Stephen R. Cochell
The Cochell Law Firm, P.C.
7026 Old Katy Road, Ste. 259
Houston, Texas 77096
Telephone: (713)980-8796
Facsimile: (214) 980-1179
srcochell@cochellfirm.com
LEAD ATTORNEY FOR JEFFREY BARON
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
JEFFREY BARON,
Respondent,
vs.
ELIZABETH SCHURIG, et. al.,
Movants.
§
§
§ CIVIL ACTION NO. 3:13-cv-03461-L
§
§
§ (Bankruptcy Case No. 12-37921)
§
§
§
§
§
BARON’S OBJECTION TO MOVANTS’ EMERGENCY
MOTION FOR STAY PENDING APPEAL
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 1 of 21 PageID 8130
i | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... ii
ARGUMENT & AUTHORITIES .................................................................................................. 1
I. Introduction .............................................................................................................................. 1
II. Movants’ Procedural Deficiencies .......................................................................................... 6
III. Movants Are Unlikely to Succeed on ................................................................................... 7
the Merits of Their Appeal .......................................................................................................... 7
A. Movants Erroneously Assert that the Law of the Case Is Applicable .................................8
B. No Remand Is Required .......................................................................................................9
IV. Movants Face No Irreparable Harm .................................................................................... 12
V. Baron Faces Substantial Harm if Stay Is Granted ................................................................ 13
VI. Granting a Stay Will Not Serve the Public Interest ............................................................ 15
VII. Conclusion ......................................................................................................................... 16
CERTIFICATE OF SERVICE ..................................................................................................... 17
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 2 of 21 PageID 8131
ii | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
TABLE OF AUTHORITIES
CASES
Armstrong v. Collier,
536 F.2d 72 (5th Cir. 1976) ....................................................................................................... 11
Arnold v. Garlock,
278 F.3d 426 (5th Cir. 2001) ....................................................................................................... 7
Christianson v. Colt Indus. Operating Corp.,
486 U.S. 800 (1988) .................................................................................................................... 8
De Beers Consolidated Mines v. United States,
325 U.S. 212 (1945) .................................................................................................................. 13
Dixie Carriers, Inc. v. Channel Fueling Services, Inc.,
843 F.2d 821 (5th Cir. 1988) ............................................................................................... 13, 14
In re Texas Equip. Co., Inc.,
283 B.R. 222 (Bankr. N.D. Tex. 2002) ....................................................................................... 7
Matter of Beverly Hills Bancorp,
752 F.2d 1334 (9th Cir. 1984) ................................................................................................... 11
Miles v. Great N. Ins. Co.,
634 F.3d 61 (1st Cir. 2011) ....................................................................................................... 10
Morrow v. Dillard,
580 F.2d 1284 (5th Cir. 1978) ..................................................................................................... 8
Myore v. Principi,
323 F.3d 1347 (Fed. Cir. 2003) ................................................................................................. 12
Netsphere, Inc. v. Baron,
703 F.3d 296 (5th Cir. 2012) ............................................................................................. 2, 5, 12
Public Service Company of New Hampshire,
116 B.R. 347 (Bankr. D.N.H. 1990) ......................................................................................... 15
Pusey & Jones Co. v. Hanssen,
261 U.S. 491 (1923) .................................................................................................................... 2
Ruiz v. Estelle,
650 F.2d 555 (5th Cir. 1981) ....................................................................................................... 7
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 3 of 21 PageID 8132
iii | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
Sbicca-Del Mac, Inc. v. Milius Shoe Co.,
145 F.2d 389 (8th Cir. 1944) ..................................................................................................... 11
Silver Star Enters. v. M/V Saramacca,
19 F.3d 1008 (5th Cir. 1994) ..................................................................................................... 11
Smith v. Schmidt,
2007 U.S. Dist. LEXIS 41901, *12 (S.D. Tex June 8, 2007 ....................................................... 7
Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc.,
982 F.2d 633 (1st Cir. 1992) ..................................................................................................... 10
Swanson & Youngdale, Inc. v. Seagrave Corp.,
561 F.2d 171 (8th Cir. 1977) ..................................................................................................... 11
Talley v. United States Postal Serv.,
720 F.2d 505 (8th Cir. 1983) ..................................................................................................... 11
USPPS Ltd. v. Avery Dennison Corp.,
647 F.3d 274 (5th Cir. 2011) ....................................................................................................... 8
Zarnow v. City of Wichita Falls Tex.,
614 F.3d 161 (5th Cir. 2010) ....................................................................................................... 8
STATUTES
11 U.S.C. § 303 ............................................................................................................................. 12
28 U.S.C. § 1334 ........................................................................................................................... 13
28 U.S.C. §§ 158 ........................................................................................................................... 13
RULES
Fed. R. Bankr. P. 8015 .................................................................................................................. 17
Local Rule 7.1 ................................................................................................................................. 9
Local Rule 7.2 ................................................................................................................................. 9
OTHER AUTHORITIES
9 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND
PROCEDURE § 2577 (1971) ................................................................................................... 14
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 4 of 21 PageID 8133
1 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
TO THE HONORABLE SAM A. LINDSAY,
UNITED STATES DISTRICT JUDGE:
NOW COMES, Jeffrey Baron (“Baron”) and files this Objection to Pronske Goolsby &
Kathman, PC, f/k/a Pronske & Patel, P.C., Shurig Jetel Beckett Tackett, Dean Ferguson, Gary G.
Lyon, Robert Garrey, Powers Taylor, LLP, Jeffrey Hall, and David Pacione’s (together, the
“Movants” or “Petitioning Creditors”) Emergency Motion for Stay Pending Appeal (the
“Motion”) [Dkt. 56], and in support thereof would respectfully show this Court as follows:
ARGUMENT & AUTHORITIES
I. INTRODUCTION
1. After having been paid over $3 million dollars, the Petitioning Creditors are
asking this Court to reward them with a stay pending appeal—an appeal, which by the
Petitioning Creditors’ own admission, is partly necessary due to the obvious tactical mistakes
they made in attempting to collect their alleged attorney fee claims against Jeff Baron.
Prominent among these foreseeable errors in judgment was the decision to lobby for a receiver to
be appointed in Netsphere, Inc. v. Baron, pending before this Court
1
for the purpose of
marshaling Mr. Baron’s personal assets to pay their contingent, unliquidated, and disputed
attorney fee claims. As a result of this error, from November 24, 2010 forward, Jeffrey Baron
was involuntarily placed in “financial lockdown,” stripped of all his personal assets, including all
of his assets exempt from his creditors’ claims under Texas law—IRA accounts and 401k
accounts—and the assets of two entities owned by a trust to which he and an unconnected
diabetes research non-profit are beneficiaries, Quantec, LLC and Novo Point, LLC. Moreover,
Mr. Baron was deprived of the right to engage counsel to defend himself against the actions
1
Netsphere, Inc. v. Baron, Civil Action No. 3:09-cv-0988-L; in the United States United States
District Court for the Northern District of Texas, Dallas Division.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 5 of 21 PageID 8134
2 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
taken by the Petitioning Creditors and the Receiver, as evidenced by email dated December 2,
2010, from the Receiver’s attorney, Barry Golden (A true and correct copy is attached as exhibit
A). Two years later, and after the payment of at least $5,200,000 in fees and expenses incurred
by the Receiver and his attorneys, funded with Baron’s assets, the Fifth Circuit found that the
appointment of the Receiver was an abuse of discretion. Netsphere, Inc. v. Baron, 703 F.3d 296,
302 (5th Cir. 2012). The Court reasoned:
A receiver may be appointed for a secured creditor who has legitimate fears his
security may be dissipated; “an unsecured simple contract creditor has, in the
absence of a statute, no substantive right, legal or equitable, in or to the property
of his debtor.” . . . Establishing a receivership to secure a pool of assets to pay
Baron’s former attorneys, who were unsecured contract creditors, was beyond the
court’s authority.” Netsphere, Inc. v. Baron, 703 F.3d 296, 308 (5th Cir. 2012)
(quoting Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923)).
2. Within two hours of the Fifth Circuit’s issuance of the Netsphere, Inc. v. Baron
opinion on December 18, 2012, the Petitioning Creditors chose to ignore the Fifth Circuit’s
admonition to liquidate their claims in state court and filed an involuntary bankruptcy proceeding
against Mr. Baron. The overarching purpose, as stated by Creditors’ counsel, Gerrit Pronske,
was to keep Mr. Baron from moving assets from the reach of Petitioning Creditors. Doc. 56, ¶
12 at 5. Specifically, Petitioning Creditors assert:
The Petitioning Creditors filed a Chapter 7 Involuntary Petition against Alleged
Debtor on the Petition Date out of concern that the Alleged Debtor might divert
assets from the jurisdiction of the United States Courts and beyond the reach of
creditors with significant claims against the Alleged Debtor.
Id.
3. However, this was precisely the abuse of process condemned by the Fifth Circuit.
Nevertheless, Petitioning Creditors intentionally took action designed to circumvent, emasculate,
and defy the decision of the Fifth Circuit even before the Court issued its Mandate. Clearly,
Petitioning Creditors (several of whom are bankruptcy lawyers) are fearful of taking their claims
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 6 of 21 PageID 8135
3 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
before a state court where a jury will likely reject their claims and grant Jeff Baron substantial
relief on his counterclaims—their mission was to keep Jeff Baron’s personal assets frozen and to
continue to deprive him of his “day in court,” where he might have an impartial trial by a court
and jury with respect to the attorney fee claims being asserted against him and his claims against
the attorneys.
4. To say the claims of the Petitioning Creditors were disputed is an understatement.
Petitioning Creditors were paid in full, over $3 million, in accordance with their agreements.
Some of the Petitioning Creditors even had settlement agreements with Mr. Baron that fully
settled their claims for fees against Baron.
5. Petitioning Creditors’ attempted to prove up their claims in the involuntary
proceeding by arguing the claims were “liquidated, and non-contingent” by virtue of the May 18,
2011 Fee Order. This illustrates their legitimate fear of a full blown trial on the merits. This
Court’s ruling that the May 18, 2011 Fee Order had no preclusive effect and simply applied
bedrock legal principles that Petitioning Creditors chose to ignore in their quest to continue a
freeze on Jeff Baron’s assets and keep him in financial lockdown for as long as possible.
Petitioning Creditors’ current motion ignores the equities posed by the facts in this case. All of
Jeff Baron’s assets, including assets not even the subject of dispute in the Netsphere case, were
seized, held and liquidated at great cost to Jeff Baron in an illegal receivership. Petitioning
Creditors appear to ignore that, if they had meritorious claims, they could have pursued Mr.
Baron in state court----- their lawful remedy.
2
. Instead, their insistence on pursuing receivership
2
Four of the petitioning creditors had fee disputes against Baron that were initiated, but none
received any judgments in their favor.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 7 of 21 PageID 8136
4 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
and then bankruptcy has ironically resulted in payment of millions to dozens of other lawyers but
not one penny to these alleged creditors.
6. Although Petitioning Creditors’ make the “remand” versus “render” issue the
centerpiece of their complaints about this Court’s Amended Memorandum Opinion and
Judgment (Dkt. Nos. 52 and 53, respectively), they inexplicably failed to file a motion for
rehearing pursuant to Federal Rule of Bankruptcy Procedure 8015, where the Court might have
had the opportunity to correct the alleged error more expediently and efficiently than filing an
appeal to the Fifth Circuit.
3
If the Court grants a stay pending appeal, this decision has the
benefit to Petitioning Creditors of prolonging the litigation in the hope that Baron is unable to
simultaneously defend himself in the Fifth Circuit and the bankruptcy court without adequate
access to his own resources.
7. A motion for rehearing was clearly the Petitioning Creditors’ adequate remedy at
law, which the Petitioning Creditors could have pursued, but consciously chose not to. Instead,
the Petitioning Creditors now “throw themselves on the mercy of this Court” requesting
equitable, injunctive relief in the form of a stay, while they spend the next year to two years
appealing this Court’s Amended Memorandum Opinion and Judgment all the while liquidating
Baron’s assets in the bankruptcy court. Given the Fifth Circuit’s previous mandate and this
Court’s rulings, the real question at this juncture is: how quickly can this Court return to Mr.
Baron his personal assets and unfreeze his exempt IRA and other retirement accounts. It is not
3
Baron does not believe the Court erred in effectively rendering a Judgment.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 8 of 21 PageID 8137
5 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
whether Mr. Baron’s assets should be tied up for another two years, or two more seconds, to
reward the Petitioning Creditors for their tactical mistakes.
4
8. Employing every “trick in the book,” the Petitioning Creditors have continued to
avoid and short-circuit the inevitable trial on the merits before a judge and jury in order to prove
up their attorney fee claims, an avenue where Jeff Baron might be afforded his minimum due
process rights under the Fourth and Fourteenth Amendment to the United States Constitution, his
right to a trial by jury, and his right to be represented by counsel of his choosing. However, the
cost to Jeff Baron continues to grow. Mr. Baron has been separated from his assets for over two
years, including his exempt property. His assets have been depleted by the substantial fees and
expenses of the Receiver and his counsel in excess of $5,200,000. The Fifth Circuit issued a
mandate directing a prompt return of Mr. Baron’s assets to him more than ten months ago. Yet,
this has not occurred. To the contrary, the Receiver and his attorneys continue to “rack up” fees
and expenses in a head-long effort to side with the Petitioning Creditors and deprive Mr. Baron
of his personal assets, including property exempt from creditors’ claims under Texas law.
9. The Petitioning Creditors allege in their Motion for Stay that Mr. Baron will
remove and secrete away his personal assets without a status quo stay. Yet such allegations are
not supported by any affidavits or declarations attached to the Motion for Stay, nor were such
allegations ever supported by any credible evidence. This frivolous assertion was previously
made to the Fifth Circuit, which squarely rejected Gerrit Pronske’s claim that Jeff Baron was
moving assets off shore to evade the Court’s jurisdiction; instead, holding that there was no
evidence that “any discrete assets subject to the settlement agreement were being moved beyond
4
With the sweep of a pen, this Court can and should sua sponte, order the Receiver to unfreeze
Jeff Baron’s exempt property IRA and Retirement Accounts within twenty-four hours.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 9 of 21 PageID 8138
6 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
the reach of the court.” Netsphere, Inc. v. Baron, 703 F.3d at 307. This argument flies in the
face of the Fifth Circuit’s holding and appears to be made vexatiously to mislead this Court.
10. The Petitioning Creditors allege in their Motion for Stay that Mr. Baron will not
be harmed by the imposition of a stay pending appeal. Simply stated, this assertion ignores the
last three years of litigation designed to freeze Mr. Baron’s assets while the Petitioning Creditors
misused the receivership process to avoid state court litigation. Such a stay will unjustifiably
continue the freeze on Mr. Baron’s assets and deprive Mr. Baron of the funds he desperately
needs to defend himself against the claims of the Petitioning Creditors. Granting a stay,
however, effectively continues the freeze on Mr. Baron’s assets, which is contrary to the
mandate of the Fifth Circuit in Netsphere, Inc. v. Baron. In Netsphere, the Fifth Circuit directed
the return of Mr. Baron’s personal assets. For this reason alone, the Petitioning Creditors’
Motion should be denied.
II. MOVANTS’ PROCEDURAL DEFICIENCIES
11. Movants are all attorneys, mainly bankruptcy attorneys, and are represented by
reputable law firms. However, while Movants seemingly followed all procedural rules in their
presentations to the bankruptcy court and before other Judges of this District, Movants appear to
flaunt the rules in the way they are proceeding with their appeal.
12. In addition to the deficiencies identified in this Court’s Order at Dkt. 58, Movants
failed to discuss or otherwise Meet and Confer prior to filing their Motion as required by Local
Rule 7.1. Indeed, with this Motion, Movants failed to include the required Certificate of
Conference.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 10 of 21 PageID 8139
7 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
13. Local Rule 7.1 further requires a brief to accompany a Motion for Stay, which
was also neglected by Movants, whom squeezed their arguments into a 24-page “Emergency
Motion.”
14. Movants 24-page Emergency Motion filed several weeks after this Court’s Order
also fail to include a table of contents and table of cases, as required for documents exceeding
10-pages by Local Rule 7.2.
15. Such procedural deficiencies and errant legal positions urged by Movants do little
more than deplete resources; yet, they graphically illustrate the point Baron has tried to make for
the last several years—Movants seek to obtain money they have not earned by following the
rules only when it suits them, and by making conclusory accusations that fail when closely
examined.
III. MOVANTS ARE UNLIKELY TO SUCCEED ON
THE MERITS OF THEIR APPEAL
16. The decision to grant or deny a motion for stay pending appeal lies in the sound
discretion of the court, subject to an abuse of discretion standard of review. See Arnold v.
Garlock, 278 F.3d 426, 438–39 (5th Cir. 2001). Courts in the Fifth Circuit use four factors to
evaluate a motion to stay: (1) the movant’s likelihood of success on the merits, (2) irreparable
harm to the movant if the stay is not granted, (3) substantial harm to other parties if the stay is
granted, and (4) the public interests implicated in granting or denying the stay. Id., 278 F.3d at
438–39. As correctly identified by the Trustee in opposition to Baron’s earlier Motion for Stay,
a Movant’s failure to satisfy any one of the four prongs identified herein defeats a motion to stay.
(NDTX 3:13-cv-03461-O, Doc. 9-1, pg. 4) (citing Smith v. Schmidt, 2007 U.S. Dist. LEXIS
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 11 of 21 PageID 8140
8 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
41901, *12 (S.D. Tex June 8, 2007) (citing In re Texas Equip. Co., Inc., 283 B.R. 222, 227
(Bankr. N.D. Tex. 2002)); see also Arnold, 278 F.3d at 438–39.
17. Thus, even if Movants raise serious legal questions and make a substantial case on
the merits, Movants must show that the remaining Ruiz equities “weigh heavily” in favor of
granting a stay. Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir. 1981).
A. Movants Erroneously Assert that the Law of the Case Is Applicable
18. In an interlocutory order, this Court suggested in a footnote that the Attorneys Fee
Order was not affected by the Fifth Circuit Court of Appeals. (Order Denying Appellant’s
Emergency Motion for Stay Pending Appeal of Order for Relief and Order Appointing Interim
Trustee, p. 4, n.1) [Dkt. 22]. Movants’ argument that the “law of the case” doctrine precluded
this Court from making a contrary finding hinges on this footnote. Movants are wrong.
19. The law of the case doctrine, as formulated in the U.S. Court of Appeals for the
Fifth Circuit, generally precludes reexamination of issues of law or fact decided on appeal, either
by a district court on remand or by the appellate court itself on a subsequent appeal. USPPS
Ltd. v. Avery Dennison Corp., 647 F.3d 274, 282 (5th Cir. 2011). Thus, Movants’ arguments are
misplaced as to scope, where the doctrine applies only to issues that were decided in a former
proceeding. Morrow v. Dillard, 580 F.2d 1284, 1290 (5th Cir. 1978). This circumstance clearly
does not apply in the instant case, where the District Court revisited its own interlocutory
order—not a final order on remand or decided on appeal to the Fifth Circuit.
20. Moreover, the law of the case doctrine does not operate to prevent a district court
from reconsidering prior rulings. While the rule yields to adequate reason, where courts are
guided to revisit prior decisions of its own or of a coordinate court in circumstances such as
where the initial decision was clearly erroneous and would work a manifest injustice, a court has
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 12 of 21 PageID 8141
9 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
the power to revisit prior decisions of its own in any circumstance. See Zarnow v. City of
Wichita Falls Tex., 614 F.3d 161, 171 (5th Cir. 2010); Christianson v. Colt Indus. Operating
Corp., 486 U.S. 800, 817, 831 (1988)).
21. The Fifth Circuit has, accordingly, rejected the argument that the law of the case
doctrine precludes the reversal of prior, interlocutory, orders. Zarnow, 614 F.3d at 171. Such
orders properly within the court’s jurisdiction leave it free to reconsider and reverse its decision
for any reason it deems sufficient, even in the absence of new evidence or an intervening change
in or clarification of the substantive law. Id. (addressing a district court’s decision to reverse its
summary judgment determination on remand).
22. As such, the law of the case doctrine is inapplicable to the instant case because the
Court’s footnote in a prior order was not made after the court had been divested of jurisdiction
and on remand, or otherwise by the appellate court on a subsequent appeal; Baron’s Motion for
Stay Pending Appeal of Order for Relief and Order Appointing Interim Trustee was an
interlocutory matter still under the Court’s jurisdiction.
5
B. No Remand Is Required
23. Movants argue that a reversal on a summary judgment would normally yield a
remand for trial on the merits, is only partially true. The involuntary bankruptcy proceedings can
hardly be equated to a “normal” proceeding given the history of the case and the fact that jury
trials and other due process rights are routinely accorded debtors in state court
24. The bankruptcy code is clear—a contested involuntary petition can survive a
motion to dismiss only if the petitioning creditors’ claims are not contingent as to liability or the
5
Indeed, Baron’s Motion for Reconsideration was pending at the time the Order for Relief was
reversed
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 13 of 21 PageID 8142
10 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
subject of a bona fide dispute. 11 U.S.C. § 303(b)(1), (h)(1). If the alleged debtor controverts
the Petitioning Creditors’ claims in a timely fashion, the bankruptcy court must decide whether
the creditors’ claims are the subject of a bona fide dispute and, if they are, must dismiss the
petition. The standard for determining whether there is a bona fide dispute is analogous to a
reverse summary judgment standard. If there is a genuine issue of a material fact that bears upon
Baron’s liability, then the petition must be dismissed. The bankruptcy court erred, as a matter of
law, when it denied Baron’s Motion to Dismiss, and this Court correctly reversed the Order for
Relief and interlocutory orders, at Baron’s urging, on appeal.
25. In addition, the proceedings in the bankruptcy court support a determination that
no remand should be issued. Unlike other proceedings, the bankruptcy court is a court of equity
where the judge alone determines both fact and law in preparing its findings and final orders.
Here, with respect to liability and bona fide dispute issues, the bankruptcy court judge considered
the same facts and evidence for both the Summary Judgment and Order for Relief.
26. This Court sits as an appellate court to the bankruptcy court. 28 U.S.C. §§ 158
and 1334. Although appellate courts are generally reluctant to decide mixed questions of law
and fact in the first instance, there are exceptions that apply in the instant case. It is well
established that appellate courts will decide mixed questions of fact and law, where, as in the
instant case, no further development of facts is required in order to resolve the mixed question
and where a remand is neither necessary nor prudent. Miles v. Great N. Ins. Co., 634 F.3d 61, 66
(1st Cir. 2011) (citations omitted).
27. In Miles, the First Circuit quoted its decision in Societe Des Produits Nestle, S.A.
v. Casa Helvetia, Inc. Id. at 66–67 which has particular relevance to this case.
[I]it is not ordinarily the province of appellate courts to make findings of fact or to
resolve, in the first instance, mixed questions of law and fact. Yet, where only
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 14 of 21 PageID 8143
11 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
one resolution of a predominantly fact bound question would, on a full record, be
sustainable, courts of appeals can, and often should, decline to remand where
there has been an error committed.”
Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 642 (1st
Cir. 1992) (emphasis supplied).
The Miles Court declined “to remand where, once the court of appeals decided the correct rule of
law, the district court’s preexisting findings of fact rendered the result obvious.” Miles, 634 F.3d
at 67 (citing Societe Des Produits, 982 F.2d at 642).
28. The Fifth Circuit essentially adopted the same standard. When the court is
“sufficiently informed as to the district court’s rationale, and the record contains undisputed facts
which support the court’s ruling, a remand for findings of fact and conclusions of law is
unnecessary.” Silver Star Enters. v. M/V Saramacca, 19 F.3d 1008, 1014 n. 11 (5th Cir. 1994)
(citing Armstrong v. Collier, 536 F.2d 72, 77 (5th Cir. 1976) (“stating that a remand for failure to
comply with Fed.R.Civ.P. 52(a) is not required if a complete understanding of the issues may be
had without the aid of separate findings”); 9 CHARLES A. WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTICE AND PROCEDURE § 2577 (1971)).
29. The Ninth and Eighth Circuits have rendered opinions with similar language. See,
e.g., Matter of Beverly Hills Bancorp, 752 F.2d 1334, 1338 (9th Cir. 1984) (citations omitted)
(stating “[a]lthough remand generally is required for findings of fact, remand is not necessary
when the trial court fails to make such findings and the facts in the record are undisputed”);
Talley v. United States Postal Serv., 720 F.2d 505, 508 (8th Cir. 1983) (citing Swanson &
Youngdale, Inc. v. Seagrave Corp., 561 F.2d 171, 173 (8th Cir. 1977); Sbicca-Del Mac, Inc. v.
Milius Shoe Co., 145 F.2d 389, 400 (8th Cir. 1944); Armstrong, 536 F.2d at 77 (stating
“[a]lthough Rule 52 of the Federal Rules of Civil Procedure requires the district court in a non-
jury case to make findings of fact and state separately its conclusions of law, compliance with
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 15 of 21 PageID 8144
12 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
the rule is not a jurisdictional requirement for appeal. The appellate court may decide an issue
without remand if ‘the record itself sufficiently informs the court of the basis for the trial court’s
decision on the material issue’ … or when the facts with respect to a particular issue are
undisputed”).
30. The whole argument over whether this Court should have remanded the case to
the bankruptcy court is, by the Petitioning Creditors’ own admission, largely moot. In their
Motion, the Petitioning Creditors summarize evidence they offered at the trial regarding the fees
that were allegedly owed to them, allegedly giving the Petitioning Creditors standing under 11
U.S.C. § 303. (Mot. pp. 7–10). This evidence was in addition to the evidence supporting the
Petitioning Creditors’ summary judgment. Because Petitioning Creditors had an opportunity to
present this evidence, in addition to relying on a partial summary judgment, the Petitioning
Creditors are not entitled to have the case remanded for a “third bite” at the proverbial apple.
See Myore v. Principi, 323 F.3d 1347, 1352–53 (Fed. Cir. 2003) (insufficient evidence presented
to overcome presumption warrants reversal, without a remand).
31. Thus, if the facts are undisputed and the lower court’s rationale is sufficiently
conveyed, this Court’s remand on a discrete issue concerning Movant’s summary judgment
motion is unnecessary.
IV. MOVANTS FACE NO IRREPARABLE HARM
32. Citing no law and providing no evidence, Movants continue to rehash old
arguments that were presented and rejected by the Fifth Circuit in Baron’s Receivership,
claiming they face irreparable harm because they believe Baron has a history of “removing [his
own] assets from the jurisdiction of the United States…” (Mot. at ¶ 46). As discussed above,
this frivolous assertion was previously made and rejected by the Fifth Circuit. Netsphere, Inc. v.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 16 of 21 PageID 8145
13 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
Baron, 703 F.3d at 307. Moreover, Baron has neither been accused nor convicted of any crime.
He is a U.S. citizen with property rights that should not be held and slowly depleted by the
proverbial greedy lawyers.
33. Without presenting anything substantive, Movants’ conclusory statements
concerning Barons trusts are just that—conclusory and defamatory statements that are not
sufficient to satisfy their burden to show irreparable harm. This is particularly true when
Movants have no standing or claim to Baron’s property or the trusts. Moreover, this Court held,
as a matter of law, that it is Baron whom would suffer irreparable harm if he is forced to continue
in an involuntary bankruptcy while an appeal is pending, holding “[t]he Court finds that
Appellant [Baron] has established that he may suffer irreparable harm … because the liquidation
of his assets may be non-reversible.” (Dist. Ct. Order Denying Baron’s Motion for Stay, 3:13-
cv-03461-O, Doc. 22 at pg. 14).
V. BARON FACES SUBSTANTIAL HARM IF STAY IS GRANTED
34. “The general federal rule of equity is that a court may not reach a defendant’s
assets unrelated to the underlying litigation and freeze them so that they may be preserved to
satisfy a potential money judgment.” Dixie Carriers, Inc. v. Channel Fueling Services, Inc., 843
F.2d 821, 824 (5th Cir. 1988) (citing De Beers Consolidated Mines v. United States, 325 U.S.
212 (1945) (civil action under RICO for treble damages).
35. Despite this rule, Movants have sought, and have been mostly successful, in
divesting Baron of assets to defend against their vexatious litigation tactics since the beginning
of the illegal receivership. Baron lost his freedom and millions of dollars to the Receiver’s
lawyers and others in the illegal receivership. During this period, Baron was inexplicably told by
the receiver that he would be held in contempt and ostensibly jailed if he dared to hire a lawyer
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 17 of 21 PageID 8146
14 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
to fight against the receivership. Baron persevered and ultimately defeated the Receivership as
an abuse of discretion.Ironically, the receivership was recommended by the same bankruptcy
judge that issued Baron’s Order for Relief to involuntary bankruptcyThen, before the mandate
issued in Netsphere, Inc. v. Baron, the Petitioning Creditors caused Baron’s assets to continue to
be ”locked down” and frozen in a bankruptcy proceeding which this Court ruled was improper.
36. If this Court has determined that Baron faces irreparable harm if forced into
bankruptcy while an appeal is pending, it follows that he would suffer substantial harm,
particularly where here Petitioning Creditors have failed to file a bond either when the forced
Baron into bankruptcy or on appeal.
37. At this juncture, the Petitioning Creditors are asking this Court to “temporarily”
maintain this unacceptable status quo so they may spend a year, more or less,
6
appealing this
case to the Fifth Circuit. As set out in their Motion, the Petitioning Creditors allegedly require a
stay for the simple reason that they elected not to file a motion for rehearing during the 14 days
this Court still has jurisdiction to modify the judgment. See Fed. R. Bankr. P. 8015 (regarding the
time for filing motions for rehearing). If a motion for rehearing were filed, the status quo that
has existed since the date of the Order for Relief would have continued as a matter of course.
Instead, the Court is now powerless to modify its Judgment and order the remand that the
Petitioning Creditors desire. If a remand is what the Petitioning Creditors really wanted, the only
place they can urge such relief is the Fifth Circuit.
6
As of September 30, 2013, the median time from a notice of appeal to disposition at the Fifth
Circuit was 9.3 months. See Administrative Office of the U.S. Courts, U.S. Court of Appeals –
Judical Caseload Profile at 14, available at http://www.uscourts.gov/viewer.aspx?doc=/
uscourts/Statistics/FederalCourtManagementStatistics/2013/appeals-fcms-profiles-september-
2013.pdf&page=13.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 18 of 21 PageID 8147
15 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
38. The Petitioning Creditors should not be rewarded for a litigation strategy,
mistake, or calculated decision that will now entail an appeal to the Fifth Circuit when they could
have, but failed to aske this Court for a remand. If the Petitioning Creditors are allowed to
continue to deprive Baron of his property rights, Baron will again face substantial harm, and
probably complete dissipation of his assets by the receiver and involuntary bankruptcy trustee,
harm not only to his property, but also to his ailing health
7
. Such harm would be totally
unjustified. See Dixie Carriers, Inc., 843 F.2d at 824.
39. Moreover, given the reversal of the Order of Relief, Baron may seek attorney fees
and damages for the more than two hundred thousand dollars in attorney fees he incurred in
fighting the involuntary bankruptcy. A stay would preclude Baron from expeditiously collecting
these funds and, as asserted by the Trustee in an earlier proceeding, “any suggestion that further
delay in payment causes no harm fails to take into account the time value of money.” See Public
Service Company of New Hampshire, 116 B.R. 347, 350 (Bankr. D.N.H. 1990) (“…delay caused
to creditors receiving their payments is also significant harm warranting denial of a stay.”).”
(Trustee Resp., Doc. 9-1, pg. 9).
VI. GRANTING A STAY WILL NOT SERVE THE PUBLIC INTEREST
40. The burden rests squarely on Movants to establish that granting a stay will serve
the public interest. However, Movants have not made a sufficient showing of the public interest
asserted in their Motion. After having been collectively paid in excess of $3.1 million prior to the
initiation of the illegal receivership, Movants are hard pressed to show that the public interest
7
Baron has submitted affidavits in the District and bankruptcy court with supporting doctor
reports.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 19 of 21 PageID 8148
16 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
would be served by allowing them to continue to milk a cash cow over disputed claims until it
runs completely dry.
41. This Court correctly gave deference to the intent and mandate of the Fifth Circuit
Court of Appeals, which clearly articulated a public interest in the Netsphere decision—to
expeditiously return assets wrongfully seized in a receivership to the rightful owners. Petitioning
Creditors’ back door attempt to circumvent the higher court’s decision serves no public interest.
Mr. Baron has been deprived of the use of his assets long enough. Further delay will simply
continue a process of destroying assets that were built by Mr. Baron’s efforts, and which have
been needlessly squandered in repeated, vexatious attempts to freeze his assets and extract a
litigation advantage in a bankruptcy court that clearly advocated that Mr. Baron’s assets be
frozen and sold off to pay lawyer claims despite the clear mandate of the Fifth Circuit. Although
a court of equity, the power of bankruptcy courts must, at some point, have limits. It is in the
public interest to apply the law of the case doctrine, or principles of collateral estoppel where, as
here, the Fifth Circuit held that Jeffrey Baron should be released from “financial lockdown.”
VII. CONCLUSION
The Fifth Circuit mandated that Baron’s assets be given back to him
expeditiously. The Petitioning Creditors have done everything in their power to frustrate
implementation of the mandate. This Court should, once and for all, inform the
Petitioning Creditors that the mandate of the Fifth Circuit will be implemented. Based on
the foregoing, Jeffrey Baron Objects to the Movants’ Motion for Stay and prays that this
Court overrules the Motion and grant Baron any further relief to which he may show
himself justly entitled.
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 20 of 21 PageID 8149
17 | P a g e
B a r o n ’ s O b j e c t i o n t o M o v a n t s ’
E m e r g e n c y M o t i o n t o S t a y P e n d i n g A p p e a l
Dated: January 31, 2014
Respectfully submitted,
TAYARI LAW PLLC
By: ___________________________
Mpatanishi Tayari Garrett, Esq.
Texas Bar No. 24073090
100 Crescent Court, Ste. 700
Dallas, TX 75201
Tel. (214) 459-8266
Fax. (214) 764-7289
And
Stephen R. Cochell
The Cochell Law Firm, P.C.
7026 Old Katy Road, Ste. 259
Houston, Texas 77096
Telephone: (713)980-8796
Facsimile: (214) 980-1179
srcochell@cochellfirm.com
Attorneys for Jeffrey Baron on Appeal
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing was served
via ECF on all parties receiving ECF Notices in the above-captioned case on January 31, 2014.
_/s/ Stephen R. Cochell
Case 3:13-cv-03461-L Document 61 Filed 01/31/14 Page 21 of 21 PageID 8150
