Defendants’ Objections to Demand for Document Disclosure and Motion for Protection

ATLANTIC WAVE HOLDINGS, LLC and SECURE COMMUNITY, LLC,

§ §

IN THE DISTRICT COURT OF

§ Plaintiff/Judgment-Creditor

§

§

V.

HARRIS COUNTY, TEXAS

g o cas §

CYBERLUX CORPORATION and

MARK D. SCHMIDT, Individually, §

Defendant/Judgment Debtors.

§ § 129TH JUDICIAL DISTRICT

DEFENDANTS' OBJECTIONS TO DEMAND FOR DOCUMENT DISCLOSURE AND MOTION FOR PROTECTION

COME NOW, Defendants Cyberlux Corporation and Mark D. Schmidt (collectively, "Cyberlux" or "Defendants"), and file their Objections to Demand for Document Disclosure and Motion for Protection ("Motion"). In support thereof, Defendants respectfully show:

Robert Berleth ("Berleth") was appointed pursuant to the Court's TCPRC section 31.002 Turnover Order entered on May 22, 2025. Therefore, his appointment in the case, as outlined in section 31.002, is limited to:"take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment." TEX. CIV. PRAC. & REM. CODE § 31.002(b)(3). Although the initial judgment in that action was approximately $1.572 million, the Court's Turnover Order identified the judgment amount to be approximately $2.1 million. The Turnover Order did not credit Cyberlux for several hundreds of thousands of dollars in prior payments that Cyberlux had made to judgment creditors Atlantic Wave and Secure Community.

Unofficial'uOf Office de Marien Burgessa in Canon United States Government.

Even though Cyberlux objected to the incorrect judgment amount in the Court's Turnover Order, in hopes of streamlining a resolution of the matter, on June 10, 2025, the sum of $3,083,639.75 was tendered and delivered via wire transfer to the Receiver. The amount had been calculated by Berleth as the amount owed on the judgment.1 In fact, on June 9g 2025, Berleth represented to the Court during a hearing that this was the amount of the judgment owed, inclusive of fees. Berleth's "judgment calculation" included amounts allegedly owed for Plaintiffs attorneys' fees, as well as over $800,000 of fees and expenses Berleth claims to have incurred despite his three-week appointment during which Berleth did not seize of sell a single asset; he merely

Despite being appointed as a 'neutral' extension of this Court, Berleth had previously refused to accept payment on the judgment on June 5, 2025 in his initial improper effort to extend the receivership. In fact, during the June 9-2025 hearing, the Court ordered Berleth to provide his wiring instructions so the judgment could be satisfied.2 During that hearing, Cyberlux expressed concern Berleth would continue to act in his own interest to try and rack up more fees. In response, Berleth disagreed, stating "there's nothing to do . . . [but] await payment .. . " In fact, Berleth represented to the Court that awaiting payment was "all I'm doing." The transcript of that exchange reflects:

MR. PENNETTI: And, Judge, with that in

mind, can we have a stay until Wednesday morning at

8:30?

THE COURT: I am going to trust counsel 's

representations that this is where -- that he's not

Tamika T. Bartee, Official Court Reporter, CSR #12593 55th Judicial District Court, Harris County, Texas

going to do anything. He's going to await your payment

until Wednesday.

MR. BERLETH: There's nothing to do, Judge.

THE COURT: Yeah.

MR. BERLETH: I mean the facility is --

all the stuff has been shipped Really, the only thing

to do is to either await payment from Legalist or await

payment from HII. That'sall I am doing. So their idea

that I am somehow going out and, you know, flipping

mattress cushions, there's nothing to do at this point.

Transcript rom June 9, 2025 hearing, at p. 36: 3, 5-10.

On June 11, 2025, Berleth confirmed he received the $3,083,639.75, the amount he had calculated and demanded.3 After receiving what Berleth knew was an overpayment, Berleth filed his Final Report, Final Accounting, Verified Motion for Disbursement of Funds and Motion to Terminate Receivership ("Final Report").4 In Berleth's Final Report, Berleth indicated, among other things, that!

The Receivership has completed with no further remaining issues pending the final distribution of funds as detailed above. The Receiver has fulfilled his obligations required by law. The Receiver moves the Court order the judgment satisfied and Receivership terminated. The Receiver as that effective on the of entry of the Termination Order, the Receivership has been terminated, the Receiver has been discharged, and the Receivership has ceased to exist as a legal entity.

Final Report, at 4.

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Indeed, on June 12, 2025, Berleth confirmed on the record that he had received the funds.5 During that hearing, Cyberlux reiterated that no credits or offsets had been applied and, because of that, funds could not be distributed until the trial court determined the correct amount of credits disagreed that the Receiver was entitled to his proposed contingent fee, Cyberlux pointed out that even if an undocumented contingent fee could be awarded to the Receiver, the amount of that fee needed to be adjusted after the judgment amount was corrected.

Apparently dissatisfied with the June 12 hearing (i.e., that Cyberlux had not caved to Berleth's unreasonable fee and that Berleth would not immediately secure the $800,000 windfall), Berleth decided to continue his efforts to collect funds under the guise that he still had authority to act even though he had already filed his Receiver's Report, in which he represented, among other things, that: "[1] The Receivership has completed with no further remaining issues pending the final distribution .[2] The Receiver has fulfilled his obligations required by law . . . [3] The Receiver moves the Court order the judgment satisfied and Receivership terminated. . . ",6 Berleth

is now falsely claiming that the judgment has not been paid and misrepresenting to third parties that he still has statutory authority to act as receiver.

For example, nearly two weeks after the June 12 hearing, on June 25, 2025, the Receiver contacted Advanced Navigation and Positioning Corporation ("ANPC"), stating:

I'm seeking to get an agreed final order to distribute funds in the Cyberlux matter entered promptly. Unfortunately, Cyberlux has ~$65M in debt, with less than half that available to pay creditors. Will your clients accept $1,200,000 lump sum payment to completely release the Cyberlux matter, which would include all your legal fees, expenses, and other incurred amounts to date? Please call to confer.7

participating in settlement conference, and seek remedy for collecting on Cyberlux outside the receivership?"8 In response, counsel for Legalist stated they had not been made aware of a settlement conference, asking "[w]hat's the status on that?"9 Rather than conceding there is no "settlement conference" outside of something orchestrated entirely by Berleth himself, Berleth responded: "But you also haven't asked me to collect the funds for [L]egalist or even told me how much is owed. I'll take your lack of action and communication as a 'no'." Legalist's counsel then pressed Berleth, stating:

. . . [o]ur understanding based on the last hearing we attended on June 12 is that the judgment has been satisfied in full based on Legalist wiring you the attached judgment amount. Cyberlux indicated at the hearing that they plan to challenge the judgment and fee amount, which is their prerogative. .. If the landscape has changed and additional funds are in play to pay other creditors, please let us know. Legalist reserves all rights to seek funds to which it is legally entitled.10

Even though it was Legalist that had wired over $3 million based upon Berleth's own "judgment calculation, Berleth falsely claimed that "Cyberlux has not 'paid in full' and they've objected to the disbursement of funds anyways. . . "11 Berleth then misrepresented that the "trial court can't even set a hearing to terminate the receivership .. . "12 This representation is directly contrary to the court of appeals' directive that the trial court was not prohibited from taking further action to conclude the matter. 13

Upon information and belief, even despite filing his Receiver's Report and Motion to Terminate and despite that the ex parte TRO in the Tucker Action has expired by its own terms, Berleth continues to contact various creditors regarding Cyberlux, making attempts to settle claims, and trying to seize property of Cyberlux, most notably an approximately $25 million payment under a subcontract with HII Mission Technologies Corp., Berleth has made repeated efforts to contact HII and persuade it to pay the full receivable to his trust account.

MITul Giudi Kusin to TurnovO Tom akty Von Gola, Con Strict Carta

Then, on June 27, 2025, Berleth contacted the undersigned, demanding that Cyberlux produce documents pursuant to the Turnover Order. 14 Berleth has no basis for this demand, which amounts to nothing more than a blatant attempt to drive up Cyberlux's litigation costs and spite Cyberlux for refusing to capitulate. Berleth's demand and all of his ongoing actions fall well outside any judicial immunity he may have been afforded before the judgment was paid. Berleth's unlawful actions must be stopped to avoid irreparable harm to Cyberlux, its subsidiaries, and business interests. The Court should grant Cyberlux's motion for protection and immediately reprimand Berleth for his wrongful conduct.

ARGUMENT AND AUTHORITIES

The appointment of a receiver pursuant to § 31.002(b)(3) is expressly limited by statute. In fact, a trial court's authority to appoint a receiver is limited to appointing a receiver "with the authority to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment." TEX. CIV. PRAC. & REM. CODE § 31.002(b)(3). In other words, Berleth cannot act for other creditors (i.e., his duty under § 31.002 is to judgment creditors Atlantic Wave and Secure Community), and he may only act until the judgment is satisfied.

Under Texas law, a turnover order becomes "immediately moot when the judgment which it was issued to enforce was satisfied." Bennett/Nguyen Joint Venture v. Coghlan, No. 01-10- 00575-CV, 2011 WL 2732435, at *1 (Tex. App .- Houston [1st Dist.] July 14, 2011, no pet.); Pandozy v. Beaty, 254 S.W.3d 613, 617 (Tex. App .- Texarkana 2008, no pet.) ("once the judgment was paid, the turnover order lost its teeth and was of no further force and effect.").

Cyberlux paid the full amount calculated by Berleth on June 9, so Berleth has no further authority as a matter of law.This does not even account for the fact that Berleth himself filed his Report and Motion to Terminate the Receivership, in which Berleth contended:

The Receivership has completed with no further remaining issues pending the final distribution of funds as detailed above. The Receiver has fulfilled his obligations required by law. The Receiver moves the Court order the judgment satisfied and Receivership terminated. The Receiver as that effective on the of entry of the Termination Order, the Receivership has been terminated, the Receiver has been discharged, and the Receivership has ceased to exist as a legal entity.

There is no legitimate purpose behind Berleth's demand that Cyberlux produce documents other than to harass Cyberlux and drive up Cyberlux's legal fees. It is indisputable that the judgment was satisfied on June 10, 2025.15 The exact amount of Berleth's "judgment calculation" was paid despite the objections to the amount remain pending. Berleth confirmed receipt and filed his Final Report, which included a Motion to Terminate the Receivership. Because the judgment amount and all fees and expenses were paid in the overpayment to Berleth, and because even Berleth acknowledged his job is done, Berleth's continued actions, including the demand for documents, plainly exceed his statutory authority and Cyberlux is not obligated to comply with Berleth's unlawful demands. Berleth has no authority to actand Cyberlux's Motion should be granted.

Berleth has no authority to act yet continues to falsely represent the nature of his involvement regarding Cyberlux. This sort of misconduct is nothing new to Berleth. Indeed, the Honorable Judge Sim Lake for the Southern District of Texas previously redressed Berleth's actions. In re Berleth, No. MC H-19-2011, 2020 WL 522710, at *25 (S.D. Tex. Jan. 31, 2020). Indeed, Judge Lake found, among other things:

This is a troubling case. An inexperienced lawyer violated several Guidelines for Professional Conduct, and his conduct could have resulted in much more serious violations had the court found fraudulent intent. Having considered all of the relevant factors, the court concludes that Berleth should be privately reprimanded. A private reprimand is not a viable remedy, however, because the records in the underlying bankruptcy cases and in this action, which will include the court's Memorandum Opinion and Order, are publicly available. The court's Memorandum Opinion and Order will serve as a reprimand since the court has reproved Berleth for

his conduct. No further sanction is necessary. The court cautions Berleth, however, to give careful attention to all of the ethical standards that govern his conduct as an attorney admitted to practice before the court and to guard against any violations of those standards.

Id.

This is not the only instance. Only a few months after Judge Lake reprimanded Berleth, the Montana Supreme Court issued a memorandum opinion in which it held against Berleth in that landlord-tenant dispute. Notably, the Montana Supreme Court took issue with Berleth's lack of candor, stating:

Upon our review of the record, we are troubled by the inaccuracy of many of Robert's factual and legal representations here and below as a self-represented litigant but licensed member of the Montana Bar. While we generally give wide latitude to self-represented litigants, we caution Robert to be more cognizant of his professional duties before the courts of this State. See M. R. Pro. Cond. 1.1, 1.3, and 3.3 (competence, diligence, and candor to the tribunal).

Rideg v. Berleth, CV 21-21-M-DLC, 2021WL 3500815, at * 1 (D. Mont. Aug. 9, 2021).

In 2022, the Bankruptcy Court for the Southern District of Texas found Berleth intentionally deprived a debtor of his assets. In re Preferred Ready-Mix LLC, No. 21-33369, 2022 WL 16952650, at *3 (Bankr, S.D. Tex. Nov. 14, 2022). The Southern District of Texas found, among other things, that Berleth had acted intentionally and with bad faith, to wit:

the Court finds Berleth's actions were with actual knowledge of the bankruptcy filing and intentional, with the intent to deprive the debtor of his assets. Additionally, his actions were not in good faith and in contravention of the provisions of the automatic stay. Furthermore, the Court finds that Berleth did more than just passive retention of estate property, as demand was made. Consequences for violations of the automatic stay can be severe. Parties that willfully violate the automatic stay may be liable to debtors for actual damages, including costs, attorneys' fees, and, in appropriate circumstances, punitive damages. Here, actual damages would be duplicative of the damage award from violation of sections 543 and 542 of the Bankruptcy Code. However, to the extent the prior award

of damages is inappropriate, it is awarded here as actual damages on the same calculation noted above. Additionally, given the finding of bad faith and intentional actions by Berleth, the Court awards punitive damages of $10,000.00. Accordingly, total damages for violation of the automatic stay are awarded in the amount of $45,000.00 for the plaintiff against Berleth.

Id.

The Fifth Circuit upheld this opinion on appeal, recounting Berleth's actions as follows:

.. . the state court appointed Robert Berleth as a receiver and ordered him to seize and maintain various assets of Preferred Ready-Mix to satisfy the judgment. [] Preferred Ready-Mix filed for Chapter 11 bankruptcy in federal bankruptcy court and demanded its property be released. Berleth agreed to do so, but only in exchange for an administrative fee. Preferred Ready-Mix paid the fee and Berleth released the property ten days later. Preferred Ready-Mix then brought the instant adversary action in the bankruptcy court asserting four claims against Berleth:(1) turnover; (2) stay violation; (3) conversion; and (4) disallowance of claim. The bankruptcy court found in favor of Preferred Ready-Mix on every claim except the conversion claim and, concluding that Berleth had "effectively held the major assets of the debtor hostage.

In re Preferred Ready-Mix, L.L. C., .2024 WL 525249874, Case No. 24-20158 (5th Cir. Dec. 31, 2024).

Like in Preferred Ready-Mix, Berleth is outside his authority. Berleth's acts illustrate his ulterior motive of trying to expand the receivership in this case beyond its statutory authority so that he may seek additional fees. The Court should intervene and stop Berleth's wrongful conduct. Further, because Berleth's conduct is intentional and in bad faith, the Court should award Cyberlux its attorneys' fees for defending against Berleth's unlawful acts.

Cyberlux prays that the Court grant its Motion, order Berleth to pay Cyberlux's attorneys' fees necessitated by this motion, and to grant all other relief to which it is entitled.

Dated: June 30, 2025

Respectfully submitted,

By: /s/ Alexander J. Pennetti Douglas S. Lang State Bar No. 11895500 Alexander J. Pennetti State Bar No. 24110208

THOMPSON COBURN LLP 2100 Ross Avenue, Suite 3200 Dallas, Texas 75201 Tel Phone: (972) 629-7100 Fax: (972) 629-7171- dlang@thompsoncoburn.com apennetti@thompsoncoburn.com

COUNSEL FOR CYBERLUX CORPORATION AND MARK D. SCHMIDT

Unofficial Copy Office piMarilyn Bereitssions Rest

I certify that on June 30, 2025, I had this document served on all counsel of record via electronic service.

/s/ Alexander J. Pennetti Alexander J. Pennetti

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Linda Carranza on behalf of Alex Pennetti Bar No. 24110208 lcarranza@thompsoncoburn.com Envelope ID: 102603629

Filing Code Description: Motion (No Fee) Filing Description: Defendants' Objections to Demand for Document Disclosure and Motion for Protection Status as of 6/30/2025 3:54 PM CST

Associated Case Party: Robert Berleth

Name

BarNumber

Email

TimestampSubmitted

Status

Robert W.Berleth

rberleth@berlethlaw.com

6/30/2025 3:45:04 PM

SENT

Case Contacts

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BarNumber

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TimestampSubmitted

Status

Robert W.Berleth

rberleth@berlethlaw.com

6/30/2025 3:45:04 PM

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David A.Walton

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Michael Poynter

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Daniel AArdmore

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This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.

Linda Carranza on behalf of Alex Pennetti Bar No. 24110208 lcarranza@thompsoncoburn.com Envelope ID: 102603629

Filing Code Description: Motion (No Fee) Filing Description: Defendants' Objections to Demand for Document Disclosure and Motion for Protection Status as of 6/30/2025 3:54 PM CST

Case Contacts

Daniel AArdmore

ardmorelawfirm@gmail.com

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Tristian Harris

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Bernadette Martin

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Bernadette Martin

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Shawn Grady

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Alex Pennetti

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