Court has concluded that the Compromise Order was 
final and binding on the parties based on the doctrine of res judicata, and precludes any bona fide 
dispute as to the Petitioning Creditors’ claims.   
The doctrine of res judicata (claim preclusion) requires the following elements:  (1) The 
parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of 
competent jurisdiction; (3) the prior action was concluded to a final judgment on the merits; and 
(4) the same claim or cause of action was involved in both actions.   Swate v. Hartwell, 99 F.3d 
1282, 1286 (5th Cir.1996).  The Fifth Circuit expressly held that the claims were not decided on 
the merits, and ruled that the appointment of the Receiver - - pursuant to which authority the 
Compromises embodied in that order were reached - - was improper.  Thus, the Alleged Debtor 
maintains that res judicata should not be applied to preclude bona fide disputes. 
III.  The Bankruptcy Ruling Conflicts with the Fifth Circuit Decision. 
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As a practical matter, the Bankruptcy Court’s ruling is in direct conflict with the Fifth 
Circuit’s decision holding that the claims of the attorney claimants in the receivership were not 
determined by the district court on the merits.  This places the Bankruptcy Court in the 
anomalous position of actually or effectively overruling a decision by the Fifth Circuit by 
holding that a Compromise Order entered by the District Order somehow supersedes an order of 
the Fifth Circuit.  While appeals for the parties are not completed, the reasoning and conclusions 
of the Fifth Circuit should not be disregarded.   The Fifth Circuit ordered that the District Court 
proceed with the wind-down of the receivership.  The Alleged Debtor respectfully submits that 
this portion of the Order must, as a matter of law, be reversed. 
IV.  The Fifth Circuit Ordered the District Court to Wind Down the Receivership.  
The District Court Should Withdraw the Reference and Comply with that 
Order.   
 
As a matter of judicial economy, the Receiver and the Alleged Debtor’s motion to 
withdraw the reference should be decided prior to any further proceedings in the Bankruptcy 
Court.  Local Bankruptcy Rules 5011-1. 
The Order interferes with the jurisdiction of the Fifth Circuit Court of Appeals in 
ordering a wind-down of the receivership and also with the District Court's ability to comply 
with the Fifth Circuit's order to wind down the receivership.   The District Court referred the 
matter to the Bankruptcy Court but previously entered an order that any interference with the 
District Court’s enforcement of its order would violate its order.  Both the Receiver and the 
Alleged Debtor believe the involuntary constitute a violation of the receivership order and should 
be the subject of a show cause order. 
The Receiver filed a motion to withdraw the reference to the bankruptcy, and the Alleged 
Debtor joined in that motion [DC Docket No. 1187,  Dkt. 1199 at 5].  The wind down plans filed 
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by the Receiver and the Alleged Debtor seek withdrawal of the reference to the bankruptcy court 
to eliminate the duplication of effort leading to the reason for the joint status conference. 
WHEREFORE, the Alleged Debtor requests an Order Granting Relief from Order 
Clarifying Application of Stay to Certain Appeals and granting leave to appeal the Order [Dkt. 
96]. 
Very respectfully, 
 
STROMBERG STOCK, PLLC 
 
 
/s/ Mark Stromberg 
Mark Stromberg 
Texas Bar No. 19408830 
 
 
 
CERTIFICATE OF SERVICE 
 
  This is to certify that, on April 1, 2013, a copy of this document was served on all 
counsel through the Court’s ECF system.   
        
/s/ Mark Stromberg 
Mark Stromberg 
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