IN
THE
UNITED
STATES
BANKRUPTCY
COURT
NORTHERN
DISTRICT
OF
TEXAS
DALLAS
DIVISION
§
§
Case
No.: 12-37921-7
IN
RE
§
§
Involuntary
Chapter
7
JEFFREY
BARON
8
Petition
JEFFREY
BARON'S
12(B)
MOTIONS
&
PROVISIONAL
ANSWER
TO
THE
HONORABLE
STACEY
G. C.
JERNIGAN,
UNITED
STATES
BANKRUPTCY
JUDGE:
L
Motion
to
Dismiss
for
Failure
to
State
a
Claim
upon
which
Relief
Can
be
Granted
and
Lack
of
Jurisdiction
1. A claim under
11
U.S.C. §303 against a debtor with more than 12 creditors
and the Court's jurisdiction thereunder, requires and is contingent upon a petition by
three or more entities, each
of
which holds a claim against such debtor
"that
is
not
contingent
as
to
liability
or
the
subject
of
a
bona
fide
dispute
as
to
liability
or
amount".
11
U.S.C.
§303(b)(l).
2. Entities alleging a debt which is contingent or the subject
of
a bona fide
dispute as to liability or amount lack standing to petition for the commencement of
an involuntary case under §303
of
Chapter 11. Id. A person seeking to invoke the
jurisdiction
of
the court must establish the requisite standing to sue. E.g.,
Whitmore
v.
Arkansas, 495 U.S. 149, 154 (1990).
3. None
of
the petitioners in this case holds a claim against the alleged debtor
that is not contingent as to liability or the subject
of
a bona fide dispute as to
liability or amount. Rather, the petitioners are attempting to invoke the power
of
the
federal bankruptcy court for the improper purpose
of
securing a pre-judgment
•1-
seizure
of
the alleged debtor's property to secure a hoped for judgment on their
disputed claims, and in a concerted effort to attempt to deny the alleged debtor
of
his Constitutional right to trial by Jury on their claims.
4. The petitioners have previously been rebuffed by the Fifth Circuit Court
of
Appeals for attempting precisely the same tactic through the improper and
unauthorized use
of
a receivership to secure resolution
of
their disputed claims. In
finding that the receivership imposed to resolve the attorneys' disputed claims was
unauthorized
by
law
and
an
abuse
of
the
court's
discretion,
the
Fifth
Circuit
noted
that "the claims had not been reduced to judgment such that a receiver would have
been proper to set aside allegedly fraudulent conveyances" Netsphere, Inc.
v.
Baron,
no. 10-11202, 2012 WL 6583058, *9, 18 (5th Cir. 2012). The Fifth Circuit reversed
the
receivership
and
the
District
Court's
order1
for
the
receiver
to
settle
the
disputed
claims
of
the petitioners. Id.
5. The petitioners filed this case in bad faith, based on claims (1) which are
all more than two years old and irrelevant to the question
of
whether a debtor is now
generally paying his debts as they become due; and (2) which the petitioners know
are subject to a bona fide dispute and for which the disputes have been extensively
briefed in prior proceedings.
6. The petitioners claim for relief also cannot be granted because their
petition and request for relief is barred and enjoined by order of the US District
Court. On November 24, 2010 the US District Court issued a receivership order
which at page 12 orders that "during the pendency
of
the receivership ordered
herein, all other persons and entities aside from the Receiver are hereby stayed from
See Dkt. 575 in
Case
3:09-cv-00988-F, filed in the Northern District
of
Texas.
taking any action to establish or enforce any claim, right, or interest
for,
against, on
behalf of, in, or In the name of, the Receivership Party, any
of
their partnerships,
assets, documents, or the Receiver or the Receiver's duly authorized agents acting in
their capacities as such, including, but not limited to, the following actions: 1,
Commencing, prosecuting, continuing, entering, or enforcing any suit or
proceeding, except that such actions may be filed to toll any applicable statute
of
limitations; 2, Accelerating the due date
of
any obligation or claimed obligation;
filing or enforcing any lien; taking or attempting to take possession, custody or
control
of
any asset". Subsequent to issuing its opinion, the Fifth Circuit has
clarified that, although its opinion vacates the receivership order, its opinion will not
go into effect until the mandate is issued by that Court.
7. Accordingly, the petitioners' actions
are
in direct violation
of
the order
of
the US District Court, and the relief requested
by
the petitioners is prohibited by
that
order.
The petitioners' attempt to avoid Jury trials on their contested claims
through
the unauthorized use
of
a
receivership
was rejected by the
Fifth
Circuit.
Within hours
of
that ruling, the petitioners then sought to use the power
of
this
Court for the same improper, unauthorized
purpose
that was expressly rejected by
the
Fifth
Circuit.
8. The petitioners have
acted
in bad
faith
in attempting to improperlyuse the
bankruptcy court to collect on disputed
claims
which
fall
outside the jurisdictional
threshold for §303. Moreover, the petitioners' underlying claims are meritless and
frivolous. A summary
of
the disputed claims is as follows:
a. Mr. Hall had a written contract,capping his fee at $10,000 per month
and containing a merger clause requiring any modification be in
-3-
writing. Mr. Hall admits being paid in full for 10 months, but alleges
that in the 11th and last month Mr. Baron orally agreed to a $5,000.00
fee
increase.
Hall
asserts
a
claim
that
Baron
breached
the
written
contract by paying the amount specified in the written agreement,
$10,000, as payment in the eleventh month. In light
of
the written
contract's merger clause, Mr. Hall's claim
of
an oral modification
increasing the fee by $5,000 for the last month is meritless as a
matter
of
law.
b. Mr. Taylor's contract also has a monthly fee cap, which Mr. Taylor
admits he was paid in full. Mr. Taylor, however, claims that he is also
entitled to a contingency fee. Taylor's claim is meritless as a matter
of
law as, according to Mr. Taylor, "no specific value was ever
negotiated that would be subject to the contingency-fee calculation".
c. Mr.
Lyon
refused to produce his written contract, but claimed his fee
increased from $40/hour to $300/hour as
of
September 2009, but that
he was paid only at $40/hour and thus under-paid From September-
December 2009. Lyon's claim is shown fictitious and meritless by
Lyon's
own
email sent to
other
attorneys in
October
2009, seeking
more
work
from Mr. Baron on the basis he was only charging Baron
$40/hour and therefore provided "more bang for the buck". Lyon's
own email clearly states and admits that his billing rate was the
$40.00 /hour he was paid, and not the $300/hour he
now
claims.
d. Mr. Ferguson claims a debt based on fraud occurring more than two
years ago and which is barred by the Statute
of
Limitations. Mr.
Ferguson, moreover, was paid in full under the terms
of
his written
agreement with Mr. Baron even though Ferguson has failed to
produce any work reports detailing his purported work hours.
e. Ms.
Schurig
now claims a debt from Mr. Baron
of
$93,731.79, but
previously swore under oath that she was paid over a million dollars
in fees and that her claim against Mr. Baron was only for $1,331.50.
Further, Mr. Baron provided Ms. Schurig over $2 Million to hold in
trust,
which
funds have never been reasonably or rationally accounted
for by Ms. Schurig.
f. Mr.
Pronske
was awarded a substantial contribution claim against
Ondova
for the same work he seeks to recover against Mr. Baron. As
Mr. Pronske is not entitled to a double payment for his work, the
claim against Baron is contingent upon the disposition
of
the Ondova
fee award. Notably, Pronske admitted under oath the Mr. Baron did
not negotiate to pay Mr. Pronske's fee. Pronske admitted under oath
that "There are no engagement agreements relating to the
representation" and that he did not expect Mr. Baron to pay for his
services, rather Pronske claims that payment was to come from the
Village Trust. Pronske swears he received a $75,000.00 initial
retainer from the Village Trust and admitted under oath he was to bill
against that pre-paid retainer. Despite his legal and fiduciary duties
to do so, Pronske failed to send monthly billing statements, failed to
send monthly reports detailing the status
of
the retainer, and failed to
-5-
request a replenishment
of
the retainer. Pronske further forfeited his
fee by violations
of
his fiduciary duties to Mr. Baron,
g. Mr.
Garrey
appears to be, at best, a pathological liar. Mr. Garrey
admits
he
has
no
contract,
and
claims
he
worked
for
two
weeks.
Garrey testified under oath that he was "asked by
Jeff
Baron to
prepare and file a Special Appearance on
behalf
of
The Village Trust
in a lawsuit pending in Dallas State District Court. I performed all
of
the tasks." As a matter
of
public record, no such special appearance
exists. Moreover, Garrey's own emails establish that contrary to his
testimony, he solicited the Village Trust to be retained to file the
special appearance and the Trust rejected his offer and did not retain
him. Similarly, Garrey claims that he was retained by Mr. Baron to
"object to the fee requests
of
the Receiver's counsel, and I was asked
to devise a strategy to remove the Receiver and the Receiver's
counsel". As Mr. Garrey's sworn testimony is that he stopped
working for Baron prior to any
motion
to appoint the receiver, it is
impossible for Mr. Garrey to have performed the services he claims.
9.
The
forum to adjudicate the petitioners' disputed claims is
not
as
petitioning creditors in an involuntary bankruptcy case. The petitioners' attempt
to do so is an abuse
of
the bankruptcy code, and wastes the limited resources
of
the
bankruptcy court.
10. Based on the foregoing, Jeffrey Baron moves that the petition be dismissed
for failure to state a claim upon which relief can be granted and for lack of
jurisdiction.
II.
Objection
to
Proceeding
before
non-Article
in
Judge
11. Jeffrey Baron objects to any proceeding on the petition before a non-
Article III Judge. The determination and adjudication
of
the substantive merits
of
the issues involve the "prototypical exercise
of
judicial power" contemplated by the
Supreme Court in
Stern
v.
Marshall,
131
S.Ct. 9594 (2011). Unlike in the case
of
a
voluntary petition, the alleged debtor has not consented to hearing
of
the matter by a
non-Article III judge.
III.
Motion
to
Dismiss
for
Insufficient
Process
and
Insufficient
Service
of
Process
12. Mr. Baron has never been served with process or a summons, (and his
counsel in other cases have not been served with a
copy
of
the processes or
summons issued by the Clerk
of
this Court in this case). The rules allow for service
by first class mail.
If
the rules are interpreted to provide that service is complete not
when delivered by the US Post Office but rather when deposited with the Post
Office,
and
that
is
the
basis
of
service in this case,
such
service
fails to
meet
the
minimum requirements
of
Due Process set out by the Supreme Court. This motion
is filed before Mr. Baron has received the summons issued by this Court. The
summons, however, has legal effect and is time limited. Accordingly, while Mr.
Baron
comes
before
this
Court
and
addresses
the
matters
raised
herein,
the
case
should properly be dismissed for insufficient service
of
process.
IV.
Motion
for
a
More
Definite
Statement
13. The only statement
of
the petitioners' standing and clams is listed as a
claim for 'attorneys fees' and amount. The statement provides no basis in fact as to
any detail, time, or basis
of
the claim.
14. The petition fails to specify the relationship between Mr. Baron and the
alleged affiliate, Ondova.
15. Based on the foregoing, Jeffrey Baron moves that a more definite state
of
the petitioners' claims be provided and that Baron be allowed an opportunity
thereafter
to
further
answer.
V.
Provisional
Answer
and
Counter-Claim
16. Subject to the forgoing,
if
not allowed additional time to answer, the
following is the answer
of
Jeffrey Baron:
17. This case should be dismissed because the petitioning creditors' claims are
all in bona fide dispute.
18. This case should be dismissed because Mr. Baron is paying his debts as
they become due. The petitioning creditors' claims are over two years old and are
disputed and have been the subject
of
litigation.
19. Jeffrey Baron denies the allegations contained in the Involuntary Petition.
a. The Petitioners are not eligible to file the petition
pursuant to
11
U.S.C. § 303(b).
b. The alleged debtor is generally paying his debts as they
become due (unless such debts are the subject
of
a
bona fide dispute as to liability or amount).
c. The petitioners' claims are all disputed. The factual
allegations and legal defenses stated above are
incorporated herein.
20. The petitioners, Pronske, Hall,
Lyon,
Garrey, Ferguson, Shurig and
Taylor have violated their fiduciary duties to the alleged debtor, and
such violation negates their right to payment for any attorneys fees
and negates the
relief
requested in their petition and their standing to
seek
such
relief.
Baron
makes
this
COUNTERCLAIM
for
beach
of
fiduciary duty, and forfeiture
of
all fees, including previously paid
fees, for those attorneys. Demand for jury trial on these counter
claims is hereby made.
21. The alleged debtor is being denied due process
of
law because his
assets, including future wages, have been seized in a receivership and
he has been prevented from hiring counsel
of
choice to represent him
in answering the petition. The alleged debtor consulted with
attorneys who wanted to help, but were unable to undertake the
representation because the receiver controls Mr. Baron's funds and
the automatic stay may prevent the receiver from disbursing those
funds to Mr. Baron to pay for counsel to defend himself. Thus a
'catch-22'
situation has been created (since the petitioners violated
the District Court stay against filing actions interfering with the
receivership res). The receiver has the alleged debtor's assets and
money and has been, apparently, restrained by the filing
of
the
petition from releasing those funds to the alleged debtor to hire an
attorney to defend the petition. Any proceeding under those
circumstances—where the alleged debtor is deprived the right to hire
counsel
of
his
choice
to
defend
himself,
is a
violation
of
Due
Process.
E.g. Chandler
v.
Fretag, 348 U.S. 3, 10 (1954);
Texas
Catastrophe
Property Ins. Ass'n
v.
Morales, 975 F.2d 1178, 1181 (5th Cir. 1992);
Potashnick
v.
Port City Const. Co., 609 F.2d 1101, 1118 (5th Cir.
1980).
22. Jeffrey Baron requests that the case be dismissed for the above and
foregoing reasons, jointly and alternatively.
23. Demand is made for trial by jury.
Dated:
January
9, 2013
Resrectfully/Subniitted,
Baron
PO
BOX
111501
Carrolton
75011
972-535-4155
email:
jeffbaronl@gmail.com
Alleged Debtor
CERTIFICATE
OF
SERVICE
The undersigned certifies that, on
January
9,
2013,
a true and correct copy of the
foregoing
document
was
served
by
fax
or
email,
where
known,
as
shown
below,
and
otherwise
by firstclassmail, postage prepaiduponthe partieslistedbelow.
Jeffrey Hall
Shurig Jetel Beckett Tackett
Powers Taylor, LLP
8150 North Central Expwy., Suite 1575
100 Congress Ave.,
8150 North Central Expwy., Suite 1575
Dallas, TX 75206
22nd
Floor
Dallas,
TX
75206
Fax:
214.239.8901
Austin,
TX 78701
Fax:
512.370.2751
Fax:
214.239.8901
•10-
Dean Ferguson
Gary G. Lyon
Gerrit
M.
Pronske
dwferg2003dm@yahoo.com
Attorney at Law
Melanie Pearce Goolsby
4715 Breezy Point Drive
PO
Box
1227
Pronske
&
Patel,
P.C.
Kingwood, TX 77345
Anna,
TX
75409-1227
2200
Ross
Avenue
glyon.attorney@gmai1.com
Suite
5350
Fax:214-831-0411
Dallas,
TX
75201
gpronske@pronskepatel.com
mgoolsby@pronskepatel.com
Fax:
214-658-6509
Gary G. Lyon
Robert Garrey
The Willingham Law Firm
1201
Elm
Street,
Suite
5200
6401 W. Eldorado Parkway
Dallas,
TX
75270
Suite
203
Fax:
214.220.3833
McKinney, TX 75070
glyon.attorney@gmai1.com
Fax:214-831-0411
•11-
/s/
Jeffrey
Baron
Jeffrey
Baron
