Gary Russell Haymond, 633 B.R. 520

Background

Triple 7 Capital loaned $1,000,000 to South Texas Innovations (STI) by promissory note; payments were made but the note matured unpaid. Haymond’s name appears on instruments and, on June 20, 2017, Haymond signed a Security Agreement in his individual capacity pledging Garyrent membership interests and real property and (as guarantor) obligating himself on the debt.
Triple 7 sent a demand and sued STI, Garyrent, and Haymond in Texas state court; Triple 7 also filed a secured proof of claim in STI’s bankruptcy case.
On July 7, 2021 Triple 7 filed an involuntary Chapter 7 petition against Gary Russell Haymond asserting he was generally not paying debts and alleging an unsecured claim of $1,690,359.05.
Haymond moved to dismiss under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and alternatively for summary judgment under Rule 56, arguing Triple 7’s claim is contingent and subject to a bona fide dispute.
The Bankruptcy Court held a hearing, denied dismissal on jurisdictional and pleading grounds, denied summary judgment, concluded §303’s requirements are nonjurisdictional, found genuine disputes of material fact remain about contingency and bona fide dispute, and ordered Haymond to answer within 14 days and set the remaining issues for trial.

Issues

Issue	Triple 7 (Plaintiff) Argument	Haymond (Defendant) Argument	Held
Whether §303(b) standing/thresholds are jurisdictional (12(b)(1))	§303 requirements must be satisfied but court may adjudicate; petitioning creditor met requirements on form and facts	Failure to satisfy §303(b) means court lacks subject-matter jurisdiction; claim is contingent/subject to bona fide dispute	§303(b) is nonjurisdictional under Arbaugh; 12(b)(1) dismissal denied
Whether Official Form 105 and checked boxes suffice to plead an involuntary petition (12(b)(6))	Use of Official Form 105 satisfies Rule 8; facts pled permit inference petitioning creditor is eligible	Form is insufficient; petition must plead additional facts to show claim is undisputed and noncontingent	Official Form 105 is legally sufficient at pleading stage; 12(b)(6) dismissal denied
Whether Triple 7’s claim is contingent as to liability (summary judgment issue)	Security Agreement and guaranty language show an unconditional guaranty/payment obligation — not contingent	Ongoing state-court litigation and record indicate liability is contingent on unresolved facts	Genuine fact dispute exists about contingency; summary judgment denied
Whether Triple 7’s claim is subject to a bona fide dispute as to liability or amount (summary judgment issue)	State-court litigation alone doesn't prove a bona fide dispute; security agreement and lack of affirmative defenses support no bona fide dispute	Denial of state-court summary-judgment motions and pending litigation show a bona fide dispute	Court finds sufficient evidence of a genuine dispute; summary judgment denied; trial required

Key Cases Cited

Stern v. Marshall, 564 U.S. 462 (2011) (limits bankruptcy courts’ constitutional authority in narrow counterclaim context)
Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (statutory limitations are jurisdictional only when Congress clearly says so)
Subway Equip. Leasing Corp. v. Sims (In re Sims), 994 F.2d 210 (5th Cir. 1993) (standard for contingent claim and bona fide dispute analysis)
In re Green Hills Dev. Co., L.L.C., 741 F.3d 651 (5th Cir. 2014) (pending litigation is probative but not dispositive of bona fide dispute)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard explained)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden-shifting principles)
Ramming v. United States, 281 F.3d 158 (5th Cir. 2001) (party asserting jurisdiction bears the burden on 12(b)(1))
In re All Media Properties, Inc., 5 B.R. 126 (Bankr. S.D. Tex. 1980) (discusses distinction between contingent claims and disputed/unliquidated claims)