MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NETSPHERE, INC.,
MANILA INDUSTRIES, INC. AND
MUNISH KRISHAN
PLAINTIFFS,
V.
JEFFREY BARON AND
ONDOVA LIMITED COMPANY,
DEFENDANTS
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CIVIL ACTION NO. 3:09-CV-0988-F
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE
FOR ONDOVA LIMITED COMPANY, FOR REIMBURSEMENT OF
FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE
TO THE HONORABLE ROYAL FURGESON, UNITED STATES DISTRICT COURT JUDGE:
Daniel J. Sherman, Chapter 11 Trustee for Ondova Limited Company ("Trustee"), files
this, his Motion for Reimbursement of Fees and Expenses from the Receivership Estate
("Motion"), respectfully stating as follows:
BACKGROUND
1. On July 27, 2009 (the "Petition Date"), Ondova Limited Company ("Ondova" or
"Debtor") filed its voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division
(the "Bankruptcy Court"). This filing initiated Ondova's bankruptcy case, Case No. 09-34784-
SGJ-11 ("Bankruptcy Case").
2. On September 17, 2009, the Bankruptcy Court entered an order removing the
principal of the Debtor, Jeffrey Baron ("Baron"), from management of the Debtor and shortly
thereafter approved the appointment of Daniel J. Sherman as Chapter 11 Trustee.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 2
3. The Trustee filed his Motion for Appointment of a Receiver over Jeffrey Baron
("Receivership Motion") on November 24, 2010. On November 24, 2010, this Court approved
the Receivership Motion thereby creating the receivership ("Receivership") and further
appointed Peter Vogel (previously Special Master in this case) as Receiver.
4. In this Motion, the Trustee is requesting reimbursement from the Receivership for
the Trustee's legal fees and expenses related to the creation of the Receivership as well as
legal work related to the Receivership, including all appellate work related to the Receivership
since its inception through March 31, 2011.
1
Certain of the professional fees and expenses
noted herein (November, 2010 through January, 2011) are included in an interim fee application
currently scheduled for hearing before the Bankruptcy Court, however, other fees and expenses
noted herein are not yet the subject of an interim fee application. All professional fees in
bankruptcy cases must be approved on a final basis at the time a bankruptcy case is closed.
5. Attached to this Motion are invoices from counsel for the Trustee, Munsch Hardt
Kopf & Harr, P.C. ("Munsch Hardt"), describing the services performed from the inception of the
Receivership on November 24, 2010 to March 31, 2011. By overview, the work included filing
the pleadings necessary to commence the Receivership, preparing for and attending hearings
on a motion to vacate and stay the Receivership, attendance at other Receivership hearings,
receiving and responding to motions of various parties, legal research, settlement conferences,
handling matters related to Baron's health insurance and appellate work. In total, the Trustee is
requesting reimbursement for the sum of $363,315.00 in legal fees and $16,446.18 in
expenses, for a total of $379,761.18.
PURPOSE OF THE RECEIVERSHIP
6. As parties involved in this case are well aware, the Trustee sought the
1
The Trustee recently became aware that the Receiver is attempting to wind down the Receivership and suggested
the Trustee file this Motion in order that this matter could be promptly set for hearing. The Trustee is currently
assisting the Receivership on five (5) appeals and additional motions for reimbursement are anticipated.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 3
establishment of the Receivership for the primary purpose of allowing him to finalize matters
related to, and wind down, the Bankruptcy Case. In the fall of 2010, the Trustee was handling
matters to consumate the settlement of complex litigation between Baron, Ondova and
numerous other parties which had just been resolved through the Trustee's efforts, and was
beginning the process of winding down the Bankruptcy Case. It was at this time that Baron had
begun a disturbing pattern of hiring and firing lawyers that was disrupting the Bankruptcy Case.
New lawyers were appearing for Baron at various hearings and certain other lawyers began
filing motions in the Bankruptcy Case to be paid fees owed to them by Baron. As explained in
more detail herein, in order to effectuate the settlement and wind down other matters related to
Ondova, and to avoid the chaos being caused by Baron, the Trustee after consultation with the
then Special Master, Peter Vogel, sought the creation of the Receivership in order to allow him
to complete matters in the Bankruptcy Case and revest remaining assets, if any, with Baron.
The Trustee has since been involved in every material aspect of the Receivership since
inception in order to allow him to achieve the primary purpose, that being to effectuate the
winding down Ondova's bankruptcy estate (the "Ondova Estate"). This Motion seeks the
reimbursement to Ondova of professional fees incurred by the Trustee for matters related to the
Receivership. It is the Trustee's belief that the creditors of Ondova should not be forced to
sacrifice payment of their claims because of Baron's failure to pay his attorneys and the
resulting need to create and defend the Receivership.
ONDOVA BANKRUPTCY CASE AND ONDOVA SETTLEMENT
7. Baron and his related entities had been involved in contentious, long running and
gridlocked litigation with former business partner, Munish Krishan and two of his related entities,
Netsphere, Inc. and Manila Industries, Inc. (collectively, "Manila"), for many years. The litigation
ensued as a result of Baron's and Manila's failed joint venture created to own and operate a
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 4
huge portfolio of internet domain names. The enormously complex and stalemated litigation
was pending in seven (7) lawsuits throughout the United States: (a) this action initially
commenced on May 28, 2009 by Manila; (b) two lawsuits in the United States Virgin Islands'
District Court; (c) one lawsuit in the Federal District Court for the Central District of California,
Los Angeles Division; (d) one lawsuit in the Superior Court of the State of California (Los
Angeles); and (e) two lawsuits pending in the 68
th
Judicial District Court of Dallas County, Texas
(all, collectively the "Joint Venture Litigation").
8. When Mr. Sherman became Trustee in October, 2009, he was urged strongly by
both this Court and the Bankruptcy Court to attempt to resolve the Joint Venture Litigation.
Through the Trustee's efforts, a global settlement was reached as documented in the Mutual
Settlement and Release Agreement, agreed to by the parties in late June 2010 ("Global
Settlement Agreement").
2
The Trustee's Motion for Approval of Settlement Agreement Pursuant
to Rule 9019, Federal Rules of Bankruptcy Procedure ("Trustee's Settlement Motion") was filed
in the Bankruptcy Case on July 2, 2010 and was approved by the Bankruptcy Court on July 29,
2009.
3
The Global Settlement Agreement provided Baron a fresh start and an ability to take
control over his affairs. Baron's portion of the Settlement Agreement allowed him to retain over
230,000 income producing internet domain names and provide him additional revenue through
other provisions of the Global Settlement Agreement. In one pleading recently filed by Baron in
the Fifth Circuit Court of Appeals (the "Fifth Circuit"), Baron has estimated the value of his
portion of the internet domain names as $20 million.
9. At the time the Trustee negotiated the Global Settlement Agreement, the amount
to be paid to the Ondova Estate was $1,750,000.00 which would provide for payment of claims
2
The Global Settlement Agreement even resolved one Baron litigation matter not even connected to Ondova entitled
Equity Trust company f/k/a Mid Ohio Securities, Custodian of Jeffrey Baron as Beneficiary of Equity Trust Company
FBO IRA 19471 v. Rohit Krishan, Munish Krishan and Manoj Krishan, Case No. DC-08-19925-C, pending in the 68
th
Judicial District Court of Dallas County, Texas (the "Calling Cards.com Litigation").
3
As this Court is aware, the settlement negotiations were enormously complex and, in fact, this Court ordered the
parties to participate in mediation sessions with the United States Magistrate Judge, Paul. D. Stickney.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 5
of Ondova's creditors at 100% and provide sufficient funds to pay all administrative claims. The
Trustee did not anticipate, nor did anyone else, that Baron would fail to pay many of the law
firms and other lawyers he hired for the Joint Venture Litigation and during the Bankruptcy Case
and therefore necessitate the need for the Receivership.
10. Almost immediately after the Global Settlement Agreement was approved,
certain attorneys representing Baron, including Baron's lead counsel, Gerrit M. Pronske of
Pronske & Patel, P.C., resigned and new attorneys, including but not limited to Dean Ferguson,
Martin Thomas, Stanley Broome, Sid Chesnin, Thomas Jackson and Robert Garrey, appeared
for Baron. Subsequently, Mr. Pronske and five other law firms filed motions for payment of fees
owed to them by Baron for substantial contribution in the Bankruptcy Case.
4
These attorneys
alleged that the Bankruptcy Court should approve and pay their fees because their work for
Baron provided a benefit for the Ondova Estate. Simultaneously, new lawsuits were being fled
by prior attorneys for Baron in state court, including suits by attorneys David L. Paccione,
Jeffrey Hall, Robert Garrey and the law firm of Friedman & Feiger, LLP.
11. Bankruptcy Court Judge Jernigan ordered Peter Vogel, then Special Master in
this case, to act as mediator between Baron and all of the unpaid lawyers. As Mr. Vogel began
this effort, it became apparent that Baron had failed to pay a larger number of lawyers and law
firms for work performed either in the Joint Venture Litigation matters for Baron and Ondova or
lawyers representing Baron in the Bankruptcy Case. The mediation efforts failed however
because the lawyer Baron hired to represent Baron in the mediation, Stanley Broome, resigned
from his representation of Baron shortly prior to the commencement of the mediations due to
nonpayment of fees. The fact that Baron had not paid numerous attorneys and law firms was
4
The six law firms seeking substantial contribution in the Bankruptcy Case are Pronske & Patel, P.C., Powers Taylor,
LLP, Hohmann Taube and Summers, LLP, Hitchcock Everett, LLP, West and Associates, LLP and Schurig, Jetel,
Beckett, Tackett.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 6
not addressed with the Trustee by Baron during the settlement talks that occurred during the
negotiations of the Global Settlement Agreement.
12. As a result of the hiring and firing of lawyers by Baron and after the resignation of
Mr. Pronske, on October 13, 2010, the Bankruptcy Court entered its Report and
Recommendation to District Court that Peter Vogel, Special Master, be Authorized and Directed
to Mediate Attorney Fee Issues ("Report and Recommendation"). A copy of the Bankruptcy
Court's Report and Recommendation is attached hereto as Exhibit "A". In her Report and
Recommendation, Judge Jernigan stated:
Jeffrey Baron's habit of hiring and then firing lawyers, in many cases after
they have incurred significant fees on his or Ondova's behalf (or on behalf of
other entities he controls or is beneficiary of), has grown to a level that is more
than a little disturbing. As the court noted in court on September 15, 2010, at the
very least, it smacks of the possibility of violating Rule 11 (i.e., it suggests a
pattern of perhaps being motivated by an improper purpose, such as to harass,
cause delay, or needlessly increase the cost of litigation for other parties). Still
more troubling is the possibility to the court that Jeffrey Baron may be engaging
in the crime of theft of services. See Texas Penal Code §§ 31.01(6) & 31.04 ("A
person commits theft of service if, with intent to avoid payment for service that he
knows is provided only for compensation: (1) he intentionally or knowingly
secures performance of the service by deception, threat, or false token";
"services" includes "professional services"). This crime can be a misdemeanor
or a felony-depending on the amount involved. If Jeffrey Baron is constantly
engaging lawyers without ever intending to pay them the full amounts that they
charge, and then terminating them when they demand payment, this court is
troubled that there are possibly criminal implications for Jeffrey Baron.
The Bankruptcy Court has announced that it will not allow this pattern to
occur any further in these proceedings, and Jeffrey Baron will not be allowed to
hire any additional attorneys. Mr. Baron has been told that he can either retain
Gary Lyon and Martin Thomas through the end of the bankruptcy case (which
this court does not expect to last much longer) or he can proceed pro se. The
bankruptcy court has further warned Mr. Baron that if he chooses to proceed pro
se and does not cooperate in connection with final consummation of the Global
Settlement Agreement, he can expect this court to recommend to His Honor that
he appoint a receiver over Mr. Baron pursuant to 28 U.S.C. §§ 754 & 1692, to
seize Mr. Baron's assets and perform the obligations of Jeffrey Baron under the
Global Settlement Agreement.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 7
13. The Report and Recommendation was adopted by this Court by order entered on
October 19, 2010 [Docket No. 119]. As a result of the Report and Recommendation, and the
fact that a number of attorneys were contacting the Trustee advising him that they were
resigning, the Trustee filed his Emergency Motion of Trustee for Appointment of Receiver Over
Jeffrey Baron on November 24, 2010 ("Receivership Motion"). The Receivership Motion was
considered by this Court the same day it was filed and was granted. A true and correct copy of
the Order approving the Receivership Motion ("Receivership Order") is attached hereto as
Exhibit "B".
BARON DECLARED WAR ON THE RECEIVERSHIP
14. As stated previously in this Motion, the Receivership was sought by the Trustee
to allow him to conclude the Bankruptcy Case and to provide some mechanism to: (a) pay all of
the Baron attorneys who had not been paid; and (b) curtail the disruption caused by Baron in
the Bankruptcy Case, including hiring and firing of lawyers, frivolous filings and other vexatious
litigation conduct. Unfortunately however, Baron's opposition to the newly created the
Receivership and his persistent tactics to cause delay and disruption to the Receivership have
been beyond astonishing. The Receivership docket currently contains 341 docket entries since
its commencement, most of them pleadings filed by Baron to end the Receivership or actions
opposed to the Receiver or the Trustee. Baron also has filed five appeals to the Fifth Circuit. It
appears Baron has declared war on the Receivership and will stop at nothing to delay and
cause expense to legal proceedings. His litigation tactics and desire to enormously drive up
litigation costs are unparalleled.
15. Following the approval of the Receivership Motion, Baron employed new
counsel, Gary N. Schepps, who filed an appeal of the Receivership Order with the Fifth Circuit.
Baron also filed. on November 27, 2010. a Motion to Vacate Order Appointing Receiver ("Motion
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 8
to Vacate") which was denied by this Court and later denied by the Fifth Circuit. This Court
conducted two lengthy hearings on the Motion to Vacate on December 17, 2010 and January 4,
2011.
5
At the conclusion of those hearings, this Court entered its Order Denying Motion to
Vacate Order appointing Receiver and In The Alternative Motion for Stay Pending Appeal on
February 3, 2011 [Docket No. 268]. A copy of this Court's Order is attached hereto as Exhibit
"C". In its Order, this Court chronicled in full detail the vexatious litigation conduct of Baron.
The Order described Baron's litigation tactics and his propensity to cause the litigation costs of
all matters to materially increase. In the Order, this Court found that, based on the evidence,
there were six reasons for the appointment of a Receiver:
• It was necessary to stop Baron's frequent changes of counsel intended to interfere
with the administration of justice.
• It was necessary to stop Baron's frequent changes of counsel that caused other
parties to incur excessive costs.
• It was necessary to reduce the increased expense to the Ondova Estate cause by
the frequent changes in counsel.
• It was necessary because Baron refused to obey previous orders to reduce his
frequent changes of legal counsel, and less restrictive than the alternative of jailing
him.
• It was necessary to stop Baron's continued fraudulent hiring of attorneys.
• It was necessary to stop Baron from transferring assets outside of the jurisdiction of
the Court when those assets might be necessary to pay claims against him arising
out of the Bankruptcy Case.
16. Unfortunately, neither this Order nor any other order has deterred Baron from his
continuing vexatious litigation tactics which continue to this day unabated. Sadly, it has been all
out war by Baron against the Receivership since this Court's Order Denying Motion to Stay
Pending Appeal (which has also been appealed).
5
The Trustee filed his Response to Motion to Vacate on December 13, 2010 which contained voluminous briefing
and exhibits. Substantial legal research was necessary and counsel for the Trustee was required to review
transcripts and pleadings in dozens of prior litigation matters regarding Baron.
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 9
WORK PERFORMED BY THE TRUSTEE
17. The work performed by the Trustee since the Receivership has fallen into a
number of categories as follows:
a. Filing the Emergency Motion of Trustee for Appointment of a Receiver
Over Jeffrey Baron and subsequently litigation on Baron's Emergency
Motion to Vacate and numerous other motions filed by Baron in
December and January;
b. Attending meetings with the Receiver at the inception of the Receivership
and coordinating various litigation matters as between the Trustee and
the Receiver;
c. Attending other Receivership hearings;
d. Handling matters related to Baron's health insurance;
e. Attending settlement conferences ordered by this Court in response to the
filing of dozens of motions by Baron;
f. Work related to handling five Fifth Circuit Appeals filed by Baron;
g. Review and analysis of all other pleadings filed by both Baron and the
Receiver to determine whether they impact the Ondova Estate;
h. Corporate work in order to provide information to the Receiver regarding
various Baron entities;
i. Providing updates to creditors, the Bankruptcy Court and various
attorneys who contacted the Trustee regarding their attorney fee claims;
and
j. Communications with Trustee and the Receiver and dealing with other
Receivership matters.
18. By far, most work performed by the Trustee's counsel related to the defense of
the Receivership by preparing for and attending the hearings on the Motion to Vacate. The
Trustee was required to research legal issues, gather documentation, review prior transcripts,
interview counsel and attend the hearings on the Motion to Vacate. Due to the emergency
nature of these matters, all of the work was handled on an expedited basis (utilizing more
attorneys to meet deadlines which would not normally be required), because this Court
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 10
scheduled the hearing on the Motion to Vacate on December 17, 2010. The Trustee's response
[Docket No. 159], filed on December 13, 2010, contained 35 pages of briefing and 815 pages of
exhibits. These matters were resolved by the Court's Order Denying the Motion to Vacate
entered on February 3, 2011. The vast majority of the work was in December 2010 when
Baron's new attorney, Mr. Schepps, filed a blizzard of pleadings in order to derail the
Receivership that added to the work of the Trustee in preparing for the hearings on the Motion
to Vacate. A copy of this Court's docket from November 24, 2010 to December 31, 2010 listing
all of these motions, objections and other pleadings is attached hereto as Exhibit "D". This work
was by far the most time consuming work performed by the Trustee. Second in time spent to
the work related to the Motion to Vacate is the Trustee's work in handling Fifth Circuit Appeal
matters. The work related to the appeals is described later in this Motion.
19. Other work performed by Trustee's counsel relates to attending meetings with the
Receiver and his counsel at the beginning of the Receivership and then later at the settlement
meetings ordered by this Court in response to the dozens of Baron motions. The Court-ordered
settlement meetings were very time consuming and only recently ended.
20. There was also substantial work needed related to Baron's health insurance.
The Trustee coordinated the continued health insurance for Baron including communications
with Pinnacle PEO Corporation and other entities in order to keep Baron's health insurance in
place. Finally, there has been significant work necessary by the Trustee in reviewing all of the
various pleadings filed by Baron, as well as the Receiver, in order to determine whether the
Trustee must take any steps to protect the Ondova Estate. The Trustee has also been required
to file over 25 responsive pleadings to deal with matters related to the Receivership. Because
the Trustee is the movant with respect to the Receivership, it is necessary for him to review all
of the filings in this case. There have been literally hundreds of filings in this case, the majority
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 11
of them by Baron. To illustrate the extent of the legal work created by Baron, below is a list of
filings of Baron, through counsel Gary Schepps, since the Receivership was established:
DISTRICT COURT PLEADINGS
FILED BY JEFFREY BARON FROM 11/24/2010 TO 3/31/2011
Date Filed
Docket
No.
Title of Pleading
12/2/2010 136 Notice of Interlocutory Appeal
12/3/2010 137 Emergency Motion to Vacate Order Appointing Receiver
12/3/2010 138 Emergency Motion to Expedite Motion to Stay Pending Appeal
12/6/2010 141 Second Motion to Expedite Consideration for Emergency Relief
12/10/2010 144 Waiver of Reply and Motion for Immediate Ruling on Motion to
Vacate Receivership and Alternative Motion to Stay Pending Appeal
12/13/2010 157 Emergency Motion to Expedite Ruling on Emergency Motion to
Vacate Order Appointing Receiver
12/15/2010 165 Emergency Motion for Clarification of Order Denying Motion for
Emergency Ruling on Motion to Stay Pending Appeal
12/16/2010 171 Motion to Disqualify Counsel for Trustee
12/23/2010 182 Objection to The Receiver's Report Concerning Mr. Baron's
Interference and Reply in Support of Motion to Clarify Receiver
Order
12/24/2010 183 Motion to Strike Response filed by Daniel J. Sherman to Motion to
Disqualify Counsel for Trustee
12/27/2010 187 Reply to Motion to Disqualify Counsel for Trustee
1/3/2011 198 Reply to Motion to Strike
1/4/2011 201 Motion to Strike Notice of Transmittal Regarding Withdrawal of
Reference [Doc 118] to Clarify Record for Hearing on Stay Pending
Appeal & Brief in Support
1/4/2011 202 Motion to Vacate Order Adopting United States Bankruptcy Judge
Stacey G.C. Jernigan's Report and Recommendation [Doc 119] to
Clarify Record for Hearing on Stay Pending Appeal 7 Brief in Support
1/4/2011 203 Trial Brief
1/5/2011 205 Response to The Receiver's Report Concerning Mr. Baron's
Interference and Reply in Support of Motion to Clarify Receiver
Order Report
1/6/2011 206 Trial Brief
1/7/2011 212 Post trial letter brief
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 12
DISTRICT COURT PLEADINGS
FILED BY JEFFREY BARON FROM 11/24/2010 TO 3/31/2011
Date Filed
Docket
No.
Title of Pleading
1/7/2011 214 Counsel for Jeffrey Baron's Report Regarding Movant's Participation
in Psychotherapy
1/10/2011 218 Letter brief reply to Mr. Hunt's response letter brief
1/18/2011 227 Notice of Interlocutory Appeal to the Fifth Circuit
1/19/2011 231 Response and Objection to Motion for Reimbursement of Fees
Incurred by Receivership Professional Joshua Cox
1/20/2011 232 Emergency Motion to Seal (regarding docket number 230)
1/20/2011 236 Response and Objection to First Application for Reimbursement of
Fees and Expenses Incurred by the Receiver and Motion for
Reimbursement of Fees and Expenses Incurred by Gardere Wynne
Sewell
1/21/2011 237 Emergency Motion to Pay Server Fees
1/24/2011 244 Response and Objection to First Motion for Reimbursement of Fees
Incurred by Receivership Professional James Eckels
1/24/2011 245 Joint Motion to Strike Motion for Order Confirming Propriety of Fund
Management and Response
1/27/2011 252 Response and Objection to Motion for Leave to File Plaintiffs'
Proposed Findings of Fact in Conjunction with Denial of Jeffrey
Baron's Emergency Motion to Vacate Order Appointing Receiver
1/28/2011 253 Reply to Motion to Vacate Order Adopting Findings and
Recommendations
2/2/2011 261 Response to Receiver's Motion for Reimbursement of Additional
Personal Funds
2/4/2011 263 Motion for Leave to File Sur-reply regarding Motion for
Reimbursement of Additional Funds filed by Receiver
2/4/2011 264 Emergency Motion to Clarify Order and for Further Emergency Relief
regarding Order Withdrawing Gary Lyon as Counsel of Record for
Defendant Jeffrey Baron
2/17/2011 320 Disclosures Regarding Document 291 (Notice per the Court's Order
regarding Order on Motion for Gary Schepps to Show Authority to
Represent the LLCs)
3/2/2011 337 Response and Objection to Motion for Order Permitting the Receiver
to Cash Out Stocks and IRAs
3/3/2011 339 Notice filed by Jeffrey Baron (letter from Schepps requesting
dissolution of receivership)
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 13
DISTRICT COURT PLEADINGS
FILED BY JEFFREY BARON FROM 11/24/2010 TO 3/31/2011
Date Filed
Docket
No.
Title of Pleading
3/3/2011 340 Notice of Interlocutory Appeal
3/3/2011 341 Notice of Interlocutory Appeal
3/7/2011 351 Response and Objection to 1000+ Page Document Dump by the
Receiver
3/7/2011 352 Response to Second Application for Reimbursement of Fees
Incurred by Receivership Professional James M. Eckels
3/11/2011 357 Notice filed by Jeffrey Baron (letter from Schepps regarding Cook
Islands entities)
3/14/2011 364 Notice of letter brief filed by Jeffrey Baron
3/14/2011 373 Response and Objection to Motion for Attorney's Fees, Motion for
Order Granting Receiver's Third Receiver Fee Application
21. In connection with Baron's appeals to the Fifth Circuit, Baron has filed the
following:
FIFTH CIRCUIT COURT OF APPEALS CASES FILED BY BARON
Docket # 10-11202
Date Filed
Title of Pleading
12/3/2010 Notice of Appeal filed by Appellant Mr. Jeffrey Baron
12/7/2010 Emergency Motion to Stay Order Appointing Receiver Over Jeffrey Baron
Pending Appeal, filed by Appellant Mr. Jeffrey Baron
12/20/2010 Emergency Motion to Stay Order Appointing Receiver Over Jeffrey Baron
Pending Appeal, filed by Appellant Jeffrey Baron
2/20/2011 Motion to Stay Ex-Parte Order Appointing Receiver Over the Person and
Property of Jeffrey Baron Pending Appeal, filed by Appellant Jeffrey Baron
2/22/2011 Emergency Motion to Protect Jurisdiction of Court of Appeals and for
Injunction ending Appeal filed by Appellant Jeffrey Baron
2/22/2011 Motion to Protect Proceedings Before the Court of Appeals and Stay the
District Court's Interference with Appellate Counsel for Injunction Pending
Appeal filed by Appellant Jeffrey Baron
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 14
2/25/2011 Reply re: Motion to Stay Ex-Parte Order Appointing Receiver Over the
Person and Property of Jeffrey Baron Pending, filed by Appellant Jeffrey
Baron
2/25/2011 Reply Re: Emergency Motion to Protect the Court of Appeals' Jurisdiction
Over the Receivership on Interlocutory Appeal filed by Appellant Jeffrey
Baron in 10-11202.
2/25/2011 Reply Re: Motion to Protect Proceedings Before the Court of Appeals and
Stay the District Court's Interference with Appellate Counsel for Mr. Baron
filed by Appellant Jeffrey Baron
2/3/2011 Motion to Reconsider Stay of District Court Order Appointing Receiver Over
the Person and Property of Jeff Baron filed by Jeffrey Baron
3/28/2011 Appellant's Brief, filed by Jeffrey Baron
4/6/2011 Novo Point and Quantec's Response to Ondova's Motion to Dismiss and for
Sanctions
4/8/2011 Corrected Appellant's Brief filed by Appellant Jeffrey Baron
4/6/2011 Corrected Appellant's Brief filed by from Appellants Novo Point L.L.C. and
Quantec L.L.C.
4/7/2011 Emergency Motion to Stay Order Permitting Disclosure of Attorney-Client
Material, filed by Appellant Mr. Jeffrey Baron
Docket # 11-10113
Date Filed
Title of Pleading
2/1/2011 Notice of Appeal
3/21/2011 Motion to Stay Order Placing Novo Point, LLC and Quantec, LLC into
Receivership
3/22/2011 Letter filed by Appellants Novo Point, L.L.C. and Quantec L.L.C advising the
appellee in the appeal is Peter S. Vogel.
3/28/2011 Supplemental Letter filed by Appellants Novo Point, L.L.C. and Quantec, LLC
3/28/2011 Letter to Court filed by Appellants Novo Point, LLC and Quantec, LLC
3/29/2011 Response Opposing Consolidation of Appeal of December 17, 2010
Injunction Order Placing Novo Point, LLC and Quantec, LLC into
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 14 of 22 PageID 17348
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 15
Receivership Into Jeff Baron's Appeal of November 24 Receivership Order
4/6/2011 Novo Point and Quantec's Response to Ondova's Motion to Dismiss and For
Sanctions
4/7/2011 Emergency Motion to Stay Order Permitting Disclosure of Attorney-Client
Material
Docket # 11-10289
Date Filed
Title of Pleading
3/21/2011 Notice of Appeal filed by Appellant Mr. Jeffrey Baron
Docket # 11-10290
Date Filed
Title of Pleading
3/22/2011 Notice of Appeal filed by Appellants Novo Point L.L.C. and Quantec L.L.C.
22. Needless to say, Baron's litigation efforts to oppose the Receivership and to
cause delay and expense have been the primary reason the Trustee's legal fees and expenses
have increased to the extent that they are today. The work of both the Receiver and the
Trustee has been tenfold more than what it should have been in a typical receivership case.
This Court, justifiably frustrated by Baron's outrageous conduct, recently issued an Order that
Baron cannot file any more pleadings unless previewed by this Court through a letter in
advance. A copy of that Order [Docket No. 359] is attached hereto as Exhibit "E".
23. One of the principal purposes for the creation of the Receivership was the fact
that Baron was hiring and firing attorneys without paying the attorneys. Since the Receiver's
appointment, he has agreed to pay the professional fees of twenty-two (22) law firms or lawyers
who were not paid by Baron.
6
6
Specifically, on March 17, 2011, the Receiver filed his Motion to Approve Assessment and Disbursement of Former
Attorney Claims [Docket No. 396] (the "First Assessment Motion"). On March 18, 2011, the Receiver filed his Second
Motion to Approve Assessment and Disbursement of Former Attorney Claims [Docket No. 400] (the "Second
Assessment Motion"). On March 24, 2011, the Receiver filed his Third Motion to Approve Assessment and
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 16
CURRENT AND ONGOING WORK OF THE TRUSTEE AT THE FIFTH CIRCUIT
24. Between the date the Receivership was created and the date of this Motion,
Baron and his attorneys filed five separately docketed interlocutory appeals. In the original
appeal, Fifth Circuit Docket No. 10-11202 ("First Appeal"), Baron filed six separate emergency
motions in addition to his First Appeal. In the second appeal, Fifth Circuit Docket No. 11-10113
("Second Appeal") Baron filed a preliminary Motion to Stay, and also filed papers attempting to
separate the First and Second Appeals and to exclude the Trustee from participation in the
appeal. The third and fourth Appeals (Docket Nos. 11-11289 and 11-11290, respectively the
"Fourth Appeal" and the "Fifth Appeal") have been docketed without any other action. The fifth
appeal was initiated by a Notice of Appeal filed in this Court on April 11, 2011 (the "Fifth
Appeal") but has not yet been docketed in the Fifth Circuit.
25. Baron's frenetic activity in the Fifth Circuit required the Trustee's counsel to do
more research, file more briefs, and spend more on purely administrative matters than would
ordinarily be the case in appeals of this kind. Taking up the appeals in the order filed, this work
is described below.
A. Docket No. 10-11202
26. Baron filed the Notice of Appeal in this case on December 3, 2010. On
December 7, 2010, he filed an Emergency Motion for a Stay Pending Appeal. The relief sought
amounted to a dissolution of the Receivership. This first emergency motion included 23 pages
of briefing citing 28 cases, with 259 pages of exhibits. Under applicable Fifth Circuit rules the
Disbursement of Former Attorney Claims [Docket No. 411] (the "Third Assessment Motion" and together with the First
Assessment Motion and the Second Assessment Motion, the "Assessment Motions"). In the Assessment Motions,
the Receiver assesses the unpaid fees claims of 26 attorneys and law firms that formerly represented Baron and/or
the other Receivership Parties. Through the Assessment Motions, the Receiver proposes to make disbursements
totaling $993,253.77 to 22 of those unpaid (or only partially paid) attorneys and law firms. On April 8, 2011, Baron
filed his Amended Response, Objection, Motion for Leave to File, and Motion for Relief with Respect to Receiver
Assessment of Former Attorney Claims [Docket No. 445].
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 16 of 22 PageID 17350
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 17
Fifth Circuit may require a responsive brief on very short notice, so, after discussing the possible
briefing schedule with the Fifth Circuit clerk, work began immediately on that response. The
Fifth Circuit denied the motion on December 8, 2010.
27. Baron filed a second Emergency Motion to Stay on December 20, 2010. This
second emergency motion included 27 pages of briefing citing 31 cases with 300 pages of
exhibits. The Fifth Circuit denied this motion the same day it was filed, and so it required
relatively little work by the Trustee's counsel.
28. Between December 20, 2010 and February 20, 2011, the work in the Fifth Circuit
was primarily administrative in character. Then, on February 20, 2010, Baron filed his third
Emergency Motion to Stay in the Fifth Circuit. On February 22, 2010 he filed two additional
motions: a Motion to Protect Jurisdiction of Court of Appeals and a Motion to Protect
Proceedings before the Court of Appeals and Stay the District Court's Interference with
Appellate Counsel. These three motions were collectively 856 pages in length with 43 pages of
briefing and 813 pages of exhibits. The third Emergency Motion to Stay cited 47 different
federal cases, the Motion to Protect Jurisdiction cited 14 different federal cases, and the Motion
to Protect Proceedings cited a single case.
29. Faced with this massive amount of material, the Trustee's counsel began working
on responses immediately. The Fifth Circuit issued a briefing order requiring that the Trustee
respond to all three motions by 5:00 p.m. on February 24, 2011. The Trustee's three
comprehensive responses were filed at the 5:00 p.m. deadline. They included 39 pages of
legal argument citing 17 cases with 790 pages of Exhibits. The day following the Trustee's
replies, Fifth Circuit denied all of Baron's motions.
30. On March 2, 2011, Baron filed a Motion for Reconsideration of the Court's order
denying his previous motions. The Motion included 19 pages of briefing, 40 pages of exhibits
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 17 of 22 PageID 17351
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 18
and 3 case citations. Trustee's counsel began preparing a response, but it was not filed
because, on March 3, 2011, the Fifth Circuit denied Baron's Motion for Reconsideration sua
sponte.
31. Between March 3, 2011 and March 28, 2011, the Trustee's work on the First
Appeal was limited to administrative matters as Baron sought two extensions of the deadline to
file his Brief on Appeal, both of which were granted. On March 28 Baron filed his Brief on
Appeal, which contains 72 pages of legal argument, cites 52 federal case authorities, and
includes 62 pages of record excerpts. Under the applicable Federal Rules of Appellate
Procedure, the Trustee's Brief in Response is due April 28, 2010, and work of that response is
ongoing.
B. Docket No. 11-11303
32. The Second Appeal was filed (improperly by Baron's attorney, Gary Schepps) on
behalf of Novo Point, LLC and Quantec LLC (collectively, "Novo Point") on January 18, 2011. It
was originally docketed in the Fifth Circuit on February 1, 2011 as a related case to the First
Appeal with the same briefing schedule. The Trustee's counsel dealt only with administrative
matters, including an extension of the briefing deadlines, between February 1, 2011 and March
9, 2011.
33. On March 21, 2011, Novo Point filed a Motion to Stay in the Second Appeal. The
motion included 29 pages of briefing citing 25 cases with 240 pages of Exhibits. The next day,
March 22, 2011, Baron's counsel attempted to escape the Trustee's expertise in dealing with
such motions by excluding the Trustee from participation in the Second Appeal. This was done
by "notifying" the Clerk of the Fifth Circuit that only the Receiver, not the Trustee, was an
appellant, which resulted in an administrative order that un-consolidated the First and Second
Appeals. It was clear that the effect of a stay would be to simply dissolve the Receivership and
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 18 of 22 PageID 17352
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 19
defeat its original purpose, and that the Receiver's counsel preferred not to appear or contest
the Motion to Stay. Therefore, on March 28, 2011, the Trustee's counsel filed a Motion to Re-
consolidate the two appeals. That motion included ten pages of briefing and 141 pages of
exhibits.
34. The same day, March 28, 2011, Novo Point filed their Brief on Appeal in the
Second Appeal. That brief included 54 pages of briefing and 71 pages of record excerpts.
Under the applicable Federal Rules of Appellate Procedure the Trustee's Brief in Response is
due April 28, 2010, and work on this appeal is ongoing.
35. On March 29, 2011, the Fifth Circuit denied Novo Point's motion to stay and
granted the Trustee's motion to re-consolidate the First and Second Appeals. The next day, the
Trustee, in order to avoid future misconduct by Baron's counsel, filed the Trustee's Motion for
Sanctions and to Dismiss the Second Appeal. The motion included 11 pages of briefing and
107 pages of exhibits. The Fifth Circuit entered a briefing order the same day that required a
response by April 11, 2011. Baron's counsel filed a response April 6, 2011 that included 17
pages of briefing resting on 18 federal case authorities. In order to expedite resolution of his
Motion for Sanctions, the Trustee filed a reply in support of the his Motion for Sanctions on April
11, 2011. That reply included 11 pages of briefing and 34 pages of exhibits.
36. While the Trustee's Motion for Sanctions was being briefed, Baron's counsel filed
yet another emergency motion in the Second Appeal. The Motion for Emergency Stay to
Protect the Privilege was filed on April 7, 2011, asking the Fifth Circuit to stop the disclosure of
allegedly privileged material. The Trustee began a response, but such work was halted when
the Fifth Circuit denied the Motion later the same day it was filed.
C. Docket Nos. 11-10289 and 11-10290 along with the undocketed Fifth Appeal.
37. The Third, Fourth and Fifth Appeals have required less work by Trustee's
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 19 of 22 PageID 17353
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 20
counsel than the First and Second Appeals; however, the propensity of Baron's counsel to file
emergency motions has required that Trustee's counsel do a preliminary evaluation of each
appeal. The Third, Fourth and Fifth Appeals are interlocutory appeals from every Order entered
by the trial court in matters related to the Receivership. The Third Appeal, by Baron, covers 18
separate orders. The Fourth Appeal, by Novo Point, covers 13 separate orders with some
overlap. The Fifth Appeal, filed by Baron and Novo Point collectively, challenges an additional
17 orders. Simply tracking the docketing of these matters requires unusual amounts of
administrative time for the Trustee's counsel. The Fifth Appeal has not yet been docketed by
the Fifth Circuit.
38. In conclusion, Baron and his counsel, sometimes purportedly acting for Novo
Point, have filed five separate appeals from 37 different orders of this Court. In connection with
these appeals, Baron and his counsel have filed six emergency motions in the First Appeal that
contain some 110 pages of briefing and more than 1400 pages of exhibits. In the Second
Appeal, they have filed two emergency motions with more than 30 pages of briefing and 250
pages of exhibits. They have filed principal Briefs on Appeal including 150 pages of briefing and
130 pages of record excerpts. The Trustee has had to respond with its own research and
briefing totaling 71 pages of briefing and around 1055 pages of exhibits. The Trustee's principal
briefs as Appellee in both cases are still in progress and of course this work is ongoing.
SUMMARY OF AMOUNTS SOUGHT
39. The Trustee is requesting reimbursement to Ondova of $379,761.18. This
relates to professional fees of $363,315.00 representing 950 hours of work needed by the
Trustee related to the Receivership. A summary of the services provided by month is attached
hereto as Exhibit "F" and copies of Munsch Hardt's invoices for the months of November 2010
through March 2011 are attached hereto as Exhibit "G".
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MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 21
40. Expenses sought by the Trustee total $12,167.90. These expenses primarily
relate to Westlaw research charges, court reporter fees and transcripts. A summary of these
charges is shown on Exhibit "F".
41. The Trustee's work related to the Receivership is necessary and obviously
continuing and furthermore all fees and expenses described herein are subject to final
Bankruptcy Court approval. Therefore, interim approval by this Court or some other payment
mechanism or protocol as this Court sees fit may be appropriate.
CONCLUSION
42. The Receivership has in many ways benefitted the Trustee's efforts in winding
down the Bankruptcy Case. There has been less work needed in the Bankruptcy Case since
the Receivership. Baron has not continued to hire and fire lawyers and the Trustee has been
able to continue his efforts to effectuate a wind down of the Bankruptcy Case. Conversely
however, the work required by the Trustee to commence the Receivership, represent the
Trustee in the Receivership and handle the appeal matters has been expensive and time
consuming. Unless this Court approves the reimbursement of the Trustee's costs and
expenses, the creditors of Ondvoa will receive a materially reduced distribution. None of this
was anticipated when the Trustee fulfilled his duties of completing the Global Settlement
Agreement. Further complicating these facts is the possibility that certain of the law firms to be
paid in the Bankruptcy Case may have residual claims against the Receivership should they not
receive payment in full from the Trustee in the Bankruptcy Case. The Trustee will continue to
handle whatever matters are necessary with respect to the Receivership, however the creditors
of Ondova should not be forced to shoulder all of these costs. For all of these reasons, the
Trustee believes that the requested reimbursement should be approved.
WHEREFORE, PREMISES CONSIDERED, the Trustee requests that the Court: (1)
Case 3:09-cv-00988-F Document 467 Filed 04/19/11 Page 21 of 22 PageID 17355
MOTION OF DANIEL J. SHERMAN, CHAPTER 11 TRUSTEE FOR ONDOVA LIMITED COMPANY, FOR
REIMBURSEMENT OF FEES AND EXPENSES FROM THE RECEIVERSHIP ESTATE – PAGE 22
approve reimbursement to the Trustee of $379,761.18 from the Receivership; (2) approve such
other payment mechanism as this Court may see fit; and (3) grant the Trustee such other and
further relief as he may be justly entitled.
Respectfully submitted this 19
th
day of April, 2011.
MUNSCH HARDT KOPF & HARR, P.C.
By: /s/ Raymond J. Urbanik
Raymond J. Urbanik
Texas Bar No. 20414050
Richard Hunt
Texas Bar No. 10288700
500 N. Akard Street, Suite 3800
Dallas, Texas 75201-6659
Telephone: (214) 855-7500
Facsimile: (214) 855-7584
rurbanik@munsch.com
lpannier@munsch.com
ATTORNEYS FOR DANIEL J. SHERMAN,
CHAPTER 11 TRUSTEE
CERTIFICATE OF SERVICE
I hereby certify that on the 19
th
day of April, 2011, I caused a true and correct copy of the
foregoing document to be served electronically on all parties receiving notice through the
Court's ECF system.
/s/ Raymond J. Urbanik
Raymond J. Urbanik
MHDocs 3202099_1 11236.1
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