Case No. 10-11202
______________________________________________________________________
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
______________________________________________________________________
Netsphere, Inc. et. al.,
Plaintiffs
v.
Jeffrey Baron,
Defendant / Appellant
Daniel J. Sherman
(Ondova Limited Company)
Defendant / Appellee
______________________________________________________________________
Appeal of Order Appointing Receiver
From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
______________________________________________________________________
BRIEF OF APPELLANT
______________________________________________________________________
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5400 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
FOR JEFFREY BARON
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CERTIFICATE OF INTERESTED PERSONS
The undersigned counsel of record certifies that the following
listed persons and entities have an interest in the outcome of this case.
These representations are made in order that the judges of this Court
may evaluate possible disqualification or recusal.
1. PARTIES
a. Appellant/Defendant: JEFFREY BARON
b. Appellee/Defendant: DANIEL J. SHERMAN, Trustee
for ONDOVA LIMITED COMPANY
c. Intervenor: Rasansky, Jeffrey H. and Charla G. Aldous
d. Intervenor: VeriSign, Inc.
e. Plaintiffs: (1) Netsphere Inc
(2) Manila Industries Inc
(3) Munish Krishan
2. ATTORNEYS
a. For Appellant: Gary N. Schepps
Suite 1200
5400 LBJ Freeway
Dallas, Texas 75240
Telephone: (214) 210-5940
Facsimile: (214) 347-4031
b. For Appellee: Munsch Hardt Kopf & Harr, P.C.
(1) Raymond J. Urbanik, Esq.
(2) Lee J. Pannier, Esq.
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3800 Lincoln Plaza
500 N. Akard Street
Dallas, Texas 75201-6659
Telephone: (214) 855-7500
Facsimile: (214) 855-7584
c. For Intervenor VeriSign: Dorsey & Whitney (Delaware)
(1)Eric Lopez Schnabel, Esq.
(2)Robert W. Mallard, Esq.
d. For Intervenor Rasansky and Aldous: Aldous Law Firm
(1) Charla G Aldous
d. For Plaintiffs:
(1) John W MacPete, Locke Lord Bissell & Liddell
(2) Douglas D Skierski, Franklin Skierski Lovall Hayward
(3) Franklin Skierski, Franklin Skierski Lovall Hayward
(4) Lovall Hayward , Franklin Skierski Lovall Hayward
(5)Melissa S Hayward, Franklin Skierski Lovall Hayward
(6) George M Tompkins, Tompkins PC
3. OTHER
a. Companies and entities purportedly seized by the
receivership:
(1) VillageTrust
(2) Equity Trust Company
(3) IRA 19471
(4) Daystar Trust
(5) Belton Trust
(6) Novo Point, Inc.
(7) Iguana Consulting, Inc.
(8) Quantec, Inc.,
(9) Shiloh LLC
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(10) Novquant, LLC
(11) Manassas, LLC
(12) Domain Jamboree, LLC
(13) Genesis, LLC
(14) Nova Point, LLC
(15) Quantec, LLC
(16) Iguana Consulting, LLC
(17) Diamond Key, LLC
(18) Quasar Services, LLC
(19) Javelina, LLC
(20) HCB, LLC, a Delaware limited liability company
(21) HCB, LLC, a U.S. Virgin Islands limited liability company
(22) Realty Investment Management, LLC, a Delaware limited
liability company
(23) Realty Investment Management, LLC, a U.S. Virgin
(24) Islands limited liability company
(25) Blue Horizon Limited Liability Company
(26) Simple Solutions, LLC
(27) Asiatrust Limited
(28) Southpac Trust Limited
(29) Stowe Protectors, Ltd.
(30) Royal Gable 3129 Trust
b. Receiver / Mediator / Special Master: Peter Vogel
c. Counsel for Receiver: Gardere Wynne Sewell LLP
(1) Peter Vogel
(2) Barry Golden
(3) Peter L. Loh
c. Other interested Non-parties:
1. Garrey, Robert (Robert J. Garrey, P.C.)
2. Pronske and Patel
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3. Pronske and Patel
4. Carrington, Coleman, Sloman & Blumenthal, LLP
5. Aldous Law Firm (Charla G. Aldous)
6. Rasansky Law Firm (Rasansky, Jeffrey H.)
7. Schurig Jetel Beckett Tackett
8. Powers and Taylor (Taylor, Mark)
9. Gary G. Lyon
10. Dean Ferguson
11. Bickel & Brewer
12. Robert J. Garrey
13. Hohmann, Taube & Summers, LLP
14. Michael B. Nelson, Inc.
15. Mateer & Shaffer, LLP (Randy Schaffer)
16. Broome Law Firm, PLLC
17. Fee, Smith, Sharp & Vitullo, LLP (Vitullo, Anthony
“Louie”)
18. Jones, Otjen & Davis (Jones, Steven)
19. Hitchcock Evert, LLP
20. David L. Pacione
21. Shaver Law Firm
22. James M. Eckels
23. Joshua E. Cox
24. Friedman, Larry (Friedman & Feiger)
25. Pacione, David L.
26. Motley, Christy (Nace & Motley)
27. Shaver, Steven R. (Shaver & Ash)
28. Jeffrey Hall
29. Martin Thomas
30. Sidney B. Chesnin
31. Tom Jackson
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
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STATEMENT REGARDING ORAL ARGUMENT
Appellant does not believe oral argument would be helpful in
determining the issues involved in this appeal. The issues are pure
questions of law determined de novo and involve long established legal
principles. Dispositive issues in the case have been authoritatively
decided, e.g., Williams v. McKeithen, 939 F.2d 1100, 1105 (5th Cir.
1991) (court may issue a preliminary injunction only on notice to the
adverse party), Gordon v. Washington, 295 U.S. 30, 37 (1935)
(receivership of property is authorized only as a step to achieve a
further, final disposition requested of that property), Connecticut v.
Doehr, 501 U.S. 1, 18 (1991) (issuance of an order for prejudgment
seizure without prior notice or hearing, violates Due Process when
issued without a showing of extraordinary circumstances and the
posting of a bond to pay damages for wrongful seizure).
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TABLE OF CONTENTS
CERTIFICATE OF INTERESTED PERSONS .......................................... 2
STATEMENT REGARDING ORAL ARGUMENT..................................... 6
TABLE OF CONTENTS.................................................................................. 7
TABLE OF AUTHORITIES ......................................................................... 11
STATEMENT OF THE JURISDICTION................................................... 16
ISSUES PRESENTED FOR REVIEW ....................................................... 17
STATEMENT OF THE CASE ...................................................................... 18
STATEMENT OF THE FACTS.................................................................... 21
ARGUMENT SUMMARY.............................................................................. 24
Overview .................................................................................................. 24
General Issues ......................................................................................... 25
Dispositive Issues Authoritatively Decided ......................................... 26
ARGUMENT & AUTHORITY ...................................................................... 28
ISSUE 1: IS A DISTRICT COURT AUTHORIZED TO ISSUE AN
INJUNCTION WITHOUT NOTICE TO THE ADVERSE PARTY
AND SECURITY REQUIRED FROM THE MOVANT
SUFFICIENT TO COMPENSATE THE ADVERSE PARTY FOR
THEIR DAMAGES IF WRONGFULLY ENJOINED ?................................ 28
Standard of Review ................................................................................. 28
As a Matter of Law, the Challenged Order is an Injunction ............... 28
An Injunction Order Issued in Violation of Rule 65(a)(1) Must
be Vacated................................................................................................ 29
An Injunction Order Issued in Violation of Rule 65(c) Must be
Vacated .................................................................................................... 30
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ISSUE 2: IS A DISTRICT COURT AUTHORIZED TO APPOINT
AN EQUITY RECEIVER OVER PROPERTY WHERE NO
PLEADING SEEKS FINAL DISPOSITION OF THE
PROPERTY ?.................................................................................................. 31
Standard of Review ................................................................................. 31
What is an Equity Receiver ? ................................................................. 31
What is the Limit of a Court’s Authority to Appoint an Equity
Receiver ? ................................................................................................. 31
The Prerequisite that a Claim Be Pled Seeking Final
Disposition of the Property Before a Receiver Is Appointed
Over It is Jurisdictional.......................................................................... 33
The Subject Matter Jurisdiction Corollary ........................................... 34
No Primary Remedy was Pled in the District Court Below .................. 34
The Seizure of Jeff Baron’s Property Falls So Far Outside the
Law That There is No Legal Precedent to Support it .......................... 35
ISSUE 3: ABSENT A LIEN OR EQUITABLE INTEREST IN
THE PROPERTY BEING AT ISSUE IN THE UNDERLYING
LAWSUIT, DOES A COURT HAVE THE INHERENT
AUTHORITY TO INTERFERE WITH A LITIGANT’S ASSETS ? ............. 36
Standard of Review ................................................................................. 36
A Court Has No Authority Over a Party’s Assets That Are Not
at Issue in the Underlying Lawsuit....................................................... 36
A Court Has No Authority to Interfere with A Party’s Assets in
Which No Lien or Equitable Interest is Claimed ................................. 37
The Long Established Limits of Equity Receivership Require
the Showing of an Interest in the Certain Property Placed into
the Receivership ...................................................................................... 38
No Lien or Equitable Interest in Jeff Baron’s Property was
at Issue..................................................................................................... 39
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ISSUE 4: WAS THE CHALLENGED ORDER ISSUED IN
VIOLATION OF THE CONSTITUTION OF THE UNITED
STATES: ......................................................................................................... 41
(A) DO THE FOURTH AND FIFTH AMENDMENTS PROHIBIT
THE SEIZURE OF ALL OF A PERSON’S PROPERTY AND
PROPERTY RIGHTS IN ORDER TO PREVENT THEM FROM
HIRING A LAWYER ? .......................................................................................41
Standard of Review ................................................................................. 41
Forbidden Purpose: To Prevent an Individual from Hiring
Legal Counsel .......................................................................................... 41
Unreasonable Grounds for Seizure........................................................ 44
“Objectively Unreasonable” is the Test for Violation of the
Fourth Amendment................................................................................. 44
The Challenged Order is Unreasonable ................................................ 44
Abuse of Discretion Corollary: Must Employ the Least Possible
Power Adequate to the End.................................................................... 47
Post-Appeal Retrospective Justifications for the Entry of the
November 24, 2010 Order....................................................................... 48
(B) DOES THE FIFTH AMENDMENT PROHIBIT EX-PARTE
ISSUANCE OF AN ORDER APPOINTING A RECEIVER OVER
ALL OF AN INDIVIDUAL’S PROPERTY AND PROPERTY
RIGHTS, WITHOUT NOTICE, HEARING, FINDINGS,
AFFIDAVITS IN SUPPORT, A SHOWING OF EXIGENT
CIRCUMSTANCES, OR A BOND REQUIRED FROM THE
MOVANT ? ..........................................................................................................60
Standard of Review ................................................................................. 60
The Requirements of Due Process ......................................................... 60
The Failure of Due Process Below ......................................................... 62
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(C) DOES THE FOURTH AMENDMENT PROHIBIT THE
ISSUANCE OF AN ORDER CONFERRING A RECEIVER WITH
AUTHORITY TO SEIZE A PERSON’S PROPERTY WITHOUT A
SUPPORTING OATH OR AFFIRMATION SHOWING
PROBABLE CAUSE FOR THE SEIZURE ?...................................................63
Standard of Review ................................................................................. 63
The Fourth Amendment Applies to Civil Seizures............................... 63
The Challenged Order is a Warrant ...................................................... 63
The Challenged Order was Issued Without any
Supporting Oath...................................................................................... 64
Strong Due Process and Public Policy Basis to Require a
Sworn Application for Issuing an Ex-Parte Receivership Order
to Seize a Person’s Property ................................................................... 65
(D) DOES THE THIRTEENTH AMENDMENT PROHIBIT
PLACING A HUMAN BEING INTO THE POSSESSION AND
CONTROL OF A RECEIVER ?.........................................................................66
Standard of Review ................................................................................. 66
The Thirteenth Amendment................................................................... 66
The District Court’s Order...................................................................... 67
CONCLUSION................................................................................................ 68
CERTIFICATE OF COMPLIANCE............................................................ 72
WITH TYPE-VOLUME LIMITATION, TYPEFACE
REQUIREMENTS, AND TYPE STYLE REQUIREMENTS .................. 72
CERTIFICATE OF SERVICE ..................................................................... 73
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TABLE OF AUTHORITIES
FEDERAL CASES
Amoco Production Co. v. Gambell, 480 U.S. 531, 542 (1987)..............................51
Baum v. Blue Moon Ventures, LLC, 513 F. 3d 181, 187 (5th Cir. 2008)..............51
Coastal Corp. v. Texas Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989) .............49
Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029
(5th Cir. 1931).................................................................................15, 20, 27, 34
Connecticut v. Doehr, 501 U.S. 1, 18 (1991) ..............................................6, 27, 61
De Beers Consol. Mines, Ltd. v. United States, 325 U.S. 212, 221-223
(1945)....................................................................................................27, 36, 37
Desarrollo, SA v. Alliance Bond Fund, Inc., 527 U.S. 308, 310
(1999)..............................................................................................27, 33, 37, 38
Fuentes v. Shevin, 407 U.S. 67, 85 (1972)............................................................60
Gandy Nursery, Inc. v. US, 318 F.3d 631, 636 (5th Cir. 2003) .................31, 36, 66
Gordon v. Washington, 295 U.S. 30, 37 (1935) ........................ 6, 26, 31, 32, 33, 35
Graham v. Connor, 490 U.S. 386, 299 (1989).......................................................44
Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439
(1974)..........................................................................................................29, 30
Griffin v. Lee, 621 F.3d 380, 388 (5th Cir. 2010)............................................58, 59
Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982).............49, 50
Grupo Mexicano, 527 U.S. 332.............................................................................40
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In re Consolidated Bancshares, Inc., 785 F.2d 1249 (5th Cir. 1986).....................52
In re DP Partners, Ltd. P'ship, 106 F.3d 667, 673 (5th Cir.1997) ..............52, 53, 54
In re Foust, 310 F.3d 849, 857 (5th Cir. 2002) ......................................................60
In re Fredeman Litigation, 843 F.2d 821, 822
(5th Cir. 1988)...................................................27, 28, 31, 36, 41, 59, 60, 63, 66
ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1359
(5th Cir. 1978)...................................................................................................33
Johnson v. City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002) .........................42
Kelleam v. Maryland Casualty Co. of Baltimore, 312 U.S. 377, 381 (1941).........32
Mathews v. Eldridge, 424 U.S. 319, 334 (1976) ...................................................61
McCuin v. Tex. Power & Light Co., 714 F.2d 1255, 1263 (5th Cir. 1983)......43, 45
Milliken v. Bradley, 433 U.S. 267, 288 (1977) .....................................................32
Mississippi Power & Light v. United Gas Pipe Line, 760 F.2d 618, 621
(5th Cir.1985)....................................................................................................28
Mitchell v. WT Grant Co., 416 U.S. 600, 605-606 (1974) ....................................62
Morgan v. McDonough, 540 F.2d 527, 533, 535 (1st Cir. 1976)...........................32
Mosley v. St. Louis Southwestern Ry., 634 F.2d 942, 946
(5th Cir. 1981).......................................................................................41, 42, 43
Natural Gas Pipeline Co. v. Energy Gathering, Inc., 2 F.3d 1397, 1409
(5th Cir. 1993)...................................................................................................33
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North Ga. Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 606 (1975)..................61
Parker v. Ryan, 960 F.2d 543, 544 (5th Cir. 1992)................................................29
Pennoyer v. Neff, 95 U.S. 714, 737 (1878) ...........................................................62
Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 131 (5th Cir.1990) .........26, 29, 30
Plessy v. Ferguson, 163 U.S. 537, 555 (1896).................................................66, 67
Porter v. Cooke, 127 F.2d 853, 859 (5th Cir. 1942) ..............................................69
Potashnick v. Port City Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980)..............41
Powell v. Alabama, 287 U.S. 45, 53-69 (1932).....................................................42
Registration Control Systems v. Compusystems, Inc., 922 F.2d 805, 807
(Fed. Cir. 1990).................................................................................................48
Roberts v. United States Jaycees, 468 U.S. 609, 618-619 (1984) ..........................42
Santibanez v. Wier McMahon & Co., 105 F.3d 234, 241 (5th Cir. 1997)..............38
Severance v. Patterson, 566 F.3d 490 (5th Cir. 2009) .....................................44, 63
Slaughter-House Cases, 83 US 36, 90 (1873).......................................................66
Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 342 (1969)..........60
Spallone v. United States, 493 U.S. 265, 272 (1990).............................................47
Tucker v. Baker, 214 F.2d 627, 631 (5th Cir. 1954)..................................25, 26, 31
United States v. Fuller, 160 U.S. 593, 597 (1896).................................................64
US v. Kozminski, 821 F. 2d 1186, 1192 (6th Cir. 1987) .......................................66
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Weinberger v. Romero-Barcelo, 456 U.S. 305,313 (1982)....................................46
Williams Holding Co. v. Pennell, 86 F.2d 230 (5th Cir. 1936)........................39, 40
Williams v. McKeithen, 939 F.2d 1100, 1105 (5th Cir. 1991).....................6, 26, 30
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) ..............62
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FEDERAL STATUTES
11 U.S.C. §503(b)(3)(D).................................................................................52, 53
11 U.S.C. 503(b)(4) ..............................................................................................52
12 U.S.C §1821(c) ................................................................................................32
18 U.S.C. § 401 ..............................................................................................40, 46
28 U.S.C. § 1654...................................................................................................70
28 U.S.C. §§1292(a)(1).........................................................................................15
FEDERAL RULES
FED. R. APP. P. 32(a)(5)......................................................................................72
FED. R. APP. P. 32(a)(6)......................................................................................72
FED. R. APP. P. 32(a)(7)(B).................................................................................72
Fed.R.Civ.P. 65(a)(1)............................................................................................29
Fed.R.Civ.P. 65(b)(1)(A)......................................................................................65
Fed.R.Civ.P. 65(b)(1)(B) ......................................................................................29
Fed.R.Civ.P. 65(b)(2)............................................................................................29
Fed.R.Civ.P. 65(c) ................................................................................................30
Fed.R.Civ.P. 7.......................................................................................................48
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STATEMENT OF THE JURISDICTION
The Fifth Circuit Court of Appeals has jurisdiction to hear this
interlocutory appeal from an order of the District Court of the Northern
District of Texas granting an injunction and appointing a receiver,
pursuant to 28 U.S.C. §§1292(a)(1) and (2).
The district court lacked subject matter jurisdiction to enter the
order because no claim for relief regarding the property ordered into
receivership was pled. Cochrane v. WF Potts Son & Co., 47 F.2d 1026,
1029 (5th Cir. 1931) (absent pleadings asserting a claim to support the
receivership, an order appointing a receiver is void for lack of subject
matter jurisdiction, in fact, “their proceedings are absolutely void in the
strictest sense of the term”).
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ISSUES PRESENTED FOR REVIEW
ISSUE 1: IS A DISTRICT COURT AUTHORIZED TO ISSUE AN
INJUNCTION WITHOUT NOTICE TO THE ADVERSE PARTY
AND SECURITY REQUIRED FROM THE MOVANT
SUFFICIENT TO COMPENSATE THE ADVERSE PARTY FOR
THEIR DAMAGES IF WRONGFULLY ENJOINED ?
ISSUE 2: IS A DISTRICT COURT AUTHORIZED TO APPOINT
AN EQUITY RECEIVER OVER PROPERTY WHERE NO
PLEADING SEEKS FINAL DISPOSITION OF THE PROPERTY ?
ISSUE 3: ABSENT A LIEN OR EQUITABLE INTEREST IN THE
PROPERTY BEING AT ISSUE IN THE UNDERLYING
LAWSUIT, DOES A COURT HAVE THE INHERENT
AUTHORITY TO INTERFERE WITH A LITIGANT’S ASSETS ?
ISSUE 4: WAS THE CHALLENGED ORDER ISSUED IN
VIOLATION OF THE CONSTITUTION OF THE UNITED STATES:
(A) DO THE FOURTH AND FIFTH AMENDMENTS
PROHIBIT THE SEIZURE OF ALL OF A PERSON’S
PROPERTY AND PROPERTY RIGHTS IN ORDER TO
PREVENT THEM FROM HIRING A LAWYER ?
(B) DOES THE FIFTH AMENDMENT PROHIBIT EX-PARTE
ISSUANCE OF AN ORDER APPOINTING A RECEIVER OVER
ALL OF AN INDIVIDUAL’S PROPERTY AND PROPERTY RIGHTS,
WITHOUT NOTICE, HEARING, FINDINGS, AFFIDAVITS IN
SUPPORT, A SHOWING OF EXIGENT CIRCUMSTANCES,
OR A BOND REQUIRED FROM THE MOVANT ?
(C) DOES THE FOURTH AMENDMENT PROHIBIT THE
ISSUANCE OF AN ORDER CONFERRING A RECEIVER
WITH AUTHORITY TO SEIZE A PERSON’S PROPERTY
WITHOUT A SUPPORTING OATH OR AFFIRMATION
SHOWING PROBABLE CAUSE FOR THE SEIZURE ?
(D) DOES THE THIRTEENTH AMENDMENT PROHIBIT
PLACING A HUMAN BEING INTO THE POSSESSION AND
CONTROL OF A RECEIVER ?
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STATEMENT OF THE CASE
This is an interlocutory appeal of an ex-parte order imposing an
injunction and equity receiver over Jeff Baron and all of his property.
R. 1619, 3924. The district judge ordered the ex-parte seizing of the
keys to Jeff Baron’s home, his cell phone, all of his personal papers and
documents, his checking accounts, his credit cards, all of his savings, all
of his stock, his IRAs, and all of his possessions, investments and
property rights. R. 1604-1616, 1699. The history of the proceedings
leading up to this ex-parte order are as follows:
The lawsuit below involved a ‘business’ divorce. R. 65-66. On one
side of the suit are the plaintiffs Munish Krishan, with Netsphere, Inc.,
and Manila Industries, Inc. R. 2. On the other side of the suit are
Jeffrey Baron with Ondova Limited Company (“Ondova”). R. 3,5.
Ondova was a domain name registrar registering domain names to
customers throughout the United States. R. 40.
At one point in the proceedings, the district judge ordered 50% of
the income stream of Ondova (which had been interpled in an
underlying state court action) to be paid to the plaintiffs, and 50% to be
paid to the defendant’s attorney Friedman as a non-refundable retainer.
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R. 367-368. Three weeks later, with 100% of its income having been
diverted by the district judge (50% to the plaintiffs, 50% to Friedman),
Ondova filed for bankruptcy protection. R. 889.
Eventually, the lawsuit below fully and finally settled. R. 2109.
The full and final settlement was approved by order of the Ondova
bankruptcy court in July 2010. R. 2225. In August 2010, all parties to
the lawsuit entered a Stipulated Dismissal with Prejudice, dismissing
with prejudice all claims and controversies in the lawsuit. R. 2346.
Then, on November 19, 2010 in the Ondova bankruptcy case,
Jeffrey Baron filed an objection to a newly filed fee application of
Munsch Hardt Kopf & Harr (“Munsch Hardt”). R. 1576-1577. Three
business days later, Munsch Hardt responded by filing, in the district
court, an unverified emergency motion on ‘behalf’ of Ondova to appoint
a receiver over Jeff Baron and seize all of his assets. R. 1575.
The sole ground averred in the motion necessitating the
emergency appointment of a receiver was “to remove Baron from control
of his assets and end his ability to further hire and fire a growing army
of attorneys.” R. 1578. The district court immediately granted the
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motion ex parte. R. 1604, 1619.
The district court’s order placed Jeff Baron and all his property
and property rights into the hands of the requested receiver, Peter
Vogel. R. 1604-1616. All of Jeff Baron’s income and property rights
were seized. Id.
No hearing was held on the motion, no opportunity to respond to
the motion was provided, and no bond was required of the movant as
security should the injunctions against Jeff and seizure of his property
be found to be wrongful. Id. The district court’s order was entered
without any findings of fact or law made in support. Id.
VeriSign, Inc., a non-party intervened, and filed an emergency
motion to vacate and modify the receivership order. R. 1640. The
district court granted the motion on November 30, 2010 and vacated the
injunction order, but only as to VeriSign. R. 1695.
Jeff Baron filed a notice of appeal from the receivership order two
days later, on December 2, 2010. R. 1699.
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STATEMENT OF THE FACTS
The lawsuit below fully and finally settled. R. 2109. All parties to
the suit entered a stipulated dismissal of all claims. R.2346.
Jeff Baron filed an objection to Munsch Hardt’s fees in the Ondova
bankruptcy case. R. 1576-1577. Three business days later Munsch
Hardt filed the emergency motion to have a receiver seize Jeff and all
his assets. R. 1575. The receiver then ‘took over’ and stepped into Mr.
Baron’s shoes as the litigant in several pending matters, including the
bankruptcy case where he withdrew Jeff’s objection to Munsch Hardt’s
fees. R. 4424.
The receiver seized Jeff’s personal papers and documents, his
bank accounts, his retirement accounts, his stocks, and his savings. All
of Jeff’s income and earnings were seized. R. 1711-1712. Jeff has been
in a civil ‘lock down’ ever since. R. 1711-1712. He is prohibited from
entering into any business transactions, prohibited from spending
money, etc. R. 1619-1632. Meanwhile, the receiver has been billing
against Jeff’s life savings at the rate of over $225,000.00 each month–
over $150,000.00 per month for the receiver’s law firm and over
$75,000.00 per month for the receiver personally. SR. v2 p413-414.
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The day after filing his notice of appeal, Jeff Baron filed a motion for
emergency relief pursuant to Federal Rule of Appellate Procedure 8(a)(1).
R. 1702. The motion was express as to its specific designation as an
emergency motion and to the provision of the rule of procedure under
which the motion was filed: “NOW COMES Jeffrey Baron, Appellant, and
files pursuant to Federal Rule of Appellate Procedure 8(a)(1), this
Emergency Motion”. Id. In support of his motion for emergency relief
pursuant to rule 8(a), Jeff Baron laid out the clear legal framework
establishing his position that the grounds asserted in the motion to appoint
a receiver did not support the appointment of a receiver as a matter of law.
R. 1732, 1747-1756, 4143-4150.
The district court withheld ruling for two months and then
entered an order denying the motion, inter alia offering new
retrospective grounds for the receivership that had not previously
appeared as grounds for relief in any motion. SR. v2 pp339-360. The
new, post-appeal, multifarious justifications offered by the district court
include: (1) that Jeff Baron defrauds lawyers, (2) that Jeff is in
contempt of court (although no show cause order was ever issued, and
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no contempt hearing was held), (3) that the global settlement is in
danger (although what term of the settlement was breached, how the
district court has subject matter jurisdiction, or why a party’s right to
trial would be waived if breach were alleged, was not explained), and (4)
Jeff is vexatious (albeit, absent a record of having ever been sanctioned
by any court, and absent any motion making such allegation). Id.
The district judge clearly believes in his own mind that he– in the
past– had entered an order prohibiting Jeff from hiring or firing any
attorney without the court’s approval. SR. v2 p342. However, no motion
ever requested such relief, a hearing on such an order was never held,
and no such order was ever pronounced or entered. R. 15-28.
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ARGUMENT SUMMARY
Overview
Imagine being a party to a civil lawsuit. You ‘buy peace’ and
settle. You perform your settlement obligations and a stipulated
dismissal of all claims is entered into by all parties. Then, a few
months later you get a knock on your door. The judge decided you
should immediately turn over all of your property to him (through its
receiver)– the keys to your home, your cell phones, all of your personal
paper and documents, your checking accounts, your credit cards, all of
your savings, all of your stock, your IRAs, and all of your possessions,
investments and property rights. The reason for this harsh invasion of
your most fundamental rights to privacy and to own and control
property and transact business with others– is to prevent you from
hiring an attorney.
Imagine too that the cost of this ‘service’ the judge (though his
receiver) seeks to charge you is over $225,000.00 per month. Even if
you had a million dollars of non-exempt assets saved up over your
lifetime, that money would be taken from you by the ‘receiver fees’ after
four months.
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General Issues
Most intuitively know that a judge cannot simply enter an order to
strip a person of all their property and property rights. This appeal lays
out the legal precedent and principles as to why that is so. The issues
raised in this appeal are very basic: As well intentioned as the district
judge may be, the district court is a court of law and equity, not an
imperial court. Accordingly, the power of the district court must be
exercised within the limits of the law and equity.
The district judge most likely did not initially intend to put Jeff
into a ‘civil lockdown’ for months on end and present him with a million
dollar receiver’s bill. But when a court disregards the rules of
procedure and long established principles of due process, they put their
finger in the meat grinder, and soon the whole body is pulled in.
The legal issues involved in this appeal relate the requirements of
due process and the limits on a court’s authority, both specifically in the
use of the remedy of equity receivership and generally. As a rule,
appointments of receivers by the federal courts have been subject to
close scrutiny. Tucker v. Baker, 214 F.2d 627, 631 (5th Cir. 1954).
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Dispositive Issues Authoritatively Decided
The Fifth Circuit and/or the Supreme Court have directly
addressed issues dispositive to this appeal. These include:
(1) A district court is not authorized to issue a preliminary
injunction without notice to the adverse party. Williams v.
McKeithen, 939 F.2d 1100, 1105 (5th Cir. 1991).
(2) A district court is not authorized to issue a preliminary
injunction without requiring the posting of a bond to protect the
adverse party should the injunction be found to be wrongfully
granted. Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 131 (5th
Cir.1990).
(3) A district court is not authorized to appoint a receiver to seize
property unless there is claim seeking further disposition of that
property pled before the court. Gordon v. Washington, 295 U.S.
30, 37 (1935); Tucker, 214 F.2d at 631.
(4) A district court is not authorized to appoint a receiver, as a
matter of subject matter jurisdiction, where no pleadings puts
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the property subject to the receivership at issue. Cochrane v. WF
Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931).
(5) A district court is not authorized to seize or freeze a party’s
assets when the disposition of these assets is not an issue in the
underlying lawsuit. In re Fredeman Litigation, 843 F.2d 821, 822
(5th Cir. 1988); De Beers Consol. Mines, Ltd. v. United States,
325 U.S. 212, 221-223 (1945).
(6) A district court is not authorized to interfere with a litigant’s
assets in which no lien or equitable interest was claimed. Grupo
Mexicano de Desarrollo, SA v. Alliance Bond Fund, Inc., 527 U.S.
308, 310 (1999).
(7) Issuance of an order for prejudgment seizure without prior notice
or hearing, violates Due Process when issued without a showing
of extraordinary circumstances and the posting of a bond to pay
the damages for wrongful seizure. Connecticut v. Doehr, 501
U.S. 1, 18 (1991).
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ARGUMENT & AUTHORITY
ISSUE 1: IS A DISTRICT COURT AUTHORIZED TO ISSUE AN
INJUNCTION WITHOUT NOTICE TO THE ADVERSE PARTY AND
SECURITY REQUIRED FROM THE MOVANT SUFFICIENT TO
COMPENSATE THE ADVERSE PARTY FOR THEIR DAMAGES IF
WRONGFULLY ENJOINED ?
Standard of Review
A district court's decision to grant an injunction is normally
reviewed under an abuse of discretion standard. Mississippi Power &
Light v. United Gas Pipe Line, 760 F.2d 618, 621 (5th Cir.1985).
However, issues based on questions law underlying the order are
subject to independent review, de novo. In re Fredeman Litigation, 843
F.2d 821, 824 (5th Cir. 1988).
As a Matter of Law, the Challenged Order is an
Injunction
The challenged order defines “Receivership Party” to “include
Jeffrey Baron” and expressly “restrained and enjoined” him from taking
any of a long list of actions basic to daily living, such as spending money
or using a credit card. R. 1619, 1621. The order also enjoins
“Commencing, prosecuting, continuing, entering, or enforcing any suit
or proceeding”. R. 1630. As a matter of law, the order is therefore an
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injunction. Phillips v. Chas. Schreiner Bank, 894 F.2d 127, 130 (5th
Cir.1990) (“The challenged order prevents Schreiner Bank from taking
any ‘further action in any state or federal court.’ It therefore is an
injunction”).
1
An Injunction Order Issued in Violation of Rule 65(a)(1)
Must be Vacated
Rule 65(a)(1) states that “The court may issue a preliminary
injunction only on notice to the adverse party”. Fed.R.Civ.P. 65(a)(1).
The notice required by rule 65(a)(1) must comply with rule 6(c)(1),
which requires five days' notice before a hearing on a motion. Parker v.
Ryan, 960 F.2d 543, 544 (5th Cir. 1992). The requirement of Rule
65(a)(1) is mandatory. Phillips, 894 F.2d at 131, citing Granny Goose
Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439 (1974)
(“[O]ur entire jurisprudence runs counter to the notion of court action
taken before reasonable notice and an opportunity to be heard has been
1
The challenged order is not a Rule 65(b) temporary order, as the order is not
temporary and does not set a date that it expires. Fed.R.Civ.P. 65(b)(2). Further,
the order was not supported by affidavit or verified complaint (Fed.R.Civ.P.
65(b)(1)(A)), contains no certification of efforts to give notice or reasons why it
should not be required (Fed.R.Civ.P. 65(b)(1)(B)), does not state the hour it was
issued, nor describe why any injury was irreparable, nor does the order state why it
was issued without notice (Fed.R.Civ.P. 65(b)(2)). R. 1619 - 1632.
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granted both sides of a dispute.”). The challenged order was issued
without notice or hearing. R. 27, 1619, 3924. Accordingly, the
challenged order was issued in violation of Rule 65(a)(1) and must be
vacated. E.g., Id.; Williams v. McKeithen, 939 F.2d 1100, 1105 (5th Cir.
1991).
An Injunction Order Issued in Violation of Rule 65(c)
Must be Vacated
Rule 65(c) states that “The court may issue a preliminary
injunction or temporary restraining order only if the movant gives
security ... proper to pay the costs and damages sustained by any party
found to have been wrongfully enjoined”. Fed.R.Civ.P. 65(c). Failure to
require the posting of a bond by the movant constitutes reversible error
as a matter of law. Phillips, 894 F.2d at 131. Accordingly, since no
security was required from nor provided by the movant below, the order
challenged on appeal must be reversed. R. 1619-1632.
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ISSUE 2: IS A DISTRICT COURT AUTHORIZED TO APPOINT AN
EQUITY RECEIVER OVER PROPERTY WHERE NO PLEADING
SEEKS FINAL DISPOSITION OF THE PROPERTY ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843 F.2d
at 824; Gandy Nursery, Inc. v. US, 318 F.3d 631, 636 (5th Cir. 2003).
What is an Equity Receiver ?
Where a final decree involving the disposition of property is
appropriately asked, the court in its discretion may appoint a receiver
to preserve and protect the property pending its final disposition.
Tucker v. Baker, 214 F.2d 627, 631 (5th Cir. 1954).
What is the Limit of a Court’s Authority to Appoint an
Equity Receiver ?
Receivership of property is a special remedy that is allowed only
as a step to achieve a further, final disposition of that property. This
fundamental rule was established by the Supreme Court in Gordon v.
Washington, 295 U.S. 30, 37 (1935). In Gordon, the Supreme Court
held that “[T]here is no occasion for a court of equity to appoint a
receiver of property of which it is asked to make no further disposition.”
Id. (emphasis). This is because Chancery Power does not extend to the
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appointment of a receiver over property of which the court is asked to
make no further disposition. Gordon, 295 U.S. at 37. The English
chancery court, from the beginning, declined to exercise its jurisdiction
for that purpose. Id. Accordingly, equity receivership has not been
allowed to be extended to other classes of cases.
2
Gordon, 295 U.S. at
38.
The law is clear and well established– a court is authorized to
order a receivership over property only as an ancillary remedy with
respect to a primary remedy seeking disposition of an accrued right in
that property. Kelleam v. Maryland Casualty Co. of Baltimore, 312 U.S.
377, 381 (1941).
3
2
Statutory schemes such as for the SEC and FDIC also authorize the appointment
of statutory receivers in particular instances relating to those statutory schemes.
E.g., 12 U.S.C §1821(c). No such statutory scheme was invoked nor applies to the
case at bar. Also, the First Circuit has held that with respect to “substitution of a
court's authority for that of elected and appointed officials” the only limitation on a
court’s power is “reasonableness under the circumstances”, allowing governmental
receivership for “constitutional purposes” in such cases. Morgan v. McDonough, 540
F.2d 527, 533, 535 (1st Cir. 1976); but cf. Milliken v. Bradley, 433 U.S. 267, 288
(1977) (court’s power limited to “traditional attributes of equity power” with the
traditional role of school authorities maintained “inviolate”).
3
Because receivership of property is authorized only with respect to accrued rights
in the property, a simple creditor has no standing to apply for a receiver. Pusey, 261 U.S. at
497 (“[A]n unsecured simple contract creditor has, in the absence of statute, no substantive
right, legal or equitable, in or to the property of his debtor”). By contrast, a judgment
creditor with an unsatisfied judgment, holds an equitable interest in the non-exempt
property of his debtor and may apply for a receiver as a step to recovery of that interest. Id.
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The Prerequisite that a Claim Be Pled Seeking Final
Disposition of the Property Before a Receiver Is
Appointed Over It is Jurisdictional
Equity jurisdiction of the district court is limited to the
jurisdiction in equity exercised by the High Court of Chancery in
England at the time of the adoption of the Constitution and the
enactment of the original Judiciary Act of 1789. Grupo Mexicano de
Desarrollo, SA v. Alliance Bond Fund, Inc., 527 U.S. 308, 318
(1999)(citing Gordon). Similarly, the inherent powers doctrine derives
from the same authority, and is subject to the same limitation. ITT
Community Development Corp. v. Barton, 569 F.2d 1351, 1359 (5th Cir.
1978); Natural Gas Pipeline Co. v. Energy Gathering, Inc., 2 F.3d 1397,
1409 (5th Cir. 1993). Accordingly, absent a statutory grant of authority,
the district court’s authority to issue writs is bounded and limited by
the authority exercised by the chancery court.
As the Supreme Court explained in Gordon, the chancery court
did not authorize a court to appoint a receiver of property where no
pleading sought final disposition of the property taken into the
receivership– and the district court is therefore not authorized to do so
either, absent a specific statutory authorization. Gordon, 295 U.S. at 37.
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The Subject Matter Jurisdiction Corollary
There is a Subject Matter Jurisdiction corollary to the limitation
of equity power of the court with respect to receivership– an order
appointing a receiver is void for lack of subject matter jurisdiction
where no pleadings puts the property subject to the receivership at
issue. Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir.
1931) (absent pleadings asserting a claim to support the receivership,
an order appointing a receiver is void for lack of subject matter
jurisdiction– in fact, “their proceedings are absolutely void in the
strictest sense of the term”).
The Fifth Circuit explained in Cochrane, “unless the subject-
matter was by proper pleadings already before the court” “it had no
jurisdiction over these properties, [and] its order appointing a receiver
to take charge of them was void”. Id. at 1028-1029.
No Primary Remedy was Pled in the District Court Below
Like the respondent in Gordon, the Appellee failed to make any
claim against any of Jeff Baron’s property, let alone all of it. In fact,
Appellee failed to seek any remedy at all against Jeff Baron other than
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the appointment of a receiver.
Like in Gordon, the Appellee was not shown to be a creditor, much
less a judgment creditor. Accordingly, as in Gordon, the district court
below exceeded its authority in appointing a receiver to seize all of Jeff
Baron’s worldly possessions. Since there was no pleading seeking any
further disposition of the property seized, the district court lacked
authority to issue a receivership over the property. Gordon, 295 U.S. at
37.
Also, as in Cochrane, no pleading in the district court below put
Jeff Baron’s personal property at issue. Accordingly, as in Cochrane,
the district court below lacked subject matter jurisdiction to seize Jeff’s
property, and the order appointing a receiver to seize all of his property
should be declared void.
The Seizure of Jeff Baron’s Property Falls So Far
Outside the Law That There is No Legal Precedent to
Support it
There is no legal precedent allowing the appointment of a receiver
to seize an individual’s property that was not subject to a claim pled
before the Court.
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ISSUE 3: ABSENT A LIEN OR EQUITABLE INTEREST IN THE
PROPERTY BEING AT ISSUE IN THE UNDERLYING LAWSUIT,
DOES A COURT HAVE THE INHERENT AUTHORITY TO
INTERFERE WITH A LITIGANT’S ASSETS ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843
F.2d at 824; Gandy Nursery, 318 F.3d at 636.
A Court Has No Authority Over a Party’s Assets That Are
Not at Issue in the Underlying Lawsuit.
The limitation of a court’s power over a party’s property to
jurisdiction over assets at issue in the underlying lawsuit was
addressed directly by the Fifth Circuit in In re Fredeman Litigation, 843
F.2d 821 (5th Cir. 1988). In Fredeman, the trial court entered a
preliminary injunction prohibiting the defendants from transferring or
removing virtually any of their assets without the court’s express
approval and the plaintiffs’ knowledge. The Fifth Circuit held that “The
disposition of these assets was not an issue in the underlying lawsuit”
and “the district court lacked power” to enter such an order. Id. at 822.
The Fifth Circuit relied upon De Beers Consol. Mines, Ltd. v.
United States, 325 U.S. 212 (1945) in reaching the Fredeman holding.
In De Beers, the Supreme Court vacated a pre-judgment asset freeze,
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because the trial court lacked authority to issue such an order. Id. at
223. The Supreme Court held that a district court’s inherent power
does not extend to exerting control over a litigant’s property not subject
of the underlying suit, and explained:
“[Appellee] argues that a court of equity has inherent
power to protect its jurisdiction. The fallacy, in the
application of the principle here, is that, if service of the
defendants is properly obtained, and if the complaint
states a cause of action, no one questions the jurisdiction
of the District Court”
De Beers, 325 U.S. at 221.
A Court Has No Authority to Interfere with A Party’s
Assets in Which No Lien or Equitable Interest is Claimed
The Supreme Court in Grupo Mexicano de Desarrollo, SA v.
Alliance Bond Fund, Inc., 527 U.S. 308 (1999) directly addressed the
power of a district court to interfere with a litigant’s assets in which no
lien or equitable interest was claimed. Id. at 310. The Supreme Court
held that a district court does not have such authority and “We think it
incompatible with our traditionally cautious approach to equitable
powers”. Id. at 329. The Supreme Court explained:
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“A more powerful weapon of oppression could not be
placed at the disposal of unscrupulous litigants.” Id. at
330.
“[W]e have no authority to craft a ‘nuclear weapon’ of the
law like the one advocated here. … [I]t would be the most
gigantic in its sway, and the most formidable instrument
of arbitrary power, that could well be devised. It would
literally place the whole rights and property of the
community under the arbitrary will of the Judge, acting, if
you please, arbitrio boni judicis … according to his own
notions and conscience; but still acting with a despotic and
sovereign authority.” Id. at 332.
The Long Established Limits of Equity Receivership
Require the Showing of an Interest in the Certain
Property Placed into the Receivership
Naturally, the long established limits of equity receivership are
consistent with the limits of a court’s inherent power. The long-
established and fundamental prerequisite to the imposition of a
receivership is the showing of an interest in certain property such as to
justify conservation of the property pending its final disposition. E.g.,
Santibanez v. Wier McMahon & Co., 105 F.3d 234, 241 (5th Cir. 1997);
Pusey, 261 U.S. at 497. Thus, for example, a simple creditor has no
standing to apply for a receiver. Williams Holding Co. v. Pennell, 86
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F.2d 230 (5th Cir. 1936).
No Lien or Equitable Interest in Jeff Baron’s Property
was at Issue
No lien or equitable interest in any of Jeff Baron’s property (let
alone all of it) was at issue in the lawsuit. First, no claim at all was
pled against Jeff Baron by Ondova, the purported movant for the
receivership. R. 563. Jeff Baron and Ondova filed a joint answer “as the
‘Ondova Parties’ ”. Id. Secondly, the lawsuit below fully and finally
settled, and all parties entered into a stipulated dismissal of all claims.
R. 2109, 2346. Thirdly, the motion for receivership granted by the order
challenged in this appeal, did not seek to protect or enforce any
equitable interest or lien in Jeff’s property. R. 1575-1579. The sole
grounds put forth in the motion to necessitate a receiver was “in order
to remove Baron from control of his assets and end his ability to further
hire and fire a growing army of attorneys.” R. 1578, paragraph 13.
Accordingly, the district court lacked the authority to enter an
order seizing all of Jeff Baron’s assets and personal property. The only
way to describe the challenged order is “a ‘nuclear weapon’ of the law …
most gigantic in its sway, and the most formidable instrument of
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arbitrary power, that could well be devised. It would literally place the
whole rights and property of the community under the arbitrary will of
the Judge”. Grupo Mexicano, 527 U.S. 332. As the Supreme Court
warned: “A more powerful weapon of oppression could not be placed at
the disposal of unscrupulous litigants.” Id. at 330. The challenged
order must accordingly be vacated.
The district judge has substantial authority, even without the
imperial power to seize a party’s assets (absent a lien or equitable
interest in the property being at issue in the underlying lawsuit). If
necessary to prevent irreparable injury, a court can enjoin a party from
hiring lawyers.
4
If a court order is disobeyed, fines and imprisonment
can be used to punish and compel compliance. 18 U.S.C. § 401. That is
our system. Summary seizure of all of a party’s property as a means of
insuring obedience to the court is a system of an imperial court, or a court
in a banana republic, not a United States District Court of law and equity.
4
If our constitution permitted preventing a party from freely retaining the advice of
legal counsel. See Issue 4, below.
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ISSUE 4: WAS THE CHALLENGED ORDER ISSUED IN
VIOLATION OF THE CONSTITUTION OF THE UNITED STATES:
(A) DO THE FOURTH AND FIFTH AMENDMENTS PROHIBIT
THE SEIZURE OF ALL OF A PERSON’S PROPERTY AND
PROPERTY RIGHTS IN ORDER TO PREVENT THEM
FROM HIRING A LAWYER ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843
F.2d at 824.
Forbidden Purpose: To Prevent an Individual from
Hiring Legal Counsel
The Fifth Amendment establishes that an individual has the
constitutional right to retain hired counsel. Potashnick v. Port City
Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980). Moreover, “the right to
counsel is one of constitutional dimensions and should thus be freely
exercised without impingement.” Id. at 1118; Mosley v. St. Louis
Southwestern Ry., 634 F.2d 942, 946 (5th Cir. 1981). An individual is
guaranteed by the Fifth Amendment the “right to the advice” of
retained counsel, not just with respect to the adversarial system of
justice, but also for “the effective protection of individual rights”.
Mosley, 634 F.2d. at 945.
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At one level, a defendant must be afforded a fair opportunity to
secure counsel “of his own choice” and that applies “in any case, civil or
criminal” as a due process right “in the constitutional sense”. Powell v.
Alabama, 287 U.S. 45, 53-69 (1932). Yet, the right to retain counsel is
not limited to ‘in court’ representation. The right also encompasses the
right of association with counsel in general.
There are certain kinds of personal relationships which play a
critical role our national traditions and act as a critical buffer between
the individual and the power of the state. Roberts v. United States
Jaycees, 468 U.S. 609, 618-619 (1984). An individual's relationship
with his or her attorney is such a relationship, and “acts as a critical
buffer between the individual and the power of the State.” Johnson v.
City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002).
Accordingly, the Fifth Circuit has established that “The right of
access to retained counsel is one of constitutional dimensions and should
be freely exercised without impingement.” Mosley, 634 F.2d at 946. The
Appellee’s motion seeking to “end” Jeff Baron’s ability to retain counsel,
sought an improper and unconstitutional purpose. R. 1578, paragraph
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13.
5
The district court’s granting of the motion must therefore be
reversed as violating the protections afforded by the Fifth Amendment.
Notably, a court clearly has authority to control which attorneys
appear at bar before it when compelling reasons exist. E.g., McCuin v.
Tex. Power & Light Co., 714 F.2d 1255, 1263 (5th Cir. 1983). Which
attorneys represent an individual in court, however, is a very distinct
issue from which attorneys an individual may associate and seek legal
counsel from.
6
The district court is prohibited by the Fifth Amendment
from impinging upon an individual’s free right to associate with and
obtain legal counsel from whatever attorneys an individual may choose.
Mosley, 634 F.2d at 946. Obviously, to exercise authority over its own
docket, a district court does not need to seize all of a litigant’s assets to
“end his ability to further hire” counsel. A district court can just say
“no” and refuse to allow new counsel to appear before it, or refuse to
delay the proceedings. McCuin, 714 F.2d at 1263.
5
The only necessity averred in the motion was “to remove Baron from control of his
assets and end his ability to further hire a growing army of attorneys.” (Id).
6
Who is to say from how many attorneys an individual may seek advice ? For
example, is one litigant permitted to retain a law firm with 300 attorneys at his call,
but another litigant prohibited from retaining 30 solo practitioners ? If there were a
limit to the number of attorneys an individual could retain for advice, would that
require a limit to the number of attorneys who could associate in a single firm ?
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Unreasonable Grounds for Seizure
The seizure clause of the Fourth Amendment prohibits the
unreasonable interference with possession of a person's property.
Severance v. Patterson, 566 F.3d 490 (5th Cir. 2009). The seizure
ordered by the District Court was purely arbitrary—based on no case
law or statute, ordered without a trial on the merits of any claim, and
entered without a hearing and based on no objective guidelines or
guiding principles.
“Objectively Unreasonable” is the Test for Violation of
the Fourth Amendment
The Fourth Amendment inquiry is one of “objective
reasonableness” under the circumstances. Graham v. Connor, 490 U.S.
386, 299 (1989). The subjective views of the actors is not relevant. Id.
The question presented is simple: Was the seizure objectively
reasonable under the circumstances ?
The Challenged Order is Unreasonable
The challenged order is clearly not objectively reasonable as it is
patently excessive to achieve the stated aim. There were many less
intrusive and costly alternatives. Accordingly, the seizure of all of Jeff
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Baron’s property was not reasonable. For example:
(1) The court could have simply said “no” when a new
attorney requested to appear in the case. The district court
clearly has the power to do so when there is a compelling
reason. McCuin, 714 F.2d at 1263.
(2) The court could have fined or otherwise sanctioned Jeff
Baron for any frivolous pleading that was filed (if there were
any).
(3) If the goal was to stop Jeff from receiving legal advice
outside of the courthouse, the district court could have
7
simply issued an injunction prohibiting Jeff from hiring any
attorneys. Notably, the issuance of an injunction ordering
Jeff not to disburse any of his assets and provide his
financial paperwork to the receiver presupposes that he will
comply with the court’s orders. If that is the case, the court
could have simply ordered him not to hire any attorneys.
7
Aside from the issue of the constitutionality of that end, as discussed above.
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The hardship on a party in having all his assets seized is extreme.
Jeff Baron has been forced to turn over his most private affairs (all of
his personal documents and records) and has been placed in a civil
prison—unable to transact business, control his investments, etc.
R. 1619-1632. The cost is also staggering, over $234,000.00 per month.
SR. v2 p413-414. The heavy burden on Jeff from the seizure of all his
property, greatly outweighs any harm that will may incurred from Jeff’s
obtaining legal counsel to object to excessive fees requested by the
Trustee’s attorney in a bankruptcy case.
The principles governing the award of equitable relief in the
federal courts are well established. E.g., Weinberger v. Romero-Barcelo,
456 U.S. 305,313 (1982). For hundreds of years, injunctions have been
recognized as the normal, equitable way to direct a party’s actions. Id.
If an injunction is disregarded, contempt is used to enforce it. 18 U.S.C.
§ 401. Injunction is equity’s tool to direct a party’s actions, not seizure
of all of a litigant’s property. Issuing an order to seize all of an
individual’s worldly possessions and legal rights (including their life
savings, exempt assets, house keys, private papers and photographs,
Case: 10-11202 Document: 00511426993 Page: 46 Date Filed: 03/28/2011
etc.) in order to stop them from hiring an attorney, is patently
oppressive and objectively unreasonable.
Abuse of Discretion Corollary: Must Employ the Least
Possible Power Adequate to the End
A corollary to the Fourth Amendment requirement of objective
reasonableness is the equitable principle that a court “must exercise
‘[t]he least possible power adequate to the end proposed.’ ”. Spallone v.
United States, 493 U.S. 265, 272 (1990). Seizure of all of an individual’s
property and property rights is clearly not the ‘least possible power’
necessary to stop an individual from hiring new lawyers. An injunction
or fine will achieve the same purpose. Seizure of all of an individual’s
property in order to control his relationship with attorneys is rolling
over him with a steam roller in order to smash a fly on his collar. It is
manifestly unreasonable.
Case: 10-11202 Document: 00511426993 Page: 47 Date Filed: 03/28/2011
Post-Appeal Retrospective Justifications for the Entry of
the November 24, 2010 Order
As a preliminary and fundamental matter, post-appeal
retrospective grounds for relief are not an issue on appeal.
8
Rule 7
requires that motions must state with particularity the grounds for the
order sought. Fed.R.Civ.P. 7. The purpose of this requirement is “to
afford notice of the grounds and prayer of the motion to both the court
and to the opposing party, providing that party with a meaningful
opportunity to respond and the court with enough information to
process the motion correctly.” Registration Control Systems v.
Compusystems, Inc., 922 F.2d 805, 807 (Fed. Cir. 1990). The only
ground asserted by the Appellee as necessitating an emergency
receivership was “to remove Baron from control of his assets and end
his ability to further hire and fire a growing army of attorneys.”
R. 1578.
The district court made no findings of fact or conclusions of law
pursuant to which it issued the challenged order. R. 27, 1619-1632.
Notably, a district court cannot “accept new evidence or arguments” to
8
This section is included in an abundance of caution. The next section, on page 59,
resumes the discussion of the issues on appeal.
Case: 10-11202 Document: 00511426993 Page: 48 Date Filed: 03/28/2011
support the order after it has been appealed. Coastal Corp. v. Texas
Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989). This is because the
filing of a notice of appeal is an event of jurisdictional significance— it
confers jurisdiction on the court of appeals and divests the district court
of its jurisdiction. Griggs v. Provident Consumer Discount Co., 459 U.S.
56, 58 (1982). Accordingly, post-appeal grounds raised in justification of
the receivership should not be of relevance to this appeal. In an
abundance of caution, these post-appeal retrospective justifications are
addressed briefly.
In denying
9
Jeff Baron’s motion for relief filed pursuant to
Appellate Rule 8(a), the district court offered a range of differing
grounds and purposes for the ex-parte, emergency receivership, as
follows:
(A) Baron Hired and Fired Counsel as a Means of Delaying Court
Proceedings. SR v2 p345.
This allegation was never raised in any motion. If Jeff
Baron had fired counsel for delay (only a single attorney was
9
71 days after the entry of the order.
Case: 10-11202 Document: 00511426993 Page: 49 Date Filed: 03/28/2011
listed as actually being fired), he apparently was not very
successful at it. Not a single specific proceeding was shown to
have actually been delayed. Even if the allegation were true,
seizing all of an individual’s property is not a reasonable method
to deal with delays from firing counsel. A court can simply order
that there will be no delay even if attorneys are substituted.
(B) Vexatious Litigation Tactics Have Increased the Cost of this
Litigation for All Parties. SR v2 p350.
As with the prior post-appeal retrospective grounds, this
allegation also was never raised in any motion. As with the prior
ground, if Jeff Baron had engaged in vexatious tactics, he was not
very successful at it. Not a single filing made on Jeff’s behalf was
shown to be legally frivolous. The lawsuit fully and finally settled
prior to the filing of the motion for emergency receivership, with
all parties releasing all claims against Jeff. R. 2109. Accordingly,
if there were increased costs, by agreement, that was absorbed by
the parties as part of their settlement. Id.
The Fifth circuit has ruled that where there really is
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vexatious litigation, the remedy authorized is a pre-filing
injunction that preserves the legitimate rights of the
litigant. Baum v. Blue Moon Ventures, LLC, 513 F. 3d 181, 187
(5th Cir. 2008). Seizing all of an individual’s property (exempt,
and non-exempt, personal documents, photos, cell phones, etc.) is
neither the authorized remedy, nor is it reasonable.
(C) Practice of Hiring and Firing Attorneys Exposed the Ondova
Bankruptcy Estate to Significant Expense. SR v2 p350.
First, if there were some basis in law whereby a creditor’s
contribution to the benefit of a bankruptcy case would mean a
financial loss to the bankruptcy estate, as the ‘threat’ is merely
one of monetary expense, there is a remedy at law, and thus there
is no basis for an equitable remedy. E.g., Amoco Production Co. v.
Gambell, 480 U.S. 531, 542 (1987).
Secondly, if an equitable remedy were appropriate, an
injunction requiring that any attorneys could only be hired if their
retainer agreement included a term that waived all claims against
the Ondova estate would resolve the issue.
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Thirdly, the entire ‘threat’ is legally fallacious and
demonstrates the absurdity of the retrospective attempts to justify
the receivership order. The ‘significant expense’ refers to
substantial contribution claims which could be made if Jeff hired
an attorney that then provided a substantial contribution to the
bankruptcy case. SR v2 p359. If a creditor makes a substantial
contribution to a bankruptcy case that is “considerable in amount,
value or worth” to “foster and enhance, rather than retard or
interrupt the progress of reorganization”, then the creditor is
entitled to recover reasonable expenses, including reasonable
attorney's fees, for the substantial contribution. 11 U.S.C.
§503(b)(3)(D); E.g., In re DP Partners, Ltd. P'ship, 106 F.3d 667,
673 (5th Cir.1997). A claim pursuant to 11 U.S.C. §503(b)(3)(D)
for the creditor's contribution may be made by the creditor or by
the professional directly. 11 U.S.C. 503(b)(4); e.g. In re
Consolidated Bancshares, Inc., 785 F.2d 1249 (5th Cir. 1986).
Notably, there is no right of recovery against the creditor
who provided the substantial contribution. Quite the opposite—a
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creditor who provides a substantial contribution to the bankruptcy
case is entitled to recovery from the bankruptcy estate for the
expenses he incurred in making that contribution. 11 U.S.C.
§503(b)(3)(D); E.g., In re DP Partners, 106 F.3d at 673.
Accordingly, the hiring and firing of lawyers can have no net
effect on the bankruptcy case under §503(b)(3)(D), unless by hiring
or firing the lawyers the creditor provides a substantial benefit to
the bankruptcy case, in which case either the creditor or the
attorney would be entitled to file a claim for allowance of the fees.
Providing a substantial contribution is a good thing, which the
bankruptcy code encourages by allowing reimbursement of
expenses. E.g. 11 U.S.C. §503(b)(3)(D).
In the case at bar:
(1) Jeff hired a new lawyer who helped object to
excessive fees applied for by the chapter 11 trustee’s
attorney (Munsch Hardt). If that objection was sustained
and the fee application denied, the bankruptcy estate would
have been benefited, and Jeff would have been entitled to
Case: 10-11202 Document: 00511426993 Page: 53 Date Filed: 03/28/2011
recover the cost for filing the objection from the bankruptcy
estate.
(2) To prevent Jeff from making that contribution,
Munsch Hardt filed their emergency motion, and Jeff’s
property and property rights were then immediately seized.
The district court’s retrospective justification for
seizing all of Jeff’s property is that by hiring lawyers who
could make a substantial contribution, Jeff exposed the
bankruptcy estate to expenses. SR v2 p350, 358. That is
true. However, that expense was only exposed if his
attorneys first made a substantial contribution to the estate
which justified the expense. E.g., In re DP Partners, 106
F.3d at 673. Accordingly, it is not reasonable to prevent an
individual from making a substantial contribution to a
bankruptcy estate, let alone seizing all his property in order
to do so.
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(D) Baron Repeatedly Ignored Court Orders. SR v2 p352.
No show cause order was ever issued. No hearing on
contempt was ever held. Nevertheless, as discussed above at page
23, the district judge sincerely
10
, but mistakenly believed he
“ordered Baron on several occasions not to hire additional counsel
without Court approval”. SR v2 p352. As discussed on page 41,
the entry of such an order would not be constitutional. If the
district court had entered an order prohibiting Jeff from hiring
any lawyers (it did not), and if Jeff had willfully violated the order,
seizure of all Jeff’s personal property and assets as punishment
would still be patently excessive and unreasonable as a first step
to enforcing the order.
Notably, aside from the fundamental procedural defect of
finding a party in contempt of court without having issued a show
cause order and holding a hearing, the district court’s ‘finding’ is
based on an irrefutable mistake of fact– that on July 1, 2009 it
10
See “the Court notes for the record that Mr. Lyons is not counsel of record in this
case. Moreover, the Court previously entered an Order on July 1, 2009, requiring
Court approval before Defendant can employ new or additional counsel (See Docket
No. 38).” R. 1512. Notably, no such ordered was entered on July 1, 2009, or on any
date. R. 17, 503-562.
Case: 10-11202 Document: 00511426993 Page: 55 Date Filed: 03/28/2011
had entered an Order requiring approval before Jeff could employ
additional counsel. Without that leg of the argument, the
district court’s entire reasoning as to ‘necessity’ for seizure
of all Jeff’s property and property rights fails. The court
reasoned that it had tried lesser restrictive means– an order not to
hire additional lawyers without court approval. Since the premise
is false, the reasoning fails on its face.
(E) Hired Attorneys Without the Intention of Paying Them. SR v2
p355.
This allegation was never raised in any motion. No specific
names of any attorney hired without the intention of paying are
stated. Only four attorneys testified at the Rule 8(a) hearing. The
first attorney who testified was Lyon. Lyon was paid twenty-six
thousand, five hundred dollars and admits he settled his fee dispute
for August and September, and that he did not do much work in
October and November. R. 4413. The second attorney to testify
was Ferguson. R. 4440. He worked “about 45 days” and was paid
twenty-two thousand dollars. R. 4442. The third attorney to testify
Case: 10-11202 Document: 00511426993 Page: 56 Date Filed: 03/28/2011
was Chesnin. R.4478. He testified that the only payment he wasn’t
paid on was due December 10, and wasn’t paid only because of the
receivership stopping it. R.4489. The final attorney was Pronske. R.
4519. Pronske did not provide Jeff with a written contract. R. 4520.
Pronske testified that he requested to be paid seventy-five thousand
dollars, up font, against which he would bill. R. 4521, 4530. He was
paid that seventy-five thousand dollars, up font. R. 4530. Pronske
did not testify as to any agreement to be paid more than the
seventy-five thousand dollars, up front. Pronske did not send Jeff
any monthly invoices. R. 4524. Then, one year after he was retained
and paid the seventy-five thousand dollar fee, Pronske demanded
more money. R. 4526, 4530. Pronske demanded a lot more
money– a hundred and ninety-five thousand dollars more. R. 4528.
The evidence established that Jeff paid attorneys tens of
thousands of dollars. However, even if the allegation about hiring
attorneys without intention to pay were true, the damages are
damages at law which the attorneys could recover at trial.
Moreover, the district court has no jurisdiction over the issue: the
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attorneys and Jeff Baron are non-diverse. Griffin v. Lee, 621 F.3d
380, 388 (5th Cir. 2010). In any case, it is patently unreasonable
and a fundamental denial of due process to seize all of an
individual’s property– before lawsuits are filed, discovery is
conducted, and jury verdicts and judgments are entered.
(F) Stopping the Attempt to Transfer Funds Outside the
Jurisdiction of the US. SR v2 p357.
This allegation was never raised in any motion. No specific
factual basis is provided for the basis of the allegation, and the
‘going to be moving money offshore’ testimony related to allegations
made in September. R. 4540-4541. In any case, since Jeff received
notice of the receivership order well before the receiver seized any
assets, if Jeff was going to disobey the court’s order, he could have
done so and transferred his assets before they were seized. But, as
the challenged order presupposes, Jeff obeyed the court’s injunction
and did not transfer his assets, and the receiver was then able to
seize them. Accordingly, the court could have simply issued an
injunction prohibiting transferring of the assets out of the country.
Case: 10-11202 Document: 00511426993 Page: 58 Date Filed: 03/28/2011
It is not reasonable to seize assets where there is no
judgment to satisfy. Here there were not even claims before the
court. It is patently unreasonable to seize all of Jeff’s assets such
as his cell phone, house keys, and exempt assets. It is patently
unreasonable to seize all of a person’s assets for an unknown
amount of claims. It is also patently unreasonable to seize a
person’s assets in November, based on allegations that the person
was going to transfer their assets the previous September.
Moreover, if the law allowed requiring a defendant to put up
pre-trial security for unsecured creditor’s claims the district court
could have simply done what the bankruptcy judge apparently
did– require the defendant to put up a deposit. R. 4539-4540. It
is patently unreasonable, after a party has already put up a cash
deposit to secure against unsecured creditor’s claims to then seize
all of their property to secure those same claims. Id. Notably, the
‘lesser’ imposition of power, the requiring of security for unsecured
creditor’s claims, is already well outside the permitted authority of
the courts. E.g., In re Fredeman, 843 F.2d 821.
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(B) DOES THE FIFTH AMENDMENT PROHIBIT EX-PARTE
ISSUANCE OF AN ORDER APPOINTING A RECEIVER
OVER ALL OF AN INDIVIDUAL’S PROPERTY AND
PROPERTY RIGHTS, WITHOUT NOTICE, HEARING,
FINDINGS, AFFIDAVITS IN SUPPORT, A SHOWING OF
EXIGENT CIRCUMSTANCES, OR A BOND REQUIRED
FROM THE MOVANT ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843
F.2d at 824.
The Requirements of Due Process
Due process requires that an individual be given an opportunity
for a hearing before he is deprived of any significant property interest.
In re Foust, 310 F.3d 849, 857 (5th Cir. 2002). It is well settled that
even a temporary deprivations of property constitute a “taking” and are
“deprivations of property that had to be preceded by a fair hearing”.
Fuentes v. Shevin, 407 U.S. 67, 85 (1972).
Some clear lines have been set by the Supreme Court, as follows:
The Supreme Court has established that “[A]bsent notice and a prior
hearing [a] prejudgment garnishment procedure violates the
fundamental principles of due process”. Sniadach v. Family Finance
Corp. of Bay View, 395 U.S. 337, 342 (1969). The Supreme Court has
Case: 10-11202 Document: 00511426993 Page: 60 Date Filed: 03/28/2011
also established that a showing of exigent circumstance is required
where impoundment of property is allowed without prior notice and
hearing. Connecticut v. Doehr, 501 U.S. 1, 18 (1991).
The Supreme Court has also suggested that the impoundment of a
bank account without requiring a bond to protect the defendant from
wrongful impoundment is a violation of an individual’s right to due
process. North Ga. Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 606
(1975).
Due process requires that the rights of the individual whose
property is seized be protected in balance of the rights of those for
whose benefit the property is seized. Mathews v. Eldridge, 424 U.S.
319, 334 (1976). The accepted protections needed to balance the rights
of the party whose property is seized ex-parte, in order to provide that
individual with the protections which due process requires include: (1) a
sworn showing of the exigent circumstances and probable cause
establishing the grounds for ex-parte seizure; (2) sufficient bond to
protect the party against all damages in the event of wrongful seizure;
(3) a right for immediate hearing to dissolve at which the burden of
Case: 10-11202 Document: 00511426993 Page: 61 Date Filed: 03/28/2011
proof rests upon the party who obtained the seizure. Mitchell v. WT
Grant Co., 416 U.S. 600, 605-606 (1974).
The Failure of Due Process Below
All of the Requirements of Due Process discussed above were
violated by the challenged order. The order was issued without notice,
hearing, findings, affidavits in support, any showing of exigent
circumstances, or a bond required from the movant. R. 27,1619, 3924.
Accordingly, the order should be declared void ab initio as rendered in
violation of due process. 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”).
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(C) DOES THE FOURTH AMENDMENT PROHIBIT THE
ISSUANCE OF AN ORDER CONFERRING A RECEIVER
WITH AUTHORITY TO SEIZE A PERSON’S PROPERTY
WITHOUT A SUPPORTING OATH OR AFFIRMATION
SHOWING PROBABLE CAUSE FOR THE SEIZURE ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843
F.2d at 824.
The Fourth Amendment Applies to Civil Seizures
The Fifth Circuit has established that the Fourth Amendment
applies to civil as well as criminal seizures. Severance v. Patterson, 566
F.3d 490, 501 (5th Cir. 2009). The Fourth Amendment protects “The
right of the people to be secure in their persons, houses, papers, and
effects, against unreasonable searches and seizures” and requires that
“[N]o warrants shall issue, but upon probable cause, supported by oath
or affirmation, and particularly describing the place to be searched, and
the persons or things to be seized.”
The Challenged Order is a Warrant
A Warrant is “A writ … from a competent authority in pursuance
of law, directing the doing of an act, addressed to a … person competent
to do the act, and affording him protection from damage, if he does it.”
Case: 10-11202 Document: 00511426993 Page: 63 Date Filed: 03/28/2011
BLACK’S LAW DICTIONARY 1756 (Rev’d 4
th
ed. 1968). The district court is
clearly an authority generally authorized to issue writs authorizing a
receiver to seize property, and the challenged order is clearly conferring
authority upon the receiver to seize Jeff Baron’s property– accordingly,
the order is a warrant. Cf., United States v. Fuller, 160 U.S. 593, 597
(1896).
The Challenged Order was Issued Without any
Supporting Oath
The challenged order was issued upon an unverified motion with
no affidavits offered in support. R. 1575-1579. The motion was filed
with no formal assertion or attestation to the truth of the motion’s
averments. (Id.). Accordingly, the district court’s issuance of the
challenged order conferring the receiver with authority to seize Jeff
Baron’s property was issued in violation of the Fourth Amendment
because it was issued without a supporting oath or affirmation showing
probable cause for its issuance.
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Strong Due Process and Public Policy Basis to Require a
Sworn Application for Issuing an Ex-Parte Receivership
Order to Seize a Person’s Property
Mere allegation should not be sufficient to intrude upon an
individual’s right to possess property. It is axiomatic that physically
seizing a person’s property is more intrusive and more an impairment of
the owner’s rights in the property than merely enjoining a person from
disposing of the property. Accordingly, the Federal Rules of Procedure
require an affidavit or verified complaint setting out the cause for a
Temporary Restraining Order issued without notice. Fed.R.Civ.P.
65(b)(1)(A). The same due process concerns apply to the issuance of an
order to seize a person’s property.
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(D) DOES THE THIRTEENTH AMENDMENT PROHIBIT
PLACING A HUMAN BEING INTO THE POSSESSION
AND CONTROL OF A RECEIVER ?
Standard of Review
Questions of law are review de novo. E.g., In re Fredeman, 843
F.2d at 824; Gandy Nursery, 318 F.3d at 636.
The Thirteenth Amendment
The Thirteenth Amendment clearly prohibits slavery or
involuntary servitude as a civil punishment.
11
Involuntary servitude
includes legal coercion. US v. Kozminski, 821 F. 2d 1186, 1192 (6th Cir.
1987). A condition of servitude occurs when one no longer possess the
liberties and privileges of a freeman. Slaughter-House Cases, 83 US 36,
90 (1873)(dissent). As established by the Supreme Court in Plessy v.
Ferguson, 163 U.S. 537, 555 (1896):
“The Thirteenth Amendment does not permit the
withholding or the deprivation of any right necessarily
inhering in freedom. It not only struck down the
institution of slavery as previously existing in the United
States, but it prevents the imposition of any burdens or
11
“Neither slavery nor involuntary servitude, except as a punishment for crime
whereof the party shall have been duly convicted, shall exist within the United
States”
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disabilities that constitute badges of slavery or servitude.
It decreed universal civil freedom in this country.”
The District Court’s Order
The order challenged on appeal orders that the receiver shall take
possession and control of Jeff Baron. R. 1619. The order is
unambiguous and grants the receiver “exclusive control” over “Jeffrey
Baron”, as well as being entitled to “Possession and control over …
Receivership Parties ... which term shall include Jeffrey Baron”. (Id.).
The challenged order also authorizes the receiver to “take in possession
... all assets and documents of the Receivership Party”.
12
R. 1625. Even
the fruits of Jeff’s labor and wages were seized. R. 1620-1626.
Placing one citizen into the possession and control of another is
slavery and servitude and is prohibited by the Thirteenth Amendment.
Accordingly, the district judge’s order must be declared void as
unconstitutional.
12
As noted above, “The Receivership Party” is expressly and unequivocally defined
in the order to include Jeffrey Baron. (R. 1619).
Case: 10-11202 Document: 00511426993 Page: 67 Date Filed: 03/28/2011
CONCLUSION
The basic rights and concepts of the American system of justice
have been thrown out the window in the proceedings below. Jeff Baron
was treated like he had millions of dollars of outstanding judgments
against him. His privacy was violated and all his property was taken
from him. However, not a single juror has found against him. Not a
single judgment has been entered against him. Due process was
entirely skipped over. If Jeff Baron is at risk, so are we all. Public trust
in the very foundations of our court system has been placed at risk.
The challenged order should be vacated for two fundamental
reasons: (1) The district court lacks authority to issue a receivership
over property against which no lien or equitable interest was pled, and
(2) The order was issued without due process and in violation of the
rules of procedure and the Constitution of the United States.
Jeff Baron, Appellant, jointly and in the alternative requests the
following relief:
(1) That this Court reverse the district court’s order challenged in
this appeal. (Docket #124, and Docket #130 in the trial court
below).
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(2) That this Court declare the challenged void ab initio.
(3) That this Court order that Jeff Baron may recover the costs of
the receivership from those who have wrongfully provoked it.
With respect to that request, the Fifth Circuit has established that
where the facts as here show that a receivership was instituted
and property was seized upon an unfounded claim, the parties
whose property has been wrongfully seized are entitled, on
equitable principles, to recover costs from those who have
wrongfully provoked the receivership. Porter v. Cooke, 127 F.2d
853, 859 (5th Cir. 1942).
The movant below, as a matter of law, had an unfounded claim
to appoint a receiver over Jeff. The movant, moreover,
misrepresented crucial facts in their motion obtaining the
receivership. Most prominently, the movant claimed the
bankruptcy Court reported that if Jeff baron decided to proceed
pro se, it would recommend the district court to appoint a receiver
over Mr. Baron and all his assets. R. 1576. The movant’s
representation is clearly unfounded. The bankruptcy judge did
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not recommend that, and most likely would never recommend
such a thing– Congress has expressly legislated the right of every
individual in the federal court system the legal right to conduct
their own cases personally. 28 U.S.C. § 1654. Instead, the
bankruptcy court threatened that if Mr. Baron (1) choose to
proceed pro se, and (2) did not cooperate in connection with the
final consummation of the Global Settlement Agreement, then it
would recommend a receiver be appointed to “perform the
obligations of Jeffrey Baron under the Global Settlement
Agreement.” R. 1588. Notably, Jeff cooperated with the final
consummation of the settlement agreement (R. 4409) and the
motion for receivership does not aver otherwise.
(4) That this Court order the return of all property the district
court below ordered taken from Jeff pursuant to the challenged
order, including all ‘fees and charges’ of the receiver and his
employees, agents, ‘professionals’ and attorneys, because the
challenged order and the taking of Jeff Baron’s property from him
Case: 10-11202 Document: 00511426993 Page: 70 Date Filed: 03/28/2011
thereunder was without due process and in violation of his
constitutional rights.
(5) That this Court order that all costs of this appeal be taxed
against the Appellee and awarded to the Appellant.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5400 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(214) 210-5940 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
FOR JEFFREY BARON
Case: 10-11202 Document: 00511426993 Page: 71 Date Filed: 03/28/2011
CERTIFICATE OF COMPLIANCE
WITH TYPE-VOLUME LIMITATION, TYPEFACE
REQUIREMENTS, AND TYPE STYLE REQUIREMENTS
1. This brief complies with the type-volume limitation of FED. R.
APP. P. 32(a)(7)(B) because: this brief contains under 12,750 words.
2. This brief complies with the typeface requirements of FED. R.
APP. P. 32(a)(5) and the type style requirements of FED. R. APP. P.
32(a)(6) because: this brief has been prepared in a proportionally spaced
typeface using MS Word 2000 in 14 and 15 point century font.
DATED: March 28, 2011.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT JEFFREY BARON
Case: 10-11202 Document: 00511426993 Page: 72 Date Filed: 03/28/2011
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 and by e-mail to:
Raymond J. Urbanik, Esq.
MUNSCH HARDT KOPF & HARR, P.C.
3800 Lincoln Plaza
500 N. Akard Street
Dallas, Texas 75201-6659
Telephone: (214) 855-7500
Facsimile: (214) 855-7584
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT JEFFREY BARON
Case: 10-11202 Document: 00511426993 Page: 73 Date Filed: 03/28/2011
