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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

IN RE: §

ONDOVA LIMITED COMPANY, § CASE NO. 09-34784-SGJ

§ (CHAPTER 11)

DEBTOR. §

JEFFREY BARON’S OBJECTIONS TO TRUSTEE’S MOTION TO SELL

SERVERS.COM

Jeffrey Baron, by and through counsel, hereby files his objections to the Trustee’s Motion to

Sell Servers.com.

I. The Chapter 11 Trustee’s Motion Violates the Stay With Respect to In re Baron,

Case No. 12-37971.

As the Court is aware and as further explained in this Objection, Mr. Baron has an

interest in <servers.com> and has appealed the previous Order of this Court authorizing the

sale, on the basis that he owns fifty percent of <servers.com>. Case No. 10-11202, Fifth

Circuit Court of Appeals, Dkt. 691. Mr. Baron requests the Court take judicial notice of the

filings in the appellate proceedings, and the arguments set out therein. Although this Court

ruled in an adversary action that the estate had rights in the <servers.com> domain name,

Baron was not a party to the adversary action, despite his ownership interest in <servers.com>.

Any attempt to sell <Servers.com> is automatically stayed pursuant to Section 362 of

the Bankruptcy Code. As the Court is aware, this Court entered an Order for Relief against

Mr. Baron, who has been adjudged an involuntary Chapter 7 debtor under Title 11, United

States Code, in the United States Bankruptcy Court for the Northern District of Texas. Case

No. 12-37921-sgj7. An Order for Relief was entered on June 26, 2013, where an appeal of the

Order for Relief is currently pending.

Section 362 of the Bankruptcy Code provides:

1. Mr. Baron is without bankruptcy counsel because the involuntary petition circumvented

the Fifth Circuit’s December 2012 Order and subsequent mandate to return receivership

property to Baron. Mr. Baron cannot access funds sufficient to hire bankruptcy counsel.

In turn, the Bankruptcy Court denied Baron’s request for a stay of its Order for Relief.

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(a) Except as provided in subsection (b) of this section, a petition filed under

section 301, 302, or 303 of this title ... operates as a stay, applicable to all

entities, of- (1) the commencement or continuation, including the issuance or

employment of process, of a judicial, administrative, or other action or

proceeding against the debtor that was or could have been commenced

before the commencement of the case under this title, or to recover a claim

against the debtor that arose before the commencement of the case under this

title; ...

11 U.S.C. § 362 (emphasis added).

Clearly, the Motion to Sell <servers.com> is a “continuation” of the action against the

debtor, Mr. Baron and as such is automatically stayed. Moreover, it appears continuation of

filing of a claim in this action is improper, as Mr. Baron’s rights to the domain name are part of

his bankruptcy estate.

II. The Trustee’s Motion is an Attempt To Circumvent the Fifth Circuit Court of

Appeals’ Jurisdiction

a. The Fifth Circuit Court of Appeals Has Exclusive Jurisdiction Over

<Servers.com>\

Upon filing of the appeal of the order concerning <servers.com>, this Court lost

jurisdiction over the order and must await the ruling of the Fifth Circuit. The Trustee’s

motion is merely an attempt to circumvent the jurisdiction of the Fifth Circuit Court of

Appeals. The rule of the Fifth Circuit was adopted by the U.S. Supreme Court, which held

“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). Similarly, a lower court lacks jurisdiction to alter the status quo of the

matter on appeal and retains jurisdiction only to maintain the status quo. E.g., Coastal Corp. v.

Texas Eastern Corp., 869 F.2d 817, 820 (5

Cir. 1989); RTC v. Smith, 53 F.3d 72, 76 (5th Cir.

1995) (“`[u]ntil the judgment has been properly stayed or superseded, the district court may

enforce it through contempt sanctions.’”).

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b. Two Courts Should Not Assert Simultaneous Jurisdiction over the Same

Matter.

The Fifth Circuit has further held that a “federal district court and a federal court of

appeals should not attempt to assert jurisdiction over a case simultaneously.” Dayton Indep.

School Dist. v. US Mineral Prods. Co., 906 F.2d 1059, 1063-4 (5th Cir. 1990) (“our well-

established rulings that the district court loses jurisdiction over all matters which are validly

on appeal”).

In the instant case, the Fifth Circuit previously ordered the trustee to cease sales efforts

of domain names subject to Appeal. In addition, the Fifth Circuit ordered that the district

court and this Court cease any efforts to sell domain names held by the receivership over

Baron, as the sale would moot the appeal and thereby undermine the jurisdiction of the Fifth

Circuit. Exhibit A, Fifth Circuit Stay Order_; Netsphere v. Jeffrey Baron, 703 F.3d 296 (5

Cir. 2012).

On November 28, 2012, the Fifth Circuit made its injunction against such domain

name sales permanent. Netsphere, supra at 314 n.2 (“We stayed the closing on sales

resulting from an auction of domain names. Our ruling means no closing can occur, and

the stay is made permanent.”). As in Netsphere, there is a serious legal question as to

whether <servers.com> is now part of the Ondova estate.

III. A Bankruptcy court is not empowered or authorized to determine ownership

rights of an asset in a motion under Section 363.

Federal Rule of Bankruptcy Procedure 7001(2) provides that a proceeding to determine

the Estate’s “interest in property” be an “adversary proceeding” and “governed by the rules of

this Part VII.” Fed.R.Bankr.P. 7001. On the other hand, a Section 363 motion to sell an asset

of the Estate is merely a “contested matter” governed by Rule 9014. Fed.R.Bankr. P.

9014. Accordingly, a bankruptcy court is not empowered or authorized to determine

ownership rights of an asset in a motion under Section 363. E.g., In re Hearthside Baking

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Co., Inc., 397 BR 899, 902 (Bkrtcy. N.D. Ill. 2008); In re Whitehall Jewelers Holdings, Inc., 2008

WL 2951974 *6 (Bankr.D.Del. 2008), holding:

The Court cannot determine whether the [property is] property of the estate through

a contested matter, such as a sale motion under Section 363. Federal Rule of

Bankruptcy Procedure 7001(2) requires that an adversary proceeding be commenced to

determine the “validity, priority or extent of [an] interest in property.”

The public policy served by this rule is substantial– before businesses or individuals

outside of bankruptcy proceedings can be stripped of their assets, the bankruptcy court must

conduct a full adversarial proceeding including service of process on the interested parties

and the full disclosures required by Fed.R.Civ.P. 26(a). See Fed.R.Bankr.P. 9014(c)

(mandatory disclosure requirements of ”adversary proceedings” do not apply in ”contested

matters”). Accordingly, because a mandatory element required for authorization pursuant to

Section 363(b) is that the property be owned by the Ondova estate, the Bankruptcy Court’s

order to sell an asset not owned by the bankruptcy estate is outside the grant of authority

provided by Section 363(b).

As set out in prior pleadings, authorizing a bankruptcy court to finally adjudicate and

transfer ownership interest in non-estate property constitutes an unconstitutional delegation of

federal judicial authority to non-Article III judges. See Northern Pipeline Constr. Co. v.

Marathon Pipe Line Co., 458 U.S. 50, 71-72 (1982); Stern v. Marshall, 131 S.Ct. 2594, 2615

(2011). Allowing a bankruptcy judge to finally adjudicate state law ownership rights would

unconstitutionally grant such judges unbridled and unchecked judicial authority over the

property of the entire community. See Id.

IV. Baron Owns Fifty Percent of <servers.com>

Pursuant to Bankruptcy Rule of Procedure 363(p), the entity asserting an interest in

property has the burden of proof on the issue of the extent of such interest. Bankr.R.P.

363(p); 11 U.S.C. §101 (15) (“entity” includes the estate). In prior proceedings in the Emke

matter, As a matter of law, the uncontroverted evidence establish t h a t Jeff Baron owns a

fifty percent interest in <servers.com> and the bankruptcy estate of Ondova owns none.

A. The Emke Settlement Provided for Baron’s Ownership in <servers.com>

On July 6, 2009, an agreement for the ownership of <servers.com> was reached

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among all interested parties (The Emke Settlement). (Exhibit B, Agreement For

<servers.com> and Dkt 130 BK Case 11-03181 at p. 2). The Emke Settlement transferred

most of the rights to <servers.com> to a new entity that the agreement required to be created

(Servers, Inc., a Nevada corporation) (Id At pp. 2-3). The Trustee of the Ondova estate

effectuated the transfer to Servers, Inc. (Id. At pp. 2-3).

The stock of Servers Inc. is owned 50/50 by Ondova and Mike Emke. Id. at p 5. It is

undisputed that Ondova owns 50% ownership of the Servers, Inc. stock (Id. at p 5). However,

Ondova does not own any direct interest in the <Servers.com> domain name. Further, the

Emke Settlement expressly reserved an interest in the Servers.com domain name for Emke

and Jeffrey Baron personally. Agreement For <Servers.com>. That interest is a security and

reverter interest in <Servers.com>, reverting ownership to Baron and Emke in the event

thatServers, Inc. was placed into receivership. Id. Specifically the Emke Settlement provides:

In the event of insolvency, receivership and/or other default of the jointly

owned company, the domain name <servers.com> shall revert to Jeff Baron

and Mike Emke, to be owned jointly and equally. To this degree, these two

principals shall maintain a first lien and security interest in the domain name

superior to any other investor, equity holder or creditor. (emphasis supplied).

Id.

B. Servers, Inc. was Placed into Receivership. Per the Terms of the Settlement

Agreement, Ownership of <Servers.com> Reverted to Baron and Emke.

On October 18, 2011, this Court entered an order placing Servers, Inc. into

receivership because Servers, Inc. was in default of its obligations regarding the Emke

Settlement and <Servers.com>. (Exhibit C, Order Appointing Receiver over Servers, Inc.,).

Because of Servers, Inc.’s default, as a matter of Texas and Nevada state law, and

pursuant to the agreement between the parties, the domain name servers.com reverted to

Baron and Emke, each owning a fifty percent ownership interest. The result of the

receivership is that the Ondova bankruptcy estate retains its fifty percent ownership interest in

Servers, Inc. but, as a matter of Texas and Nevada state law, Servers, Inc. no longer owns

any interest in the <servers.com> domain name.”

To be clear, the reversion of the interest in <servers.com> was not triggered by a

bankruptcy. In fact, Servers, Inc. has never been in bankruptcy. Instead, the triggering event

of the reversion of Servers.com was Servers, Inc.’s default in carrying out its purpose, as set

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out and agreed in the Emke Settlement. After being forced into receivership, Servers, Inc.

has no remaining right to sell servers.com. Notably, Ondova has not lost any interest in

<Servers.com>, since one hundred percent ownership of <Servers.com> was vested in

Servers, Inc.--not in Ondova.

Similarly, Servers, Inc.’s loss of <servers.com> is unrelated to the fact that Ondova

filed for bankruptcy. The Ondova estate is a stockholder of Servers, Inc., and it still owns the

stock, but does not own any of Servers, Inc’s assets. While the value of the stock that Ondova

owns in <Servers.com> may be diminished due to Servers, Inc.’s loss of the <Servers.com>

domain name, Ondova does not have any greater interest in the individual assets of Servers,

Inc. than it would in individual assets of a publically traded company in which Ondova were a

stockholder. The mere fact that Ondova happened to own Servers, Inc. stock when Ondova

went into bankruptcy does not give Ondova any special rights to the asset, <Servers.com>. In fact, the

statutory protections afforded to an entity in bankruptcy do not extend to third party entities

of which the bankrupt entity is a stockholder.

For the above reasons, the Court should sustain Jeffrey Baron’s Objections and deny

the Trustee’s Motion to Sell.

Very respectfully,

/s/ Stephen R. Cochell

Stephen R. Cochell

The Cochell Law Firm, P.C.

7026 Old Katy Rd., Ste. 259

Houston, Texas 77034

(713)980-8796

(713)980-1179 (fax)

Attorneys for Jeff Baron

CERTIFICATE OF SERVICE

This is to certify that a copy of this document was electronically served on all counsel of record

on September 7, 2013.

/s/Stephen R. Cochell

Stephen R. Cochell

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