In re Haymond
| Decision Date | 24 March 2022 |
| Docket Number | CASE NO: 21-32307 |
| Parties | IN RE: Gary Russell HAYMOND, Debtor. |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas |
Matthew Brian Probus, The Probus Law Firm, Houston, TX, for Debtor.
Stephen Douglas Statham, Office of US Trustee, Houston, TX, for U.S. Trustee.
Eduardo Rodriguez, United States Bankruptcy Judge Triple 7 Capital, LLC asks this Court to summarily find in its favor and enter an order of relief against Gary Russell Haymond in this involuntary chapter 7 where the only statutory predicates under 11 U.S.C. § 303 remaining for trial are whether Triple 7 Capital, LLC's claim is contingent, whether it is subject to a bona fide dispute as to liability or amount, and whether an order of relief should be entered pursuant to § 303(h). On February 7, 2022, the Court held a hearing and took the matter under advisement. As detailed below, this Court summarily finds that Triple 7 Capital, LLC's claim is not contingent. Accordingly, summary judgment will be granted as to that matter. Genuine disputes of material fact remain regarding whether Triple 7 Capital, LLC's claim is subject to a bona fide dispute as to liability or amount, and whether an order of relief should be entered pursuant to § 303(h). Accordingly, summary judgment as to those matters is denied.
1. On June 6, 2016, South Texas Innovations, d/b/a STI, LLC ("STI ") executed apromissory note ("Note ") to Triple 7 Capital, LLC ("Triple 7 " or "Petitioning Creditor ") in the amount of $995,752 with a maturity date of December 1, 2016.1 The Note was signed by "South Texas Innovations, LLC, (‘STI ’) Gary Haymond" as Borrower.2
2. By December 1, 2016, the Note was not paid.3
3. On March 3, 2017, and after STI defaulted, Triple 7's managing member, Robbie Hass ("Hass ") contacted Gary Russell Haymond ("Haymond " or "Alleged Debtor ") several times to demand payment and to discuss a potential plan for repayment.4 As discussions continued, STI made two payments—on April 4, 2017 in the amount of $106,435.15, and on May 1, 2017 in the amount of $97,354.5
4. By May 31, 2017, Hass and Haymond still had not reached an acceptable repayment plan, and Hass threatened suit.6 In response, Haymond e-mailed Hass stating that his lawyer had drawn up a document that gave Hass security and told Hass to make modifications to it if he did not like it.7 Haymond stated that he could not stop Hass from suing him but threatened that a suit "puts [Hass] well behind other people who [are] after STI for debt collection."8
5. On June 21, 2017, STI negotiated an extension of the maturity date of the Note to March 15, 2018 ("Security Agreement ").9
6. The Security Agreement contained the following language:
7. Under the Security Agreement, "Debtor" agreed to repay $400,000 on or before September 15, 2017, and the remainder by March 15, 2018.11
8. The Security Agreement also provided that "Debtor" would be in default under the Security Agreement if, among other things, "Debtor" failed to pay the $400,000 by September 15, 2017, and/or failed to repay the Note in full by March 15, 2017.12 Upon default, Triple 7 could declare all obligations immediately due and payable and exercise any remedies under the Security Agreement or under applicable law.13
9. On October 12, 2017, Triple 7 sent a demand letter purporting to accelerate the debt due under the Note because the payment of $400,000.00 was not made on or before September 15, 2017.14
10. On November 17, 2017, Triple 7 filed suit against STI, Garyrent Properties LLC, and Haymond in Montgomery County, Texas ("State Suit ").15
11. On August 3, 2018, three petitioning creditors filed an involuntary petition under chapter 7 of the Bankruptcy Code against STI in a case styled In re South Texas Innovations, LLC , Case No. 18-34245, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division ("STI BK ").16 On October 30, 2018, an order for relief under chapter 11 was entered, converting the case to a case under chapter 11 of the Bankruptcy Code.17
12. On March 11, 2019, Triple 7 filed its secured Proof of Claim No. 34 in the STI BK, based on the Note and Security Agreement. The claim was for $1,460,957.29 and asserted a secured portion of only $1.00.18
13. On July 7, 2021, Triple 7 filed the instant involuntary petition ("Involuntary Petition ") against Haymond.19 In the Involuntary Petition, Triple 7 asserted a claim for $1,690,359 ("Claim ").20
14. On July 10, 2021, Haymond filed a "Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(1) and (6) and Alternatively, to be Treated as a Motion for Summary Judgment Pursuant to Fed. R. Civ. P. 12(d) and 56(a)" ("Motion to Dismiss ").21
15. On September 13, 2021, the Court held a hearing on the Motion to Dismiss.22
16. On September 28, 2021, the Court issued its Memorandum Opinion and accompanying Order denying the Motion to Dismiss.23
17. On October 12, 2021, Alleged Debtor filed "Gary Russell Haymond's Original Answer to Involuntary Petition" ("Answer ").24
18. On November 24, 2021, Triple 7 filed the instant motion for summary judgment ("Motion for Summary Judgment ") and accompanying supplement.25
19. On December 23, 2021, Haymond filed his response ("Response ").26
20. On January 13, 2022, Triple 7 filed its "Reply in Support of Its Motion for Summary Judgment" ("Reply ").27
21. On February 7, 2022, the Court held a hearing on the Motion for Summary Judgment and, at the conclusion, took the matter under advisement ("Hearing ").
This Court holds jurisdiction pursuant to 28 U.S.C. § 1334, which provides "the district courts shall have original and exclusive jurisdiction of all cases under title 11." Section 157 allows a district court to "refer" all bankruptcy and related cases to the bankruptcy court, wherein the latter court will appropriately preside over the matter.28 This court determines that pursuant to 28 U.S.C. § 157(b)(2)(A) and (O), the instant motion contains core matters because the motion seeks relief under the United States Bankruptcy Code. Further, this is the type of proceeding that can only arise in the context of a bankruptcy case.29 There is no state law equivalent for an involuntary bankruptcy petition. Finally, this Court may only hear a case in which venue is proper.30 Pursuant to 28 U.S.C. § 1409(a), "a proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending." Here, venue is proper because over the last 180 days before the filing of this Involuntary Petition, Alleged Debtor resided, had the principal place of business, or had principal assets located in this district longer than in any other district.31
The Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."32 A genuine dispute of material fact exists if the fact at issue could affect the outcome of the case and based on the evidence, a reasonable jury could return a verdict for the non-moving party.33 A movant asserting that a fact cannot be genuinely disputed must cite to particular parts of material in the record evidencing that no genuine dispute is present, or show that an adverse party cannot produce admissible evidence to support that fact.34 While the Court may consider other materials in the record, it need only consider those actually cited.35
In a motion for summary judgment, "[t]he movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact."36 Where the nonmoving party has the burden of proof at trial, the movant must show the court that the nonmoving party lacks evidence of one or more material elements of its case.37 This does not require the movant to negate the elements of the nonmovant's case—demonstrating the absence of evidence suffices.38 If the movant fails to meet this burden, the summary judgment motion must be denied.39 Conversely, if the movant succeeds in showing a lack of evidence, then the nonmoving party "must identify specific evidence in the summary judgment record demonstrating that there is a material fact issue concerning the essential elements of its case for which it will bear the burden of proof at trial."40 A court is not to weigh evidence, assess its probative value, or resolve factual disputes, but it must construe the evidence in the light most favorable to the nonmoving party.41
Involuntary bankruptcy petitions are governed by § 303 of the Bankruptcy Code. Section 303(b) sets the numerosity and debt thresholds for petitioning creditors eligible to commence an involuntary case.42 It is a " ‘gating’ provision, intended to place limitations on the commencement of an involuntary case."43 In turn, § 303(h) governs the determination of whether a petitioning creditor who has filed an involuntary bankruptcy petition may obtain an order for...
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