Gary Schepps, et al v. Daniel Sherman
UNPUBLISHED OPINION FILED. [13-10122 Dismissed as Moot] Judge: EGJ , Judge: PEH , Judge: WED. Mandate pull date is 09/04/2015; denying as moot motion to dismiss appeal filed by Appellee Mr. Daniel J. Sherman [7414524-2] [13-10122]
Date Filed: 08/14/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
In the Matter of: ONDOVA LIMITED COMPANY,
United States Court of Appeals
August 14, 2015
Lyle W. Cayce
---------------------------GARY N. SCHEPPS,
DANIEL J. SHERMAN, Chapter 11 Trustee,
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:12-CV-416
Before JOLLY, HIGGINBOTHAM, and DAVIS, Circuit Judges.
Attorney Gary Schepps appeals from a bankruptcy court order entered
in the case styled Matter of Ondova Limited Company. 1 The order at issue,
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case No. 09-34784-sgj-11 (Bankr. N.D. Tex.).
Date Filed: 08/14/2015
entered on December 15, 2011, barred Schepps from appearing or participating
further in the Ondova Limited bankruptcy (the “Bar Order”). 2 Concluding that
the Bar Order against Schepps was effectively vacated by subsequent orders
of the district court and bankruptcy court—and emphasizing that it has so
been vacated—we dismiss this appeal as moot. 3
By way of background, the Ondovo Limited bankruptcy spawned out of
a convoluted litigation, the history of which we set out in Netsphere, Inc. v.
Baron. 4 Schepps had served as counsel for Jeffrey Baron in Netsphere and he
purported to represent Baron and various Baron-controlled entities, along with
various other entities, in the Ondovo Limited bankruptcy. Some of the entities
Schepps purported to represent in the Ondovo Limited bankruptcy became
subject to a receivership order entered by the district court in the Netsphere
R.19-21. The Bar Order provided, specifically, that: (1) “Gary Schepps . . . shall file
no further pleadings and/or appeals of any kind in the Ondova Limited Company bankruptcy,
Case No. 09-34784-sgj-11;” (2) “[t]he Clerk for the United States Bankruptcy Court for the
Northern District of Texas is directed to remove any pleadings and/or appeals filed by Gary
Schepps electronically as soon as they are filed;” (3) “[n]o responses are required to be filed
by counsel relating to any pleadings or appeals filed by Gary Schepps in this Bankruptcy
Case;” and (4) “[i]n the event Gary Schepps files any pleadings in violation of this Order, this
court will conduct a show cause hearing and issue appropriate sanctions against Gary
Schepps.” Id. at 21.
3 Schepps’ notice of appeal references a district court order administratively closing
the case with regard to his appeal from the Bar Order, but his substantive challenge pertains
to the Bar Order itself. Because we dismiss Schepps’ substantive arguments as moot, and
because mootness is an independent jurisdictional barrier, see North Carolina v. Rice, 404
U.S. 244, 245-46 (1971), we need not and do not reach the question of whether the district
court order administratively closing the case was a “final decision” over which we have
jurisdiction under 28 U.S.C. §§ 158(d) and 1291. See generally Mire v. Full Spectrum Lending
Inc., 389 F.3d 163 (5th Cir. 2004) (explaining that in some situations an administratively
closed case is the functional equivalent of a stay and cannot constitute a final appealable
order, but in others it is the functional equivalent of a dismissal over which an appellate court
can exercise review).
4 703 F.3d 296, 302-05 (5th Cir. 2012).
Date Filed: 08/14/2015
case on November 24, 2010 (the “Receivership Order”). 5 The Receivership
Order identified entities subject to the receivership as Baron and any Baroncontrolled entity, and it “enjoin[ed] any person from taking any action based
upon any [then] existing directive from any person other than the [r]eceiver
with regard to the affairs and business” of any such entity. 6 It also gave the
receiver exclusive authority to act on behalf of any such entity in legal
proceedings and to control such entity’s actions in such proceedings. 7 After
entry of the Receivership Order, Schepps made several filings in the
bankruptcy court on behalf of Novo Point, LLC, an entity expressly subject to
the receivership, apparently in violation of the Receivership Order. In response
to these filings, and on motion of the receiver, the bankruptcy court issued a
show-cause order and initiated contempt proceedings against Schepps.
Following several rounds of hearings, the bankruptcy court issued the Bar
Order, the purpose of which was to prohibit Schepps from taking further action
on behalf of entities subject to the receivership in violation of the Receivership
Schepps appealed the Bar Order to the district court. By the time
briefing was completed, “the [r]eceivership [was] in the process of winding
down,” and the district court reasoned that the underlying purpose of the Bar
Order would not be further served by its enforcement at that time. 8 On June
18, 2012, the district court entered an “Order on Appeal” that effectively
reversed the Bar Order. 9 The district court’s Order on Appeal was entered on
Doc. 130, Case No. 3:09-cv-00988-L (N.D. Tex.) (Order Appointing Receiver, Nov. 24,
Id. at 2.
Id. at 7-8.
8 See R.996-1001.
9 Id. at 1001 (“[I]t is ORDERED that Gary Schepps has a right to appear in the District
Court as counsel of record for Baron and those entities he claims he owns. Schepps is
Date Filed: 08/14/2015
the bankruptcy court docket the same day. 10 In response to the Order on
Appeal, the bankruptcy court issued the following order dated August 27, 2012:
This court must honor the guidance and reasoning of the Article
III court from which this bankruptcy court’s authority to exercise
bankruptcy jurisdiction flows. [The district court] has essentially
indicated in the Order on Appeal of Schepps Bar Order that,
regardless of whatever restrictions he may have at one time
intended with respect to Novo Point, LLC and who may speak for
it, he believes Schepps should be permitted to speak for Jeff Baron,
Novo Point, LLC, and any other entities Jeff Baron claim he owns
in these court proceedings. Given this ruling, this court does not
believe it is appropriate to further consider the Show Cause
Matters that it has had under advisement.
WHEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED, that the Show Cause Matters are considered resolved
and discharged and this court will not further consider the
appropriateness of civil contempt sanctions against . . . Schepps. 11
No party challenged the district court’s Order on Appeal or the bankruptcy
court’s subsequent order discharging the show-cause matters against Schepps.
Months later, in Netsphere, we vacated the Receivership Order as
improper. 12 We found it unnecessary to address an outstanding petition for a
writ of mandamus filed by Novo Point, LLC, “which challenged the bankruptcy
court’s decision to strike various notices of appeal filed by Novo Point [because]
[t]he bankruptcy court struck these notices based on its finding that they
violated the terms of the [R]eceivership [O]rder—which we have now set
aside.” 13 To be clear, the Bar Order at issue today also stemmed from the
GRANTED LEAVE TO APPEAL all orders of the Bankruptcy Court allegedly affecting
property now in possession and control of the Receiver on Jeffrey Baron’s behalf.”).
10 Doc. 790, Case No. 09-34784-sgj-11 (Bankr. N.D. Tex.).
11 Doc. 807, Case No. 09-34784-sgj-11 (Bankr. N.D. Tex.).
12 703 F.3d 296, 311 (5th Cir. 2012).
13 Id. at 315.
Date Filed: 08/14/2015
bankruptcy court’s efforts to enforce the terms of the Receivership Order,
which we vacated in Netsphere.
On January 7, 2013, the district court entered an order instructing the
clerk to administratively close the case with regard to Schepps’ appeal of the
Bar Order because, “[i]n light of the Fifth Circuit’s recent opinion [in
Netsphere] . . . there are no further issues . . . to address concerning the appeal
administratively closing the case to our court. 15
Our decision in Netsphere vacated the Receivership Order from which
the Bar Order derived. Yet even before Netsphere issued both the district court
and the bankruptcy court issued orders effectively vacating the Bar Order and
discharging all show-cause matters against Schepps. Emphasizing that the
Bar Order is no longer of any effect and that Schepps remains an officer of the
court in good stead, we DISMISS this appeal as MOOT. The Trustee’s motion
to dismiss this appeal as untimely is DENIED as MOOT.
Id. at 1003-05.
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