Not a Lexis Advance subscriber? Try it out for free.

Domain Prot., LLC v. Sea Wasp, LLC

United States District Court for the Eastern District of Texas, Sherman Division

November 19, 2019, Decided; November 19, 2019, Filed

Civil Action No. 4:18-cv-792

Opinion

MEMORANDUM OPINION AND ORDER

Pending before the Court are: (1) Sea Wasp, LLC's Motion for Sanctions (Dkt. #144); (2) Sea Wasp, LLC's Opposed Motion to Disqualify Gary Schepps as Counsel for Domain Protection, LLC (Dkt. #162); (3) Sea Wasp, LLC's Second Motion for Sanctions Against Gary Schepps (Dkt. #189); and (4) Sea Wasp, LLC's Motion to Supplement its Opposed Motion to Disqualify Gary Schepps as Counsel for Domain Protection, LLC (Dkt. #282). Having considered the motion and the relevant pleadings, the Court finds that each Motion is DENIED save Sea Wasp, LLC's Second Motion for Sanctions Against Gary Schepps (Dkt. #189) which is GRANTED in part and DENIED in part and Sea Wasp, LLC's Motion to Supplement its Opposed [*2]  Motion to Disqualify Gary Schepps as Counsel for Domain Protection, LLC (Dkt. #282) which is GRANTED.

BACKGROUND

The underlying facts of the present Motions, and indeed this entire action, are needlessly complicated.1 At the outset, the Court notes that each party is attempting to litigate matters not before the Court. That a number of appeals where taken up to the Fifth Circuit in prior cases by Schepps or that Jeffrey Baron brought a conspiracy claim against Domain Protection, Katz, and others is irrelevant. The only facts that the Court will consider are the facts that concern the present action and those that go directly to the validity of current representation. Those facts are as follows.

On June 18, 2018, Schepps filed the present action against Sea Wasp on behalf of Domain Protection (Dkt. #1). Domain Protection, through Schepps, claimed, in its first complaint, that Sea Wasp was liable for interference with contract, civil conspiracy, and conversion for impermissibly placing an executive lock on its Domain Names (Dkt. #1). Further, Domain Protection alleged that Sea Wasp was liable under the Texas Theft Liability Act and Stored Communications Act for the same conduct (Dkt. #1). [*3]  This was not Schepps first time litigating over the Domain Names, however. Prior to the present action, Schepps represented Jeffrey Baron, Quantec, LLC, and Novo Point, LLC in matters involving rights to the Domain Names ("Initial Proceeding") (Dkt. #162). Schepps then represented Plaintiffs Chris Payne, Domain Protection, LLC, Domain Vault, LLC, and Lisa Katz in a subsequent action in the Bankruptcy Court for the Eastern District of Texas against Baron, Quantec, and Novo Point ("Bankruptcy Proceeding"). The Bankruptcy Proceeding also concerned a dispute over ownership rights and control to the Domain Names. Upon discovery of Schepps' former representation of Baron, Quantec, and Novo Point in the Initial Proceeding, Judge Brenda Rhoades, immediately disqualified Schepps from further representation of Katz and Domain Protection in the Bankruptcy Proceeding. In re Payne, Case No. 16-41533, 2018 Bankr. LEXIS 4217 (Bankr. E.D. Tex. Dec. 11, 2018). As Judge Rhoades opined, the two proceedings were substantially related, and thus it was improper for Schepps to continue his representation. Id. 2

Schepps now represents Domain Protection in the present action for the very Domain Names which were in dispute in the former [*4]  two actions. Baron, Quantec, Novo Point, and Katz are not parties here, however. Indeed, each of Baron and Quantec's attempts to intervene have been denied by the Court (Dkt. #15; Dkt. #52; Dkt. #224). Rather, this action concerns Domain Protection's allegations against Sea Wasp and Individual Defendants Gregory Faia and Vernon Decossas. Despite Baron and Quantec's absence from the present action, Conrad Herring—counsel to Baron and Quantec—filed a Motion to Disqualify Gary Schepps (Dkt. #66) through his capacity as an officer of the court. Herring claimed that Schepps could not represent Domain Protection here as the present lawsuit was contrary to the interests of his former clients, Baron and Quantec (Dkt. #66). The Court denied Herring's Motion after finding that Herring lacked standing to challenge Schepp's representation (Dkt. #197). Specifically, the Court found that Herring was not one of the parties Schepps had formerly represented and thus, even as an officer of the court, Herring could not challenge Schepps' representation (Dkt. #197). Sea Wasp now makes the same, and additional, arguments that Herring made to disqualify Schepps from representing Domain Protection. Sea Wasp [*5]  additionally utilizes the same, and again additional, arguments to attempt to levy sanctions against Schepps for his representation of Domain Protection. The additional arguments can be characterized as pre-filing conduct and post-filing conduct.3 The Court begins with the pre-filing conduct.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

2019 U.S. Dist. LEXIS 199865 *; 2019 WL 6131298

DOMAIN PROTECTION, LLC, Plaintiff, v. SEA WASP, LLC, ET. AL., Defendants.

Subsequent History: Reconsideration denied by, Motion granted by, Motion denied by Domain Prot., LLC v. Sea Wasp, LLC, 2019 U.S. Dist. LEXIS 214722 (E.D. Tex., Dec. 13, 2019)

Prior History: Domain Prot., LLC v. Sea Wasp, LLC, 2019 U.S. Dist. LEXIS 118545 (E.D. Tex., July 17, 2019)

CORE TERMS

Sanctions, deposition, disqualify, disqualification, domain name, liquidation, allegations, motions, parties, former client, matters, argues, opposing counsel, present action, appearing, substantial relation, financial interest, essential facts, financial stake, alter ego, entitlement, discovery, questions, obstruct, lawsuit, orders, disqualification motion, prior representation, proprietary interest, substantial hardship