Documente Academic
Documente Profesional
Documente Cultură
Plaintiff - Appellant
v.
Defendants - Appellees
---------------------------------------------------------
Plaintiff - Appellant
v.
Defendants - Appellees
---------------------------------------------------------
Plaintiff - Appellant
v.
Defendants - Appellees.
_______________________________________________________
The undersigned counsel of record certifies that the following listed persons
and entities as described in the fourth sentence of Rule 28.2.1 have an interest in
the outcome of this case. These representations are made in order that the judges
Plaintiff – Appellant
a. Quinn Veysey
b. Weycer, Kaplan, Pulaski & Zuber, P.C. (counsel for Quinn Veysey)
i. Mr. Mark J. Levine
i. X Yuhau Jiang
s. YQT.com (Defendant-Appellee)
i. Yuhau Jiang
t. SQG.com (Defendant-Appellee)
i. Feng Lu
u. XSG.com (Defendant-Appellee)
i. Feng Lu
v. YCX.com (Defendant-Appellee)
i. Feng Lu
w. ZDP.com (Defendant-Appellee)
i. Feng Lu
x. VCZ.com (Defendant-Appellee)
i. Teng Wang
y. VGJ.com (Defendant-Appellee)
i. Huochun Huang
z. WYD.com (Defendant-Appellee)
i. Yanbin Lin
aa. XFF.com (Defendant-Appellee)
i. Xiaoying Li
bb.ZZM.com (Defendant-Appellee)
i. Xiaoying Li
cc. YJR.com (Defendant-Appellee)
i. Xumin Huang
dd.YJX.com (Defendant-Appellee)
i. Chunmei Lin
ee. YRN.com (Defendant-Appellee)
i. Dongdong Xu
ff. YTE.com (Defendant-Appellee)
i. Domain Capital, LLC
gg.YYG.com (Defendant-Appellee)
i. Liwei Liu
hh.ZULIN.com (Defendant-Appellee)
i. Feng Yan
ii. Dentons US LLP (counsel for 34 in rem Domain Name Defendants-
Appellees)
i. Mr. Richard D. Salgado
Case: 18-10596 Document: 00514726590 Page: 12 Date Filed: 11/16/2018
Third Parties
Upon information and belief:
would be helpful to the Court given this case’s long and complex history.
Case: 18-10596 Document: 00514726590 Page: 18 Date Filed: 11/16/2018
TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT .................................................................... 1
V. ARGUMENT ................................................................................................ 13
VI. CONCLUSION............................................................................................. 43
I
Case: 18-10596 Document: 00514726590 Page: 19 Date Filed: 11/16/2018
TABLE OF AUTHORITIES
Page(s)
CASES
All Am. Builders, Inc. v. All Am. Siding of Dallas, Inc.,
991 S.W.2d 484 (Tex. App. – Fort Worth 1999, no pet.) .............................43
Baron v. Vogel, 678 F. App’x 202 (5th Cir. 2017) .......................................7, 12, 31,
36
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007).........................13
Campbell v. City of San Antonio, 43 F.3d 973 (5th Cir. 1995) ...............................13
Copeland v. Merrill Lynch & Co., 47 F.3d 1415 (5th Cir. 1995) ............................23
Croft v. Gov. of Texas, 562 F.3d 735 (5th Cir. 2009) ..............................................29
CRS Recovery, Inc. v. Laxton, 600 F.3d 1138 (9th Cir. 2010) ................................ 34
Derrick Mfg. Corp. v. Sw. Wire Cloth, Inc., 934 F. Supp. 796
(S.D. Tex. 1996) ............................................................................................40
EDS Corp. v. Southwestern Bell Tel., 674 F.2d 453 (5th Cir. 1982).................34, 35
ii
Case: 18-10596 Document: 00514726590 Page: 20 Date Filed: 11/16/2018
Mayo v. Hartford Life Ins. Co., 354 F.3d 400 (5th Cir. 2004) ................................38
Netsphere, Inc. v. Baron, 2013 U.S. App. LEXIS 13315 (5th Cir. Apr.
4, 2013) ..........................................................................................................19
Netsphere, Inc. v. Baron, 703 F.3d 296 (5th Cir. 2012) ...................................passim
Netsphere, Inc. v. Baron, 799 F.3d 327 (5th Cir. 2015) ........................................3, 5
iii
Case: 18-10596 Document: 00514726590 Page: 21 Date Filed: 11/16/2018
Orca Assets, G.P. v. Burlington Res. Oil & Gas Co., 464 S.W.3d 403
(Tex. App. – Corpus Christi 2015, pet. denied) ............................................21
R2 Invs. LDC v. Phillips, 401 F.3d 638 (5th Cir. 2005) .......................................... 13
S. Co. v. Dauben Inc., 324 F. App’x 309 (5th Cir. 2009) ..................................41, 42
Savage v. Doyle, 153 S.W.3d 231 (Tex. App. – Beaumont 2004) ..........................21
Stefano v. First Union Nat. Bank of Virginia, 981 F. Supp. 417 (E.D.
Va. 1997) .......................................................................................................39
Tex. Dept. of Transp. v. A.P.I. Pipe & Supply, LLC, 297 S.W.3d 162
(Tex. 2013) ....................................................................................................21
STATUTES
15 U.S.C. § 1125 ......................................................................................................40
iv
Case: 18-10596 Document: 00514726590 Page: 22 Date Filed: 11/16/2018
RULES
Fed. R. Civ. P. 12(b)(6)......................................................................................13, 33
MISCELLANEOUS
Black’s Law Dictionary (10th ed. 2014) .................................................................21
v
Case: 18-10596 Document: 00514726590 Page: 23 Date Filed: 11/16/2018
TABLE OF ABBREVIATIONS
Netsphere I Netsphere, Inc. v. Baron, 703 F.3d 296 (5th Cir. 2012)
Netsphere II Netsphere, Inc. v. Baron, 799 F.3d 327 (5th Cir. 2015)
vi
Case: 18-10596 Document: 00514726590 Page: 24 Date Filed: 11/16/2018
I. PRELIMINARY STATEMENT
This is at least the sixth time this Court will address the litigation arising out
of Mr. Jeffrey Baron’s business venture involving ownership and sale of internet
domain names. As this Court explained in its opinion from the most recent appeal,
these cases have become “a nightmare,” and that “[w]hat should have been a
and massive frustrations for all parties, for [the district court], for the [b]ankruptcy
[c]ourt, and for the Fifth Circuit.” Netsphere III (quoting Netsphere, Inc. v. Baron,
This situation has only gotten worse. As the Court noted, “Baron has a
proclivity for derailing otherwise orderly litigation.” Netsphere III at 320. The
Baron’s other companies (Novo Point LLC), which seeks to set aside sales of
domain names that were made during a receivership the district court had put in
place to “bring Baron’s vexatious litigation conduct to heel.” Id. Thus, Associated
Recovery now seeks to relitigate an issue that was resolved by this Court six years
ago in the first appeal, Netsphere I, and left undisturbed in the subsequent
Recovery has cycled through numerous counsel, and filed multiple rounds of
1
Case: 18-10596 Document: 00514726590 Page: 25 Date Filed: 11/16/2018
pleadings, in the various cases that were consolidated below and are here on
appeal.
Unsatisfied with the answer he has received from this Court, Mr. Baron now
attacks the legitimate businesses that purchased domain names during the
receivership sold the domain names to try to recover receivership costs. But Mr.
Baron (or more aptly, his proxy Associated Recovery) asks a question that has
for the receivership fees and expenses. Netsphere I, 703 F.3d at 311-12. Because
Baron’s own making,” there was nothing improper about “charging the . . .
additional assets to be sold.” Id. at 313. Simply put, the money that appellees or
their predecessors paid for domain names was ordered by this Court to be used to
pay receivership expenses, and because the money was not ordered to be returned
to the purchasers, it cannot be correct that those domain name sales were undone.
It is time for this litigation to finally end. As the district court held below,
collateral estoppel bars appellant from relitigating what was decided in Netsphere I
and each subsequent case. The district court’s judgment of dismissal should
therefore be affirmed.
2
Case: 18-10596 Document: 00514726590 Page: 26 Date Filed: 11/16/2018
several cases listed in the footnote below,1 and in the District Court’s Opinion on
appeal (at ROA.2900-2906). The District Court’s Opinion also describes the
various actions that were transferred and consolidated into the action on appeal
This case began over twelve years ago when Netsphere, Inc. sued Jeffrey
Baron over a joint business venture involved in selling domain names. As this
Court previously put it, “[w]hat should have been a simple contract dispute . . .
dollars in legal fees, thousands of docket entries, and massive frustrations for all
parties, for [the district court], for the [b]ankruptcy [c]ourt, and for the Fifth
1
The factual history of the Netsphere Action can be found in this Court’s
opinions in Netsphere, Inc. v. Baron, 703 F.3d 296 (5th Cir. 2012) (“Netsphere I”);
Netsphere, Inc. v. Baron, 799 F.3d 327 (5th Cir. 2015) (“Netsphere II”); and
Netsphere, Inc. v. Gardere Wynne Sewell, L.L.P, 657 F. App’x 320 (5th Cir. July 8,
2016) (“Netsphere III”).
2
At multiple points, Associated Recovery’s brief cites to pages that do not appear
to be in the record. Appellees have attempted to identify and respond to the
portions of the record that Associated Recovery appears to be referencing.
3
Case: 18-10596 Document: 00514726590 Page: 27 Date Filed: 11/16/2018
Circuit.” Netsphere III (quoting Netsphere, Inc. v. Baron, No. 3:09–cv–0988, 2013
hiring and firing attorneys, the district court placed Baron and certain of his assets
Recovery’s alleged predecessor in interest, Novo Point LLC,3 which at the time
owned the domain names at issue in this appeal. See id. at 304; ROA.2906.
also filed five motions requesting to stay the receivership pending the appeal,
which this Court denied. See Netsphere I at 304; ROA.2902, 6832. Thus, while
the appeal was pending, the receivership continued to manage Baron’s assets.
The receiver requested permission from the district court to sell domain
names to pay for Novo Point’s lawyers and to pay the administrative fees of the
receivership. See ROA.2901, 2315, 2323-24; see also N.D. Tex. Case No. 3:09-
cv-00988-L, ECF No. 242.4 Pursuant to orders from the district court, the receiver
caused Novo Point to sell the domain names at issue here, and the proceeds from
3
The Receivership also included another company, Qantec LLC. For
conciseness, this brief refers to Novo Point only.
4
Associated Recovery moved to supplement the record on appeal with
materials from N.D. Tex. Case No. 3:09-cv-00988-L, but did not seek to include
the Receiver’s motion to permit sales of domain names (ECF No. 242).
4
Case: 18-10596 Document: 00514726590 Page: 28 Date Filed: 11/16/2018
these sales became part of the cash assets in the receivership used to pay Novo
Point’s lawyers and the receiver’s administrative fees. See ROA.2315, 2901;
Netsphere I at 314. Baron appealed these sales orders as well, as did Novo Point,
and this Court consolidated those appeals with Baron’s appeal of the order
In its opinion in Netsphere I, this Court determined that the district court had
abused its discretion in establishing the receivership and ordered the district court
to wind down the receivership. At the same time, this Court recognized that
“Baron’s own actions resulted in more work and more fees for the receiver and his
attorneys,” and “[f]or these reasons, charging the current receivership fund for
sold, is an equitable solution.” Netsphere I at 313. That fund included the money
from the domain name sales at issue, which sales were left in place. See id. at 313-
315; ROA.2903; see also Netsphere III at 321 n.1, 324 n.3 (observing that Novo
Point’s “assets were part of the receivership and Netsphere I ordered the district
court to award fees using the receivership assets) (emphasis in original). Novo
Point petitioned for certiorari, which was denied. 135 S. Ct. 436 (2014).
On remand, the district court awarded fees to the receiver to be paid out of
the cash in the receivership. Baron and Novo Point filed an interlocutory appeal of
5
Case: 18-10596 Document: 00514726590 Page: 29 Date Filed: 11/16/2018
the orders awarding fees. In Netsphere II, this Court dismissed for lack of
In 2015, the district court discharged the receiver and awarded fees to cover
the work of himself, “his attorneys, and his employees” up until discharge. See
Netsphere III at 322. This fee award depleted the remaining cash in the
receivership. Baron and Novo Point appealed again. In Netsphere III, this Court
reached the merits of the orders awarding fees. This Court affirmed the fee awards
holding (1) that Novo Point had waived its challenges to the fee awards by not
objecting in the district court, and (2) that challenge to whether fees could be
charged against its assets in the receivership was “squarely foreclosed by the law
of the case doctrine,” based on this Court’s decision in Netsphere I “ordering the
district court to award fees using the receivership assets.” Netsphere III at 324 n.3
(emphasis in original).
Meanwhile, Baron and Novo Point filed suit against the receiver. The
district court dismissed the complaint, holding that the claims were barred by
judicial immunity and that “any claim by Plaintiffs based on the wrongful
No. 3:15-CV-232-L, 2016 WL 1273465 at *6 (N.D. Tex. Mar. 31, 2016). On the
inevitable appeal by Baron, this Court “affirm[ed] the district court’s judgment and
6
Case: 18-10596 Document: 00514726590 Page: 30 Date Filed: 11/16/2018
adopt[ed] its analysis in full.” Baron v. Vogel, 678 F. App’x 202, 203 (5th Cir.
Novo Point has assigned its purported interests in the domain names to its
operative pleading, its Third Amended Complaint, ¶¶ 34, 39, stating Novo Point’s
interest). Associated Recovery brought the instant lawsuit under a host of legal
theories against the third parties and their successors who bought domain names
during the receivership or from subsequent sellers of the domain names, seeking
return of the domain names, damages for alleged losses in connection with the
sales, the profits from the sales, and a constructive trust placed upon “such profits
receiver never had “any actual legal right to possess, control or manage any of the
Domain Names whatsoever, or the ability to effectuate any legally valid transfer of
any right, title or ownership interest in any of the Domain Names.” ROA.2273.
The district court dismissed the complaint, holding that because this Court
did not vacate the orders authorizing the sales of the domain names in Netsphere I,
Associated Recovery is collaterally estopped from arguing here that those orders
7
Case: 18-10596 Document: 00514726590 Page: 31 Date Filed: 11/16/2018
remaining claims depend on its assertion that the sales orders were reversed, so the
characterization does not withstand scrutiny for several legal reasons. It is worth
noting up front, however, that Associated Recovery in its appeal brief has
below regarding these instruments. Associated Recovery alleges that every such
warranty that “Seller [Novo Point] is the sole owner of the Domain Names” and
“has the power and authority to execute and perform its obligations under this
Agreement,” and which (2) reserved that warranty in the “Limitations of Liability”
5
The District Court initially dismissed Associated Recovery’s breach of
contract claim against certain Defendants without prejudice, ROA.2932, but
Associated Recovery elected not to attempt to re-plead that claim, or appeal it.
ROA.2953-2959, 2966 at n.2.
8
Case: 18-10596 Document: 00514726590 Page: 32 Date Filed: 11/16/2018
Finally, the arguments advanced by Associated Recovery here are the same
that have been advanced from the outset. During the original Netsphere I appeal,
Novo Point sought to un-do the receiver’s actions, including to “recover the costs
of the receivership from those who have wrongfully provoked it,” and asked for
“the return of all property the district court below ordered taken from Novo Point,
LLC” (i.e., the domain names at issue), while Baron also sought the return of “the
receivership assets disbursed while the matter has been on appeal.” Novo Point
March 28, 2011 Brief in Netsphere I at 49-50; Baron July 15, 2011 Reply Brief in
valid claim under any of its legal theories, Associated Recovery must be able to
allege that it has a valid interest in the domain names. Because the domain names
9
Case: 18-10596 Document: 00514726590 Page: 33 Date Filed: 11/16/2018
The issues presented in this case have been litigated before. In Netsphere I,
this Court reversed the appointment of the receiver, but it did not immediately
dissolve the receivership, nor did it reverse the receiver’s sales of domain names.
Netsphere I at 315. Instead, this Court instructed that “[n]o further sales of
domain names or other assets are authorized,” and explicitly authorized the district
court to pay the receiver’s fees out of the cash then-currently in the receivership
“without allowing any additional assets to be sold,” in recognition of the fact that
Baron’s own making” and that “to a large extent, Baron’s own actions resulted in
more work and more fees for the receiver and his attorneys.” Id. at 313, 314
(emphasis added).
If there was any doubt as to the scope of this Court’s Netsphere I decision,
this Court removed it by issuing a clarifying order, which explained that the
Inc. v. Baron, 2012 U.S. App. LEXIS 27248, at *4 (5th Cir. Dec. 31, 2012).
Instead, this Court remanded to the district court for a “winding up of the
receivership.” Id. at *5. Thus, the order explained that “[n]o assets that were
brought under the control of the receiver will be released immediately from that
10
Case: 18-10596 Document: 00514726590 Page: 34 Date Filed: 11/16/2018
whether the receiver’s prior actions, including the sale of domain names, should be
reversed in Netsphere I. Because the Court rejected these requests and determined
not to reverse the sales orders in Netsphere I, 703 F.3d at 313, Associated
Recovery is collaterally estopped from asserting that the sales orders were, or
should be, reversed—i.e., from relitigating issues that were already decided against
its predecessors. Without establishing that the sales were reversed, Associated
are yet another collateral attack on this Court’s resolution of the fee issue in
trying to recover the fees that this Court said could be properly paid to the receiver.
But such arguments must be made within an original litigation, not in a collateral
order itself. This Court rejected the appeal, holding that any argument as to
“whether fees could be charged against [its] assets in the receivership” was
“squarely foreclosed by the law of the case doctrine” because Novo Point’s “assets
were part of the receivership and Netsphere I ordered the district court to award
fees using the receivership assets.” Id. at 333, n.3 (emphasis in original). Then,
11
Case: 18-10596 Document: 00514726590 Page: 35 Date Filed: 11/16/2018
when that did not work, they filed suit against the receiver in his personal capacity,
which the Northern District of Texas rejected as “an impermissible collateral attack
of prior orders,” which this this Court affirmed and “adopt[ed] its analysis in full.”
Baron v. Vogel, No. 3:15-CV-232-L, 2016 WL 1273465 at *6 (N.D. Tex. Mar. 31,
2016); Baron v. Vogel, 678 F. App’x 202, 203 (5th Cir. 2017). Now, they seek
recovery of the fees from the innocent third parties that bought the domain names
when they were managed by the receivership. This latest collateral attack should
also be rejected.
Finally, if this Court concludes that collateral estoppel does not bar
grounds supported in the record. First, Associated Recovery lacks standing, which
also defeats its claims. Second, the complaint establishes that appellees are bona
fide purchasers for value, which defeats all of Associated Recovery’s claims.
Finally, several claims are barred by the statute of limitations, and several fail due
6
Defendants – appellees focus on certain alternative grounds in this brief,
without prejudice to arguing additional grounds presented in their original motions
to dismiss if necessary on any remand.
12
Case: 18-10596 Document: 00514726590 Page: 36 Date Filed: 11/16/2018
V. ARGUMENT
A. Standard of Review
A district court order granting a motion to dismiss for failure to state a claim
Ins. Co. (In re Katrina Canal Breaches Litig.), 495 F.3d 191, 205 (5th Cir. 2007).
This Court may affirm dismissal on any basis supported by the Rule
12(b)(6) record. See R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005).
While the Court must “accept[ ] all well-pleaded facts [of the complaint] as
true, viewing them in the light most favorable to the plaintiff,” In re Katrina Canal
Breaches Litig., 495 F.3d at 205 (quotation marks and citation omitted), the
plaintiff must plead “enough facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007). That is,
“[f]actual allegations must be enough to raise a right to relief above the speculative
level, on the assumption that all the allegations in the complaint are true (even if
doubtful in fact).” Id. at 1965 (quotation marks, citations, and footnote omitted).
element necessary to obtain relief.” Campbell v. City of San Antonio, 43 F.3d 973,
On a motion to dismiss, the Court may take judicial notice of prior court
papers and rulings. E.g., Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir. 1994)
13
Case: 18-10596 Document: 00514726590 Page: 37 Date Filed: 11/16/2018
does not convert this motion into one for summary judgment.”) (citations omitted).
In addition, material documents referred to in the pleadings are part of the 12(b)(6)
record. See Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.
part of the pleadings if they are referred to in the plaintiff’s complaint and are
need only determine whether the Sales Orders in the Receivership of Jeffrey
Baron, Case No. 3:09-cv-00988-L, were reversed on appeal when this Court
reversed the Receivership in Netsphere, Inc. v. Baron, 703 F.3d 296 (5th Cir. 2012)
(Netsphere I).” Op. Br. at i. Because the answer to this question is clearly “no,”
the Court should affirm the district court’s judgment dismissing Associated
Recovery’s claims.
appointment of the receiver was proper. While this Court concluded that
appointing the receiver was an abuse of discretion, it did not immediately dissolve
the receivership, nor did it reverse any of the receiver’s prior actions—including
14
Case: 18-10596 Document: 00514726590 Page: 38 Date Filed: 11/16/2018
the sales of domain names. Netsphere I at 315. Instead, the Court remanded to the
Importantly, while this Court instructed that “[n]o further sales of domain
names or other assets are authorized,” it did not unwind the sales that had already
occurred. Id. at 314 (emphasis added). In fact, the Court explicitly authorized the
district court to pay the receiver’s fees out of the cash then-currently in the
the fact that “the circumstances that led to the appointment of a receiver were
primarily of Baron’s own making” and that “to a large extent, Baron’s own actions
resulted in more work and more fees for the receiver and his attorneys.” Id. at 313
(emphasis added).
The district court had authorized the domain names to be sold to pay for the
work of Novo Point’s attorneys and to pay for the administrative cost of the
receivership, e.g. ROA.2315, so the cash assets in the receivership included the
proceeds from the sale of the domain names. See Op. Br. at 23. And this Court, in
Netsphere I and in its other decisions, was well aware that that domain names were
being auctioned and those proceeds were being used to pay the receivership-related
expenses. See, e.g., 703 F.3d at 305 (“The receiver was granted exclusive control
over assets, including Baron’s personal property, that were not at issue in the
underlying litigation over domain names.”); Netsphere III at 321 n.1, 322, 324
15
Case: 18-10596 Document: 00514726590 Page: 39 Date Filed: 11/16/2018
(affirming use of cash proceeds from Novo Point’s domain name sales to pay
Recovery fails to address how this Court could have ordered the district court to
use Novo Point’s assets to pay for receivership fees if, as it contends, the sales of
Novo Point’s domain names were void ab initio and Novo Point was never
divested of the domain names. Associated Recovery cannot explain how the
predecessors when those purchasers’ money was not returned but instead ordered
Netsphere I, this Court eliminated all doubt by issuing a clarifying order at the
request of the receiver. In its order, this Court explained that its “opinion did not
dissolve the receivership immediately.” Netsphere, Inc. v. Baron, 2012 U.S. App.
LEXIS 27248, at *4. Instead, this Court remanded to the district court for a
“winding up of the receivership.” Id. at *5. Thus, the order explained that “[n]o
assets that were brought under the control of the receiver will be released
immediately from that control even when the mandate is issued.” Id. This order is
declared the receivership void ab initio and reversed all sales made by the receiver.
16
Case: 18-10596 Document: 00514726590 Page: 40 Date Filed: 11/16/2018
Moreover, the Court explicitly noted that it had declined to stay the case
pending appeal, id. at 304, despite that fact that Baron moved for a stay five
separate times. See ROA.2902, 6832.7 Without a stay, the receiver was permitted
to sell and in fact sold the domain names, and this Court did not reverse those
reversed the sales orders based on the separate mandates that were entered” by this
Court. See, e.g., Op. Br. at 28. But the mandates state only that “the judgment of
the District Court is reversed, and the cause is remanded to the District Court for
2418. And as explained above, this Court’s opinion explicitly kept the
receivership in place for an orderly wind-down by the district court. That is,
instead of ruling that the receivership was void ab initio and that all actions taken
under authority of the district court were meaningless, this Court directed a wind-
down.
7
Associated Recovery suggests that this Court actually stayed the sale of the
domain names by “verbal instructions” made to the district court by telephone.
Op. Br. at 8, 36. While the record reflects that this district court “consulted with
the Clerk of the U.S. Court of Appeals for the Fifth Circuit,” before staying the
case below, it does not reflect that this Court instructed the district court to stay the
case, or for how long. ROA.6801. Indeed, after this Court denied Baron’s five
requests for stays pending appeal, the district court reexamined its previous stay
and concluded that further staying the case would be inappropriate. ROA.6832.
17
Case: 18-10596 Document: 00514726590 Page: 41 Date Filed: 11/16/2018
reversed all of the orders appealed by Baron in Netsphere I. See Op. Br. at 31
(“These mandates did not say ‘affirmed’ or ‘affirmed in part.’ The mandates stated
that the appealed orders were ‘reversed and remanded.’”); see also id. at 9-10
state that the “appealed orders” were reversed; they state that the judgment was.
See ROA.2411-2418. If there was any doubt what this refers to, the final
paragraphs of the opinion make clear that it was the “judgment appointing the
cannot cogently explain how it could be that this Court ordered one thing in its
“Baron appealed the appointment of the receiver and then appealed numerous
subsequent orders entered by the district court,” but that the Court’s “conclusions
about the receivership itself make most of the later appeals irrelevant.” Id. at 305.
Indeed, Novo Point and Baron specifically argued in their Netsphere I briefing for
the receiver’s actions to be undone. See, e.g., Novo Point March 28, 2011 Brief in
Netsphere I at 49-50; Baron July 15, 2011 Reply Brief in Netsphere I at 15. The
18
Case: 18-10596 Document: 00514726590 Page: 42 Date Filed: 11/16/2018
there was an issue that any “party believes still needs a ruling, that claimed
petitioned for rehearing, noting that its assets consisted of domain names, and
arguing that those assets should not have been taken. See Jan. 2, 2013 Petition in
Netsphere I at 1 n.1. The Court denied the petition. Netsphere, Inc. v. Baron, 2013
U.S. App. LEXIS 13315 (5th Cir. Apr. 4, 2013). Novo Point also petitioned the
Supreme Court for certiorari, which was likewise denied. 135 S. Ct. 436 (2014).
that the “issues litigated in Netsphere I are not identical to the issues in this matter,
and therefore preclude the application of collateral estoppel.” Op. Br. at 35; see
also id. at 36 (arguing that the Netsphere I opinion contained “no discussion at all
as to the issues regarding the purported sale of [the] Domain Names.”). This Court
In short, this Court never reversed the sale of the domain names that serve as
the basis of Associated Recovery’s claims. Because the sales orders were allowed
to stand, Associated Recovery cannot state a claim upon which relief can be
granted. The District Court’s analysis in this regard was correct, and should be
affirmed.
19
Case: 18-10596 Document: 00514726590 Page: 43 Date Filed: 11/16/2018
contingent interests in the Domain Names and have always known that they were
merely purchasing a quitclaim instrument, subject to the claims of Novo Point and
the reversal on appeal of the Sales Orders and Receivership Orders.” See, e.g., Op.
Br. at 23. As described above, the undisputed evidence in the record proves this
false. See ROA.2623 (actual exemplary domain name transfer instrument); see
explaining why such instruments are properly considered part of the pleadings).
Even assuming for the sake of argument that the domain name transfer instruments
even if the sale orders stand, they are unenforceable as to Associated Recovery
because they were “mere quitclaims.” This is wrong for multiple reasons.
First, the assignment documents state that they convey Novo Point’s “rights,
title, and interest in, to, and under the Domain Names.”8 See, e.g., ROA.5963,
8
Again, documents such as contracts referred to in the pleadings are part of
the 12(b)(6) record. See Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285,
288 (5th Cir. 2004) (“Documents that a defendant attaches to a motion to dismiss
20
Case: 18-10596 Document: 00514726590 Page: 44 Date Filed: 11/16/2018
at the time of execution.” Savage v. Doyle, 153 S.W.3d 231, 234 (Tex. App. –
Beaumont 2004). See also “Quitclaim,” Black’s Law Dictionary (10th ed. 2014)
Thus, even if the initial conveyances during the receivership were quitclaim
assignments, they were effective to divest any interest in domain names from
Associated Recovery’s predecessor, Novo Point. See Lott v. Lott, 370 S.W.2d 463,
465 (Tex. 1963) (“It is too well settled to be open to question that a quitclaim deed,
interest a grantor has in the premises as fully and effectually as if the grantor had
are considered part of the pleadings if they are referred to in the plaintiff’s
complaint and are central to her claim.”).
9
Associated Recovery has never cited any authority that “quitclaim”
instruments are used for anything other than real property under Texas law. Real
property deeds present a unique context where purchasers are charged with
knowledge of recorded instruments, such that a “quitclaim” transfer makes sense
as a viable instrument. See, e.g., Orca Assets, G.P. v. Burlington Res. Oil & Gas
Co., 464 S.W.3d 403, 408-409 (Tex. App. – Corpus Christi 2015, pet. denied); Tex.
Dept. of Transp. v. A.P.I. Pipe & Supply, LLC, 297 S.W.3d 162, 169 (Tex. 2013);
see also ROA.2763, 2788 (Associated Recovery’s citation to these cases below);
ROA.2880 (certain Defendants’ reply discussing same).
21
Case: 18-10596 Document: 00514726590 Page: 45 Date Filed: 11/16/2018
given a deed purporting to convey the fee.”). Thus, Associated Recovery has no
Recovery alleges is a lack of warranty against claims by third parties, not by the
seller itself. To hold otherwise would render a quitclaim deed meaningless. Cf.
Geodyne Energy Income Prod. P’ship I-E v. Newton Corp., 161 S.W.3d 482, 486
(Tex. 2005) (“We have long recognized the validity of quitclaim deeds, even if it
Second, while a “quitclaim deed does not of itself establish any title in those
holding under it,” the “quitclaim passes the interest of the grantor in the property,
and for the quitclaim to be a conveyance, title in the grantor must be shown.”
Jackson v. Wildflower Prod. Co., Inc., 505 S.W.3d 80, 89 (Tex. App. – Amarillo
2016), review denied (Mar. 10, 2017) (emphasis in original). Thus, if Novo Point
had any rights in the domain names, they passed to Appellees. For Associated
Novo Point, did not have valid title to the domain names, which would, of course,
mean that it, too, has no valid claim (i.e., nemo dat quod non habet—no one gives
10
As discussed below, this is also a standing issue.
22
Case: 18-10596 Document: 00514726590 Page: 46 Date Filed: 11/16/2018
immaterial because no stay was put in place to preclude any sales while the appeal
was pending. See generally Hovey v. McDonald, 109 U.S. 150, 160-62 (1883)
(receiver case; explaining that absent a stay, district court orders are operative
during an appeal). Associated Recovery argues at length in its Opening Brief (at
16-20, and without supporting facts) about the purchasers’ alleged knowledge that
the sales could be undone on appeal. Regardless, however, because no stay was
entered, the purchasers were fully entitled to rely on the seller’s court-given
(Op. Br. at 14), Baron and Novo Point sought a stay—but that stay “was never
ROA.2925-2932. In the Fifth Circuit, there are at least three requirements for
collateral estoppel to apply: “(1) the issue to be precluded must be identical to that
involved in the prior action; (2) in the prior action the issue must have been
actually litigated; and (3) the determination made of the issue in the prior action
must have been necessary to the resulting judgment.” In re Davis, 3 F.3d 113, 114
(5th Cir. 1993) (citation omitted). Some cases add a fourth requirement: that
“there is no special circumstance that would make it unfair to apply the doctrine.”
23
Case: 18-10596 Document: 00514726590 Page: 47 Date Filed: 11/16/2018
Copeland v. Merrill Lynch & Co., 47 F.3d 1415, 1422 (5th Cir. 1995). All four
First, the issue presented here is the same as the issue presented in
Netsphere I—whether the Receivership was valid, and if not, what is the proper
way to unwind the receivership, i.e., what happens to the impacted assets. See
predecessor, Novo Point, specifically appealed the sale of the domain names and
presented the same argument in its briefs that it makes in this case. See, e.g.,
Novo Point March 28, 2011 Brief in Netsphere I at 50 (seeking “the return of all
property the district court below ordered taken from Novo Point, LLC”); Novo
Point and Baron June 29, 2012 Brief in Netsphere I at 97-102 (arguing, inter alia,
that the “District Court was without power to make any disposition of the assets
because the District Court was not authorized to seize the property of Novo Point
Once the Court had decided that the receivership was improper, deciding
how to equitably charge the costs of the receivership was difficult because the
ordinary solution of charging the costs against the party that had sought the
improper, but allowing the cash already in the receivership to be used to pay the
24
Case: 18-10596 Document: 00514726590 Page: 48 Date Filed: 11/16/2018
receiver’s fees, subject to the limitation that “[n]o further sales of domain names
or other assets are authorized.” Netsphere I at 314. Because the cash in the
receivership included the proceeds from the domain name sales, the Court’s
opinion allowed those sales proceeds to be used to pay the receiver’s fees. It was
reverse[d] the sales orders,” but simultaneously “did not expressly address factual
and legal issues relating to the” orders. Op. Br. at 35. In addition to the internal
contradiction, this argument is beside the point. While this Court did not address
all of Novo Point’s arguments regarding the sales order, it had no need to do so
because it concluded that the equitable solution was to wind down the receivership
by paying the receiver out of the cash in receivership without allowing any further
sales. The alleged new issues that Associated Recovery points to in its brief, id. at
36-37, all depend on the mistaken premise that this Court reversed the domain
25
Case: 18-10596 Document: 00514726590 Page: 49 Date Filed: 11/16/2018
name sales in Netsphere I.11 Because the Court allowed the prior sales to stand,
there are no new issues involving the sales implicated by this appeal.12
litigate these issues in the prior litigation. Among other things, it submitted briefs
to this Court in Netsphere I arguing that the domain sales orders should be
reversed. See, e.g., Novo Point March 28, 2011 Brief in Netsphere I at 49-50;
Novo Point and Baron June 29, 2012 Brief in Netsphere I at 97-102.
Associated Recovery asserts that Novo Point was not permitted to submit
briefs to the district court. But this is the same argument it made in Netsphere III,
which this Court rejected. See Netsphere III at 324 (“[Novo Point] contends that it
was prevented by the district court from lodging their fee award objections, but its
11
Associated Recovery also suggests that whether the sales orders “were
properly stayed pending appeal is an issue in and of itself, not addressed in
Netsphere I.” Op. Br. at 36. This is demonstrably incorrect as the Netsphere I
opinion explicitly noted that it had declined to stay the case pending appeal.
Netsphere I at 304. (“Baron appealed to the Fifth Circuit Court of Appeals and
five days later moved for a stay. While ‘express[ing] no view on the ultimate
merits,’ we held on December 20, that he had made an inadequate showing for a
stay. Baron renewed his motion on occasion but was never granted a stay.”).
12
Associated Recovery also argues that collateral estoppel cannot apply to the
sales order because collateral estoppel “does not apply to orders or judgments that
have been reversed on appeal.” Op. Br. at 27 (quoting Hudson v. Comm’r, 71 F.3d
877 (5th Cir. 1995)). Appellees do not dispute that had this Court vacated the sales
orders in a manner undoing past sales, collateral estoppel would not attach to those
orders. Here, however, appellees seek to collaterally estop Associated Recovery
based on this Court’s decision in Netsphere I and subsequent related decisions,
which have never been vacated or reversed.
26
Case: 18-10596 Document: 00514726590 Page: 50 Date Filed: 11/16/2018
record citation does not support this allegation. Further, [Novo Point], through
their counsel in this appeal, filed numerous motions in the district court following
the Netsphere I remand and did object to the March 2015 order. These acts belie
the claim that [Novo Point] was prevented from objecting to the fee orders.”).13
two courts.” Op. Br. at 40. But Netsphere I and this case have been litigated in the
same courts. Similarly, Associated Recovery alludes to new “issues” it says could
not have been addressed prior to the mandate issuing in Netsphere I. But it does
not identify these issues or explain how they affect the validity of the sales orders
Third, the resolution of the validity of sales was necessary to this Court’s
decision in Netsphere I. Simply put, this Court could not have authorized the
13
The Netsphere III opinion refers to both NovoPoint and Quantec as “Quantec”
for convenience. See Netsphere III at n.1. The quotations above replace “Quantec”
with “[Novo Point].”
14
Associated Recovery’s Seventh Amendment argument, which it raises in a
footnote, Op. Br. at 40 n.17, was not made to the district court below and is
therefore waived. It is also meritless because the Seventh Amendment does not
trigger the avoidance of issue preclusion. See Parklane Hosiery Co. v. Shore, 439
U.S. 322, 337 (1979) (“Thus if, as we have held, the law of collateral estoppel
forecloses the petitioners from relitigating the factual issues determined against
them in the SEC action, nothing in the Seventh Amendment dictates a different
result.”).
27
Case: 18-10596 Document: 00514726590 Page: 51 Date Filed: 11/16/2018
payment of the receiver out of the cash in the receivership without deciding
whether the sales producing the cash should stand. Associated Recovery does not
dispute that this requirement is met (which is unsurprising since it contends that
While Associated Recovery asserts that the domain names were sold for less that it
thinks they were worth, e.g., Op. Br. at 16, that is an unsupported opinion and not a
reason not to apply collateral estoppel; and Associated Recovery cites nothing to
receivership are particularly misplaced as this Court has repeatedly recognized that
those expenses were incurred and magnified by Baron’s vexatious conduct. See,
e.g., Netsphere I at 313 (“We also take into account that, to a large extent, Baron’s
own actions resulted in more work and more fees for the receiver and his
1400543, at *3 (N.D. Tex. Mar. 27, 2015) (“[T]he court also takes into account the
disruptive conduct of Receivership Parties Jeffrey Baron, Novo Point LLC, and
Quantec LLC, which continued after the order establishing the Receivership was
reversed and increased the Receivership expenses to which Baron now objects.”).
28
Case: 18-10596 Document: 00514726590 Page: 52 Date Filed: 11/16/2018
which is burdening third parties who were not involved in the original litigation or
Finally, even if this Court were to conclude that any of the collateral
estoppel requirements are not met, the judgment still should be affirmed. As
shown above, this Court did not vacate the sales of the domain names in Netsphere
I. Because the domain names were sold and the sales were never vacated,
Associated Recovery cannot allege that it has valid title to the domain names and
Novo Point, only has standing to assert an “injury in fact” incurred by its assignor,
Murphy Energy Corp., 923 F.Supp.2d 961, 965 (S.D. Tex. 2013); Croft v. Gov. of
Texas, 562 F.3d 735, 745 (5th Cir. 2009). Here, there is no injury in fact; this
Court ordered the sales proceeds to be used in Netsphere I and ratified the sales in
Netsphere III. Regardless, Associated Recovery cannot point to any injury caused
29
Case: 18-10596 Document: 00514726590 Page: 53 Date Filed: 11/16/2018
claims fail because they are all improper collateral attacks on this Court’s
Netsphere I decision deciding how to apportion the costs of the receivership, and
the concomitant orders and judgments. See, e.g., Federated Department Stores,
Inc. v. Moitie, 452 U.S. 394, 398 (1981) (“A final judgment on the merits of an
action precludes the parties or their privies from relitigating issues that were or
could have been raised in that action.”).15 In Netsphere I, this Court addressed the
issue of whether prior domain name sales should be undone, and decided that issue
of what this Court decided in Netsphere I, however, any challenge to that decision
or the related judgments and orders could only be brought in the context of the
lawsuit against different defendants. The very fact that Associated Recovery’s
predecessors actively sought but did not obtain the relief they seek here in the
Netsphere litigation, which is over and final, but instead seek relief in a new case,
15
Even an “erroneous conclusion” in a final judgment “is not open to collateral
attack, but can be corrected only by a direct review and not by bringing another
action.” Moitie, 452 U.S. at 398 (internal quotation omitted).
30
Case: 18-10596 Document: 00514726590 Page: 54 Date Filed: 11/16/2018
Again, this is not the first collateral attack lawsuit. Baron and Novo Point
sued the receiver in his personal capacity in state court, seeking to recover the
receivership fees. The receiver removed the case to the Northern District of Texas,
which dismissed the complaint, holding that “any claim by Plaintiffs based on the
Baron v. Vogel, No. 3:15-CV-232-L, 2016 WL 1273465 at *6 (N.D. Tex. Mar. 31,
2016) (emphasis added). This Court “affirm[ed] the district court’s judgment and
adopt[ed] its analysis in full.” Baron v. Vogel, 678 F. App’x 202, 203 (5th Cir.
2017).
As explained above, the receivership assets included proceeds from the sales
of the domain names. Over Baron’s and Novo Points objections, this Court
determined that the most equitable way to resolve the costs attributable to the
improper receivership was to allow those cash assets already in the receivership to
be used to pay the receiver’s costs, but that “[n]o further sales of domain names or
other assets [would be] authorized.” Netsphere I at 314; see also Netsphere III.
By embracing the proceeds of the sales for further use, this Court necessarily
ratified the sales that created those proceeds. By asking this Court to unwind the
sales instead, Associated Recovery seeks to recapture the very funds this Court
ordered should be used to pay the receiver’s fees incurred because of Baron’s
31
Case: 18-10596 Document: 00514726590 Page: 55 Date Filed: 11/16/2018
vexatious conduct, thereby undoing the orders in the earlier, concluded case.
Associated Recovery has never identified any authority that such relief may be
Indeed, in Netsphere III, Novo Point argued that the award of fees against its
assets in the receivership was improper. On appeal, this Court held that Novo
Point had waived any challenge to the fee orders and noted that in Netsphere I, the
Court has already decided that “the receivership assets be charged for ‘reasonable
Baron’s own vexatious conduct.” Netsphere III. The court further concluded that
Novo Point’s argument as to “whether fees could be charged against [its] assets in
the receivership” was “squarely foreclosed by the law of the case doctrine”
because Novo Point’s “assets were part of the receivership and Netsphere I ordered
the district court to award fees using the receivership assets.” Id. at 333, n.3
16
Associated Recovery argues that this Court is not “bound” by its decision in
Netsphere III but offers no reason why this is so, or why this Court should depart
from its prior decision. Op. Br. at 30 n.16. The Schurig case, cited by Associated
Recovery at Op. Br. 32, is not to the contrary. That case held that the fee order
was unenforceable against Baron, which is consistent with this Court’s Netsphere I
opinion instructing the district court to wind down the receivership. This Court did
not review the issue on appeal because the “creditors d[id] not challenge the
district court’s ruling that [this] court’s opinion in Netsphere, Inc., reversed
implicitly the fee order.” See In re Baron, 593 F. App’x 356, 360 (5th Cir. 2014).
See also ROA.2930 (District Court’s discussion of Schurig).
32
Case: 18-10596 Document: 00514726590 Page: 56 Date Filed: 11/16/2018
the Northern District of Texas and this Court, and thus cannot be attacked in
another lawsuit.
Having failed to recover the assets from the receiver, Baron and Novo
from the innocent third parties that bought the domain names from Novo Point
while it was in receivership. But Associated Recovery concedes in its brief that the
cash in the receivership used to pay the receiver’s fees included cash from the sales
of the domain names. See Op. Br. at 23. Thus, its argument that Netsphere I
grounds relied on by the district court but “may affirm dismissal on any basis
supported by the Rule 12(b)(6) record.” Torch Liquidating Tr. ex rel. Bridge
Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir. 2009). Even if this Court
concludes that the arguments for affirmance above do not apply, there are several
additional independent grounds preserved in the record on which this Court should
17
Appellees do not address Associated Recovery’s contract claim because it
voluntarily dismissed that claim below. ROA.2953-2959, 2966 at n.2.
33
Case: 18-10596 Document: 00514726590 Page: 57 Date Filed: 11/16/2018
purchasers for value of the domain names. Associated Recovery does not dispute
that it cannot state a claim against a bona fide purchaser for value, but it contends
this defense requires resolving factual disputes over whether appellees are, in fact,
This Court need not resolve any factual disputes to conclude that that
This Court has explained that a “bona fide purchaser . . . is one who buys property
in good faith for valuable consideration and without knowledge (actual or imputed)
Tel., 674 F.2d 453, 459 (5th Cir. 1982); see also CRS Recovery, Inc. v. Laxton, 600
F.3d 1138, 1145 (9th Cir. 2010) (addressing title to a domain name and stating that
“an innocent purchaser for value and without notice, actual or constructive, that his
vendor had secured the goods by a fraudulent purchase, is not liable for
Texas issued orders purporting to establish a receivership, appoint the receiver, and
grant exclusive possession and control over Novo Point’s ‘assets,’” including the
34
Case: 18-10596 Document: 00514726590 Page: 58 Date Filed: 11/16/2018
that “the District Court issued an order purportedly permitting the receiver to sell
Novo Point’s domain names.” ROA.2267 (Id. ¶¶ 15, 17, 19). Finally, it alleges
that the receiver sold the domain names. ROA.2268 (Id. ¶ 21). Thus, the operative
complaint itself establishes the facts necessary to conclude that appellees were
Novo Point’s claims, that allegation is conclusory and without supporting facts.
As such, this Court is not required to accept it as true. E.g., Gonzalez v. Kay, 577
F.3d 600, 603 (5th Cir. 2009) (explaining that to survive dismissal, “a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief
But even putting that aside, the knowledge that Novo Point disputed the
To defeat a bona fide purchaser defense, Associated Recovery must show that
party,” EDS Corp., 674 F.2d at 459 (emphasis added), not that its
Novo Point’s claim, the very entity that sold the domain names to appellees
through the receivership, and that assigned the purported claims in this case to
Associated Recovery.
35
Case: 18-10596 Document: 00514726590 Page: 59 Date Filed: 11/16/2018
The complaint also alleges that the sales of the domain name were below fair
market value. Third Amend. Compl. ¶ 27. This does not defeat the bona fide
purchaser defense for two reasons. First, the allegation is merely conclusory. See
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). Associated Recovery does not
allege what the fair market value of the domain names are or what they sold for.
But in its opening brief, it states that the domain names were sold for $1.6 million.
Second, the complaint alleges that appellees accepted the lower sales prices
to compensate for certain “risks” and “unfavorable terms” in the sale contracts.
ROA.2271 (Third Amended Compl. ¶ 27). Taking that as true, a purported lower
sales price in recognition of risk and unfavorable terms is a market value price, one
that prices in those alleged factors. Thus, the facts alleged in the complaint
actually establish that appellees paid fair market value for the domain names.
In addition, the district court already determined that the receiver’s actions
were within the scope of authority granted by the district court and not in bad faith,
which determinations this Court adopted on appeal. Baron v. Vogel, No. 3:15-CV-
232-L, 2016 WL 1273465 at *6 (N.D. Tex. Mar. 31, 2016); Baron v. Vogel, 678 F.
App’x 202, 203 (5th Cir. 2017) (“affirm[ing] the district court’s judgment and
adopt[ing] its analysis in full.”); see also Netsphere, Inc. v. Baron, No. 3:09-CV-
36
Case: 18-10596 Document: 00514726590 Page: 60 Date Filed: 11/16/2018
0988-F, 2013 WL 3327858, at *15 (N.D. Tex. May 29, 2013) (finding that “that
Because the complaint establishes that appellees were bona fide purchasers
for value, it fails to state a claim upon which relief can be granted. This Court
basis.
claims are barred by the statute of limitations. Associated Recovery offers two
First, Associated Recovery argues that this issue cannot be decided now
because “the applicable statute [of limitations] cannot be determined unless the
district court decides on the choice of law.” Op. Br. at 43. This objection is
meritless. While Associated Recovery does not identify which state’s law it thinks
should apply here, the only candidates are Texas, where the claims for relief were
brought and the domain name sales were consummated, or Virginia, where the
domain name registries are located. See, e.g., Griffin Tech., Inc. v.
26, 2014) (“The defendant domain names, which have a <.com> extension, reside
with the registry VeriSign, which is responsible for maintaining the <. com>
37
Case: 18-10596 Document: 00514726590 Page: 61 Date Filed: 11/16/2018
barred under either Texas or Virginia law, as described below, so this Court need
not decide choice of law issues to determine that the claims are barred.
earlier than March 27, 2015, the date that the receiver was discharged. But its
claims, such as conversion, would have accrued when the domain names were sold
(here, by December 12, 2012), not when the receiver was discharged. In addition,
this argument is incompatible with Associated Recovery’s position that the sales
orders were all vacated and void ab initio when the Netsphere I mandates issued.
for claims for conversion is the two-year period expressly provided by Texas Civil
Produccion v. BASF Corp., No. CIV.A. H- 10-1997, 2013 U.S. Dist. LEXIS
144166, at *33 (S.D. Tex. Oct. 1, 2013); Mayo v. Hartford Life Ins. Co., 354 F.3d
400, 410 (5th Cir. 2004) (“The applicable limitations period for [plaintiff’s]
years.”). Associated Recovery alleges that the sales giving rise to this claim
occurred “before December 18, 2012,” ROA.2268 (Third Amended Compl. ¶ 21);
38
Case: 18-10596 Document: 00514726590 Page: 62 Date Filed: 11/16/2018
see Netsphere I (issued Dec. 18, 2012 and prohibiting any “further” sales). The
theory of recovery. See Merrill Lynch, Pierce, Fenner & Smith, P.C. v. Greystone
Servicing Corp., No. 3:06-CV- 0575-P, 2007 U.S. Dist. LEXIS 69235, at *32
(N.D. Tex. Sep. 18, 2007); David Dittfurth, Restitution in Texas: Civil Liability for
Unjust Enrichment, 54 S. Tex. L. Rev. 225, 238 (2012) (“Most of the Texas courts
of appeals and federal courts that have considered the question under Texas law
enrichment.”). But to the extent the unjust enrichment allegation states a claim, it
would also be subject to the two-year statute of limitations period provided for by
Texas Civil Practice and Remedies Code § 16.003 and is therefore time-barred. See
Texas law a two-year statute of limitations also applies to claims for unfair
18
The conversion claim would also be time barred under Virginia’s three-year
statute of limitations. “[U]nder the Code, an action for conversion of an instrument
must be commenced within three years after the cause of action accrues.” Va.
Code § 8.3A–118(g); see Stefano v. First Union Nat. Bank of Virginia, 981 F.
Supp. 417, 421 (E.D. Va. 1997).
39
Case: 18-10596 Document: 00514726590 Page: 63 Date Filed: 11/16/2018
Corp. v. Sw. Wire Cloth, Inc., 934 F. Supp. 796, 806 (S.D. Tex. 1996)
(distinguishing such claims from Lanham Act claims for purposes of limitations
and finding “two year statute of limitations applies to [an] unfair competition
pleaded. Associated Recovery alleges that simply having a domain name in the
past results in trademark protection for that domain name. See ROA.2266, 2275-
Protection Act (ACPA) claim under 15 U.S.C. § 1125, Associated Recovery must
prove that (1) its mark “is a distinctive or famous mark entitled to protection;”
19
The trademark and unfair competition claims would also be time barred
under Virginia’s two-year statute of limitations. See Teaching Co. P’ship v. Unapix
Entm’t, Inc., 87 F. Supp. 2d 567, 585 (E.D. Va. 2000) (“The statute of limitations
applicable to TTC’s federal and common law claims for trademark infringement
and unfair competition is two years. (citing Va. Code Ann. §§ 8.01–249 (Michie
1999 Supp.), 8.01–243(A) (Michie 1992) (“[E]very action for damages resulting
from fraud, shall be brought within two years after the cause of action accrues.”)).
40
Case: 18-10596 Document: 00514726590 Page: 64 Date Filed: 11/16/2018
[Plaintiff]’s mark”; and (3) Defendant “registered the domain names with the bad
faith intent to profit from them.” S. Co. v. Dauben Inc., 324 F. App’x 309, 314
(5th Cir. 2009). Associated Recovery’s allegations fail at least the first and third
Associated Recovery cannot prove the first prong because it has no mark
Corp., 174 F.3d 1036, 1052 (9th Cir. 1999) (holding that registering a domain
name, even with an intent to use both the domain name and a corresponding mark
domain name alone could equate to having a mark, Associated Recovery has
effectively admitted that neither it nor its predecessors have used any of the
disputed marks / domain names since 2012. See, e.g., Op. Br. at 37-38 (alleging
transferred). Indeed, the transfer of the domain names away from Associated
shall be deemed to be abandoned … [w]hen its use has been discontinued with
intent not to resume such use. Intent not to resume may be inferred from
41
Case: 18-10596 Document: 00514726590 Page: 65 Date Filed: 11/16/2018
assertion that it or its predecessors-in-interest are currently using the alleged marks
in commerce. Thus, even if any alleged marks were ever used in a manner that
the claim.
Associated Recovery also cannot prove the third prong because there can be
§ 1125(d)(1)(B)(ii) (“Bad faith intent described under subparagraph (A) shall not
be found in any case in which the court determines that the [defendant] believed
and had reasonable grounds to believe that the use of the domain name was a fair
use or otherwise lawful.”); see also E. & J. Gallo Winery v. Spider Webs Ltd., 286
F.3d 270, 275 (5th Cir. 2002); Dauben Inc., 324 F. App’x at 315. The Court-
approved, lawful sale of the domain names falls under the ACPA safe harbor
believe the purchase and use of the domain names were lawful.
Recovery’s claim under Texas state law for unfair competition premised on
42
Case: 18-10596 Document: 00514726590 Page: 66 Date Filed: 11/16/2018
Recovery has not pleaded any mark that is eligible for protection. See, e.g., All
Am. Builders, Inc. v. All Am. Siding of Dallas, Inc., 991 S.W.2d 484, 488 (Tex.
VI. CONCLUSION
For the foregoing reasons, the judgment of the United States District Court
43
Case: 18-10596 Document: 00514726590 Page: 67 Date Filed: 11/16/2018
44
Case: 18-10596 Document: 00514726590 Page: 68 Date Filed: 11/16/2018
45
Case: 18-10596 Document: 00514726590 Page: 69 Date Filed: 11/16/2018
46
Case: 18-10596 Document: 00514726590 Page: 70 Date Filed: 11/16/2018
CERTIFICATE OF SERVICE
electronically upon counsel of record this 16th day of November, 2018 via the
47
Case: 18-10596 Document: 00514726590 Page: 71 Date Filed: 11/16/2018
P. 32(a)(5) and the type-style requirements of FED. R. APP. P. 32(a)(6) because this
48
Case: 18-10596 Document: 00514735589 Page: 1 Date Filed: 11/16/2018
Sincerely,
LYLE W. CAYCE, Clerk
By: _________________________
Renee S. McDonough, Deputy Clerk
504-310-7673
cc:
Mr. Mark Richard Backofen
Mr. R. William Beard Jr.
Mr. Joel Christian Boehm
Mr. Brian Casper
Mr. Matthew Thomas Furton
Ms. Debra E. Gunter
Mr. Conrad C. Herring
Mr. Timothy Brooks Hyland
Mr. Darin M. Klemchuk
Mr. William Robert Lamb
Ms. Claire Molle Maddox
Mr. James Mark Mann
Mr. Jerome A. Moore
Mr. Brian Pandya
Case: 18-10596 Document: 00514735589 Page: 2 Date Filed: 11/16/2018