Civil Action No. 3:12-cv-00367-F (O)
____________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
____________________________________________________________________________
JEFF BARON,
Appellant,
v.
CHAPTER 11 TRUSTEE DANIEL J. SHERMAN
Appellee
____________________________________________________________________________
Appeal from the United States Bankruptcy Court
For the Northern District of Texas, Dallas Division
Bankruptcy Petition No. 09-34784-sgj11
____________________________________________________________________________
APPELLANT’S REPLY BRIEF
____________________________________________________________________________
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(972) 200-0000 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANT
Case 3:12-cv-00367-F Document 16 Filed 04/08/12 Page 1 of 6 PageID 1540
ii
TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................ii
TABLE OF AUTHORITIES ........................................................................................ iii
REPLY ISSUES PRESENTED .......................................................................................1
ARGUMENT AND AUTHORITIES ..............................................................................1
REPLY ISSUE 1. BARON HAS STANDING. .......................................................................1
REPLY ISSUE 2. THE ‘RECEIVERSHIP ORDER’ IS VOID...............................................2
CONCLUSION.................................................................................................................3
CERTIFICATE OF SERVICE.......................................................................................3
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iii
TABLE OF AUTHORITIES
Armstrong v. Manzo,
380 U.S. 545, 552 (1965)..................................................................................................................... 2
Boddie v. Connecticut,
401 U.S. 371, 379 (1971)..................................................................................................................... 2
Cochrane v. WF Potts Son & Co.,
47 F.2d 1026, 1029 (5th Cir. 1931) ..................................................................................................... 2
Gannett Co. v. DePasquale,
443 U.S. 368, 412 (1979)..................................................................................................................... 2
Goss v. Lopez,
419 U.S. 565, 579 (1975)..................................................................................................................... 2
In re Coho Energy Inc.,
395 F.3d 198, 203 (5th Cir. 2004) ....................................................................................................... 1
Landy v. Federal Deposit Insurance Corporation,
486 F.2d 139 (3rd Cir. 1973) ............................................................................................................... 1
Pennoyer v. Neff,
95 U.S. 714, 737 (1878)....................................................................................................................... 2
Phillips v. Vandygriff,
711 F.2d 1217, 1227 (5th Cir. 1983) ................................................................................................... 2
Registration Control Systems v. Compusystems, Inc.,
922 F.2d 805, 807 (Federal Cir. 1990) ................................................................................................ 2
Securities & Exchg. Com'n v. Spence & Green Chemical,
612 F.2d 896, 903 (5th Cir. 1980) ....................................................................................................... 1
World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 291 (1980)..................................................................................................................... 2
Case 3:12-cv-00367-F Document 16 Filed 04/08/12 Page 3 of 6 PageID 1542
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REPLY ISSUES PRESENTED
REPLY ISSUE 1. Baron has standing.
REPLY ISSUE 2. The ‘receivership order’ is void.
ARGUMENT AND AUTHORITIES
REPLY ISSUE 1. Baron has standing.
Jeff Baron is clearly “directly and adversely affected pecuniarily by the order of the
bankruptcy court” and therefore has standing to appeal. In re Coho Energy Inc., 395 F.3d
198, 203 (5th Cir. 2004). The District Court in the ‘receivership’ proceedings expressly
ordered that the undersigned counsel was authorized to represent Baron in the District Court,
for “all purposes”. Here, Baron seeks to protect an asset that Vogel, as receiver, refused and
failed to defend. Even in statutory SEC receivership cases (which the instant receivership is
not) the Fifth Circuit has recognized the right of 'some sort' of derivative action to enforce
the rights of a company that the receiver has failed or refused to protect. See e.g., Securities
& Exchg. Com'n v. Spence & Green Chemical, 612 F.2d 896, 903 (5th Cir. 1980), citing with
approval Landy v .Federal Deposit Insurance Corporation, 486 F.2d 139 (3rd Cir. 1973).
Notably, as discussed below, as a legal matter Baron’s rights were not seized by the
‘receiver because the receivership order is void for lack of Due Process and want of subject
matter jurisdiction and is therefore is incapable of binding persons or property in any other
tribunal, Pennoyer v. Neff, 95 US 714, 722-723 (1878).
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REPLY ISSUE 2. The ‘receivership order is void.
An ex parte order such as the ‘receivership order’ that was signed without a motion on
file to support it, and without notice, opportunity to be heard, sworn affidavits, or bond to
protect the rights of those adversely affected by the order, etc., is an order fundamentally
devoid of due process and void as a matter of law. As a matter of well-established law,
failure to afford a party the opportunity to be heard on a motion seeking relief against them
is fundamentally inconsistent with the notion of due process, and orders issued without such
an opportunity are void. See e.g., Armstrong v. Manzo, 380 U.S. 545, 552 (1965); Goss v.
Lopez, 419 U.S. 565, 579 (1975); Boddie v. Connecticut, 401 U.S. 371, 379 (1971); Phillips
v. Vandygriff, 711 F.2d 1217, 1227 (5th Cir. 1983); Registration Control Systems v.
Compusystems, Inc., 922 F.2d 805, 807 (Federal Cir. 1990). Thus, the Supreme Court has
described secret judicial proceedings as “a menace to liberty”. Gannett Co. v. DePasquale,
443 U.S. 368, 412 (1979). Because the ‘receivership order was signed in secret, off-the-
record proceedings before a motion requesting the order was filed and failed to provide the
most basic aspects of Due Process, the order is void ab initio and subject to collateral attack
in the Bankruptcy Proceedings. 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”).
The ‘receivership order is also void for lack of subject matter jurisdiction. The
district court lacked subject matter jurisdiction to enter the receivership order because no
claim for relief regarding the property ordered into receivership was pled before that court.
Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931) (absent pleadings
asserting a claim in and to the property subject of the receivership, an order appointing a
receiver over that property is “absolutely void in the strictest sense of the term”).
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CONCLUSION
The Bankruptcy Court’s order should be reversed.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(972) 200-0000 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANT
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.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANTS
Case 3:12-cv-00367-F Document 16 Filed 04/08/12 Page 6 of 6 PageID 1545

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