AFFIDAVIT OF GARY SCHEPPS - Page 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., )
MANILA INDUSTRIES, INC., and )
MUNISH KRISHAN, )
Plaintiffs, )
)
vs. ) Civil Action No. 3-09CV0988-F
)
JEFFREY BARON, and )
ONDOVA LIMITED COMPANY, )
Defendants. )
DECLARATION OF GARY SCHEPPS
1. My name is Gary Schepps. I am the appellate counsel for Jeff Baron
and have been ordered by Judge Furgeson to act as trial counsel as well. I
am competent to make this declaration. The facts stated in this declaration
are within my personal knowledge and are true and correct. I have personal
knowledge of the stated facts, which I learned as the result of being
subjected to the facts and events stated herein.
2. I formally requested that the receiver produce the material as stated in
the exhibit attached to Jeffs Response, and Amended Response to the
Assessment of Former Attorney Claims, previously filed in this cause. A
very limited amount of material was requested, including for example, all
fee agreements, all correspondence between the attorneys and their client
relating to the fee and specifically (1) a copy of the actual billing sent to the
client, and (2) the correspondence sent by each attorney making any demand
for payment, and any return correspondence. The receiver agreed to produce
this material in the format requested (OCR’d tabbed PDF files) and I spoke
with a copy service hired by the receiver explaining specifically what
material was requested. The receiver refused to produce the material they
had promised to produce. There were several exchanges with the receiver,
including the receiver’s claim that the failure of their production was my
fault because I failed to contact their copy service. I did contact their copy
service and had a detailed conversation setting out specifically what was
requested (the exact thing which was requested in writing to the receiver). I
discussed the request at a formal meet and confer’ meeting with the
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EXHIBIT D 3
AFFIDAVIT OF GARY SCHEPPS - Page 2
receiver. Still, the receiver refused to produce what they had promised to
produce, and I was forced to make a formal motion. The withheld material
is necessary to fairly evaluate and respond to claim for unpaid attorney’s
fees.
3. The rules of ethics require that an attorneys fee be limited to
reasonable fees for the services rendered. An attorney is prohibited from
charging unreasonable fees and fee forfeiture of the entire fee paid the
attorney is the remedy for an attorney’s excess fee demand. As a matter of
law, proof of the reasonable of an attorney’s fee requires expert opinion. I
formally requested from the receiver access to some of Jeffs funds to hire
an expert on the fees issue. I requested this even in a formal ‘meet and
confer’ session with the receiver. The receiver refused to provide any such
funding. I attempted to find an expert who would work on a contingency
basis, and was unable to find any qualified expert agreeing to do so. As a
matter of law, without an expert’s opinion is not possible at this time to
present evidence that any attorney’s fee is unreasonable. Accordingly, it is
not possible to offer evidence in defense of the attorney’s claims with
respect to that aspect of the claim’s defense. It is my opinion there are
grounds to assert the defense of unreasonable fees on Jeffs behalf.
4. Proof of Malpractice requires expert opinion. In order to present
evidence of malpractice an expert’s opinion is required. The facts stated
above apply to an expert on malpractice. If Jeff is prohibited from using his
own money to hire an expert, as a matter of law he is unable to present
evidence to establish a defense of malpractice. It is my opinion there are
grounds to assert the defense of malpractice, on Jeff’s behalf.
5. I handle federal appeals, not federal trials. I have never on my own
handled a federal trial, bench or jury, and have always relied upon hired trial
counsel for trials in the federal court. I am not qualified on my own to
appear in federal court and defend multiple claims against multiple teams of
attorneys. I require assistance to handle the organization of the files, tracking
of admission of evidence, preparation and tracking of objections, and many
other aspects of the appearance. If I was up against a single attorney who
also had no support, I think I could manage. It is simply not possible for me
to properly represent Jeff’s interests by myself. My engagement was
express and clear that I was not accepting employment to make any
appearance as trial counsel. An AV rated trial attorney was representing Mr.
Baron at the time I was retained as appellate counsel, but he was fired’ by
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AFFIDAVIT OF GARY SCHEPPS - Page 3
the receiver. From the moment this Court ordered me to be trial counsel for
Jeff, I have been flooded by the receiver and the trustee with a mountain of
paperwork. I have been working well over 65 hours per week on the trial
court issues, for around four months now. As the Court is aware, I have not
been paid because the Court has not allowed Jeff to pay me.
6. Even a minimal evaluation of an attorney’s claim would take a week
of work. Some of the larger claims will take a couple weeks of work to
properly evaluate. Working on my own it will take me over 24 weeks,
approximately half a year, dedicated strictly to that job, to evaluate the
‘claims’ presented. If I were allowed the funds to hire sufficient attorneys
and staff to assist me, the evaluation could be completed in less than a
month.
7. Basic discovery is necessary to properly investigate and respond to the
claims. This includes an opportunity to conduct depositions, and obtain
disclosures from the claimants. An opportunity to serve admissions would
also be helpful. For example, Mr. Ponske at one time swears under oath that
there was no engagement agreement, but at another time swears that there
was an engagement agreement. While some attorneys may be quick on
their feet and have sufficient experience to put on a hearing with live
witnesses without the need to conduct formal discovery, I am not one of
those attorneys. I need to question a witness in a deposition, and then spend
considerable time figuring out how to admit the relevant evidence I desire. I
am not qualified to prove up a foundation from the seat of my pants’. My
ability to put on a hearing is based on hard work and preparation. Without
the opportunity to conduct the underlying discovery I am not qualified to
defend the claims against Jeff. I am not able to ‘shoot from the hip’ and
reliably hit a target. In order to put on a defense at a hearing I must be
allowed to prepare for it. As discussed in this affidavit, I have not been
allowed to prepare a defense in this case.
8. Because this Court has ordered that the undersigned counsel must
work without payment, for the past four months the undersigned has been
forced to work over 65 hours a week on trial court matters reviewing,
researching and responding to a mountain of paperwork generated by two
teams of attorneys billing often over 24 hours a day. The overwhelming
workload without pay, has forced counsel to turn away and defer other work,
and go without material income for four months. Frankly, I am also tired.
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AFFIDAVIT OF GARY SCHEPPS - Page 4
9. It is notable, that the claimant attorneys have been paid nearly two
million dollars while by court order the undersigned has worked on this case
as court ordered trial counsel for months and has been paid no money.
Instead, this court has taken Jeff’s own money, most of his liquid funds, and
paid the receiver who has engaged in a blizzard of work in fabricating claims
against Jeff, and against me personally as his attorney. In addition to being
unpaid, I have been subject to personal insults by the Court’s receiver and
his law partners (for example, accusing me of being “despicable”).
I declare under penalty of perjury that the foregoing is true and correct.
Signed this 28th day of April, 2011, in Dallas, Texas.
/s/ Gary N. Schepps
Gary N. Schepps
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