CIVIL ACTION NO. 3:13-cv-03461-O
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
Dallas Division
JEFFREY BARON,
Appellant
v.
ELIZABETH SHURIG, et. al.
Appellees
ON APPEAL FROM THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
MEMORANDUM IN SUPPORT OF EMERGENCY MOTION FOR
RECONSIDERATION OF APPELLANT’S MOTION FOR STAY
PENDING APPEAL OF ORDER OF RELIEF
Tayari Law PLLC
By: /s/ M. Tayari Garrett ______
Mpatanishi S. Tayari Garrett
100 Crescent Court, Ste. 700
Dallas, Texas 75201
Tel: (214) 459.8266
Fax: (214) 764.7289
m.tayari@tayarilaw.com
Acosta & Associates P.C.
/S/ H. Joseph Acosta________
H. Joseph Acosta
619 E. 2
nd
Street
Irving, Texas 75060
Tel: (214) 614.8939
Fax: (214) 614.8992
jacosta@acosta-law.com
The Cochell Law Firm, P.C.
/s/ Stephen R. Cochell___________
Stephen R. Cochell
Texas Bar No. 24044255
7026 Old Katy Rd., Ste 259
Houston, Texas 77096
(713)980-8796 (phone)
(713)980-1179 (facsimile)
srcochell@cochellfirm.com
Attorneys for Appellant Jeffrey Baron
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TABLE OF CONTENTS
Page
TABLE OF CONTENTS .............................................................................................................i
TABLE OF AUTHORITIES ...................................................................................................... ii
I. BACKGROUND ................................................................................................................. 1
II. ARGUMENT ...................................................................................................................... 2
Standard for Reconsideration ............................................................................................... 2
Technical Compliance with Bankruptcy Rule 8005 ..............................................................3
Standard for Stay Pending Appeal........................................................................................ 4
A. Irreparable Harm ..........................................................................................................5
B. Likelihood of Success ................................................................................................. 11
(a) Bankruptcy Court clearly erred refusing to Enforce the Receivership Order which
enjoined the Petitioning Creditors from filing the Involuntary Petition against
Baron ................................................................................................................. 11
(b) Bankruptcy Court clearly erred in ruling that, as a matter of law, Baron could not
demonstrate a bona fide dispute as to the amount or liability of the Petitioning
Creditors’ claims ................................................................................................ 13
(c) The Bankruptcy Court clearly erred in failing to give preclusive effect to the Fifth
Circuit’s Reversal Opinion and mandate ............................................................ 17
(d) The Bankruptcy Court clearly erred in finding that Baron had not been paying his
debts as they came due ....................................................................................... 18
C. Harm to Other Parties ................................................................................................. 20
D. Public Interest ............................................................................................................. 23
III. CONCLUSION ................................................................................................................. 24
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TABLE OF AUTHORITIES
Page
Cases
Arnold v. Garlock, Inc., 278 F.3d 426, 438-39 (5
th
Cir. 2001).......................................................5
Christie v. Lowrey, 589 S.W.2d 870, 873 (Tex. Civ. App.-Dallas 1979, no writ) ......................... 16
Coburn v. Hill, 103 F. 340, 340-41 (6
th
Cir. 1900) ...................................................................... 15
Coskery v. Roberts & Mander Corp., 189 F.2d 234 (3rd Cir. 1951) ............................................ 15
In re ABQ-MCB Joint Venture, 153 B.R. 338, 342 (Bankr. D.N.M. 1993) .................................. 22
In re Axl Indus, Inc., 127 B.R. 482, 484-85 (S.D. Fla. 1991) ...................................................... 22
In re First S. Sav. Assoc., 820 F.2d 700 (5
th
Cir. 1987) .................................................................3
In re Hodges, 351 B.R. 758, 771 (Bankr. N.D. Okl. 2006) ......................................................... 22
In re TPG Troy, LLC, 492 B.R. 150, 160-61 (Bankr. S.D.N.Y 2013) .......................................... 22
Jacksonsville, T. & K. W. RY. CO. v. American Const. Co., 57 F. 66 (5
th
Cir. 1893) .................... 15
Ruiz v. Estelle, 650 F.2d 555, (5
th
Cir. Unit A June 1981) .............................................................3
Ruiz v. Estelle, 666 F.2d 854, 856 (5
th
Cir. 1982) .........................................................................3
Sclafani v. Sclafani, 870 S.W.2d 608,611 (Tex. App.-Hous. [1 Dist.] 1993) ............................... 15
Statutes
11 U.S.C. § 543 ......................................................................................................................... 13
11 U.S.C. §§ 1106 ..................................................................................................................... 19
11 U.S.C. §§ 362(a) ................................................................................................................... 19
28 U.S.C. § 158(d) .................................................................................................................... 24
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I. BACKGROUND
A detailed recitation of the factual background of this appeal is set forth in Baron’s Brief
in Support of Appeal of Bankruptcy Court Orders Granting Petitioning Creditors’ Partial
Summary Judgment and Order for Relief (“Baron Brief”) [Dkt. No. 25] and such factual
background is incorporated herein.
1
A shorter recitation of the facts is set forth below.
On December 18, 2012 (the “Petition Date”), eight petitioning creditors (the
“Petitioning Creditors”) filed an involuntary chapter 7 bankruptcy petition against Baron (the
“Involuntary Case”). While three of the leading Petitioning Creditors have pending state court
actions over their fees and all of the Petitioning Creditors were included in the Judge Furgeson’s
May 18, 2011 interlocutory order assessing attorneys’ fees (the “Fee Order”), none of the
Petitioning Creditors has obtained a final judgment against Baron adjudicating alleged debts.
On January 17, 2013, at the request of the Petitioning Creditors, John Litzler (the
“Trustee”) was appointed the interim trustee in the Involuntary Case and later became the
permanent chapter 7 trustee.
On February 20, 2013, the Bankruptcy Court issued an oral ruling granting the
Petitioning Creditors’ motion for partial summary judgment on the issue of whether they had
standing to initiate the Involuntary Case, pursuant to section 303(b) of the Bankruptcy Code.
On June 26, 2013, the Bankruptcy Court entered an order of relief and related findings of
fact and conclusions of law, adjudicating Baron bankrupt (collectively, the “Order of Relief”).
(R. 3887-3925.) The primary bases for granting the Petitioning Creditors’ motion for partial
summary judgment and entering the Order of Relief was that the Bankruptcy Court’s clearly
erroneous findings that (a) the Fee Order was never stayed pending appeal and (b) a clarification
1
Terms not otherwise defined herein have the same meaning ascribed to them in the Baron Brief.
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order entered by the Fifth Circuit Court somehow made the Fee Order enforceable in bankruptcy
court. As demonstrated below, both grounds were clearly erroneous.
On July 8, 2013, 2013, Baron filed a notice of appeal regarding the Order of relief. On
August 28, 2013, the appeal of the Order of Relief was docketed in this Court.
On September 6, 2013, after a failed attempt in bankruptcy court, Baron filed an
emergency motion for stay pending appeal (Dkt. No. 4) and brief and memorandum in support of
the stay motion (Dkt. No. 5) (collectively, the “Stay Motion”) in this Court. On October 1, 2013,
the Court entered an order denying the Stay Motion (Dkt. No. 22) (the “Stay Order”), but did
not instruct that Baron could not amend his request or file a motion to reconsider his ruling.
On October 20, 2013, Baron filed the Baron Brief, which addresses most of the Court’s
rationale for denying the original Stay Motion.
Pursuant to Federal Rule of Civil Procedure 54(b), Baron files this motion to reconsider
the Stay Order, because such order (a) is based on manifest errors of law and fact and/or (b) the
record and newly discovered evidence reveals that the Order of Relief was entered in error and
therefore must be stayed.
II. ARGUMENT
Standard for Reconsideration
Federal Rule of Civil Procedure 54(b) provides that a district court “possesses the
inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen
by it to be sufficient.” Gulf Fleet Triger Acquisition, LLC v. Thoma-Sea Ship Builders, LLC, 282
F.R.D. 146, 152 (E.D. La. 2012). The general practice is to review any motion under Rule 54(b)
using the same standards used for reviewing motions under Federal Rule 59(e). Id. While a
59(e) motion must be filed 28 days after the entry of an order, however, a motion under Rule
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54(b) has no time limitations. See Fed. R. Civ. P. 54(b), 59(e); see also Gulf Fleet Triger, 282
F.R.D. at 153 (“Although Rules 59 and 60 set forth specific time frames during which
reconsideration may be sought, Rule 54 sets forth no such limitation.”).
Motions to reconsider serve the narrow purpose of allowing a party “to correct manifest
errors of law or fact or to present newly discovered evidence.” Waltman v. Int’l Paper Co., 875
F.2d 468, 473 (1989) (quoting Keene Corp. v. International Fidelity Insurance Co., 561 F.Supp.
656, 665 (N.D.Ill.1982), affd. 735 F.2d 1367 (7th Cir.1984); Coliseum Square Assoc. Inc. v.
Jackson, 465 F.3d 215, 247 (5
th
Cir. 2006) (same); Ross v. Marshall, 426 F.2d 745, 763 (5
th
Cir.
2005) (“A district court abuses its discretion if it “bases its decision on an erroneous view of the
law or on a clearly erroneous assessment of the evidence.”)
The factual and procedural backgrounds in this appeal involve a four year history of
several proceedings and are extremely complicated. As such, any error this Court may have
made early in this appeal as to the factual or legal issues is certainly understandable. This
Motion, however, attempts to clarify the record, evidence and law, so that the Court can properly
evaluate Baron’s motion for stay, pursuant to Bankruptcy Rule 8005.
Technical Compliance with Bankruptcy Rule 8005
As an initial matter, this Court previously denied Baron’s Stay Motion because he did not
technically comply with Bankruptcy Rule 8005’s requirement that a movant demonstrate why the
bankruptcy court did not grant his prior request for a stay pending appeal. The Fifth Circuit has
held, however, that technical compliance with Rule 8005 should not be rigidly enforced and a
movant should be given an opportunity to cure any technical noncompliance. See SI
Restructuring, Inc., 542 F.3d 131, 135 (5
th
Cir. 2008) (The Fifth Circuit affirmed the district
court’s failure to enforce technical compliance with Rule 8005, when the bankruptcy court had
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made her intentions known.”); In re Berryman Prods., Inc., 159 F.3d 941, 943 (5
th
Cir. 1998)
(Fifth Circuit noted that, when a district court denies a stay motion on technical grounds, the
movant can file an amended motion to cure the deficiency).
Here, in Baron’s original Stay Motion, Baron attached the Bankruptcy Court’s order
denying his stay request but did not describe why the Bankruptcy Court denied his stay motion.
This task was made difficult because the Bankruptcy Court only made oral findings on his stay
motion. (See Order Denying Stay, Ex. A.) Baron nonetheless will now describe why the
Bankruptcy Court denied his prior stay request.
In its oral ruling, the Bankruptcy Court found that the stay was not warranted, because
Baron was not likely to succeed on the merits, given Judge Ferguson had already issued a final
judgment that collaterally estopped him from challenging the Petitioning Creditors’ claims. The
Bankruptcy Court also ruled that Baron had not shown any harm by the absence of a stay and
instead the petitioning creditors—who had already been paid over $3 million and had asserted
the same claims against Baron’s company (Ondova)—would be harmed because they had not
been paid—approximately $500,000—in several years. Finally, the Bankruptcy Court orally
ruled that she found no public interest in the granting of the stay.
As more fully explained in the Memorandum in Support of Baron’s Motion to
Reconsider, Baron believes that this Motion cures the technical deficiencies in its original Stay
Motion, seeks to correct manifest errors of law and fact, and presents newly discovered evidence.
Standards for Stay Pending Appeal
As previously demonstrated, the Fifth Circuit employs a four part test in determining
whether to grant a stay pending appeal:
(1) whether the movant has made a showing of likelihood of success on
the merits; (2) whether the movant has made a showing of irreparable
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injury if the stay is not granted; (3) whether the granting of the stay would
substantially harm the other parties; and (4) whether the granting of the
stay would serve the public interest.
Ruiz v. Estelle, 666 F.2d 854, 856 (5
th
Cir. 1982); Arnold v. Garlock, Inc., 278 F.3d 426, 438-39
(5
th
Cir. 2001). While each part must be met, the appellant “need not always show a ‘probability’
of success on the merits; instead, the movant need only present a substantial case on the merits”
when a serious legal question is involved, as here. In re First S. Sav. Assoc., 820 F.2d 700, 704
(5
th
Cir. 1987) (quoting Ruiz v. Estelle, 650 F.2d 555, 565 (5
th
Cir. Unit A June 1981). As
demonstrated below, Baron meets all four of these factors.
A. IRREPARABLE HARM
While irreparable harm is traditionally the second element in obtaining a stay, the
importance of this element cannot be understated in this case. As this Court has correctly noted,
there is a high risk that this appeal will be mooted by the actions taken in the Involuntary Case
and this risk constitutes irreparable harm. The magnitude of this harm will be severe, absent a
stay.
Indeed, notwithstanding this appeal, the Bankruptcy Court has taken the position that the
Involuntary Case should proceed “full steam ahead.” This is the same approach that Judge
Furgeson took after he issued the Receivership Order and it has caused Baron to expend over $3
million on the fees for an illegal receivership (and likely over $4 million if Judge Furgeson’s
final assessment withstands appeal) and over $2 million in the Ondova bankruptcy case. (App. 1
at 6; App. 5.5 at 66, 122; App. 34; R. 424-25, 437.)
2
All of these expenditures were made at the
2
References to “App.” constitute references to the Appendix [Dkt. No. 26-27] filed in connection with the
Baron Brief. Because the Appendix is voluminous, Baron is not refilling it in connection with this motion for
consideration. As mentioned in the Baron Brief, the Appendix consists of case law and public filings in several
federal proceedings before the Bankruptcy Court, the Fifth Circuit and Judge Furgeson, and therefore this Court may
take judicial notice of the documents included in the Appendix.
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request of, and presumably to benefit, the alleged creditors of Baron.
Yet this enormous cost does not begin to explain the irreparable harm to Baron. Baron’s
constitutional rights have been, and continue to be, eviscerated. In particular, (a) Baron has
never been allowed counsel of choice to challenge the Petitioning Creditors’ claims during any
proceeding, including the Involuntary Proceeding, (b) his right to a jury trial on these disputed
claims have been waived by an illegal receiver and are being entirely ignored by the current
Trustee and Bankruptcy Court during the Involuntary Case, and (c) Baron’s property rights have
been stripped away without Baron being afforded due process of law.
As a start, in January 2013, when the Involuntary Case commenced, the Bankruptcy
Court rejected Baron’s request to hire counsel (Mr. Matt Probus) to defend against the
Involuntary Case and instead only authorized Baron to spend $25,000 during the entire seven
month involuntary proceeding. (R. 382-83, 444, 1593-1599.) The Bankruptcy Court thereafter
repeatedly denied Baron’s request for additional funds to pay counsel. As a result, Baron has had
to endure very limited assistance from counsel during the entire Involuntary Case and now has
no counsel because his prior bankruptcy counsel quit after the Order of Relief was entered (for
lack of funds) and he cannot find anyone to represent him without a substantial retainer.
Meanwhile, the Bankruptcy Court appointed the Trustee, who has hired both counsel and
accountants of choice (since March 2013), and further has allowed the Receiver, the Ondova
Trustee, the Trustee and the Petitioning Creditors access to millions of dollars of Baron’s funds
to challenge Baron at every step of the way.
3
Absent a stay, the irreparable injury will assuredly cause irreparable harm to Baron. For
example, at a July 15, 2013 status conference, the Bankruptcy Court told Baron he did not need
3
On August 9, 2013, the Petitioning Creditors alone filed a fee application to be paid $250,000.00 for
challenging Baron during the Involuntary Case. A true and correct copy of the fee application is attached hereto as
Exhibit N.
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any counsel during the Involuntary Proceeding and she would proceed with the case full steam
ahead. A copy of the relevant portion of the transcript of this status hearing is attached hereto as
Exhibit B and a tape of the full hearing will be provided to the Court. During this status
conference, which lasted several hours, the Bankruptcy Court invited the Ondova Trustee,
Receiver, and Petitioning Creditors to make a record, so that she could make a Recommendation
to the District Court to authorize the Receiver to transfer all of the Receivership assets, including
Baron’s exempt assets and assets belonging to third parties (which the Fifth Circuit
unequivocally held did not belong in receivership) to the current Trustee. Based on the record
made at such status conference, the Bankruptcy Court did issue such a Recommendation, a true
and correct copy of which is attached hereto as Exhibit C. But, Baron never had a voice to
defend himself against the allegations being tossed against him at this status conference.
The irreparable injury will ensure an evisceration of Baron’s constitutional rights.
4
On
October 13, 2013, Baron filed an application (the “Application”) to retain proposed counsel,
Pendergraft and Simon, LLP (“Proposed Counsel”). A true and correct copy of the application
is attached hereto as Exhibit D. The necessity of the Proposed Counsel is described in detail the
Application. Among other reasons, the Trustee is currently (a) fighting Baron in this appeal, (b)
attempting to validate the Petitioning Creditors’ claims, (c) attempting to examine Baron’s
current and former counsel (disregarding attorney-client privilege issues), (d) attempting to
conduct discovery, and (e) attempting to prosecute non-dischargeability (fraud) claims against
Baron, and (f) attempting to extinguish—without filing a lawsuit or adversary proceeding—
4
This irreparable harm does not even take into consideration Baron’s sever health issues. As the Petitioning
Creditors are well-aware, Baron has type I diabetes, a progressive disease that can be fatal. Complicating his type 1
diabetes, Baron also suffers from other disabling diseases, including macular degeneration (chronic degeneration of
the eye that leads to blindness), cataracts, neuropathy (peripheral nerve damage), grand mal seizures and severe
thrombocytopenia (which causes dangerous internal bleeding). These diseases have been greatly aggravated by the
stress caused by these proceedings, as well as the resulting disruption in his disease management routine.
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substantive property rights of Baron (to exempt assets) and third parties (Novo Point and
Quantec).
And the Trustee is not waiting for any adjudication of this Appeal by this Court. While
asking this Court for an extension of time to file his initial opening brief, the Trustee is forging
full steam ahead in the Involuntary Case and in other proceedings. Within the last two months,
the Trustee has expressly waived Baron’s property rights (a) in the Ondova bankruptcy case, by
consenting to the sale of assets, like servers.com (once valued at millions of dollars), and (b) in
the Fifth Circuit, by abating Baron’s appeal of the final award of the Receiver’s fees and
expenses. And this waiver has had significant consequences. The Bankruptcy Court has already
approved the sale of servers.com for a fraction of its value, and the Receiver recently filed a
motion in the District Court seeking immediate payment of $1.3 million in legal fees and
expenses, plus additional ongoing expenses, even though the payment of such fees and expenses
is currently on appeal. (See Sale Order, Ex. E; Receiver Mtn. to Pay, Ex. F.)
On October 3, 2013, the Trustee filed in the Involuntary Case a motion to extend the time
to object to the dischargeability of Baron’s debts. A true and correct copy of this motion is
attached hereto as Exhibit G. The Trustee apparently wants to preserve the right to argue that
Baron has committed some type of fraud against creditors.
On October 17, 2013, the Trustee filed in the Involuntary Case a motion to conduct a
2004 examination—admittedly a fishing expedition—of Baron’s appellate counsel. A true and
correct copy of the motion is attached hereto as Exhibit H. On the same date, knowing Baron is
not represented, the Trustee filed a motion to compel (the “Motion to Compel Baron”) Baron to
be examined and produce thousands of pages of financial documents, many of which are in the
possession of the Receiver and/or Baron’s former counsel. A true and correct copy of the
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Trustee’s Motion to Compel Baron is attached hereto as Exhibit I.
On October 18, 2013, the Trustee filed in the Involuntary Case a motion to compel a 2004
examination of one of Baron’s former counsel who previously assisted Baron in establishing
certain spend-thrift trusts. A true and correct copy of this motion is attached hereto as Exhibit J.
The sole purpose of this examination is to establish a record that certain spend-thrift trusts are
not legitimate. The injury to Baron is obvious; the examination of this friendly witness—who is
a Petitioning Creditor—risks waiving Baron’s attorney-client privilege with his former counsel.
On October 24, 2013, the Trustee filed an objection to Baron retaining the Proposed
Counsel, taking the position that Baron should only be allowed $25,000 for representation, even
though the Trustee himself has access to all of Baron’s money. A true and correct copy of the
objection is attached hereto as Exhibit K. The Ondova Trustee filed a similar objection, but took
the incredible position that the Bankruptcy Court had no authority to allow Baron to employ any
counsel at all. (See Ondova Trustee Objection, Ex. L, ¶ 23-24.)
On October 28, 2013, the Bankruptcy Court conducted a hearing on the retention of
Proposed Counsel, where the Ondova Trustee, Trustee, Receiver and Petitioning Creditors were
all allowed to grill Baron and Proposed Counsel for several hours. Even though she has been
told time and time again no one will represent Baron without a substantial retainer, the
Bankruptcy Court ruled that she would “recommend” to the District Court that Baron should
only have $25,000 for bankruptcy counsel, provided he not use any funds to appeal her Order of
Relief or in any other proceedings. Of course, Proposed Counsel then declined to represent
Baron, and Baron again is left with no counsel.
On October 31, 2013, the Receiver filed a motion in the Involuntary Case requesting that
certain assets in the possession of the Receiver be turned over to the Trustee (the “Receiver
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Turnover Motion”), even though the Fifth Circuit had previously ordered the Receiver to return
these assets to their respective owners. A true and correct copy of this motion is attached hereto
as Exhibit M.
On November 1, 2013, the Bankruptcy Court granted (a) the Motion to Compel Baron,
compelling Baron to be examined and to produce numerous documents regarding his financial
affairs, (b) the motion to extend the time to object to Baron’s dischargeability of debt and (c)
setting an expedited hearing on the Receiver Turnover Motion. (See BK. Docket Nos. 373-375.]
On November 12 and 14, Novo Point and Quentec filed in the District Court and in the
Involuntary Case emergency motions to protect the dignity of the District Court and to withdraw
the reference from the Bankruptcy Court in connection with the proceedings related to the
Receiver Turnover Motion and the Trustee’s motion to examine counsel (collectively, “Motions
to Withdraw”). Attached hereto as Exhibits O and OO are both Motions to Withdraw filed by
Novo Point and Quantec. Among other reasons, Novo Point and Quantec point out that the
Receiver and Trustee are seeking attorney client privilege information in connection with their
various requests and are seeking to circumvent the Fifth Circuit mandate.
On November 15, 2013 the Bankruptcy Court entered orders allowing the Trustee to (a)
examine Baron’s former counsel and review attorney client privileged information and (b)
examine Baron’s current appellate counsel. [See BK. Docket Nos. 389-390.]
On November 15, 2013, the District Court (Judge Lindsey) issued an order requesting the
Bankruptcy Court to make a recommendation on the Motions to Withdraw. A copy of the Order
is attached hereto as Exhibit P.
On November 18, 2013, the Receiver filed an objection to the Motions to withdraw, a
true and correct copy of which is attached hereto as Exhibit Q. On November 21, 2013, the
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Trustee and Ondova Trustee filed their objections to the Motions to Withdraw, copies of which
are attached hereto respectively as Exhibits R and S. Baron has had no counsel to assist him
with any of these matters, as appellate counsel has been specifically engaged solely to handle this
Appeal and Baron cannot find anyone who will represent him in bankruptcy for a mere $25,000
retainer.
On November 21, 2103, the Receiver filed numerous confidential and privileged
documents under seal in the Involuntary Case. (See BK Docket Nos. 408-413.) Baron has not
been provided a copy of any of these documents.
Very soon—with unlimited assets, friendly witnesses and Baron unrepresented—the
irreparable harm will become apparent. Trustee will make a record in the Involuntary Case that
(a) assets belonging to Novo Point and Quantec belong in the bankruptcy estate, (b) Baron holds
no assets, like retirement funds, that are exempt from creditors, (c) the claims of the Petitioning
Creditors are valid, and (d) Baron’s claims against third-parties, i.e., the Petitioning Creditors,
are waived and/or compromised.
Baron cannot continue to fight against several parties who are using all of his assets
against him to eviscerate his rights. It took him 3 years to reverse an illegal receivership and it
has costs him millions of dollars during the process and resulted in an ill-advised fee assessment
(i.e., the Fee Order) that is now being used against him. The same prejudice will occur during the
Involuntary Case, except this time his remaining assets will be extinguished and the issues on
appeal will be mooted. Baron understands the danger enough that, if a stay is granted, he is
willing to agree to deposit all of his assets in the registry of this Court, provided he be given
$250,000 to pay counsel of his choice to properly challenge the arguments made in this appeal in
and in other proceedings.
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B. LIKELIHOOD OF SUCCESS
(a) Bankruptcy Court clearly erred refusing to Enforce the Receivership Order
which enjoined the Petitioning Creditors from filing the Involuntary Petition
against Baron
The Bankruptcy Court clearly erred in failing to enforce the Receivership Order, which
enjoined the Petitioning Creditors from initiating the Involuntary Case. At the time the
Involuntary Case was commenced, the Receivership Order was still effective and such Order
contained a broad injunction banning any creditors from attempting any collection efforts against
Baron. Among other things, the Receivership Order provided that “all other persons aside from
the Receiver are hereby stayed” from:
“[c]ommencing, prosecuting, continuing, entering, or enforcing any suit or
proceeding . . .;”
“taking or attempting to take possession, custody or control of any asset”
“[e]xecuting, issuing, serving or causing the execution, issuance or service of, any
legal process . . . whether specified in this Order or not;”
“[d]oing any act or thing whatsoever to interfere with the Receiver taking custody,
control, possession, or management of the assets or documents subject to the
receivership.”
(See App. 6, 139-140.) As discussed below, pursuant to Federal Rule of Civil Procedure 41 and
the Clarification Order, the Reversal Opinion would not become effective until the Fifth Circuit’s
mandate issued. Moreover, there is no provision in the Fee Order that somehow modified the
original injunction imposed by Judge Furgeson. Thus, the Receivership Order was effective
when the Involuntary Case was commenced.
In clear contravention of the Receivership Order, the Petitioning Creditors commenced an
Involuntary Proceeding, which is akin to a lawsuit, in order to collect on their alleged debt. They
also quickly moved for an interim trustee to dispose the Receiver of possession of property. See
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11 U.S.C. § 543. The Bankruptcy Court clearly erred in ignoring Judge Furgeson’s broad
injunction against this type of collection activity. At a minimum, the Bankruptcy Court should
have realized that Judge Furgeson’s injunction casted a doubt on the Petitioning Creditors’
claims.
(b) Bankruptcy Court clearly erred in ruling that, as a matter of law, Baron
could not demonstrate a bona fide dispute as to the amount or liability of the
Petitioning Creditors’ claims
This Court correctly noted that the Fifth Circuit has adopted the “objective basis” for
determining whether there exists a legal or factual dispute as to the validity of a debt under
section 303(b) of the Code. (Stay Order at 10.) The Court, however, was under the incorrect
impression that the Bankruptcy Court actually applied the objective test. The Bankruptcy Court
never did, as she weighed no evidence in granting summary judgment for the Petitioning
Creditors and instead ruled, as a matter of law, the Fee Order precluded Baron from arguing that
there was any bona fide dispute.
In the Baron Brief, Baron has demonstrated that the Bankruptcy Court clearly erred in
providing preclusive effect to the Fee Order for several reasons. First, the Bankruptcy Court
ignored that the Fee Order was, in fact, stayed pending appeal and was permanently stayed and
nullified after the appeal of the Fee Order concluded. While the Bankruptcy Court cited to a
June 18, 2012 decision by Judge Furgeson enforcing the stay, she completely ignored that Judge
Furgeson stayed the Fee Order six days after it was entered and used unequivocal language that
this was a stay pending appeal of the Fee Order. According to Judge Furgeson on May 24, 2011,
“having consulted with the Clerk of the U.S. Court of Appeals for the Fifth Circuit, the
Court advises the parties that it is STAYED from taking any action in the various matters
[including the Fee Order (Dkt. No. 575)] involved in the instant appeal.” (App. 28, p. 214.)
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14 | P a g e
A month later, Judge Furgeson reiterated it had “stay[ed] orders concerning . . . fees to be paid
to Baron attorneys pending appeal.” (App. 31, p. 217.) Thus, while Baron did not file a
motion for stay pending appeal of the Fee Order, he never needed to do so. The Bankruptcy
Court also committed clear error in ignoring that, on May 29, 2013, after the Fifth Circuit
mandate was issued, Judge Furgeson made it abundantly clear that the Fifth Circuit banned him
from ever enforcing the Fee Order. (App. 34, p. 443.) Further, this Court cannot ignore that the
Fifth Circuit has held that stayed orders create bona fide dispute as to the claims in such orders.
5
The Bankruptcy Court also clearly erred in applying the wrong collateral estoppel
principles, relying on state law instead of federal common law, and the error caused the
Bankruptcy Court to neglect two important factors. First, the issue of whether there existed a
bona fide dispute over the Petitioning Creditors’ claims was not necessary to support the Fee
Order. (Baron Br. 26-27.) The Petitioning Creditors and Receiver specifically represented to
Judge Furgeson that the Summary Proceeding was not a trial on the fee claims and “[was] not
extinguishing Baron’s right to dispute these fees.” (R. 1357, 1373.) The Fee Order itself
preserved Baron’s and the Petitioning Creditors rights to assert claims against one another over
the fee claims (R. 1327-28) and thus the Fee Order, at best, represents a compromise between the
Petitioning Creditors and the Receiver; but not Baron.
The second factor ignored was whether there existed special circumstances that would
5
See In re Norris, 183 B.R. 437, 453 (Bankr. W.D. La. 1995), aff’d, 114 F.3d 1182 (5
th
Cir. 1997) (“if the
judgment had been stayed, the claimant would appear to be precluded from joining the involuntary petition”); In re
Placid Oil Co., 1989 Bankr. Lexis 334 (N.D. Tex. March 13, 1989) (citing In re Drexel, 56 B.R. 960, 967 (Bankr.
S.D.N.Y. 1986)); In re Raymark Indus., 99 B.R. 298, 299 (Bankr. E.D. Pa. 1989) (holding that “a creditor who holds
a stayed judgment holds a claim which is subject to a bona fide dispute, and hence, lacks standing to institute an
involuntary bankruptcy case.”). Even the sole case cited by the Bankruptcy Court on unstayed judgments
acknowledges that there is no per se rule that such unstayed judgments dispel a bona fide dispute and a bankruptcy
court must still examine under the objective test under In re Sims, 994 F.2d 210 (5
th
Cir. 1993), whether “subsequent
events cast doubt on the judgment’s enforceability.” See In re Henry S. Miller, LLC, 418 B.R. 912, 921-22 (Bankr.
N.D. Tex. 2009). Here, the Fee Order was stayed pending appeal, but even if it had not been, subsequent events
certainly left no doubt that such Order was not enforceable and therefore could not objectively confer standing on
the Petitioning Creditors.
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15 | P a g e
make it unfair to apply collateral estoppel. (See Baron Br. at 26, 32-36.) Specialized
circumstances did existed, including, but not limited to, (a) Baron’s denial of funds to hire
counsel, hire experts or conduct discovery prior to the Summary Proceeding; (b) Baron’s denial
of counsel during the Summary Proceeding; (c) Baron’s denial of jury trial rights during the
Summary Proceeding; (d) the Receiver’s and Petitioning Creditors’ representation that the
Summary Proceeding was not an adjudication of disputed fee claims and Judge Furgeson’s
findings in the Fee Order regarding the same; and (e) Judge Furgeson’s (i) instant stay of the Fee
Order pending appeal and (ii) permanent stay of the Fee Order after the Fifth Circuit mandate
was issued. Baron has also demonstrated, beyond doubt, that the Petitioning Creditors’ claims are
disputed, though the affidavit he filed with Judge Furgeson, as well as his motion to dismiss and
response to summary judgment filed in the Bankruptcy Court. (R. 230-33; R. 1526-1537.) The
Bankruptcy Court erred in never considering this evidence.
The Baron Brief further demonstrates that the Bankruptcy Court clearly erred in
determining that the Fee Order was “tantamount to a final judgment,” because such order
patently did not resolve all the claims between the parties, as required by Federal Rule 54, and
did not otherwise contain a clear indication that Judge Ferguson intended it to be final. (Baron
Br. 27-28.) Thus, Judge Furgeson was always able to vacate, stay or nullify the Fee Order—
which is exactly what he did six days after he entered it and after the Fifth Circuit mandate. For
all intend and purposes, Judge Furgeson was required to nullify the Fee Order after the Fifth
Circuit mandate, because of clear precedence denying him authority to enforce such
interlocutory order after the receivership was reversed. See Jacksonsville, T. & K. W. RY. CO. v.
American Const. Co., 57 F. 66 (5
th
Cir. 1893); Coskery v. Roberts & Mander Corp., 189 F.2d 234
(3rd Cir. 1951); Coburn v. Hill, 103 F. 340, 340-41 (6
th
Cir. 1900); Sclafani v. Sclafani, 870
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16 | P a g e
S.W.2d 608,611 (Tex. App.-Hous. [1 Dist.] 1993); Christie v. Lowrey, 589 S.W.2d 870, 873 (Tex.
Civ. App.-Dallas 1979, no writ).
Finally, the Baron Brief demonstrates that the Bankruptcy Court clearly erred in
recognizing that law of the case doctrine and the mandate rule ensured that the Fee Order could
never be enforced because the Reversal Opinion clearly established that the Petitioning Creditors
had unresolved claims and, in any instance, Judge Furgeson could never satisfy such claims with
Baron’s property and property of third parties that were not the subject of the underlying lawsuit.
(R. 181, 185, 186-88) While the Bankruptcy Court incorrectly found that “the Fifth Circuit did
not set aside or overturn in any way the May 18, 2011 Fee Order” and “[a]ll appeals of it have
been exhausted” (R. 3913), this Court fundamentally should ask itself why Judge Furgeson
rejected the Petitioning Creditors’ request to enforce the Fee Order after the Fifth Circuit
mandate issued, stating “the Fifth Circuit found this Court could not order the payment of
these fees from the Receivership estate.” (App. 34, p. 0443.)
The Bankruptcy Court clearly erred in relying on circumstantial evidence in concluding
the Fee Order was a final judgment, without citing to any authority. The Bankruptcy Court first
relied on the Clarification Order, which was taken completely out of context. (R. 3904, 3905,
3913.) The temporary Clarification Order, issued thirteen days after the Reversal Opinion,
merely clarified that the mandate had not yet issued and that the orders on appeal remained in
place until the mandate issued. (See Baron Br. 29-30.) Moreover, the clarification request was
made by the Receiver in order to curb the Petitioning Creditors from filing the Involuntary
Petition. (App. 48, p. 450-51.) According to the Receiver, absent intervention by the Fifth
Circuit, such actions by the Petitioning Creditors were causing confusion and expense and
irreparable harm to the Receivership estate. (App. 48, p. 453.) In any instance, the temporary
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17 | P a g e
Clarification Order became moot when the Fifth Circuit issued its mandate. (App. 49, p. 462-
63.) Thus, the Clarification Order had no bearing on finality or enforceability of the Fee Order.
The Bankruptcy Court also clearly erred in relying on allegations by Petitioning Creditors
that Baron was afforded due process during the Summary Proceeding. These allegations are
unsupported by the record; in particular, the transcript of the Summary Proceeding itself. As
clearly demonstrated in such transcript, contrary to the Bankruptcy Court’s findings, (a) Baron
was not provided funds to hire counsel, hire experts or conduct discovery, (b) Baron was not
represented by counsel; (c) Baron did not have counsel to cross examine witnesses; (d) Baron did
not invoke his Fifth Amendment rights; and (e) Baron did file contravening evidence, via an
affidavit, with Judge Furgeson, but was forced to withdraw his affidavit because of lack of
representation. (R. 1346-47, 1364, 1399, 1401, 1402, 1549, 1550).
Because the Bankruptcy Court clearly erred in giving preclusive effect to the Fee Order,
this Court cannot and must not rely on her conclusions in determining whether a stay pending
appeal should be granted. This Court’s reliance on the Bankruptcy Court would ignore errors
manifest errors of law and/or fact.
(c) The Bankruptcy Court clearly erred in failing to give preclusive effect to the
Fifth Circuit’s Reversal Opinion and mandate
This Court believed that the central issue in the 5
th
Circuit appeal was whether Judge
Furgeson could impose a receivership on a vexatious litigant. (Stay Order, n.1.) That is simply
not the case, as the Reversal Opinion analyzed all six grounds used by Judge Furgeson to impose
a receiver. The second ground that the Fifth Circuit addressed was whether Judge Furgeson
could impose a receivership at the request of non-judgment creditors. (R. 185-88.) In fact, the
Fifth Circuit analyzed the “Paying Attorneys” factor before the “Vexatious Litigation” factor and
found that this was Judge Furgeson’s primary factor for the imposing a receivership. (R. 185,
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18 | P a g e
189.)
This Court incorrectly believed that the Fifth Circuit only took into consideration the
status of the Petitioning Creditors as of November 10, 2010. (D. Ct. Stay Order n. 1.) That is
also incorrect. The appeal of the Receivership Order included the appeal of the Fee Order, as the
Fifth Circuit consolidated the appeals of both Orders. ((App. 26, p. 205-212; App. 35, p. 221-22.)
As a result, Baron, the Ondova Trustee, the Receiver, and Novo Point and Quantec fully briefed
the Fifth Circuit with the merits of the Fee Order. (See Baron Br. at 10) (citing App. 36, 37, 38,
in passim.) Thus, the Fifth Circuit was abundantly aware, in finding that the Petitioning
Creditors had unresolved claims, that Judge Furgeson had assessed $870,000 in attorneys’ fees in
the Fee Order. (R. 185-88.)
Moreover, the Fifth Circuit did not need to specifically vacate the Fee Order, because the
Reversal Opinion and related mandate made this Order unenforceable as a matter of law. As
demonstrated in the Initial Brief, the reversal of a receivership vacates any related orders issued
pursuant to that receivership and strips the district court from any authority to enforce such
related orders. (Baron Br. at 27.) That is precisely why Judge Furgeson said he was banned
from enforcing the Fee Order after the Fifth Circuit mandate. Even though the trial on the
Involuntary Case occurred in June 2013 (after the May 29, 2013 Furgeson Order), the
Bankruptcy Court never addressed, or considered, this last treatment of the Fee Order.
(d) The Bankruptcy Court clearly erred in finding that Baron had not been
paying his debts as they came due
Without citing to any evidence in the record, the Bankruptcy Court found that Baron was
generally not paying his debts solely to former attorneys. Presumably, the Bankruptcy Court was
relying again on the Fee Order. There are several reasons, however, why the Bankruptcy Court
clearly erred in her factual finding.
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19 | P a g e
The record is devoid of any evidence that Baron was not paying his counsel when he was
in control of his assets prior to the Netsphere Litigation. In point of fact, only one of the
Petitioning Creditors had a relationship with Baron, Ondova, Novo Point and Quantec prior to
the Netsphere Litigation, and that sole Petitioning Creditor admits in her affidavit that she was
only owed $1,300.00 by Baron, individually, after having a 7 year client relationship and after
being paid over $2 million in fees. (R. 2604, 2722, 3753-59)
After the Netsphere Litigation commenced, the Bankruptcy Court ignored that Baron was
dispossessed of all assets necessary to satisfy the Petitioning Creditors’ claims. Indeed, less than
two months after the Netsphere Litigation began, Judge Furgeson ordered all of Ondova’s
revenues to be paid to one set of counsel. (App. 7, p. 38.) This essentially prevented Baron from
paying any of Ondova’s operating expenses, including the expenses incurred by the Petitioning
Creditors on behalf of Ondova. Judge Furgeson’s order also caused Ondova to file bankruptcy,
which again prevented the payment of any prepetition claims of the Petitioning Creditors and
required the Petitioning Creditors to request Bankruptcy Court permission before their post-
petition claims were paid. See 11 U.S.C. §§ 362(a) (automatic stay), 329 (application for
compensation by attorneys). Moreover, when the Ondova Trustee was appointed, Baron was
completely without any authority to direct the use of Ondova’s assets to satisfy any creditor
claims; instead the Ondova Trustee was charged with that task. See 11 U.S.C. §§ 1106 (duties of
chapter 11 trustee); 1108 (authority of trustee to operate business).
The Bankruptcy Court also clearly erred in failing to consider that since November 2010,
the Receivership Order prevented the payment of the Petitioning Creditors’ claims for two
reasons: (a) the Receiver took possession and control of all of Baron’s assets; and (b) the
Receivership Order banned the Petitioning Creditors from attempting to collect any money from
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20 | P a g e
Baron. (App. 6, p. 129-132 (exclusive control over Baron’s current and future assets and
personal records); p. 133-35 (broad powers of receiver); p. 139-140 (stay of all actions by
Petitioning Creditors to collect money.) Indeed, as discussed above, the Receivership Order’s
injunction against collection activities is very broad and, independently, prevented the
Petitioning Creditors from being paid anything with Baron’s assets. (See App. 6, 139-140.)
6
Furthermore, the Bankruptcy Court clearly erred in not giving Baron any credit for
agreeing to have $2 million dollars in settlement proceeds—essentially all of the proceeds—from
the Netsphere Litigation transferred to the Ondova bankruptcy for the payment of all of Baron’s
and Ondova’s creditors. (App. 1, p.5-6.) This amount of money, which was paid in full, was
more than sufficient to cover the $870,000 in fees assessed under the Fee Order.
Finally, the Bankruptcy Court never gave Baron any credit for paying for over $3 million
in receivership costs (and possibly $4 million), all of which were caused by the Petitioning
Creditors’ request to impose a Receiver over Baron’s assets. (App. 34, p. 424-25, 437.) This
money should have been used to pay creditors, but instead was used by the Receiver and Ondova
Trustee to fight Baron’s appeals to dissolve the illegal Receiver and to fight Baron in the Ondova
bankruptcy case. Baron had absolutely no control over how the Receiver and Trustee were using
his money, and if anyone is to blame for why the Receiver spent most of Baron’s money the way
he did, it should be cast on the Petitioning Creditors who requested the receivership in the first
place.
C. HARM TO OTHER PARTIES
The Court previously found that the Petitioning Creditors would suffer substantial harm
6
Besides ignoring the Receivership Order’s broad injunction, the Bankruptcy Court also erred in ignoring
that on two occasions (June 2012 and May 2013), the Receiver and Petitioning Creditors even attempted to enforce
the Fee Order, but Judge Furgeson rejected them out right.
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21 | P a g e
because they are not being paid amounts owed. But this finding places the cart before the horse
because it assumes that the Petitioning Creditors are entitled to be paid based on an enforceable
judgment, and they clearly are not.
It has been over 2 years since the Fee Order was entered and no Petitioning Creditor or
Receiver has been able to enforce the Fee Order before the issuing court (Judge Furgeson) or on
appeal—nor will they ever be able to do so. The Fee Order was nullified by the Reversal
Opinion, as demonstrated above, because it was the product of an illegal receivership, where
Baron was denied fundamental constitutional rights, including right to counsel, right to a jury
and denial of property without due process of law. Indeed, no fair civil dispute between two
parties is ever resolved in the manner in which the Fee Order was entered. Moreover, if the
Petitioning Creditors did believe they had something akin to a final judgment, then they (e.g.,
Pronske; Hall; and Pacione) had adequate time to make their cases in the several state court
lawsuits pending for over 3 years, even before the receivership. The following are a list of
lawsuits pending in state court, where the fee issues of the Petitioning Creditors could have been
decided many years ago:
(1) Baron v. Gerritt M. Pronske, Individually and Pronske & Patel, P.C., District Court,
Dallas, Texas, Cause No.1 0-11915 removed by Gerritt Pronske to Bankruptcy Court in
20 1 0; stayed and pending before the Bankruptcy Court;
(2) Pacione v. Baron, District Court, Dallas, Texas, Cause No. DC-I0-06464 (Case Type:
Debt); and
(3) Hall v. Baron, Dallas, Texas, Justice Court, Precinct 3, Place 3, Cause No. JC-1O-
00721N;
The facts that the Petitioning Creditors (a) lost before the Fifth Circuit and Judge Furgeson in
collecting their fees and (b) have waited so long to make their case in front of a friendly forum
clearly demonstrates that any harm—if any—was caused by Petitioning Creditors and
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22 | P a g e
themselves alone.
But there is absolutely no harm to the Petitioning Creditors because they have never
established in trial that they are owed any amount of money and Baron has never been given an
opportunity to properly challenge their claims as well as assert his own claims against the
Petitioning Creditors. Thus. this Involuntary Case then represents nothing more than a two-party
dispute between two parties over claims that has never been adjudicated. And courts have
repeatedly found that involuntary cases which essentially are two-party disputes should be
dismissed from bankruptcy court.
7
The rationale in these opinions is that “[i]t is not appropriate
to file an involuntary petition in an effort to gain control of a business” or where another forum
exists to resolve claims or enforce remedies. In re Axl Indus, Inc., 127 B.R. 482, 484-85 (S.D.
Fla. 1991); see also In re TPG Troy, LLC, 492 B.R. 150, 160-61 (Bankr. S.D.N.Y 2013) (finding
bankruptcy courts should abstain from involuntary case where other forum exists to resolve
claims”); In re Hodges, 351 B.R. 758, 771 (Bankr. N.D. Okl. 2006) (“Courts generally dismiss
two-party disputes that could be resolved in other forums”); In re ABQ-MCB Joint Venture, 153
B.R. 338, 342 (Bankr. D.N.M. 1993) (“A court may properly abstain from hearing an involuntary
case which is essentially a two-party dispute, when the creditor has adequate state court
remedies.”)
Here, there is no harm to the Petitioning Creditors who have had ample time to resolve
their claims in other forums. The Involuntary Case was simply commenced to forum shop the
7
See In re Mountain Dairies, Inc., 372 B.R. 623 (Bankr. S.D.N.Y. 2007) (“Even if Schneider-Valley were an
eligible petitioner … the Court would be compelled to abstain … because this is essentially a two party dispute for
which the parties have adequate remedies in state court.”); In re Spade, 258 B.R. 221, 234-35 (Bankr. D. Col. 2001)
(“There is no need for a federal court to resolve this two-party dispute that implicates state law.”); In re Ballato, 252
B.R. 553, 558 (Bankr. M.D. Fla. 2000) (dismissal of involuntary case involving two party dispute with former
counsel); In re Jr. Food Mart of Arkansas, Inc., 241 B.R. 423 (Bankr. E.D. Ark. 1999) (“[A]n involuntary case which
is essentially a two-party dispute may be dismissed.”); In re Kujawa, 224 B.R. 104, 108 (E.D. Mo. 1998) (dismissal
of involuntary case involving two-party dispute with former counsel); In re Axl Indus., Inc., 127 B.R. 482 (S.D.Fla.
1991) (“Generally, a [bankruptcy] court should not take jurisdiction over a two party dispute.”); In re 7H Cattle
Corp., 6 B.R. 29 (Bankr. D. Nev. 1980) (same).
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23 | P a g e
Fee Order and ensure that (a) the illegal receivership over Baron would continue and (b) Baron
would not have access to funds to challenge the Petitioning Creditors’ claims. There is no
evidence in the record that Baron has committing fraud, other than the very loose testimony of
one Petitioning Creditor, who has never been examined by Baron and who has never provided
any documentation to support his loose allegations.
8
In any instance, any harm to the Petitioning Creditors, who have admittedly been paid
over $3 million, who have never filed a bond and who have filed claims in the Ondova
bankruptcy case, pales in comparison to the over $5 million that Baron has expended to satisfy
their claims and the continuing amounts that Baron continues to expend to attempt to have his
day in Court.
D. PUBLIC INTEREST
There are too many reasons why the granting of a stay would serve the public interest.
As demonstrated in the Baron Brief, the Involuntary Case has denied Baron due process of law,
in stripping him of all of his assets and allowing the Petitioning Creditors to use those assets
against him. (See Baron Br. at 16-24.) These due process concerns should be paramount in the
Court’s consideration. Moreover, as demonstrated in the Baron Brief, Baron’s right to counsel
and right to a jury trial over the Petitioning Creditors’ claims are being entirely ignored during
the Involuntary Case.
Judicial economy and fairness will also be served by a stay because what the Petitioning
Creditors have essentially done is forum shopped a nullified, interlocutory fee assessment, in
8
In fact, when Baron does have an opportunity to examine this Petitioning Creditor, he will demonstrate that
the Petitioning Creditor mislead the Court into believing that Baron was transferring assets, when in fact, Baron was
complying with a Court approved, global settlement that required him to assist in locating a new replacement trustee
of the trust at issue in the settlement. The Bankruptcy Court never investigated this issue to any degree and merely
believed the unsupported testimony of the Petitioning Creditor.
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24 | P a g e
contravention of rulings by the Fifth Circuit and Judge Furgeson, in order to obtain an unfair
advantage over Baron in a civil dispute. This tactic has substantially prolonged the litigation
between the parties (which could have been resolved several years ago in other forums) and
exhausted millions of dollars in funds (which could have been used to pay valid claims).
Moreover, as recently demonstrated in the flurry of activity in this District Court before
the Honorable Judge Sam Lindsey, the Bankruptcy Court is issuing orders that overlap with
matters for which this Court has jurisdiction. (See Case 12-37921-sgj7, Dkt. 391, pg. 2). This
Court, pursuant to the Order of Reference by the Honorable Judge Sam Lindsey, is currently
preparing to consider a Motion to Withdraw the Reference which must first be considered at the
Bankruptcy Court by status conference. (Civ. Action No. 3:09-cv-0988-L, Dkt. 1339). Multiple
orders by the Bankruptcy Court targeting entities and individuals not under its jurisdiction
squarely support Baron’s argument that judicial economy would be preserved if a stay is
imposed, where additional litigation and appeals have already ensued in response.
A stay pending appeal should absolutely be granted under these circumstances where the
balance of the equities weighs heavily in favor of granting the stay. At a minimum, Baron should
be allowed access to sufficient funds to challenge the Involuntary Case on appeal, challenge the
Petitioning Creditors’ claims, assert his own claims, and protect his remaining property. If no
stay is granted, then this Court should consider immediately withdrawing the reference in this
case, pursuant to 28 U.S.C. § 158(d),
9
to provide Baron with a fair and just proceeding.
III. CONCLUSION
For the foregoing reasons, Appellant Jeffrey Baron requests this Court reconsider its Stay
Order and grant a stay of the Order of Relief pending an appeal.
9
28 U.S.C. § 158(d) provides that this Court can withdraw the reference on its own motion.
Case 3:13-cv-03461-O Document 40 Filed 11/22/13 Page 27 of 28 PageID 7380
25 | P a g e
Dated: November 22, 2013 Very respectfully,
Tayari Law PLLC
By: /s/ M. Tayari Garrett ______ .
Mpatanishi S. Tayari Garrett
100 Crescent Court, Ste. 700
Dallas, Texas 75201
Tel: (214) 459.8266
Fax: (214) 764.7289
m.tayari@tayarilaw.com
H. Joseph Acosta
Acosta & Associates P.C.
619 E. 2
nd
Street
Irving, Texas 75060
Tel: (214) 614.8939
Fax: (214) 614.8992
jacosta@acosta-law.com
The Cochell Law Firm, P.C.
/s/ Stephen R. Cochell___________
Stephen R. Cochell
Texas Bar No. 24044255
7026 Old Katy Rd., Ste 259
Houston, Texas 77096
(713)980-8796 (phone)
(713)980-1179 (facsimile)
srcochell@cochellfirm.com
Attorneys for Appellant Jeffrey Baron
CERTIFICATE OF SERVICE
On this date, I electronically submitted the foregoing document with the U.S. District
Court, Northern District of Texas, using the electronic case filing system of the court. I hereby
certify that I have served all parties who receive notification through the electronic filing system.
/s/ H. Joseph Acosta
H. Joseph Acosta
Case 3:13-cv-03461-O Document 40 Filed 11/22/13 Page 28 of 28 PageID 7381
