EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN THE ALTERNATIVE,
MOTION FOR STAY PENDING APPEAL, AND BRIEF IN SUPPORT - Page 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC., § Civil Action No. 3-09CV0988-F
MANILA INDUSTRIES, INC., and §
MUNISH KRISHAN, §
Plaintiffs. §
§
v. § MOTION FOR EMERGENCY RELIEF
§
JEFFREY BARON, and §
ONDOVA LIMITED COMPANY, §
Defendants. §
EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN
THE ALTERNATIVE, MOTION FOR STAY PENDING APPEAL, AND BRIEF IN
SUPPORT
TO THE HONORABLE ROYAL FURGESON, U.S. DISTRICT COURT JUDGE:
NOW COMES Jeffrey Baron, Appellant, and files pursuant to Federal Rule of Appellate
Procedure 8(a)(1), this Emergency Motion to Vacate Order Appointing Receiver signed on
November 24, 2010 [Docket #124, and Docket #130, Entered 11/30/2010], and Motion for Stay
Pending Appeal, and would raise to the attention of this Court:
I. SUMMARY
Jeffrey Baron is entitled to the entry of an order vacating the order appointing
receiver because the order was not issued for one of the three grounds recognized by the
Fifth Circuit for the entry of such orders. If the order is not vacated, Mr. Baron is
entitled to relief from the order pending appeal because he has substantial likelihood of
success on appeal, and is suffering irreparable injury from the order.
The relevant law is clear and longstanding. There is no basis in law to appoint a
receiver in this case and the law expressly prohibits such an appointment.
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Moreover, the order appointing receiver squarely violates the Constitution of the
United States. No purpose, no matter how well intended, justifies even temporary
suspension of the constitution. The damages being inflicted upon Mr. Baron by virtue of
the order are very real, harsh, and irreparable.
II. STANDARD IN GRANTING STAY PENDING APPEAL
The Fifth Circuit has adopted the four standards set out in Virginia Petroleum Job.
Ass'n v. Federal Power Com'n, 259 F.2d 921 (DC Cir. 1958) to determine whether stay
pending appeal should be granted. Belcher v. Birmingham Trust National Bank, 395 F.2d
685 (5th Cir. 1968). Those factors are: (1) Whether the movant has made a showing of
likelihood of success on the merits; (2) Whether the movant has made a showing of
irreparable injury if the stay is not granted; (3) Whether the granting of the stay would
substantially harm the other parties; and (4) Whether the granting of the stay would serve
the public interest. Id.
III. ARGUMENT & AUTHORITIES
A. LIKELIHOOD OF SUCCESS ON APPEAL
The appoint of a receiver in this case is prohibited by law
As a matter of longstanding Federal law, an unsecured contract creditor
1
has, in
the absence of statute, no substantive right, legal or equitable, in or to the property of his
debtor and may not be granted an order of receivership against the debtor. Pusey &
Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923). Pusey explains “[A]n unsecured simple
1
Daniel J. Sherman is not even a creditor of Mr. Baron’s, lacks diversity with Mr. Baron, and lacks even the
standing to bring a motion for appointment of a receiver in this lawsuit.
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contract creditor has, in the absence of statute, no substantive right, legal or equitable, in
or to the property of his debtor … He has no right whatsoever in equity until he has
exhausted his legal remedy. After execution upon a judgment recovered at law has been
returned unsatisfied he may proceed in equity by a creditor's bill.”
The Fifth Circuit has accordingly recognized three grounds for which a District
Court may appoint a receiver: (1) the appointment of a receiver can be sought “by
anyone showing an interest in certain property or a relation to the party in control or
ownership thereof such as to justify conservation of the property by a court officer.”; (2)
receivers may be appointed “to preserve property pending final determination of its
distribution in supplementary proceedings in aid of execution.”; and (3) receivership may
be an appropriate remedy for a judgment creditor who (a) “seeks to set aside allegedly
fraudulent conveyances by the judgment debtor”, (b) “has had execution issued and
returned unsatisfied”, (c) “proceeds through supplementary proceedings pursuant to Rule
69”, (d) “seeks to subject equitable assets to the payment of his judgment”, or (e)
“otherwise is attempting to have the debtor's property preserved from dissipation until his
claim can be satisfied.” Santibanez v. Wier McMahon & Co., 105 F. 3d 234, 241 (5th
Cir. 1997)(underline emphasis).
Notably, the appointment of a receiver so that a defendant can not hire a lawyer is
not one of the three grounds allowed in the Fifth Circuit, nor by the US Supreme Court.
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EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN THE ALTERNATIVE,
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The purpose for which the receiver was appointed is clearly unconstitutional
The Fifth Amendment to the United States Constitution establishes 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 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). A defendant must be afforded a fair opportunity to secure
counsel “of his own choice” and that applies “in any case, civil or criminal” as a due
process right “in the constitutional sense”. Powell v. Alabama, 287 U.S. 45, 53-69 (1932).
If in any case, civil or criminal, a state or federal court were arbitrarily to refuse to
hear a party by counsel, employed by and appearing for him, it reasonably may not be
doubted that such a refusal would be a denial of a hearing, and, therefore, of due process
in the constitutional sense. Chandler v. Fretag, 348 U.S. 3, 10 (1954). A necessary
corollary is that “a defendant must be given a reasonable opportunity to employ and
consult with counsel; otherwise, the right to be heard by counsel would be of little
worth.” Id.
The means of the receivership order is also clearly unconstitutional
The seizure clause of the Fourth Amendment prohibits the unreasonable
interference with possession of a person’s property. Severance v. Patterson, 566 F.3d
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490 (5th Cir. 2009). The seizure ordered by this Court was purely arbitrary—based on no
case law or statute, ordered without a trial on the merits of any claim, and entered based
on no objective guidelines or guiding principles.
B. IRREPARABLE INJURY
Deprivation of constitutional rights is irreparable injury as a matter of law
It is well settled that the loss of constitutional freedoms for even minimal periods
of time constitutes irreparable injury. Deerfield Med. Center v. City of Deerfield Beach,
661 F.2d 328, 338 (5th Cir. 1981). Accordingly, the receivership order—expressly
designed to interfere with Mr. Baron’s constitutional right to hire legal counsel—
involves irreparable injury as a matter of law.
Similarly, each day, in fact each hour that Mr. Baron is deprived of his own
property taken by an unreasonable seizure, as a matter of law he is suffering irreparable
injury. Similarly to, with each piece of private and personal information about his private
life and affairs that Mr. Baron is compelled to disclose, his constitutional right to privacy
is either threatened or in fact being impaired. This “mandates a finding of irreparable
injury”. Deerfield at 338.
Serious and real harm to Mr. Baron personally
As detailed in Mr. Baron’s declaration attached hereto and incorporated herein by
reference, this Court is imposing very real injury to Mr. Baron personally:
1. He is living in constant fear, day and night. Threatened with contempt, is a
prisoner to the constant demands and threats of the receiver.
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EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN THE ALTERNATIVE,
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2. He is being, against his will forced to reveal all sorts of private, personal
information.
3. He is suffering emotionally, is becoming despondent at times, feels
threatened with contempt and even jail.
4. He is having shortness of breath and getting dizzy several times a day to the
extent that he has lost his balance and cannot stand upright.
5. COUNSEL RAISES TO THE ATTENTION OF THIS COURT THAT
THE LOSS OF ALL OF HIS ASSETS WITHOUT A TRIAL IS
CAUSING MR. BARON TO BECOME SEVERELY DEPRESSED.
6. With every piece of private information that the receiver and his adversary
obtain from him, Mr. Baron feels that he is being exploited. MR.
BARON’S SENSE OF SELF CONTROL HAS BEEN TAKEN FROM
HIM, NO LESS THAN IF HE HAD BEEN THROWN IN JAIL.
7. Mr. Baron cannot travel – his money has been taken from him.
8. Mr. Baron cannot hire lawyers to defend himself.
9. Mr. Baron’s health and medical condition are rapidly deteriorating under
the stress of the receivership order.
10.Mr. Baron not able to sleep and is having frequent panic attacks, blood
glucose levels over 500 (normal readings are less than 100), nausea and
general ill health. He cannot go to an independent doctor because the
receiver has his money.
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11.Mr. Baron’s diabetes is worsening under the stress of the Court’s order and
he is no longer able to control his blood sugar level.
C. NO SUBSTANTIAL HARM TO OTHER PARTIES
This case has settled. Moreover, no party has a legitimate interest in denying Mr.
Baron his constitutional right to legal counsel of his choice. If such an interest could be
constitutionally served, an injunction prohibiting Mr. Baron from retaining counsel would
serve the same interest, without taking away Mr. Baron’s constitutional right to own and
possess property.
D. PUBLIC INTEREST
There is a compelling public interest in upholding the US Constitution. Protecting
an individual’s rights in his property and his privacy, and his right to hire legal counsel of
his choice, are important public interests served by granting the relief requested by Mr.
Baron.
IV. CONCLUSION
This Court has suspended Mr. Baron’s constitutional right to own and control his
own property, for the purpose of denying Mr. Baron the ability to retain counsel. Such an
order is unlawful and violates the US Constitution.
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EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN THE ALTERNATIVE,
MOTION FOR STAY PENDING APPEAL, AND BRIEF IN SUPPORT - Page 8
V. PRAYER
Wherefore, Mr. Baron prays that this Honorable Court grant this motion, and
immediately vacate the order appointing receiver entered by this Court on November
24, 2010. If the order is not vacated, Mr. Baron prays that this Honorable Court stay
the order appointing receiver pending appeal and determination by the Fifth Circuit as
to the legality and constitutionality of the Court’s order.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(214) 210-5940
(214) 347-4031 Facsimile
APPELLATE COUNSEL FOR
JEFFREY BARON
CERTIFICATE OF SERVICE
This is to certify that this was served on all parties who receive notification
through the Court’s electronic filing system.
/s/ Gary N. Schepps
Gary N. Schepps
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EMERGENCY MOTION TO VACATE ORDER APPOINTING RECEIVER AND IN THE ALTERNATIVE,
MOTION FOR STAY PENDING APPEAL, AND BRIEF IN SUPPORT - Page 9
CERTIFICATE OF CONFERENCE
This is to certify that the undersigned conferred with Mr. Raymond J. Urbanik, attorney
for DANIEL J. SHERMAN, Trustee for ONDOVA LIMITED COMPANY, and Mr.
Urbanik is opposed.
/s/ Gary N. Schepps
Gary N. Schepps
INDEX OF KEY AUTHORITIES
Federal Cases
Belcher v. Birmingham Trust National Bank, 395 F.2d 685 (5th Cir. 1968) ................................2
Chandler v. Fretag, 348 U.S. 3, 10 (1954)...................................................................................4
Deerfield Med. Center v. City of Deerfield Beach, 661 F.2d 328, 338 (5th Cir. 1981).................5
Johnson v. City of Cincinnati, 310 F.3d 484, 501 (6th Cir. 2002)................................................4
Mosley v. St. Louis Southwestern Ry., 634 F.2d 942, 946 (5th Cir. 1981)...................................4
Potashnick v. Port City Const. Co., 609 F.2d 1101, 1104 (5th Cir. 1980) ....................................4
Powell v. Alabama, 287 U.S. 45, 53-69 (1932) ...........................................................................4
Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497 (1923)...........................................................2
Santibanez v. Wier McMahon & Co., 105 F. 3d 234, 241 (5th Cir. 1997)....................................3
Severance v. Patterson, 566 F.3d 490 (5th Cir. 2009)..................................................................5
Virginia Petroleum Job. Ass'n v. Federal Power Com'n, 259 F.2d 921 (DC Cir. 1958) ................2
Rules
Federal Rule of Appellate Procedure 8(a)(1) 1
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