No. 11-10289

In the

United States Court of Appeals

for the Fifth Circuit

▬▬▬▬▬▬▬▬▬▬▬

NETSPHERE, INC., ET AL,

Plaintiffs

JEFFREY BARON,

Defendant- Appellant

DANIEL J SHERMAN,

Appellee

▬▬▬▬▬▬▬▬▬▬▬

Interlocutory Appeal of Orders

In Receivership on Appeal

▬▬▬▬▬▬▬▬▬▬▬

From the United States District Court

Northern District of Texas, Dallas Division

Civil Action No. 3-09CV0988-F

▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

BRIEF FOR JEFFREY BARON

▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬

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 APPELLANT

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. Defendant: JEFFREY BARON

b. 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

F. APPELLANTS: (1) NOVO POINT, LLC

(2) QUANTEC, LLC

G. APPELLEE: PETER S. VOGEL

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: Gardere Wynne Sewell LLP

(1) Barry Golden

(2) Peter L. Loh

1601 Elm Street, Suite 3000

Dallas, Texas 75201

Telephone (214) 999-3000

Facsimile (214) 999-4667

bgolden@gardere.com

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

(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. Non-parties seeking money from the receivership res:

1. Garrey, Robert (Robert J. Garrey, P.C.)

2. Pronske and Patel

3. Carrington, Coleman, Sloman & Blumenthal, LLP

4. Aldous Law Firm (Charla G. Aldous)

5. Rasansky Law Firm (Rasansky, Jeffrey H.)

6. Schurig Jetel Beckett Tackett

7. Powers and Taylor (Taylor, Mark)

8. Gary G. Lyon

9. Dean Ferguson

10. Bickel & Brewer

11. Robert J. Garrey

12. Hohmann, Taube & Summers, LLP

13. Michael B. Nelson, Inc.

14. Mateer & Shaffer, LLP (Randy Schaffer)

15. Broome Law Firm, PLLC

16. Fee, Smith, Sharp & Vitullo, LLP (Vitullo, Anthony “Louie”)

17. Jones, Otjen & Davis (Jones, Steven)

18. Hitchcock Evert, LLP

19. David L. Pacione

20. Shaver Law Firm

21. James M. Eckels

22. Joshua E. Cox

23. Friedman, Larry (Friedman & Feiger)

24. Pacione, David L.

25. Motley, Christy (Nace & Motley)

26. Shaver, Steven R. (Shaver & Ash)

27. Jeffrey Hall

28. Martin Thomas

29. Sidney B. Chesnin

30. Tom Jackson

CERTIFIED BY: /s/ Gary N. Schepps

Gary N. Schepps

COUNSEL FOR APPELLANTS

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., Griggs v. Provident Consumer Discount Co., 459 U.S. 56,

58 (1982)(The filing of a notice of appeal confers jurisdiction on the

court of appeals and divests the district court of its control over those

aspects of the case involved in the appeal); Cochrane v. WF Potts Son &

Co., 47 F.2d 1026, 1029 (5th Cir. 1931) (absent pleadings asserting a

claim over the receivership property, an order appointing a receiver is

void for lack of subject matter jurisdiction); St. Clair v. Cox, 106 U.S.

350, 353 (1882) (order void unless the District Court acquired

jurisdiction over the party by personal service or voluntary appearance);

Lion Bonding & Surety Co. v. Karatz, 262 U.S. 640, 642 (1923)(Even

where the court which appoints a receiver had jurisdiction at the time,

but loses it ... the first court cannot thereafter make an allowance for

the receiver’s expenses and compensation.) .

TABLE OF CONTENTS

CERTIFICATE OF INTERESTED PERSONS .......................................... 3

STATEMENT REGARDING ORAL ARGUMENT..................................... 7

TABLE OF CONTENTS.................................................................................. 8

TABLE OF AUTHORITIES ......................................................................... 11

STATEMENT OF THE JURISDICTION................................................... 13

ISSUES PRESENTED FOR REVIEW ....................................................... 14

STATEMENT OF THE CASE ...................................................................... 15

STATEMENT OF FACTS ............................................................................. 15

ARGUMENT SUMMARY.............................................................................. 19

ARGUMENT & AUTHORITY ...................................................................... 20

ISSUE 1: Does an interlocutory appeal divest the trial court of

jurisdiction over the matter appealed ?......................................................... 20

Standard of Review ................................................................................. 20

Appeal Divests the District Court of Jurisdiction Over the

Matter Appealed...................................................................................... 20

The District Court was Divested of Jurisdiction over

Receivership Res ..................................................................................... 21

District Court was Divested of Jurisdiction to Tamper with the

Order on Appeal ...................................................................................... 23

Policy Issue: Prejudgment of Validity of Receivership......................... 23

ISSUE 2: Does Due Process require that a party be afforded the

opportunity to be heard on motions before relief is granted

against that party ? ........................................................................................ 25

Standard of Review ................................................................................. 25

Argument ................................................................................................. 25

ISSUE 3: Must a court acquire personal jurisdiction over a third-

party in order to order that third-party into receivership ? .......................... 28

Standard of Review ................................................................................. 28

Argument ................................................................................................. 28

ISSUE 4: Where a single receiver was appointed over multiple

receivership parties and res, did the District Court abuse its

discretion in awarding receivership fees and expenses (1) Without

a showing or finding that the fees and expenses were reasonable or

necessary; and (2) Without regard to which of multiple

receivership parties or for which of a multiple receivership res the

fees were allegedly incurred. .......................................................................... 30

Standard of Review ................................................................................. 30

Argument ................................................................................................. 30

ISSUE 5: Did the District Court err in awarding receivership fees

and expenses where the receiver was prohibited by law from being

appointed as a receiver ?................................................................................. 32

Standard of Review ................................................................................. 32

Argument ................................................................................................. 32

ISSUE 6: Did the District Court err in (1) Awarding receivership

fees and expenses Without allowing the receivership party the

opportunity to hire experienced legal counsel to offer evidence and

argument as to the necessity or reasonableness of the fees and (2)

Denying Baron the right to use his own money to hire counsel to

represent him and protect his rights ? ........................................................... 34

Standard of Review ................................................................................. 34

Argument ................................................................................................. 34

PRAYER........................................................................................................... 36

CERTIFICATE OF COMPLIANCE............................................................ 37

CERTIFICATE OF SERVICE ..................................................................... 38

TABLE OF AUTHORITIES

FEDERAL CASES

Armstrong v. Manzo, 380 U.S. 545, 552 (1965) ...................................................25

Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986)...................29

Coastal Corp. v. Texas Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989) .......21, 23

Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931) .......7, 13, 29

Commodity Credit Corporation v. Bell, 107 F.2d 1001 (5th Cir. 1939) ....30, 32, 34

Dayton Indep. School Dist. v. US Mineral Prods. Co., 906 F.2d 1059, 1065 (5th

Cir. 1990) ....................................................................................................20, 24

Devlin v. Scardelletti, 536 U.S. 1 (2002) ..............................................................32

Goss v. Lopez, 419 U.S. 565, 579 (1975)..............................................................25

Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982)...............7, 20

International Transactions v. Embotelladora Agral, 347 F.3d 589, 596 (5th Cir.

2003).................................................................................................................26

Johnson v. City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002) .........................35

Joint Anti-Fascist Refugee Comm. v. McGrath, 341 U.S. 123, 161 (1951)...........26

Lion Bonding & Surety Co. v. Karatz, 262 U.S. 640, 642 (1923) .....................7, 22

Logan v. Zimmerman Brush Co., 455 U.S. 422, 429-430 (1982)..........................25

Middle South Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir.

1986).................................................................................................................29

Mosley v. St. Louis Southwestern Ry., 634 F.2d 942, 946 (5th Cir. 1981)............35

Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987).............29

Palmer v. Texas, 212 U.S. 118, 126 (1909)...........................................................21

Pennoyer v. Neff, 95 US 714, 737 (1878) .......................................................25, 29

Potashnick v. Port City Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980)........34, 35

Powell v. Alabama, 287 U.S. 45, 53-69 (1932).....................................................35

St. Clair v. Cox, 106 U.S. 350, 353 (1882)........................................................7, 28

Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 89 (1998)...................29

Taylor v. Sterrett, 640 F.2d 663, 668 (5th Cir. 1981) ............................................22

Wabash R. Co. v. Adelbert College of Western Reserve Univ., 208 U.S. 38, 46

(1908)................................................................................................................22

STATE CASES

Horton v. Ferrell, 335 Ark. 366, 981 S.W.2d 88 (1998) ........................................35

FEDERAL STATUTES

28 U.S.C. §§1292(a)(1).........................................................................................15

28 U.S.C. §958 .....................................................................................................35

FEDERAL RULES

FED. R. APP. P. 32(a)(5)......................................................................................39

FED. R. APP. P. 32(a)(6)......................................................................................39

FED. R. APP. P. 32(a)(7)(B).................................................................................39

STATEMENT OF THE JURISDICTION

The Fifth Circuit Court of Appeals has jurisdiction to hear this

interlocutory appeal from the orders of the District Court of the

Northern District of Texas: (1) appointing a receiver, (2) taking steps to

accomplish the purposes of a receivership, including denying Jeff Baron

the ability to hire counsel, (3) directing the sale of receivership assets,

(4) ordering the disposal and disbursement of receivership property;

pursuant to 28 U.S.C. §§1292(a)(1) and (2).

The District Court lacked subject matter jurisdiction to enter the

orders because: (1) The District Court was divested of jurisdiction over

the matter when it was appealed to the Fifth Circuit Court of Appeals;

(2) the District Court lacks personal and subject matter jurisdiction

over the multitude of parties ordered into receivership; and (3) 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”).

ISSUES PRESENTED FOR REVIEW

ISSUE 1: Does an interlocutory appeal divest the trial court of

jurisdiction over the matter appealed ?

ISSUE 2: Does Due Process require that a party be afforded the

opportunity to be heard on motions before relief is granted against

that party ?

ISSUE 3: Must a court acquire personal jurisdiction over a third-

party in order to order that third-party into receivership ?

ISSUE 4: Where a single receiver was appointed over multiple

receivership parties and res, did the District Court abuse its

discretion in awarding receivership fees and expenses (1) Without

a showing or finding that the fees and expenses were reasonable or

necessary; and (2) Without regard to which of multiple receivership

parties or for which of a multiple receivership res the fees were

allegedly incurred.

ISSUE 5: Did the District Court err in awarding receivership fees

and expenses where the receiver was prohibited by law from being

appointed as a receiver ?

ISSUE 6: Did the District Court err in (1) Awarding receivership

fees and expenses Without allowing the receivership party the

opportunity to hire experienced legal counsel to offer evidence and

argument as to the necessity or reasonableness of the fees and (2)

Denying Baron the right to use his own money to hire counsel to

represent him and protect his rights ?

STATEMENT OF THE CASE

This is an interlocutory appeal from orders entered by the District

Court exercising control of a receivership while the matter is on appeal

to the Fifth Circuit.

STATEMENT OF FACTS

One defendant below, Ondova (through the chapter 11 trustee

who now controls it, Sherman) filed a motion for the District Court to

seize all of the assets of another defendant, Jeffrey Baron, in order to

prevent him from hiring an attorney.

Sherman falsely made it look

like the bankruptcy judge desired a receiver over Baron if he hired any

lawyers.

The District Judge granted Sherman’s motion ex parte and

later explained: “[T]he receivership is an effort to stop the parade of

lawyers trying to wiggle out of lawful injunctions from judicial officers.

Yes, sir.”

R. 1578 (paragraph 13, “the appointment of a receiver is necessary under the

circumstances in order to remove Baron from control of his assets and end his

ability to further hire and fire a growing army of attorneys.” ), 1619-1632. One

reason cited by Sherman in his motion was that three business days before, Baron

had hired an attorney to assist in objecting to Sherman’s Attorney’s fee application

in the bankruptcy court where Baron is a creditor. 1576-1577.

R. 1576.

R. 4593-4594.

The original purpose of the ex parte receivership was clear: Jeff

Baron was warned that he was “prohibited from retaining any legal

counsel” and that if he did “the Receiver may move the Court to find you

in contempt”.

To enforce compliance and to stop Jeff from having any

money to hire a lawyer, all of his assets (including his exempt property)

were seized

, as were all of his future earnings

. Jeff was ordered not to

cash any checks

or enter into any business transactions

. Jeff Baron

has been this “civil lockdown” since the day the challenged order was

issued ex parte in November 2010. Baron has been forced to live off a

monthly sustenance stipend disbursed to him by the receiver. Under

the express threat of contempt, Jeff Baron has been permitted to

purchase only “local transportation, meals, home utilities, medical care

and medicine.”

SR. v8 p1213.

R. 1620.

R. 1622 paragraph F.

R. 1620, 1621 paragraph C.

R. 1620, 1622, 1627 paragraph A.

SR. v8 p1213.

When the receivership was imposed, Baron immediately turned

over his personal documents and files requested by the receiver.

Baron’s estate consists essentially of some savings accounts and some

Roth IRAs.

Accordingly, the receiver was not left with very much to

do.

Baron appealed the receivership order on Dec. 2, 2010.

The receiver then moved to add a multitude of companies into his

receivership (without lawsuits, service, evidence, or the normally

expected process of law).

Those companies include:

1. NovoPoint, LLC.

2. Quantec, LLC.

3. Iguana Consulting, LLC.

4. Diamond Key, LLC.

5. Quasar Services, LLC

6. Javelina, LLC.

7. HCB, LLC, a Delaware limited liability company.

8. HCB, LLC, a USVI company.

9. Realty Investment Management, LLC.- Deleware.

10. Realty Investment Management, LLC – USVI.

11. Blue Horizon, LLC.

12. Simple Solutions, LLC.

13. Asiatrust Limited.

14. Southpac Trust Limited.

R. 3891.

SR. v8 p1007.

R. 1699-1700.

R. 1717, 3952; SR. v1 p40, and sealed record Doc 609; SR. v2 pp365,405.

15. Stowe Protectors, Ltd.

16. Royal Gable 3129 Trust.

17. CDM Services, LLC

18. URDMC, LLC.

The District Judge made no findings in entering his November

2010, ex parte receivership order. R. 1619-1632. Months later, in

February 2011 the District Court entered findings in denying Baron’s

FRAP 8(a) motion for relief pending appeal. The post-appeal

explanation in those findings is essentially as follows: The District

Court believes Baron was a vexatious litigant (although never

appearing pro se) who owed money in undetermined amounts to his

former attorneys, and therefore should be denied the ability to hire an

experienced trial lawyer to defend himself, and should be stripped of his

possessions without trial “so that justice is done”. SR v2 p358.

While this matter has been on appeal, the District Court has

distributed essentially all of Jeff’s savings account balances to the

receiver and his law firm.

The amount is staggering— almost a

million dollars. SR. v8 p990-992.

Around $400,000 in a stock portfolio, and IRAs remain, but the stocks are

currently subject to a motion by the receiver to liquidate to pay additional fees, and

the receiver did not pay 2010’s taxes.

ARGUMENT SUMMARY

The District Court below lacked jurisdiction over the receivership

with respect to which the challenged orders were issued. Additionally

there was a breakdown of the basic protections of Due Process, with the

District Court:

(1) issuing orders against non-parties upon whom no service

was made and over whom the District Court lacked

personal jurisdiction;

(2) issuing orders without allowing the mandated

opportunity to respond to the motions seeking relief; and

(3) denying Baron the opportunity to hire experienced

Federal trial counsel.

ARGUMENT & AUTHORITY

ISSUE 1: DOES AN INTERLOCUTORY APPEAL DIVEST THE

TRIAL COURT OF JURISDICTION OVER THE MATTER

APPEALED ?

Standard of Review

Issues based on questions law are subject to independent review,

de novo. In Re Fredeman, 843 F.2d at 824.

Appeal Divests the District Court of Jurisdiction Over

the Matter Appealed

Jeffrey Baron filed a notice of appeal from the receivership order

on December 2, 2010. R. 1699. 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 control over those aspects of

the case involved in the appeal. Griggs v. Provident Consumer Discount

Co., 459 U.S. 56, 58 (1982). The divesture of jurisdiction of the trial

court involves all those aspects of the case appealed. Id. As a matter of

well-established law, the district court loses jurisdiction over all

matters which are validly on appeal. Dayton Indep. School Dist. v. US

Mineral Prods. Co., 906 F.2d 1059, 1065 (5th Cir. 1990) (“rule which we

follow rigorously”). The sole authority of a district court with respect to

a matter on interlocutory appeal is to maintain the status quo of the

case as it rests before the court of appeals. E.g., Coastal Corp. v. Texas

Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989); Dayton at 1063.

The District Court was Divested of Jurisdiction over

Receivership Res

As an well-established principle of law, the effect of an appeal of a

receivership is that the appellate court is vested with jurisdiction over

the receivership res. E.g., Palmer v. Texas, 212 U.S. 118, 126 (1909).

The Supreme Court held in Palmer “[T]he effect of the appeal was

simply ... that the appellate court still had jurisdiction over the

res the same as the trial court had”. Id. The Supreme Court

explained this rule in Palmer, holding:

“If a court of competent jurisdiction, Federal or state, has

... obtained jurisdiction over the same, such property is

withdrawn from the jurisdiction of the courts of the other

authority as effectually as if the property had been

entirely removed to the territory of another sovereignty”

Id. at 125.

As a well-established rule, “Even where the court which appoints

a receiver had jurisdiction at the time, but loses it ... the first court

cannot thereafter make an allowance for his expenses and

compensation”. Lion Bonding & Surety Co. v. Karatz, 262 U.S. 640, 642

(1923). Once the matter was placed before the Court of Appeals, the

property was in the possession of the Court of Appeals, and “[T]hat

possession carried with it the exclusive jurisdiction to determine all

judicial questions concerning the property.” Wabash R. Co. v. Adelbert

College of Western Reserve Univ., 208 U.S. 38, 46 (1908). As a well-

established principle of law and comity, two courts should not attempt

to assert jurisdiction over the same matter simultaneously. Griggs at

58; Dayton at 1063.

While the matter is on appeal, not only is the district court

divested of authority over the receivership res, but it is without

authority over the matter on appeal, and has no jurisdiction award fees

for the matter while it is on appeal. E.g., Taylor v. Sterrett, 640 F.2d

663, 668 (5th Cir. 1981) (“[T]he District Court was divested of

jurisdiction only as to matters relating to the April 27 and May 12

orders and subsequent orders and, for that reason, fees cannot be

recovered for work relating to these orders.”).

Accordingly, the District Court was without authority to disburse

hundreds of thousands of dollars from the receivership res as ‘fees’.

Docs 274, 275, 276, 278, 283, 284, 292, 294, 295, and 297. SR. v2 pp 367,

368, 369, 371, 377, 378, 411, 413, 414; SR. v3 p44. Similarly the

District Court was without Authority to authorize the liquidation of

receivership assets, nor to restart the 10-clock for expanding the

receiver’s authority. Doc 288; SR. v2 p406 and Doc 293; SR. v2 p412.

District Court was Divested of Jurisdiction to Tamper

with the Order on Appeal

As a matter of established law, “[T]he district court lacks

jurisdiction ‘to tamper in any way with the order then on

interlocutory appeal’ ” Coastal Corp, 869 F.2d at 820. Accordingly,

the District Court was without authority to expand the receivership

order to include a multitude of new receivership parties. Doc 272; SR.

v2 p365 and Doc 287; SR. v2 p405.

Policy Issue: Prejudgment of Validity of Receivership

The validity of the receivership order should be resolved on appeal

before the District Court should be allowed to distribute and disburse

the property of a party which was seized by the District Court’s

receivership order. Otherwise, the District Court can effectively bypass

review by the Court of Appeals by de facto distribution of the

receivership res before the validity of the receivership has been resolved

on appeal. A district court should not be allowed to moot a matter

pending before the Court of Appeals. Dayton, 906 F.2d at 1063.

Accordingly, the challenged orders Doc 275 (SR. v2 p368), Doc 276 (SR.

v2 p369), Doc 294 (SR. v2 p413), Doc 295 (SR. v2 p414), Doc 274 (SR. v2

p367), Doc 278 (SR. v2 p371), Doc 283 (SR. v2 p377), Doc 292 (SR. v2

p411), and Doc 297 (SR. v3 p44), should be reversed.

ISSUE 2: DOES DUE PROCESS REQUIRE THAT A PARTY BE

AFFORDED THE OPPORTUNITY TO BE HEARD ON MOTIONS

BEFORE RELIEF IS GRANTED AGAINST THAT PARTY ?

Standard of Review

Issues based on questions law are subject to independent review,

de novo. In Re Fredeman, 843 F.2d at 824.

Argument

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. E.g. Armstrong v. Manzo,

380 U.S. 545, 552 (1965)(restored the petitioner to the position he would

have occupied had due process of law [the opportunity to be heard] been

accorded to him in the first place); Pennoyer v. Neff, 95 US 714, 737

(1878) (“void as not being by due process of law”); Goss v. Lopez, 419

U.S. 565, 579 (1975) (“The fundamental requisite of due process of law

is the opportunity to be heard”); Logan v. Zimmerman Brush Co., 455

U.S. 422, 429-430 (1982) (due process violated in denying potential

litigants established adjudicatory procedures); Joint Anti-Fascist

Refugee Comm. v. McGrath, 341 U.S. 123, 161 (1951) (“Fairness of

procedure is ‘due process in the primary sense.’ It is ingrained in our

national traditions and is designed to maintain them.”)(citation

omitted); International Transactions v. Embotelladora Agral, 347 F.3d

589, 596 (5th Cir. 2003).

The local rule of the Northern District of Texas allows a

respondent 21 days to respond to motions. N.D. Tex. L.R. 7.1(e) (“Time

for Response and Brief. A response and brief to an opposed motion must

be filed within 21 days from the date the motion is filed.”). The District

Judge did not order or provide any notice that the time would be

shortened, and expressly acknowledged that the time allowed was “a

full twenty-one days to respond to every motion that’s filed”. SR. v4

p863. Accordingly, with respect to Orders Doc 287 (SR. v2 p405), Doc

288 (SR. v2 p406), Doc 285 (SR. v2 p403), Doc 293 (SR. v2 p412) and

Doc 291 (SR. v2 p409), the District Court abused its discretion in

granting relief without allowing Baron the legally mandated

opportunity to respond and be heard on the requested relief. As

discussed above, the District Court’s failure to allow Mr. Baron the

established procedures and opportunity to respond and be heard on the

relief requested against him, constitutes a violation of Due Process and

should render the orders so entered void.

ISSUE 3: MUST A COURT ACQUIRE PERSONAL JURISDICTION

OVER A THIRD-PARTY IN ORDER TO ORDER THAT THIRD-

PARTY INTO RECEIVERSHIP ?

Standard of Review

Issues based on questions law are subject to independent review,

de novo. In Re Fredeman, 843 F.2d at 824.

Argument

The District Court issued two Orders (Doc 272;SR. v2 p365 and

Doc 287;SR. v2 p405) placing a multitude of companies into the District

Court’s receivership. The orders were granted at the request of the

receiver himself. No service was issued against any of the added

parties, no personal jurisdiction over those parties was obtained, no

hearing was held on the orders, etc. SR. v2 pp 365, 405.

As a fundamental principle of well established law, a court

rending a ruling against a party must first acquire jurisdiction over

that party by personal service or voluntary appearance. St. Clair v.

Cox, 106 U.S. 350, 353 (1882). Before a federal court may exercise

personal jurisdiction over a defendant, the procedural requirement of

service of summons must be satisfied. Omni Capital Int'l, Ltd. v. Rudolf

Wolff & Co., 484 U.S. 97, 104 (1987). Orders issued without personal

jurisdiction are void. Pennoyer v. Neff, 95 U.S. 714, 728 (1878).

Similarly, since there was no claim or controversy concerning the

non-parties added to the receivership, the District Court below lacked

subject matter jurisdiction to place the multitude of companies into

receivership. Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1029 (5th

Cir. 1931); Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 89

(1998); and see Bender v. Williamsport Area School Dist., 475 U.S. 534,

541 (1986); Middle South Energy, Inc. v. City of New Orleans, 800 F.2d

488, 490 (5th Cir. 1986)(without an actual case or controversy between

the parties within the meaning of Article III of the Constitution there is

no subject matter jurisdiction).

Accordingly, the District Court’s orders (Doc 272;SR. v2 p365 and

Doc 287;SR. v2 p405) should be declared void.

ISSUE 4: WHERE A SINGLE RECEIVER WAS APPOINTED OVER

MULTIPLE RECEIVERSHIP PARTIES AND RES, DID THE

DISTRICT COURT ABUSE ITS DISCRETION IN AWARDING

RECEIVERSHIP FEES AND EXPENSES (1) WITHOUT A

SHOWING OR FINDING THAT THE FEES AND EXPENSES

WERE REASONABLE OR NECESSARY; AND (2) WITHOUT

REGARD TO WHICH OF MULTIPLE RECEIVERSHIP PARTIES

OR FOR WHICH OF A MULTIPLE RECEIVERSHIP RES THE

FEES WERE ALLEGEDLY INCURRED.

Standard of Review

Receivership fee allowances are reviewed for abuse of discretion.

Commodity Credit Corporation v. Bell, 107 F.2d 1001 (5th Cir. 1939).

Argument

A series of orders challenged in this appeal, Doc 275 (SR. v2 p368),

Doc 276 (SR. v2 p369), Doc 294 (SR. v2 p413), Doc 295 (SR. v2 p414),

Doc 274 (SR. v2 p367), Doc 278 (SR. v2 p371), Doc 283 (SR. v2 p377),

Doc 292 (SR. v2 p411), and Doc 297 (SR. v3 p44), award fees to the

receiver, his law partners, and ‘professionals’ employed by the receiver.

With respect to the motions seeking such fees, there was no argument

or evidence offered that the fees were reasonable or necessary. The fees

moreover were billed for work on multiple receivership res, for work

involving multiple receivership parties, but were not segregated in any

way, and were charged randomly against any particular receivership

party or res. The District Court entered no findings of fact or law in

support of its granting the motions for payment of the fees.

Accordingly, the District Court abused its discretion in granting the fee

awards.

ISSUE 5: DID THE DISTRICT COURT ERR IN AWARDING

RECEIVERSHIP FEES AND EXPENSES WHERE THE RECEIVER

WAS PROHIBITED BY LAW FROM BEING APPOINTED AS A

RECEIVER ?

Standard of Review

Issues based on questions law are subject to independent review,

de novo. In Re Fredeman, 843 F.2d at 824. The discretionary aspects of

receivership fee allowances are reviewed for abuse of discretion.

Commodity Credit, 107 F.2d at 1001.

Argument

On July 9, 2009, the District Court employed Peter Vogel as a

special master in the case below. R. 394. While still in his role as

special master, Vogel consulted ex parte with Sherman (who then

controlled the defendant Ondova) with respect to the motion to appoint

himself (Vogel) as a private receiver over Mr. Baron’s assets. SR. v5

p238. Vogel was also a special master when he moved to add additional

parties under his own receivership. R. 1717. A special master employed

by the Court is an officer of the court. E.g., Devlin v. Scardelletti, 536

U.S. 1 (2002). Further, courts which have considered the issue have

held that a special master is a judge sitting in the case in which he is

employed. E.g., Horton v. Ferrell, 335 Ark. 366, 981 S.W.2d 88 (1998);

Vereen v. Everett, Dist. Court, (ND Georgia 2009, No. 1:08-CV-1969-

RWS).

Congress mandated in 28 U.S.C. §958 that any person (1) holding

any civil office or (2) employed by any judge of the United States shall

not be appointed a receiver in any case. Accordingly, Peter Vogel could

not be appointed a receiver because he was employed by the District

Judge as a special master at the time he was appointed receiver. A

clear public policy purpose of the statute is to prevent conflict of

interest. The possibility that a special master in a case would consult to

have himself appointed as receiver over a party in the lawsuit where he

presently sat as a judge, violates the most fundamental notations of an

independent judiciary. If the motive of personal profit is allowed to

enter the side of the bench behind which judges and special masters sit,

the very foundation of an independent, impartial judiciary is

threatened. For this reason, the fees awarded to Peter Vogel and his

law should be reversed.

ISSUE 6: DID THE DISTRICT COURT ERR IN (1) AWARDING

RECEIVERSHIP FEES AND EXPENSES WITHOUT ALLOWING

THE RECEIVERSHIP PARTY THE OPPORTUNITY TO HIRE

EXPERIENCED LEGAL COUNSEL TO OFFER EVIDENCE AND

ARGUMENT AS TO THE NECESSITY OR REASONABLENESS OF

THE FEES AND (2) DENYING BARON THE RIGHT TO USE HIS

OWN MONEY TO HIRE COUNSEL TO REPRESENT HIM AND

PROTECT HIS RIGHTS ?

Standard of Review

Issues based on questions law are subject to independent review,

de novo. In Re Fredeman, 843 F.2d at 824. The discretionary aspects of

receivership fee allowances are reviewed for abuse of discretion.

Commodity Credit, 107 F.2d at 1001.

Argument

Baron repeatedly moved to be allowed access to his own money in

order to hire attorneys to represent him. E.g., R. 2720; SR. v2 p384 (Doc

264). However, the District Court did not allow Baron to hire counsel.

E.g., Doc 316 (SR. v4 p119).

The Fifth Circuit has held that a civil litigant has a constitutional

right to retain hired counsel. Potashnick v. Port City Const. Co., 609

F.2d 1101, 1104 (5th Cir. 1980). Moreover, the Fifth Circuit has held

that “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's relationship with his or her attorney “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). The Supreme

Court has held that a party 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).

That basic right was denied Baron by the District Court below.

The order denying Baron the right to hire an experienced Federal trial

attorney and the orders issued against Baron while he was deprived of

that basic constitutional right should be reversed.

PRAYER

Appellant, jointly and in the alternative requests the following

relief:

(1) That the challenged orders be reversed.

(2) That the challenged orders be found to be void ab initio.

(3) That costs be taxed against the Appellees.

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 APPELLANT

JEFF BARON

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 5,456 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: August 12, 2011.

CERTIFIED BY: /s/ Gary N. Schepps

GARY N. SCHEPPS

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