In re Petrus

Full title: IN RE: David George PETRUS, Alleged Debtor.

Court: United States Bankruptcy Court, D. Nevada

Date published: Jul 20, 2024

662 B.R. 713 (Bankr. D. Nev. 2024)

Opinion

Case No.: 22-11818-abl

2024-07-20

IN RE: David George PETRUS, Alleged Debtor.

Brett A. Axelrod, Fox Rothschild LLP, Las Vegas, NV, Troy S. Fox, Fox, Imes and Crosby, LLC, Las Vegas, NV, for Debtor.

Honorable August B. Landis, United States Bankruptcy Judge

Brett A. Axelrod, Fox Rothschild LLP, Las Vegas, NV, Troy S. Fox, Fox, Imes and Crosby, LLC, Las Vegas, NV, for Debtor.

MEMORANDUM AND ORDER GRANTING INVOLUNTARY CHAPTER 7 PETITION

Honorable August B. Landis, United States Bankruptcy Judge.

On July 21, 2023, the contested involuntary bankruptcy petition filed in the case identified in the caption came on for trial. Attorney David Mincin appeared on behalf of the sole petitioning creditor, Dogwood Consulting, LLC¹. Attorney Troy S. Fox appeared on behalf of alleged debtor David George Petrus.²

1 Hereafter, "Dogwood."

2 Hereafter, "Mr. Petrus."

I. OVERVIEW

Dogwood is the holder of a prepetition judgment entered in its favor against Mr. Petrus and others by the Oregon Circuit Court for Josephine County.³ Ultimately, Dogwood's prebankruptcy efforts to collect the Dogwood Judgment in Oregon, Virginia, and Nevada, proved unsuccessful.

3 Hereafter, "Dogwood Judgment." Trial Ex. 1, Bates Nos. DOGWOOD 004-012.

On May 24, 2022, Dogwood filed an involuntary Chapter 7 bankruptcy petition against Mr. Petrus. As amended by an August 3, 2022 "Submission of Signature," that involuntary petition identifies Mr. Petrus as the alleged debtor and Dogwood as the sole petitioning creditor.

On March 30, 2023, counsel for Mr. Petrus filed an Amended Answer to Involuntary Petition,⁴ in which it was alleged that he had 12 or more creditors as identified on an attached list, that Dogwood was not a creditor qualified to file an involuntary petition against Mr. Petrus, that Dogwood could not show that Mr. Petrus was generally not paying his debts as they became due, and that Dogwood's involuntary petition was subject to dismissal because it had been filed in bad faith.

4 Hereafter, "Amended Answer." ECF No. 51. In this document, all references to "ECF No." are to the numbers assigned to the documents filed in the bankruptcy case identified in the caption as they appear on the official docket maintained by the Clerk of the Court.

The July 21, 2023, trial record is closed. Post-trial briefs were timely submitted by counsel for Dogwood and Mr. Petrus. The issue presented is whether the Court should grant Dogwood's involuntary Chapter 7 bankruptcy petition against Mr. Petrus and enter order for relief in this case.

II. THE TRIAL RECORD

A. Stipulated Facts

On July 20, 2023, counsel for Dogwood and Mr. Petrus prepared and filed Stipulated Facts for Trial.⁵ The Court takes judicial notice of those stipulated facts to the extent appropriate under and permitted by FED. R. EVID. 201.

5 ECF No. 75.

B. Trial Exhibits

At trial, these exhibits were admitted into evidence:

Exhibits Admitted Via Party Offering Exhibits Admitted by Stipulation Testimony Dogwood 1 and 5 7 Mr. Petrus N/A A, C, H, I, K, L, M, N, O, P, and Q

C. Witness Testimony

Two witnesses provided trial testimony: Dogwood's managing member, Sascha Eiblmayr,⁶ and Mr. Petrus.

6 Hereafter, "Mr. Eiblmayr."

1. Dogwood's Case in Chief as Petitioning Creditor

a. Mr. Eiblmayr's Testimony

i. Direct Examination

Mr. Eiblmayr testified that he had resided near Medford, Oregon, since 2016. He explained that he had been involved in the hemp industry for the 5-year period preceding trial. Mr. Eiblmayr wanted to expand his involvement in the hemp industry to include the growing, cultivating, and refinement of hemp into various saleable products. In 2018, Mr. Eiblmayr learned that an individual named Galen Weiss⁷ was also involved in the hemp growing industry. Mr. Eiblmayr explained that he wanted to develop a partnership with someone who, like Mr. Weiss, had experience in the hemp growing industry. In 2019, Mr. Eiblmayr met Mr. Weiss.

7 Hereafter, "Mr. Weiss."

Subsequently, Dogwood was created in Oregon by Mr. Eiblmayr, Mr. Weiss, Nathan Plant, and three other equity members. Mr. Eiblmayr testified that he held a 26% ownership interest in Dogwood. As one of Dogwood's managing members, Mr. Eiblmayr stated that he performed various executive duties including negotiation of lease agreements and business contracts. Mr. Eiblmayr said that his involvement with Dogwood's business operations was more at the back end of the hemp production process, with an emphasis on the sale of Dogwood's various hemp products. Mr. Eiblmayr explained that Mr. Weiss was the head grower for Dogwood.

Mr. Eiblmayr testified that Dogwood's hemp growing operations were conducted entirely in the State of Oregon. He stated that hemp farming is an "all year process." He explained that hemp propagation and genetic testing begins in the spring, with seed planting following in June, the harvest of the hemp crop in October and November, followed by post-harvest cultivation and refinement work that continues until the growing cycle begins anew the following spring.

Mr. Eiblmayr explained that after Dogwood was created, he met Mr. Petrus during the 2019 hemp harvest through a hemp industry contact. Mr. Eiblmayr understood that Mr. Petrus was interested in procuring hemp product that remained in the field after Dogwood's initial cultivation work was completed.

Mr. Eiblmayr testified that eventually a contract was executed under which Mr. Petrus's employees would collect hemp product that remained in the field after Dogwood's harvest was complete, and Dogwood would then be paid for all post-harvest hemp product collected by Mr. Petrus's employees (the "Contract"). Under the Contract, Mr. Petrus agreed to pay Dogwood the total sum of $175,000.00. An initial $25,000.00 payment was to be delivered to Dogwood when the Contract was signed, followed by two $75,000.00 payments over the next six weeks. Mr.

Eiblmayr stated that Mr. Petrus did make the initial $25,000.00 down payment when the Contract was signed but didn't make either of the two remaining $75,000.00 payments to Dogwood when due under the Contract.

Mr. Eiblmayr explained that when Dogwood did not receive the $150,000.00 balance due under the Contract from Mr. Petrus, Dogwood began collection efforts. He testified that over the next several months he had a number of telephone conversations with Mr. Petrus in which Mr. Petrus made several promises to pay the balance due under the Contract. Mr. Eiblmayr averred that Mr. Petrus failed to honor any of those promises. Ultimately, Mr. Eiblmayr told Mr. Petrus that Dogwood would have no choice but to retain counsel because the continuing payment default under the Contract was causing ongoing financial harm to Dogwood and its equity owners. In response, Mr. Petrus told Mr. Eiblmayr that if Dogwood filed suit to enforce the payment obligations under the Contract, Dogwood wouldn't receive anything at all.

Mr. Eiblmayr testified that when the $150,000.00 balance due to Dogwood under the Contract remained unpaid in February 2020, Dogwood retained counsel and filed suit in Oregon.⁸ He stated that because Mr. Petrus did not appear or oppose the relief requested in the Dogwood Lawsuit, the Dogwood Judgment was entered in favor of Dogwood against Mr. Petrus by default.⁹

8 Hereafter, "Dogwood Lawsuit."

9 Trial Ex. 1, Bates Nos. DOGWOOD 004-012.

Mr. Eiblmayr said that Dogwood retained counsel in Virginia in an effort to collect the Dogwood Judgment because Dogwood believed Mr. Petrus owned real property there. He explained that although the Dogwood Judgment was transcribed to Virginia and recorded as a lien against Mr. Petrus's real property there, Dogwood did not recover any money through those efforts. He said that while some money was garnished from a Virginia bank account held in the name of Mr. Petrus's company, 9 Distribution, Inc.,¹⁰ Dogwood was unsuccessful in collecting any other money from Mr. Petrus in Virginia.

10 Hereafter, "Virginia Garnishment."

According to Mr. Eiblmayr, the Dogwood Judgment was subsequently transcribed to Nevada in a continuing effort to collect the unpaid balance. Mr. Eiblmayr said that Mr. Petrus was residing in Las Vegas at that time, so Dogwood hoped to collect the unpaid balance of the Dogwood Judgment from Mr. Petrus's assets there. Mr. Eiblmayr testified that Dogwood did not succeed in collecting any money from Mr. Petrus in Nevada. He also stated that Mr. Petrus did not make any voluntary payments on the Dogwood Judgment.

Having unsuccessfully attempted to collect the Dogwood Judgment in Virginia and Nevada, Mr. Eiblmayr testified that Dogwood's principals believed that the "next step was to see if we could have a trustee assigned to pay Dogwood if Mr. Petrus wouldn't." Asked if the filing of the involuntary bankruptcy petition was an attempt to "shake down" Mr. Petrus or force him to the settlement table, Mr. Eiblmayr responded in the negative. Mr. Eiblmayr stated that Mr. Petrus simply hadn't fulfilled his obligations to Dogwood under the Contract. Mr. Eiblmayr explained that since he brought the Contract with Mr. Petrus to Dogwood in the first instance, he felt a fiduciary responsibility to Dogwood's other equity partners to fight to recover

the unpaid balance due under the Dogwood Judgment from Mr. Petrus.

Mr. Eiblmayr stated that because Dogwood was a startup company, the negative financial impact of Mr. Petrus's default under the Contract and failure to satisfy the Dogwood Judgment was severe. According to Mr. Eiblmayr, the payments owed to Dogwood by Mr. Petrus under the Contract were needed to financially support Dogwood's future business operations. He explained that while Dogwood grew a hemp crop the following year, the crop wasn't successful. At that point, according to Mr. Eiblmayr, Dogwood lacked the money to continue its business operations.

ii. Cross-examination

On cross-examination, Mr. Eiblmayr acknowledged that after efforts to collect the Dogwood Judgment in Virginia and Nevada proved unsuccessful, Dogwood opted to pursue an involuntary bankruptcy case against Mr. Petrus. He also acknowledged that Dogwood's counsel had taken Mr. Petrus's judgment debtor examination several months after the Virginia Garnishment occurred in January of 2021.¹¹ More particularly, Mr. Eiblmayr confirmed that Dogwood's counsel took Mr. Petrus's judgment debtor examination on September 29, 2021, about 8 months after the Virginia Garnishment, and about 8 months before Dogwood filed the involuntary bankruptcy petition against Mr. Petrus on May 24, 2022.¹² He stated that the focus of the judgment debtor examination was on whether Mr. Petrus's financial records would reveal any assets available to satisfy the Dogwood Judgment, not whether Mr. Petrus owed money to other creditors.

11 See Trial Ex. 7.

12 Hereafter, "Petition Date."

Mr. Eiblmayr acknowledged that he had been advised, prior to the Petition Date, that if the involuntary petition against Mr. Petrus was not granted by the Court, he and Dogwood could be held responsible for Mr. Petrus's related attorney fees and expenses. He also testified that prior to the Petition Date, Dogwood had been made aware of the statutory requirements that would have to be proven before the involuntary petition against Mr. Petrus could be granted. He confirmed that he signed and filed the involuntary petition against Mr. Petrus on Dogwood's behalf.

Mr. Eiblmayr testified that he had not reached out to any of Mr. Petrus's other creditors prior to the Petition Date seeking to have them join Dogwood's involuntary petition against Mr. Petrus. Asked how many creditors needed to sign the involuntary petition against Mr. Petrus before it could be granted, Mr. Eiblmayr testified that he relied on the advice of counsel on that issue. He stated that the involuntary petition against Mr. Petrus was filed because, in his view, it was his job to try to make things right for the people who had been wronged as a result of Mr. Petrus's breach of the Contract.

As to whether Dogwood had asked any creditors identified on the creditor list attached to Mr. Petrus's Amended Answer¹³ to the join the involuntary petition against Mr. Petrus, Mr. Eiblmayr responded in the negative. He testified that he believed certain creditors were disputed, and stated that he would generally not have contacted Mr. Petrus's creditors except upon advice of counsel.

13 ECF No. 51, pp. 3-10 of 10.

Mr. Eiblmayr was asked how much money had been obtained by Dogwood through the Virginia Garnishment. He testified that the Virginia Garnishment netted about $72,000.00 for Dogwood. He testified further that it was his understanding that

9 Distribution, Inc., whose bank account was the target of the Virginia Garnishment, was a company wholly owned by Mr. Petrus.¹⁴

14 Hereafter, "9 Distribution."

iii. Redirect Examination

No questions were asked of Mr. Eiblmayr on redirect examination.

b. Mr. Petrus's Testimony

i. Direct Examination

Having been sworn as a witness, Mr. Petrus conceded that Dogwood is the holder of the Dogwood Judgment.¹⁵ He also acknowledged that the Dogwood Judgment had been transcribed to, and recorded in, the State of Nevada.¹⁶ He claimed to be unaware that the Dogwood Judgment had been transcribed to and recorded in the State of Virginia, but did acknowledge that Dogwood had successfully obtained money from a 9 Distribution bank account pursuant to the Virginia Garnishment.¹⁷ Mr. Petrus stated that he did not make any voluntary offers to pay the money owed to Dogwood under the Dogwood Judgment outside the context of a proposed settlement agreement.

15 See Trial Ex. 1, Bates Nos. DOGWOOD 004-012.

16 See Trial Ex. 1.

17 9 Distribution was a co-defendant named in the Dogwood Lawsuit and in the Dogwood Judgment. See Trial Ex. 1, Bates Nos. DOG-WOOD 004-012.

Mr. Petrus was next asked to review a judgment¹⁸ entered by the Nevada District Court for Clark County in a case styled Shawn Taylor and Kimberly Taylor, Plaintiffs, v. David G. Petrus and 9 Distribution, Inc., Defendants, Case No. A-21-842294-C.¹⁹ Mr. Petrus stated that the Taylor Judgment first came to his attention at some point in 2023 while he was addressing the involuntary bankruptcy petition filed by Dogwood.

18 Trial Ex. N; the "Taylor Judgment."

19 Hereafter, "Taylor Lawsuit."

Asked who Shawn and Kimberly Taylor²⁰ were, Mr. Petrus identified them as individuals who had invested a total of $200,000.00 in 9 Distribution. Asked if the Taylors had received any of their money back, Mr. Petrus answered affirmatively. He said a "good faith payment of $20,000.00" had been made to the Taylors "early on" but conceded that no other voluntary payments had been made to them. Asked whether the $20,000.00 payment to the Taylors had been made by Mr. Petrus personally or by 9 Distribution, Mr. Petrus testified that he was uncertain but believed that the payment had probably been made by 9 Distribution. He further noted that he was aware that the Taylor Judgment entered against him by default was for approximately $1.4 million. When asked if he had taken any steps to set aside the Taylor Judgment, he stated simply "not yet."

20 Collectively "the Taylors."

Mr. Petrus was then questioned about a group of documents memorializing a loan made to National O&M, Inc.²¹ by the United States Small Business Administration.²² Mr. Petrus explained that O&M was a government contracting business, wholly owned by Mr. Petrus, that operated utilities for the Department of Defense. Asked to review the documents memorializing the loan made to O&M by the SBA,²³ Mr. Petrus stated that he believed that he was required to personally guarantee repayment of the O&M SBA loan. He proved

21 Hereafter, "O&M."

22 Hereafter, "SBA."

23 Trial Ex. M; the "O&M SBA Loan."

unable, though, to identify a written personal guarantee or any other loan documents signed in his personal capacity to corroborate that testimony.

Mr. Petrus was next asked to examine a group of documents memorializing a separate loan made to 9 Distribution by the SBA.²⁴ Asked whether he had personally guaranteed or signed any loan documents regarding the 9 Distribution SBA Loan in his personal capacity, Mr. Petrus was again unable to identify a written personal guarantee or any other loan documents that he had signed in his personal capacity.

24 Trial Ex. L; the "9 Distribution SBA Loan."

Questioning then turned to a document purporting to memorialize a Paycheck Protection Program²⁵ loan made to O&M.²⁶ Asked whether he had personally guaranteed or signed any loan documents in connection with the O&M PPP Loan, Mr. Petrus was yet again unable to identify a written personal guarantee or any other loan documents that he had signed in his personal capacity. Mr. Petrus testified that O&M had actually received two PPP loans. He testified that while the first PPP loan to O&M had been forgiven, the document he had been asked to examine regarding the O&M PPP Loan²⁷ related to a second and separate loan which had not been forgiven.

25 Hereafter, "PPP."

26 Trial Ex. O; the "O&M PPP Loan."

27 Trial Ex. O.

Asked whether he had any personal communications with Mr. Eiblmayr when the Virginia Garnishment took place, Mr. Petrus responded in the negative. He also acknowledged that the Virginia Garnishment was an involuntary collection action, not a voluntary attempt to satisfy some or all of the Dogwood Judgment.

ii. Cross-examination

On cross-examination, Mr. Petrus was again asked about documents related to the 9 Distribution SBA Loan.²⁸ In particular, he was asked to review the provisions related to the SBA's rights upon default.²⁹ He acknowledged that the documents memorializing the 9 Distribution SBA Loan provided the SBA with "recourse to collect all of the amounts owing from any borrower and guarantor, if any." Asked if he recalled executing a personal guarantee for repayment of the amounts advanced under the 9 Distribution SBA Loan, Mr. Petrus stated that he was uncertain whether the amount of the loan required him to execute a personal guarantee.

28 Trial Ex. L.

29 See Trial Ex. L, Bates No. DP 123, para. 5, under the heading "SBA'S RIGHTS IF THERE IS A DEFAULT."

Mr. Petrus was next asked a series of questions about the documents memorializing the O&M SBA Loan.³⁰ Specifically, he was asked to review the provisions related to the SBA's rights upon default.³¹ He acknowledged that the loan documents provided the SBA with "recourse to collect all of the amounts owing from any borrower and guarantor, if any." Asked if he recalled executing a personal guarantee for the amounts advanced by the SBA to 9 Distribution, Mr. Petrus stated he believed that he did sign a personal guarantee related to the SBA loan to 9 Distribution.

30 Trial Ex. M.

31 See Trial Ex. M, Bates No. DP 142, para. 5, under the heading "SBA'S RIGHTS IF THERE IS A DEFAULT."

Mr. Petrus was asked again to review the list of creditors he had prepared in

connection with the trial.³² He stated that he believed the list was a true and accurate reflection of all creditors he owed money to when the list was prepared. He confirmed that he personally provided the information contained in the creditor list.

32 Trial Ex. A.

iii. Redirect Examination

On redirect examination, Mr. Petrus was questioned further about the list of creditors he had provided.³³ He identified the first creditor as TD Auto Finance, the holder of a secured loan collateralized by a 2019 Ram Truck.

33 Id.

Mr. Petrus identified the next creditor on the list as American Express National Bank.³⁴ He acknowledged that the list identified AmEx as the holder of an unsecured claim in an "Unknown" amount. Asked if he knew how much was owed to AmEx, he stated "about $40,000.00." Pressed about documents that would corroborate the amount owed to AmEx, Mr. Petrus acknowledged that documents existed that would verify the amount owed to AmEx. He conceded that no such documents had been produced in connection with his testimony.

34 Hereafter, "AmEx."

Asked if the next creditor on the list was Berlin-Wheeler, Inc.,³⁵ Mr. Petrus answered in the affirmative. He testified that BWI was a collection agent for Cox Communications.³⁶ Mr. Petrus testified to his belief that in January 2023, BWI opened an account as a collection agent in order to collect on unpaid invoices for services rendered by Cox on account during or before October 2022.

35 Hereafter, "BWI."

36 Hereafter, "Cox."

Mr. Petrus was then questioned about the unsecured claim of Cash 1, LLC,³⁷ another creditor on the list.³⁸ He acknowledged that the Cash 1 claim was shown as having been incurred in 2023, well after the Petition Date.

37 Hereafter, "Cash 1."

38 As is discussed in more detail later in this Memorandum, the Cash 1 claim was not included in the creditor list attached to Mr. Petrus's Amended Answer. Compare Trial Ex. A, Bates No. DP 3, Item 4.4, with ECF No. 51, p. 5 of 10, Items 4.3 and 4.4.

Questioning of Mr. Petrus next turned to the unsecured claim of Discover Financial³⁹ as shown on the creditor list. He acknowledged that the unsecured claim held by Discover had been listed in an "Unknown" amount, stated that the related credit card was his personal credit card, and testified that he believed he owed Discover "about $8,000.00." Pressed for more detail, Mr. Petrus conceded that he did not know whether any exhibits produced in connection with the trial would corroborate his testimony that Discover was owed $8,000.00, or that the related credit card was his personal credit card.

39 Hereafter, "Discover."

Questioning then turned to the unsecured claim of NV Energy as shown on the creditor list. He acknowledged that the unsecured claim held by NV Energy had been listed in an "Unknown" amount, reflected recurring energy billings on an account in his name, and that he stayed current on the billing statements he received from NV Energy. He stated that if he failed to pay NV Energy invoices, his electrical service would be turned off, and noted that his electrical service had continued uninterrupted for about two years.

Next, Mr. Petrus was asked about the unsecured claim of Paradigm Assets Recovery⁴⁰

40 Hereafter, "Paradigm."

shown on the creditor list. He testified that Paradigm's claim was "a loan that one of [his] companies got that [he] had to personally guarantee." He was then asked whether any written documents existed that would confirm his personal guarantee of a loan made by Paradigm to one of his companies. In response, Mr. Petrus testified that while he was sure such documents existed, to his knowledge they had not been produced in connection with the trial.

Mr. Petrus was then asked about the unsecured claim of Pinnacle Bank shown on the creditor list. Mr. Petrus testified that Pinnacle Bank's claim related to a PPP loan made to one of his companies, and that he had personally guaranteed repayment of that loan. Asked whether any written documents existed that would confirm his personal guarantee of Pinnacle Bank's PPP loan to one of his companies, Mr. Petrus stated again that he believed he was required to sign a personal guarantee. But he also conceded that to his knowledge no documents evidencing such a personal guarantee had been produced in connection with the trial.

Next, Mr. Petrus was asked about the SBA's unsecured claim shown on the creditor list. He acknowledged that the SBA's unsecured claim related to an EIDL loan made to one of his companies, and stated that he had personally guaranteed repayment of that loan. Asked whether any written documents existed that would confirm his personal guarantee of the EIDL loan the SBA made to one of his companies, Mr. Petrus testified that he believed he was required to sign a personal guarantee. But he also conceded that to his knowledge no documents evidencing such a personal guarantee had been produced in connection with the trial.

Dogwood's counsel confirmed that there would be no further testimony offered in Dogwood's case in chief. Counsel for Dogwood rested with respect to presentation of evidence in support of the involuntary petition against Mr. Petrus. Counsel for Mr. Petrus moved for entry of judgment as a matter of law, contending that Dogwood had failed to establish that there were fewer than 12 holders of qualified claims against Mr. Petrus in the context of 11 U.S.C. § 303(b). Counsel for Dogwood opposed. The Court overruled Mr. Petrus's motion for entry of judgment as a matter of law for reasons stated on the record. Counsel for Mr. Petrus then proceeded with the presentation of evidence in Mr. Petrus's case in chief.

2. Mr. Petrus's Case in Chief as Alleged Debtor

a. Mr. Petrus's Testimony

i. Direct Examination

Mr. Petrus testified that through June 2022 he owned a few companies that provided government contracting services. He explained that O&M had historically been the company that provided Mr. Petrus with his primary income stream, supplemented by income generated by 9 Distribution's business operations. He stated that neither O&M nor 9 Distribution were currently operating or generating any cash flow, and that he had been self-employed as a consultant for approximately one year.

Asked whether O&M and 9 Distribution existed when Dogwood filed its involuntary petition, Mr. Petrus responded that he was still running O&M and 9 Distribution. He clarified that while 9 Distribution was still open on the Petition Date, it did not have any cash flow at that time.

Mr. Petrus testified that the source of O&M's business income was periodic payments

received from the federal Government. He explained that the receipt of those payments was occasionally delayed due to the Government's payment process, sometimes for as long as 4-5 months. He also noted that when large payments were delayed, it would put strain on the finances of O&M and his personal finances, and resultantly he would fall behind or default on his personal bills. He said that eventually the Government would issue the anticipated payments to O&M, at which point he would catch up on his personal bills.

Asked why O&M was no longer operating, Mr. Petrus characterized the year 2022 as "challenging." He explained that the last two Government contracts at O&M were completed in 2022, with the final contract being completed in June of that year.

Mr. Petrus was next questioned about the creditor list he had prepared for trial.⁴¹ He reaffirmed that the debt to TD Auto Finance secured by his 2019 Dodge Ram pickup truck was his personal debt. He also reaffirmed that there was an outstanding unpaid balance owed to TD Auto Finance, and that the related payments were current on the Petition Date. Mr. Petrus reviewed a payment history of the TD Auto Finance loan⁴² and confirmed that it was a true and accurate summary of payments he had made on the related debt.

41 Trial Ex. A.

42 Trial Ex. E.

Asked about the debt owed to AmEx as shown on the creditor list, Mr. Petrus testified that a total of four corporate credit card accounts had been taken out through AmEx in connection with two of the companies that he owned. He stated that AmEx required him to personally guarantee payment of the balances due as a predicate to issuing the corporate credit cards. Asked if any amounts owed to AmEx were in default on the Petition Date, Mr. Petrus stated that he was unsure. Asked if he was certain that he owed money to AmEx on the Petition Date, he answered in the affirmative. Mr. Petrus conceded that the creditor list showed an "Unknown" amount due to AmEx, but stated that he believed the amount currently owed to AmEx was "about $40,000.00." Mr. Petrus also acknowledged his personal and contractual obligation to repay the debt owed to AmEx.

Questioning then turned to the BWI debt shown on the creditor list. Mr. Petrus reiterated that BWI was a collection agent for Cox. Mr. Petrus verified that he did owe money to Cox on the Petition Date and did not dispute that debt. He also stated that to the best of his knowledge, he still owed money to Cox and/or BWI and was personally and contractually obligated to repay it.

Asked about the debt to Capital One shown on the creditor list, Mr. Petrus stated that it reflected the balance due on his personal Capital One credit card account. He testified that he owed money on the Capital One credit card account as of the Petition Date. He stated that to the best of his knowledge he still owed money on the Capital One credit card account and was personally and contractually obligated to repay it. Asked to review a related credit card statement for the period from February 3, 2023, through March 3, 2023,⁴³ Mr. Petrus confirmed that it was a true and accurate copy of the billing statement issued to him by Capital One for that time frame. He also verified that the Capital One billing statement was issued to him in his individual capacity. Next, Mr. Petrus was asked about the unsecured claim of Cash 1 reflected on the creditor list.⁴⁴ He reaffirmed that the claim held by Cash 1 was shown as having been incurred in 2023, long after the Petition Date. He testified that the Cash 1 debt, incurred after the Petition Date, was a revolving debt. He stated that he still owed money to Cash 1.

43 Trial Ex. I.

44 See note 38, supra.

Questioned next about the debt to Chase Card Services⁴⁵ shown on the creditor list, Mr. Petrus confirmed that it reflected a balance owed to Chase on a personal credit card. He testified that he personally owed money on his Chase credit card account as of the Petition Date. He testified further that to the best of his knowledge he still owed money on the Chase credit card account. He did not dispute his indebtedness to Chase and affirmed his personal and contractual obligation to repay the amount owed to Chase on his credit card account.

45 Hereafter, "Chase."

As for the debt to Discover shown on the creditor list, Mr. Petrus reiterated that the debt was for money owed on a personal credit card account which was last active on November 17, 2021. Mr. Petrus testified that he believed the credit card account balance owed to Discover on that date was "about $10,000.00." He stated that he still owed Discover about $8,000.00 on the Petition Date. He testified that he did not dispute his indebtedness to Discover card, stating that he believed he was personally and contractually obligated to pay it.

Asked about the debt to Dogwood shown on the creditor list, Mr. Petrus stated that he did not dispute that Dogwood was the holder of the Dogwood Judgment that had been entered against him.

With respect to the debt to Jefferson Capital shown on the creditor list, Mr. Petrus testified that it was for a personal loan used to pay personal expenses. He stated that he owed money to Jefferson Capital on the Petition Date, that he still owed money to Jefferson Capital, and that he believed he was personally and contractually obligated to repay the Jefferson Capital debt.

Questioned about the debt to Mariner Finance shown on the creditor list, Mr. Petrus testified that it arose from a personal loan he had taken out. He stated that he owed money to Mariner Finance on the Petition Date and did not dispute that debt. He testified that he still owed money to Mariner Finance, and believed that he was personally and contractually obligated to repay the Mariner Finance debt.

As for the debt to National Credit Systems, Inc.⁴⁶ shown on the creditor list, Mr. Petrus explained that the debt arose from his personal guarantee of amounts due under a business lease with Rock Ridge Management,⁴⁷ and that NCSI was pursuing related collection remedies on behalf of Rock Ridge. He testified that he owed money to Rock Ridge and/or NCSI on the Petition Date. He testified further that he did not dispute his indebtedness to Rock Ridge and/or NCSI, that he still owed money to Rock Ridge and/or NCSI, and that he believed that he was personally and contractually obligated to repay it.

46 Hereafter, "NCSI."

47 Hereafter, "Rock Ridge."

Mr. Petrus was then asked to revisit the unsecured claim of NV Energy shown on the creditor list. He said that he owed money to NV Energy on the Petition Date, since he owed them money every month in connection with his electric service. He stated that he currently owed money to NV Energy and affirmed that he was personally

paying the amounts owed to NV Energy in connection with his electric service.

Questioned again about the unsecured claim held by Paradigm shown on the creditor list, Mr. Petrus explained that one of his businesses had originally taken out a loan from Headway Capital which he had personally guaranteed. He stated that he did not dispute the fact that he was personally and contractually obligated to repay the money owed to Headway Capital on the Petition Date. He testified that Paradigm was shown on the creditor list because Paradigm had purchased the Headway Capital loan and his related personal guarantee. Mr. Petrus said that he had worked out a payment plan with Paradigm in early 2023.⁴⁸ He testified that he did not dispute his personal obligation to repay the debt held by Paradigm.

48 Trial Ex. K.

Mr. Petrus was next asked to revisit the unsecured claim of Pinnacle Bank shown on the creditor list. He reiterated that the claim held by Pinnacle Bank arose from a PPP loan to one of his companies which he had personally guaranteed. He testified that he did not believe that the PPP loan had been forgiven, did not dispute that he personally owed money to Pinnacle Bank, and believed that the loan was reflected on his personal credit report.

Questioning then turned to the unsecured claim held by the Taylors shown on the creditor list. Mr. Petrus stated that he did not dispute that he owed money to the Taylors under the Taylor Judgment. He also confirmed that he had not yet taken any action to set aside the Taylor Judgment.

Next, Mr. Petrus was asked to again review the SBA's unsecured claim shown on the creditor list. He reaffirmed that the SBA's unsecured claim as shown on the creditor list related to an EIDL loan made to one of his companies. He stated that he had personally guaranteed repayment of that loan and did not dispute that he owed money to the SBA on the Petition Date.

Turning to a list of four executory contracts and unexpired leases included in his creditor list,⁴⁹ Mr. Petrus was asked about the related financial obligations. He was first asked about a contract with AT&T for cellular telephone service. He testified that the cellular telephone contract with AT&T was in existence on the Petition Date. He stated that while he had remained current on the payment obligations under the AT&T contract through the Petition Date, the contract had not expired. He stated that he was still current on his payments to AT&T under the contract. He reviewed a monthly statement issued by AT&T under the contract for the post-petition period from January 25, 2023, through February 24, 2023.⁵⁰ Having done so, he posited that it was a true and accurate statement for cellular telephone services rendered by AT&T during that post-petition time period.

49 Trial Ex. A, Bates No. DP 9.

50 Trial Ex. H.

Mr. Petrus was next asked about a rental agreement with an entity identified on the creditor list as "Berkshire."⁵¹ Mr. Petrus responded that Berkshire was the current landlord for his personal apartment under a written lease agreement dated July 4, 2022.⁵² He testified further that he had lived in the same apartment prior

51 Trial Ex. A, Bates No. DP 9.

52 Trial Ex. C. Mr. Petrus testified that his lease was originally with an entity he identified as Tri-Con Residential, but said that Berkshire had subsequently purchased the lease and was his current landlord.

to July 4, 2022, and that the term of his written lease with Berkshire would expire on July 3, 2023. He confirmed that as of the Petition Date, he was living in the premises leased from Berkshire and was current on the related lease payments. He testified that he did not dispute his personal obligation to pay monthly rent to Berkshire under his lease agreement.

The next series of questions related to an insurance contract with Progressive Insurance⁵³ as shown on the creditor list.⁵⁴ Mr. Petrus explained that the contract with Progressive provided vehicle insurance for his 2019 Ram pickup truck. Asked about a related payment receipt dated after the Petition Date,⁵⁵ he stated that the receipt confirmed a regular premium payment made on his automobile insurance contract with Progressive. He said that he had maintained vehicle insurance with Progressive for at least 2-3 years. He stated that as of the Petition Date, the insurance contract with Progressive was in existence and he was current on the related premium payments. He did not dispute his personal and contractual obligation to make the premium payments required under his insurance contract with Progressive.

53 Hereafter, "Progressive."

54 Trial Ex. A, Bates No. DP 9.

55 Trial Ex. F. The payment receipt consists of a single page, and is dated January 4, 2023.

Mr. Petrus was then questioned about an internet service contract with Verizon as shown on the creditor list.⁵⁶ He explained that Verizon provided his personal high-speed internet service. While he was uncertain as to precisely when Verizon started providing his personal internet service, he testified that "it's been a while, though." He stated that on the Petition Date he had personal high-speed internet service though Verizon and was current on the related payments. Asked about a billing statement for the post-petition period from February 22, 2023, through March 21, 2023,⁵⁷ he confirmed that it was an accurate copy of the statement issued to him by Verizon for that post-petition time period. He testified that he typically remained current on the amounts owed to Verizon under the contract for his personal high-speed internet service. He acknowledged that he remained personally and contractually obligated to pay for personal high-speed internet services provided Verizon.

56 Trial Ex. A, Bates No. DP 9.

57 Trial Ex. P.

Mr. Petrus was directed back to the documents relating to the Pinnacle Bank claim shown on the creditor list.⁵⁸ Mr. Petrus acknowledged that the documents had been issued by Pinnacle Bank to his wholly owned company, 9 Distribution, not to him personally. Upon review of the documents, he confirmed that a $71,918.60 levy on 9 Distribution's account at Pinnacle Bank occurred on January 5, 2021, and verified that the funds levied upon were remitted to Dogwood.⁵⁹

58 Trial Ex. 5.

59 Trial Ex. 5, Bates No. DOGWOOD 027.

Asked whether he had suffered any damages resulting from the filing of the involuntary petition by Dogwood, Mr. Petrus answered in the affirmative. He asserted that the involuntary petition resulted in damage to his reputation. He stated that vendors observed that he was in bankruptcy. He stated that a business deal for the sale of a Government utilities contract related to Shaw Air Force Base to an entity identified as "Optech" was pending

on the Petition Date.⁶⁰ He posited that the Optech Sale failed to close due, at least in part, to the filing of Dogwood's involuntary petition. He testified that the bankruptcy resulted in a "major hit" to his credit score and resulted in credit denials. He testified that in the Government contracting process, he was required to disclose whether he was the subject of a bankruptcy proceeding, and resultantly, this case was a "major cloud over [his] head." He stated that he had incurred approximately $20,000.00 in related legal fees.

60 Trial Ex. Q; the "Optech Sale."

ii. Cross-examination

On cross-examination, Mr. Petrus acknowledged that Optech cited several other reasons unrelated to the involuntary bankruptcy petition in declining to move ahead with the Optech Sale.⁶¹ Mr. Petrus acknowledged that the $1.4 million Taylor Judgment entered against him previously and by default also had a negative impact on his creditworthiness. He reaffirmed that he had not taken any steps to obtain relief from the Taylor Judgment. Mr. Petrus also acknowledged that no copies of any signed personal guarantees were included in the exhibits proffered at trial.

61 See id.

Turning back to the TD Auto Finance payment history discussed earlier in his testimony,⁶² Mr. Petrus was asked whether his name appeared anywhere in the document. He responded that it did not, but stated that he had printed the statement off from his online account with TD Auto Finance.

62 Trial Ex. E.

Asked again about the claims held by AmEx, Mr. Petrus acknowledged that those accounts typically required payment in full each month. Asked if the AmEx accounts he had testified about previously were current on the Petition Date, Mr. Petrus stated that he owed AmEx money on the Petition Date but would have to look at the related statements to see whether the accounts were current at that point in time.

Asked to review his Capital One statement,⁶³ Mr. Petrus acknowledged that the statement was for the post-petition period from February 3, 2023, through March 2, 2023. Asked if he believed that the $298.26 statement balance was evidence of the amount owed to Capital One on the Petition Date, Mr. Petrus indicated that he didn't know, and would have to look at the statement encompassing the Petition Date to be certain. He also conceded that the Capital One account was opened in December 2022, about 7 months after the Petition Date.⁶⁴ He also conceded that he was able to get the Capital One credit card notwithstanding the filing of the involuntary petition, albeit with a credit limit of $300.00.

63 Trial Ex. I.

64 Trial Ex. A, Bates No. DP 3.

Mr. Petrus was asked again about the claim held by BWI as Cox's collection agent. He acknowledged that the creditor list he had provided showed that his Cox account was last active in October 2022, and that BWI opened its account in January 2023.⁶⁵ Mr. Petrus was asked if he believed that the BWI claim shown on the creditor list was evidence of how much he owed on the Petition Date. He responded that he believed he could provide documentation establishing the amount he owed to Cox on the Petition Date since Cox was still providing high-speed internet services to him at that time. He conceded that no such documentation was present in the trial record. Asked to revisit the list of executory contracts and unexpired leases included in his creditor list,⁶⁶ Mr. Petrus acknowledged that although he had made some payments late, he generally remained current on the required payments to the entities identified on that list (i.e., AT&T, Berkshire, Progressive, and Verizon). He conceded that default in payments to the entities on that list would generally result in termination of services. He acknowledged that he still had all of the accounts referenced on that list with the exception of Progressive. He explained that his vehicle insurance was currently provided by GEICO. He confirmed that he was current on his premium installment payments with Progressive when he switched to GEICO.

65 Id.

66 Trial Ex. A, Bates No. DP 9.

iii. Redirect Examination

Asked whether he typically paid his credit cards in full or only made minimum payments, Mr. Petrus stated that full payment was typically required by AmEx each month. He said the amount paid on his other credit card accounts would vary depending on how much money he had on hand.

Counsel for Mr. Petrus confirmed that there would be no further testimony offered in his case in chief, then rested as to the presentation of evidence.

3. Dogwood Declines to Present Rebuttal Evidence and the Record is Closed

Counsel for Dogwood confirmed that Dogwood would not present any rebuttal evidence. The Court then closed the evidentiary record.

D. Post-Trial Matters

In lieu of closing arguments, and in keeping with the Court's instruction, counsel for Dogwood and Mr. Petrus filed their respective post-trial briefs by August 10, 2023.⁶⁷ The Court takes judicial notice of the documents comprising its official docket to the extent appropriate under and permitted by FED. R. EVID. 201(a)-(d). Satisfied that the evidentiary record is both complete and robust, the Court issues the following findings of fact and conclusion of law.

67 More particularly, Mr. Petrus's post-trial brief was filed on August 4, 2023. ECF No. 77. Dogwood's post-trial brief was filed on August 10, 2023. ECF No. 78.

III. FINDINGS OF FACT

A. Prepetition Matters

1. On September 9, 2020, Dogwood obtained a General Judgment and Money Award by Default against Mr. Petrus in the Oregon Circuit Court for Josephine County in a case captioned Dogwood Consulting, LLC, an Oregon Limited liability Company, Plaintiff, v. 9 Distribution, Inc., a Nevada Corporation, and David Petrus, Defendants, Case No. 20CV26558.⁶⁸ On September 22, 2020, a Supplemental Judgment and Money Award for Dogwood's attorney's fees was entered in that case.⁶⁹

2. The Dogwood Judgment in favor of Dogwood and against Mr. Petrus included the following monetary awards:

68 Trial Ex. 1, Bates Nos. DOGWOOD 004-007; ECF No. 75, p. 2 of 2, para. 4 and 5.

69 Trial Ex. 1, Bates Nos. DOGWOOD 009-012. For clarity and avoidance of any doubt, all references to "Dogwood Judgment" in this Memorandum are to the General Judgment and Money Award by Default and the Supplemental Judgment and Money Award collectively.

a. Principal: $155,000.00⁷⁰ b. Prejudgment Interest: $133,500.00⁷¹ c. Postjudgment Interest: Accruing monthly at the rate of 10% of the unpaid principal amount until paid⁷² d. Costs: $681.00⁷³ e. Prevailing Party Fee: $345.00⁷⁴ f. Attorney Fees: $7,312.50⁷⁵ g. Postjudgment Interest on Fees: 9% simple interest until paid⁷⁶

3. On March 12, 2021, Dogwood transcribed the Dogwood Judgment to the Nevada District Court for Clark County under Case No. A-21-830978.⁷⁷ The parties' Stipulated Facts for Trial⁷⁸ and transcription filings made by Dogwood with the Nevada District Court for Clark County⁷⁹ reveal that on January 5, 2021, Dogwood received two garnishment checks, one for $333.70 and the other for $71,918.60, which after application to the Dogwood Judgment reduced the unsatisfied balance to $224,586.20.⁸⁰

4. Mr. Petrus never satisfied the amounts due under the Dogwood Judgment. While he disputes the basis of the Dogwood Judgment, he has never taken any legal action to set aside, appeal from, contest, invalidate, or otherwise legally attack the validity of the Dogwood Judgment.⁸¹

5. On August 14, 2022, the Taylor Judgment was entered against Mr. Petrus by default the Nevada District Court for Clark County in the amount of $1,409,098.00.⁸²

6. The Taylors are not petitioning creditors in this case.

70 Trial Ex. 1, Bates No. DOGWOOD 005.

71 Id.

72 Id.

73 Trial Ex. 1, Bates No. DOGWOOD 006.

74 Id.

75 Trial Ex. 1, Bates No. DOGWOOD 010.

76 Id.

77 Trial Ex. 1, Bates Nos. DOGWOOD 001-002; ECF No. 75 p. 2 of 2, para. 6.

78 ECF No. 75.

79 Trial Ex. 1, Bates Nos. DOGWOOD 001-002.

80 Trial Ex. 1, Bates No. DOGWOOD 002; ECF No. 75, p. 2 of 2, para. 10.

81 ECF No. 75, p. 2 of 2, para. 7.

82 Trial Ex. N, Bates No. DP 149.

B. The Involuntary Petition

1. On May 24, 2022, counsel for Dogwood filed the involuntary Chapter 7 bankruptcy petition against Mr. Petrus commencing

this case.⁸³

83 ECF No. 1; ECF No. 75, p. 1 of 2, para. 2.

2. Although the involuntary petition filed by Dogwood against Mr. Petrus on May 24, 2022, was signed by counsel for Dogwood, it was not signed by a Dogwood representative.⁸⁴

84 ECF No. 1, p. 4 of 5, Part 4.

3. On August 3, 2022, counsel for Dogwood filed a "Submission of Signature," with a copy of the involuntary petition against Mr. Petrus bearing the signature of Dogwood's counsel and the signature of Mr. Eiblmayr in his capacity as "Managing Member for Dogwood Consulting, LLC."⁸⁵

85 ECF No. 28, p. 6 of 6, Part 4.

C. Post-Petition Matters

1. On May 26, 2022, counsel for Dogwood filed a Certificate of Service showing that Dogwood's involuntary petition and a related summons were served on Mr. Petrus "[b]y placing same to be depositing [sic] for mailing in the United States Mail in Las Vegas, Nevada, with which first class postage was fully prepaid and was addressed to the parties as listed in the attached matrix."⁸⁶

86 ECF No. 3.

2. The Certificate of Service listed Mr. Petrus's address as "2744 South Highland Drive, Las Vegas, Nevada 89109"⁸⁷ the same address reflected on the involuntary petition.⁸⁸

87 Id.

88 Compare ECF 1, p. 2 of 5, Item 6 with ECF No. 3; see also Trial Ex. 7, Bates No. DOGWOOD 068, p. 8 line 14-p. 9 line 21.

3. On March 30, 2023, after Dogwood's involuntary petition was filed and served on Mr. Petrus, after a series of stipulations between the parties extending the time to file an answer were approved by the Court,⁸⁹ after the withdrawal of Mr. Petrus's original counsel,⁹⁰ after Dogwood submitted the required signature on the involuntary petition,⁹¹ after Mr. Petrus filed a pro se response to Dogwood's involuntary petition,⁹² after new counsel for Mr. Petrus appeared,⁹³ and after the parties' stipulated scheduling order regarding trial of the involuntary petition was approved by the Court,⁹⁴ counsel for Mr. Petrus filed an Amended Answer to the involuntary petition.⁹⁵

89 See ECF Nos. 6, 7, 11, and 12.

90 See ECF Nos. 15, 16, 19, 22, and 25.

91 See ECF No. 28.

92 See ECF No. 29 and 32.

93 See ECF No. 31.

94 See ECF Nos. 39 and 40.

95 ECF No. 51.

4. Paragraph 1 of the Amended Answer filed by Mr. Petrus in response to Dogwood's involuntary petition states:

1. [Mr.] Petrus contends that he has 12 or more creditors. A list of said creditors is attached to this answer. [Mr.] Petrus contends that these were creditors on the date of the filing of the petition. As such, the numerosity requirement of § 303(b) has not been met.⁹⁶

96 ECF No. 51, p. 1 of 10, para. 1, lines 21-23.

5. A creditor list is annexed to Mr. Petrus's Amended Answer⁹⁷ which identifies a total of nineteen claims:

97 ECF No. 51, pp. 3-10 of 10.

• One secured claim;

• No priority unsecured claims;

• 14 general unsecured claims (including Dogwood); and

• Four holders of executory contracts.⁹⁸

98 Id. As discussed below, the creditor list admitted into evidence at trial as Exhibit A contains a total of twenty claims, because it includes an unsecured claim in favor of Cash 1. The claim of Cash 1 is not included in the creditor list attached to Mr. Petrus's Amended Answer. Compare ECF No. 51, p. 5 of 10, Items 4.3 and 4.4 with Trial Ex. A, Bates Nos. DP 3-4, Items 4.3 through 4.5, inclusive.

6. The creditor list attached to Mr. Petrus's Amended Answer provided a mailing address for each creditor.

7. There was an opportunity to solicit joinders from any or all of the creditors on the creditor list appended to Mr. Petrus's Amended Answer commencing with the filing of Mr. Petrus's Amended Answer on March 30, 2023, and ending with the commencement of trial in this matter on July 21, 2023, a span of approximately 3 ½ months.

8. No creditors ever joined in the involuntary petition Dogwood filed against Mr. Petrus.

9. Dogwood is the sole petitioning creditor in this case.

IV. CONCLUSIONS OF LAW

A. Jurisdiction; Venue; Core Proceeding

The Court has jurisdiction over this involuntary bankruptcy case. 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and LR 1001(b)(1). Venue is appropriate in the District of Nevada. 28 U.S.C. § 1408(1).

Under 28 U.S.C. § 157(b)(3):

The bankruptcy judge shall determine, on the judge's own motion or on timely motion of a party, whether a proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title 11. A determination that a proceeding is not a core proceeding shall not be made solely on the basis that its resolution may be affected by State law.

Under LR 9014.2(c), the Court "may sua sponte determine and enter an order on whether the proceeding is a core proceeding not subject to entry of final orders or judgment by the bankruptcy court, unless the district court withdraws the reference first."

As required by 28 U.S.C. § 157(b)(3), contemplated by LR 9014.2(c), and on its own motion, the Court concludes that:

1. The issue of whether to grant Dogwood's involuntary Chapter 7 bankruptcy petition against Mr. Petrus and enter a related order for relief is a statutorily core proceeding under 28 U.S.C. § 157(b)(2)(A) and (O); and separately,

2. The issue of whether to grant Dogwood's involuntary Chapter 7 bankruptcy petition against Mr. Petrus and enter a related order for relief is a Constitutionally core proceeding because it "arises under" the Bankruptcy Code, and specifically under 11 U.S.C. § 303.

See Marshall v. Stern (In re Marshall), 600 F.3d 1037, 1055-56 (9th Cir. 2010) ("We agree with Pierce Marshall that our case law presents a two-step approach. A bankruptcy judge may only determine a claim that meets Congress' definition of a core proceeding and arises under or arises in title 11."), aff'd sub. nom. Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011); see also Certain Underwriters at Lloyds v. GACN, Inc. (In re GACN, Inc.), 555 B.R. 684, 693 (9th Cir.

BAP 2016), appeal dismissed, 2017 WL 4513499 (9th Cir. May 10, 2017) ("A proceeding "arises under" title 11 if it presents claims for relief created or controlled by title 11."), citing Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729 F.3d 1279, 1285 (9th Cir. 2013); see also 28 U.S.C. §§ 157(b)(1), (b)(2), (c)(1).

The Court concludes that determining whether to grant Dogwood's involuntary Chapter 7 petition against Mr. Petrus and enter a related order for relief is a statutorily and constitutionally core proceeding. Resultantly, that issue can be properly heard and resolved by this Court through entry of a final order without doing any offense to the Constitution.

B. Controlling Bankruptcy Code Provisions

The Court's analytical trek begins with relevant text of the Bankruptcy Code and Rules. It is well established that when the statute's language is plain, the sole function of the court — at least where the disposition required by the text is not absurd — is to enforce it according to its terms. Dale v. Maney (In re Dale), 505 B.R. 8, 11 (9th Cir. BAP 2014), citing Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004).

Involuntary bankruptcy proceedings are generally governed by Section 303 of the Bankruptcy Code. ⁹⁹ On the Petition Date, Section 303 provided in relevant part:

99 11 U.S.C. §§ 101-1532, inclusive. Unless otherwise noted, the term "Section" when used in this Memorandum refers to the corresponding section of the Bankruptcy Code.

§ 303. Involuntary cases

(a) An involuntary case may be commenced only under chapter 7 or 11 of this title, and only against a person, except a farmer, family farmer, or corporation that is not a moneyed, business, or commercial corporation that may be a debtor under the chapter under which such case is commenced.

(b) An involuntary case against a person is commenced by the filing with the bankruptcy court of a petition under chapter 7 or 11 of this title —

.....

(1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $18,600 more than the value of any lien on property of the debtor securing such claims held by the holders of such claims;

(2) if there are fewer than 12 such holders, excluding any employee or insider of such person and any transferee of a transfer that is voidable under section 544, 545, 547, 548, 549, or 724(a) of this title, by one or more of such holders[.]

.....

(h) If the petition is not timely controverted, the court shall order relief against the debtor in an involuntary case under the chapter under which the petition was filed. Otherwise, after trial, the court shall order relief against the debtor in an involuntary case under the chapter under which the petition was filed, only if —

(1) the debtor is generally not paying such debtor's debts as such debts become due unless such debts are the subject of a bona fide dispute as to liability or amount; or

(2) within 120 days before the date of the filing of the petition, a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of the debtor for the purpose of enforcing a lien against such property, was appointed or took possession.

The Ninth Circuit Bankruptcy Appellate Panel has summarized the law governing involuntary petitions this way:

Section 303 authorizes the filing of an involuntary petition against a [person]. 11 U.S.C. § 303(a). When the petition is not contested, the bankruptcy court enters an order for relief, and the bankruptcy case proceeds. 11 U.S.C. § 303(h). But [alleged debtors] can resist the involuntary petition, and the Code provides for standards and procedures that govern the resulting decisional process. The Code requires that the involuntary debtor be in financial distress and that a sufficient number of undisputed creditors request involuntary relief. When an involuntary petition is contested, the petitioning creditors must show that the involuntary debtor is in actual financial distress; they may meet this requirement by establishing that the involuntary debtor is not paying its undisputed debts as they come due. 11 U.S.C. § 303(h)(1). Petitioning creditors must also show that there is sufficient desire for an involuntary bankruptcy on the part of undisputed creditors; in a case with fewer than 12 creditors, a single qualified creditor suffices, but, where the debtor has a larger creditor body, three qualified creditors must petition for involuntary relief. 11 U.S.C. § 303(b)(1), (2).

Hayden v. QDOS, Inc. (In re QDOS, Inc.), 607 B.R. 338, 343 (9th Cir. BAP 2019). As this Court has observed:

Under Section 303(b), an involuntary petition may be filed "by three or more entities, each of which is ... a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount ... if such noncontingent, undisputed claims aggregate at least $15,775¹⁰⁰ more than the value of any lien on property of the debtor ..." 11 U.S.C. § 303(b)(1) (emphasis added). Alternatively, "if there are fewer than 12 such holders," then an involuntary petition may be filed "by one or more of such holders" that hold an aggregate debt of at least $15,775.¹⁰¹ 11 U.S.C. § 303(b)(2) (emphasis added). "Since section 303(b)(1) requires that claims not be contingent as to liability or the subject of bona fide dispute as to liability or amount, those requirements also apply to the holders referred to in section 303(b)(2)." See 2 COLLIER ON BANKRUPTCY, ¶ 303.14[3] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2017).

100 As of April 1, 2022, and as of the Petition Date, the aggregate total of noncontingent, undisputed claims referenced in Section 303(b) had increased to $18,600.00.

101 Id.

In re Aliya Medcare Fin., LLC, 2018 WL 6980927 at *4 (Bankr. D. Nev. Dec. 20, 2018) (Hon. Mike K. Nakagawa, presiding; emphasis added).

C. Elements Which Must Be Established Before an Involuntary Bankruptcy Petition May Properly Be Granted

As the predicate to granting an involuntary petition, the petitioning creditor(s)

must establish each of the following elements by a preponderance of the evidence:

1. The involuntary petition was filed by the appropriate number of creditors (one creditor if 11 U.S.C. § 303(b)(2) applies, or three creditors if 11 U.S.C. § 303(b)(1) applies);

2. The petitioning creditor(s) each hold claims against the alleged debtor that are not contingent as to liability;

3. The petitioning creditor(s) each hold claims against the alleged debtor that are not the subject of a bona fide dispute as to liability or amount;

4. The claims held by the petitioning creditor(s) are in the aggregate amount of at least $18,600;¹⁰² and

5. The alleged debtor is generally not paying the alleged debtor's debts as those debts become due.

102 Id.

See In re Marciano, 446 B.R. 407, 420 (Bankr. C.D. Cal. 2010),¹⁰³ aff'd, 459 B.R. 27 (9th Cir. BAP 2011),¹⁰⁴ aff'd, 708 F.3d 1123 (9th Cir. 2013).¹⁰⁵

103 Subsequent references to "Marciano BK" are to this bankruptcy court decision.

104 Subsequent references to "Marciano BAP" are to this decision of the 9th Circuit Bankruptcy Appellate Panel.

105 Subsequent references to "Marciano Circuit" are to this decision of the 9th Circuit Court of Appeals.

D. The Burden and Standard of Proof

Creditors that file an involuntary bankruptcy petition bear the initial burden of proving both that the alleged debtor is in actual financial distress as contemplated by 11 U.S.C. § 303(h)(1), and that a sufficient number of qualified creditors request involuntary relief in keeping with 11 U.S.C. §§ 303(b)(1) and (2). See QDOS, 607 B.R. at 343, citing Cunningham v. Rothery (In re Rothery), 143 F.3d 546, 548 (9th Cir. 1998). The petitioning creditor(s) must meet their burden of proving both of those issues by a preponderance of the evidence. Marciano BK, 446 B.R. at 422 (citing Grogan v. Garner, 498 U.S. 279, 286, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991), for the proposition that "where the statute fails to prescribe the standard of proof, the preponderance of the evidence standard generally applies in civil actions between private litigants.").

In involuntary cases where the initial burden of proof is met by the petitioning creditor(s), and the alleged debtor files an answer asserting that it has more than 12 qualifying creditors, the alleged debtor must also concurrently file the creditor list required by FED. R. BANKR. P. 1003(b). The filing of the creditor list required under Rule 1003(b) substantiates the assertion that the alleged debtor has more than 12 qualifying creditors, and returns to the petitioning creditor(s) the ultimate burden of persuading the court that the involuntary petition should be granted. QDOS, 607 B.R. at 345, citing Liberty Tool & Mfg. v. Vortex Fishing Sys., Inc. (In re Vortex Fishing Sys., Inc.) 277 F.3d 1057, 1071 (9th Cir. 2002) and In re Clignett, 567 B.R. 583, 587 (Bankr. C.D. Cal. 2017).

E. The Court Will Grant the Involuntary Chapter 7 Petition Filed by Dogwood Against Mr. Petrus and Will Enter an Order for Relief

The reasons follow. 1. The Court Concludes that the Involuntary Petition Commencing This Case Was Properly Filed Against a "Person" Under Chapter 7 of the Bankruptcy Code

Section 303(a) provides that an involuntary case "may be commenced only under chapter 7 or 11 of this title, and only against a person." Dogwood's involuntary petition against Mr. Petrus was filed under Chapter 7 of the Bankruptcy Code.¹⁰⁶ Because Mr. Petrus is an individual, he is also a "person"¹⁰⁷ against whom an involuntary chapter 7 petition may be filed under Section 303(a). The preponderance of the evidence supports those conclusions. Neither party suggests otherwise.

106 ECF No. 1.

107 See 11 U.S.C. § 101(41) (defining the term "person" as used in Section 303(a) to include an individual).

2. The Court Concludes that Dogwood Properly Served the Involuntary Chapter 7 Petition and Related Summons on Mr. Petrus

The process for serving an involuntary bankruptcy petition upon an alleged debtor is generally governed by FED. R. BANKR. P. 1010. Bankruptcy Rule 1010 reads in relevant part:

Rule 1010. Service of Involuntary Petition and Summons

(a) Service of involuntary petition and summons. On the filing of an involuntary petition, the clerk shall forthwith issue a summons for service. When an involuntary petition is filed, service shall be made on the debtor. The summons shall be served with a copy of the petition in the manner provided for service of a summons and complaint by Rule 7004(a) or (b). If service cannot be so made, the court may order, that the summons and petition be served by mailing copies to the party's last known address, and by at least one publication in a manner and form directed by the court. The summons and petition may be served on the party anywhere. Rule 7004(e) and Rule 4(l) F.R.Civ.P. apply when service is made or attempted under this rule.

Review of the docket confirms that the Clerk of Court issued a summons for service on Mr. Petrus in compliance with Bankruptcy Rule 1010(a).¹⁰⁸ Bankruptcy Rule 1010(a) provides that after the filing of an involuntary petition, "[t]he summons shall be served with a copy of the petition in the manner provided for service of a summons and complaint by Rule 7004(a) or (b)." Rule 7004, in turn, states:

108 ECF No. 2.

Rule 7004. Process; Service of Summons, Complaint

(a) Summons; service; proof of service

(1) Except as provided in Rule 7004(a)(2), Rule 4(a), (b), (c)(1), (d)(5), (e)-(j), (l), and (m), F.R.Civ.P. applies in adversary proceedings. Personal service under Rule 4(e)-(j) F.R.Civ.P. may be made by any person at least 18 years of age who is not a party, and the summons may be delivered by the clerk to any such person.

(2) The clerk may sign, seal, and issue a summons electronically by putting an "/s/" before the clerk's name and including the court's seal on the summons.

(b) Service by first class mail. Except as provided in subdivision (h) [relating to service on insured depository institutions and not relevant here], in addition to the methods of service authorized by Rule 4(e)-(j) F.R.Civ.P., service may be made within the United States by first class mail postage prepaid as follows:

(1) Upon an individual other than an infant or incompetent, by mailing a copy of the summons and complaint to the individual's dwelling house or usual place of abode or to the place where the individual regularly conducts a business or profession.

Review of the docket confirms that Carol Burke, an employee of Dogwood's counsel, served a copy of the summons and involuntary petition upon Mr. Petrus.¹⁰⁹ Ms. Burke's certificate of service shows that the summons and involuntary petition were served on Mr. Petrus on May 26, 2022, "[b]y placing same to be depositing [sic] for mailing in the United States Mail in Las Vegas, Nevada, with which first class postage was fully prepaid and was addressed to the parties as listed in the attached matrix."¹¹⁰ The certificate of service identifies Mr. Petrus's address as "2744 South Highland Drive, Las Vegas, Nevada 89109"¹¹¹ the same address shown on the involuntary petition.¹¹² Mr. Petrus has testified under oath that the South Highland Property was a leased 20,000 foot warehouse space with an office, that he originally intended to use the South Highland Property in connection with his hemp-related business, and that he ultimately used the South Highland Property to conduct O&M's business operations.¹¹³

109 ECF No. 3.

110 Id.

111 Id; hereafter, "South Highland Property."

112 Compare ECF 1, p. 2 of 5, Item 6 with ECF No. 3.

113 Trial Ex. 7, Bates Nos. DOGWOOD 068-069, p. 8 line 14-p. 10 line 5.

The Court concludes that the preponderance of the evidence established that Mr. Petrus was properly served with the summons and involuntary petition in compliance with Bankruptcy Rules 1010(a), 7004(a), and 7004(b)(1).

3. The Court Concludes that Mr. Petrus Properly Filed an Answer to the Involuntary Petition

Upon service of the summons and involuntary petition, Mr. Petrus had the option of filing a motion to dismiss or filing an answer to Dogwood's involuntary petition. As explained by the Ninth Circuit Bankruptcy Appellate Panel:

An involuntary debtor may initially contest the involuntary petition through a Civil Rule 12(b)(6) motion, but where a trial is required for resolution it must answer and file the list required by Rule 1003(b). Rule 1011 provides that the debtor may contest an involuntary petition, and it expressly allows the alleged involuntary debtor to file a Civil Rule 12 motion before answering. FED. R. BANKR. P. 1011(a), (b), and (c). Thus, Civil Rule 12(b)(6) applies in a contested involuntary situation just as it does generally; the motion challenges the sufficiency of the allegations in the involuntary petition and "may be based on either a 'lack of a cognizable legal theory' or 'the absence of sufficient facts alleged under a cognizable legal theory.'" Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008) (citation omitted). The court accepts factual allegations as true but disregards legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). It then determines if the remaining factual allegations, construed in the light most favorable to the nonmoving party's favor, state a facially plausible claim for relief. Id. at 679, 129 S. Ct. 1937; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).

In many cases, a bankruptcy court will not be able to dismiss an involuntary case solely on a motion to dismiss. If the petitioning creditors plausibly allege that they have met the standards, the motion must fail, and the involuntary debtor must answer.

[......]

[I]f the debtor asserts that it has more than 12 creditors in its answer, it must comply with Rule 1003(b) and concurrently file the required creditor list. FED. R. BANKR. P. 1003(b). Rule 1003(b) serves two purposes. It implements, in part, § 303(c)'s joinder provisions. In re Vortex Fishing Sys., Inc., 277 F.3d at 1071. And it provides the mechanism by which an alleged debtor substantiates its assertion that it has more than 12 qualifying creditors and returns the burden to petitioning creditors. In re Clignett, 567 B.R. 583, 587 (Bankr. C.D. Cal. 2017) ("[A] debtor cannot merely state that [it] has more than twelve creditors in [its] motion to dismiss.").

In summary, if resolution of a contested involuntary proceeding requires a trial, there is no procedural path that allows the alleged involuntary debtor to leap over the requirement that it answer and, if appropriate given its answer, file the creditor list mandated by Rule 1003(b). The mere fact that the involuntary debtor initiated its opposition through a Civil Rule 12(b)(6) motion delays, but does not invariably negate, the requirement of answer and creditor list.

QDOS, 607 B.R. at 345.

Review of the docket in this case reveals that Mr. Petrus opted not to file a motion to dismiss Dogwood's involuntary petition under Bankruptcy Rule 1011. Instead, after Dogwood's involuntary petition was filed and served on Mr. Petrus, after a series of stipulations between the parties extending the time to file an answer were approved by the Court,¹¹⁴ after the withdrawal of Mr. Petrus's original counsel,¹¹⁵ after Dogwood submitted the required signature on the involuntary petition,¹¹⁶ after Mr. Petrus filed a pro se response to Dogwood's involuntary petition,¹¹⁷ after new counsel for Mr. Petrus appeared,¹¹⁸ and after the parties entered into a stipulated scheduling order regarding trial of the involuntary petition was approved by the Court,¹¹⁹ counsel for Mr. Petrus properly filed an Amended Answer to the involuntary petition.¹²⁰

114 See ECF Nos. 6, 7, 11, and 12.

115 See ECF Nos. 15, 16, 29, 22, and 25.

116 See ECF No. 28.

117 See ECF No. 29 and 32.

118 See ECF No. 31.

119 See ECF Nos. 39 and 40.

120 ECF No. 51.

4. The Court Concludes that Mr. Petrus Properly Filed the List of Creditors Required by Bankruptcy Rule 1003(b) With His Amended Answer

Paragraph 1 of the Amended Answer filed by Mr. Petrus in response to Dogwood's involuntary petition clearly states:

1. [Mr.] Petrus contends that he has 12 or more creditors. A list of said creditors is attached to this answer. Petrus contends that these were creditors on the date of the filing of the petition. As such, the numerosity requirement of § 303(b) has not been met.¹²¹

121 ECF No. 51, p. 1 of 10, para. 1, lines 21-23.

Since Mr. Petrus's Amended Answer specifically states that he had 12 or more creditors on the Petition Date, he was also required to file a creditor list compliant with Bankruptcy Rule 1003(b) along with his Amended Answer. QDOS, 607 B.R. at 345. A creditor list compliant with Bankruptcy Rule 1003(b) was, in fact, annexed to Mr. Petrus's Amended Answer.¹²² The creditor list submitted by Mr. Petrus in support of his Amended Answer identifies a total of nineteen claims:

122 ECF No. 51, pp. 3-10 of 10.

• One secured claim;

• No priority unsecured claims;

• 14 general unsecured claims (including Dogwood); and

• Four holders of executory contracts or unexpired leases.¹²³

123 ECF No. 51, pp. 3-10 of 10. As will be discussed in more detail below, a creditor list admitted into evidence at trial identifies Cash 1 as an additional unsecured creditor. See Trial Ex. A.

The preponderance of the evidence established that Mr. Petrus's Amended Answer to Dogwood's involuntary petition was supported by the creditor list mandated under Bankruptcy Rule 1003(b). Because more than 12 creditors were shown on the creditor list filed with Mr. Petrus's Amended Answer in compliance with Bankruptcy Rule 1003(b), the joinder provisions of 11 U.S.C. § 303(c) were triggered, and the burden of proving that a sufficient number of creditors supported the involuntary petition returned to Dogwood. QDOS, 607 B.R. at 345, citing Vortex Fishing, 277 F.3d at 1071.

5. The Court Concludes that All Creditors Had a Reasonable Opportunity to Join Dogwood's Involuntary Petition as Petitioning Creditors Under Section 303(c)

The Bankruptcy Code expressly authorizes creditors to join in an involuntary bankruptcy petition. More particularly, Section 303(c) provides:

§ 303. Involuntary cases

[.....]

(c) After the filing of a petition under this section but before the case is dismissed or relief is ordered, a creditor holding an unsecured claim that is not contingent, other than a creditor filing under subsection (b) of this section, may join in the petition with the same effect as if such joining creditor were a petitioning creditor under subsection (b) of this section.

Ninth Circuit case law establishes that "generally when an alleged debtor answers [an involuntary] petition filed by fewer than three qualifying petitioners, asserts the § 303(b)(1) three-petitioning creditors requirement, and alleges that [the alleged debtor] has twelve or more creditors, the bankruptcy court 'must assure that other creditors have a 'reasonable opportunity' to exercise their § 303(c) statutory power to join as petitioners [......]." QDOS, 607 B.R. at 344, citing Vortex Fishing, 277 F.3d at 1071.

The requirement that non-petitioning creditors be afforded a "reasonable opportunity" to join in an involuntary petition under section 303(c) does not, however,

require that non-petitioning creditors receive specific notice of their right to join in the petition. In QDOS, the Ninth Circuit Bankruptcy Appellate Panel analyzed the decision of the Ninth Circuit Court of Appeals in Vortex Fishing, and observed:

Vortex Fishing objected to an involuntary petition; it disputed the sufficiency in number of qualified petitioning creditors and also disputed that it was in economic distress. 277 F.3d at 1065, 1070-71. So, pending trial on both disputed issues, the bankruptcy court ordered it to submit a list of its creditors to the bankruptcy court, and the parties agreed that the list could not be released without a court order. Id. at 1070. The petitioning creditors did not ask for pretrial release of the list. Id. At trial, the bankruptcy court found that the number of then-existing petitioning creditors was insufficient, but it also continued with the trial and determined that Vortex Fishing was generally paying its debts as they came due. Id. at 1063. It then dismissed the involuntary petition. Id. On appeal, the petitioning creditors argued, based on Rule 1003(b), that the bankruptcy court should have notified all creditors of the involuntary petition, afforded them an opportunity to join, and only then dismissed the involuntary case. Id. at 1070. The Ninth Circuit rejected this argument.

QDOS, 607 B.R. at 344, citing Vortex Fishing, 277 F.3d at 1070-72 (emphasis added).¹²⁴

124 The QDOS court observed that some courts have "made a compelling case for a requirement that all claimholders receive an opportunity to consider supporting an involuntary petition when the debtor is in financial distress even if there initially are too few petitioning creditors." QDOS, 607 B.R. at 343-44 and n. 6. But the cases referenced in connection with that observation were penned by a lower court within, and a bankruptcy appellate panel in an unpublished decision outside of, the Ninth Circuit. See id. , citing In re Kidwell, 158 B.R. 203 (Bankr. E.D. Cal. 1993); Banco Popular de Puerto Rico v. Colon (In re Colon), 2008 WL 8664760, at *7 (1st Cir. BAP Nov. 21, 2008). The burden of proof as to creditor numerosity under Section 303(b) is ultimately borne by the petitioning creditor(s). It is therefore this Court's view that the proper focus of the "reasonable opportunity" inquiry is on how much time petitioning creditor(s) have been afforded to contact the creditors on the alleged debtor's Rule 1003(b) list in an effort to secure joinders in the involuntary petition under Section 303(c).

Mr. Petrus filed an Amended Answer on March 30, 2023.¹²⁵ The Amended Answer states plainly at paragraph 1 that "Petrus contends that he has 12 or more creditors" and is supported by the list of creditors mandated by Bankruptcy Rule 1003(b).¹²⁶ The Rule 1003(b) List provides a mailing address for each creditor listed. The ultimate burden of persuasion regarding the sufficiency of the involuntary petition therefore shifted back to Dogwood as the petitioning creditor.

125 ECF No. 51.

126 ECF No. 51, pp. 3-10 of 10; hereafter, "Rule 1003(b) List." A similar list including Cash 1 as the holder of an additional unsecured claim was admitted into evidence at trial as Exhibit A. The Court will examine the claim of Cash 1 to ensure analytical completeness, but subsequent references to "Rule 1003(b) List" in this Memorandum are to the creditor list appended to and filed with Mr. Petrus's Amended Answer.

Mr. Petrus's Amended Answer was served electronically on Dogwood's counsel and the United States Trustee at 2:02 p.m. Pacific Daylight Time on March 30, 2023. Dogwood had the opportunity to solicit joinders from the creditors identified on the list appended to Mr. Petrus's Amended Answer during the time period

beginning with the filing of Mr. Petrus's Amended Answer on March 30, 2023, and ending with the commencement of trial on July 21, 2023. That is a span of approximately 3 ½ months. The preponderance of the evidence established that Dogwood was afforded a "reasonable opportunity" to contact the creditors identified on the Rule 1003(b) List, and to invite them to join the involuntary petition against Mr. Petrus as authorized under Section 303(c).

No other creditors joined Dogwood's involuntary petition. Dogwood was the sole petitioning creditor when the involuntary petition against Mr. Petrus was filed and has remained the sole petitioning creditor at all times after the Petition Date. The next step in the analysis is to determine whether Dogwood was qualified to file the involuntary bankruptcy petition against Mr. Petrus under Section 303(b).

6. The Court Concludes That on the Petition Date, Dogwood Was A Creditor Qualified to File an Involuntary Bankruptcy Petition Against Mr. Petrus Under Section 303(b)

Examining the question of which creditors are qualified to file an involuntary bankruptcy petition under Section 303(b), the Ninth Circuit Court of Appeals made the following observations:

To commence involuntary bankruptcy proceedings against a debtor, a creditor must be:

a holder of a claim against [the debtor] that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount ... [and] such noncontingent, undisputed claims [must] aggregate at least [$18,600] more than the value of any lien on property of the debtor securing such claims held by the holders of such claims. 11 U.S.C. § 303(b)(1). Consequently, a petitioning creditor's claim must not be (1) contingent or (2) "the subject of a bona fide dispute as to liability or amount." Id. Both requirements "aim to prevent creditors from using the threat of an involuntary petition to bully an alleged debtor into settling a speculative or validly disputed debt." Chi. Title Ins. Co. v. Seko Inv., Inc. (In re Seko Inv., Inc.), 156 F.3d 1005, 1007-08 (9th Cir. 1998) [cert. denied, 526 U.S. 1066, 119 S.Ct. 1458, 143 L.Ed.2d 544 (1999)].

Dept. of Revenue v. Blixseth, 942 F.3d 1179, 1183 (9th Cir. 2019).

a. The "Contingent as to Liability" Standard Under Section 303(b)

The Ninth Circuit Court of Appeals has provided the following guidance for proper application of the "contingent as to liability" standard in the Section 303(b) analysis:

Chicago Title's claim against Seko is not contingent as to liability. Claims are contingent as to liability when the debtor's duty to pay arises only upon the occurrence of a future event that was contemplated by the parties at the time of the contract's execution. See In re Sims, 994 F.2d at 220¹²⁷ (citing In re All Media Properties, Inc., 5 B.R. 126, 132 (Bankr. S.D. Tex. 1980) [aff'd, 646 F.2d 193 (5th Cir. 1981)]. The classic example is a wager between two parties; until the wagered-on event comes to pass, both have contingent liabilities in the amount of the bet. No such future event is contemplated by the notes.

127 The full citation to the case referenced here is Sims v. Subway Equip. Leasing Corp. (In re Sims), 994 F.2d 210, 220 (5th Cir. 1993), cert. denied, 510 U.S. 1049, 114 S.Ct. 702, 126 L.Ed.2d 669 (1994).

Chicago Title Ins. Co. v. Seko Inv., Inc., (In re Seko Inv., Inc.), 156 F.3d 1005, 1008 (9th Cir. 1998), cert. denied, 526 U.S. 1066, 119 S.Ct. 1458, 143 L.Ed.2d 544 (1999); see generally 2 COLLIER ON BANKRUPTCY,

¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that that past due or future rental payments, defaulted promissory notes, and overdue trade invoices are not contingent as to liability in the context of Section 303(b), while the liability of a guarantor of payment is contingent as to liability under Section 303(b)).

b. The "Bona Fide Dispute" Standard as to Liability and Amount Under Section 303(b)

As to when a "bona fide dispute as to liability or amount" exists within the ambit of Section 303(b), this Court has observed:

For a majority of the federal circuits, including the Ninth Circuit, a "bona fide dispute" exists if "there is an objective basis for either a factual or legal dispute as to the validity of a debt." See Vortex Fishing, 277 F.3d at 1064. A "bona fide dispute as to liability" exists "if there is either a genuine issue of material fact that bears upon the debtor's liability, or a meritorious contention as to the application of law to undisputed facts." Id. (citation and footnote omitted). The same objective test applies for determining a bona fide dispute as to the amount of a debt. See Marciano v. Chapnick (In re Marciano), 708 F.3d 1123, 1126 (9th Cir. 2013).

In re EB Holdings II, Inc., 589 B.R. 704, 722 (Bankr. D. Nev. 2017) (Hon. Mike K. Nakagawa, presiding).

c. Judgment Claims Under Section 303(b)

With respect to judgment claims in the Section 303(b) decisional calculus, the Ninth Circuit Bankruptcy Appellate Panel has observed:

Ultimately, whether one characterizes the conclusion as a "per se" rule, we conclude, consistent with the holding in AMC Investors¹²⁸ and the majority of courts that have considered the issue, including the bankruptcy court in this case, that an unstayed judgment, other than a default judgment, that is regular on its face, is "in and of itself, sufficient to establish that the claim underlying the judgment is not in bona fide dispute for purposes of determining whether a petitioning creditor is eligible" to initiate an involuntary bankruptcy case. In re AMC Investors, LLC, 406 B.R. at 487. See also C.W. Mining Co. v. Aquila, Inc. (In re C.W. Mining Co.), 431 B.R. 307, 2009 WL 4798264 *5 (10th Cir. BAP 2009) ("This Court declines to adopt the [In re] Byrd [357 F.3d 433 (4th Cir. 2004)] approach for the reasons so articulately and convincingly set forth by the Delaware Bankruptcy Court in In re AMC Investors, LLC."), rev'd on other grounds, 636 F.3d 1257 (10th Cir. 2011).

128 In re AMC Investors, LLC, 406 B.R. 478 (Bankr. D. Del. 2009).

Marciano BAP, 459 B.R. at 54-55; Sony Music Publishing (US) LLC v. Priddis (In re Priddis), 2023 WL 2203562 at *1 (9th Cir. Feb. 24, 2023) (noting that a "claim is a 'right to payment, whether or not such a right is reduced to judgment.' 11 U.S.C. § 101(5)(A). Thus, under the text of § 303(b) and § 101(5), the Petitioning Creditors have 'noncontingent, undisputed claims' because the $3 million amount is not in dispute, and, as counsel for Priddis admitted at oral argument, they each have a 'right to payment' of some portion of the judgment.").

d. As the Holder of the Unsatisfied Dogwood Judgment on the Petition Date, Dogwood Was a Creditor Qualified to File an Involuntary Petition Against Mr. Petrus Under Section 303(b)

On the Petition Date, Dogwood was the holder of the unstayed and final

Dogwood Judgment against Mr. Petrus, with an unsatisfied balance due of at least $224,586.20.¹²⁹ Under the controlling Ninth Circuit decisions in Blixseth, Priddis, and the persuasive holding in Marciano BAP, the Court concludes that on the Petition Date, Dogwood held a claim against Mr. Petrus in the form of the Dogwood Judgment that was "neither contingent as to liability, nor the subject of bona fide dispute as to liability or amount" that easily exceeded the $18,600.00 statutory minimum set forth in 11 U.S.C. § 303(b).¹³⁰

129 See note 80, supra. The Court is mindful that the Dogwood Judgment was entered by default. But the Court finds that the preponderance of the evidence established that the Dogwood Judgment was entered on September 9, 2020, Mr. Petrus acknowledged that he had taken no action to contest it as of the hearing on this involuntary petition, and the Dogwood Judgment is a final judgment. Under the particular facts of this case, the Court concludes that the default nature of the Dogwood Judgment does not remove it from the scope of the holdings in Blixseth, Priddis, and Marciano BAP, supra.

130 This conclusion is consistent with the Stipulated Facts for Trial submitted by the parties. See ECF 75, p. 2 of 2, para. 4-8.

The fact that Dogwood held a claim against Mr. Petrus in excess of $18,600.00 that was "neither contingent as to liability, nor the subject of bona fide dispute as to liability or amount" on the Petition Date does not, however, alter the fact that no other creditor(s) of any kind subsequently signed or joined in that petition as authorized under Section 303(c). Dogwood is, and always has been, the sole petitioning creditor. As aptly summarized by the United States District Court for the Southern District of Florida:

Under Section 303(b), if the alleged debtor has twelve or more creditors, three or more petitioning creditors are needed to commence an involuntary case. Id.;¹³¹ see also 11 U.S.C. § 303(b)(1)-(2). Conversely, if the alleged debtor has fewer than twelve creditors, one petitioning creditor is enough. 11 U.S.C. § 303(b)(2). The number of creditors is generally determined on the date the involuntary petition is filed. See, e.g., In re Atwood, 124 B.R. 402 (S.D. Ga. 1991); see also 2 COLLIER ON BANKRUPTCY ¶ 303.14[3] (16th ed. 2012). Further, to qualify as creditors under Section 303(b), both the petitioning creditors and alleged debtor's creditors must hold noncontingent, undisputed claims, see 11 U.S.C. § 303(b)(1)(2); In re Basil St. Partners, LLC, 477 B.R. at 849, and the aggregate of the petitioning creditors' claims must be at least [$18,600],¹³² 11 U.S.C. § 303(a). Failure to satisfy the statutory requirements under Section 303(b) is grounds for dismissal of the involuntary petition. See, e.g., In re E.S. Prof'l Servs., Inc., 335 B.R. 221, 227 (Bankr. S.D. Fla. 2005) subsequently aff'd sub nom. In re E.S. Prof'l Servs., Inc., 250 F. App'x 294 (11th Cir. 2007); In re Ramm Indus., Inc., 83 B.R. 815, 825 (Bankr. M.D. Fla. 1988).

131 The full citation to the case cited here is In re Basil Street Partners, LLC, 477 B. R. 846, 849 (Bankr. M.D. Fla. 2012).

132 See note 100, supra.

Isbell v. DM Records, Inc., 529 B.R. 793, 797-98 (S.D. Fla. 2015) (emphasis added).

So, the remaining and ultimate question is how many claims existed against Mr. Petrus on the Petition Date that were "neither contingent as to liability, nor the subject of bona fide dispute as to liability or amount." If fewer than 12 such claims existed on the Petition Date, then the one petitioning creditor numerosity standard imposed by Section 303(b)(2) applies. If 12 or more such claims existed on the Petition Date, then the three petitioning creditor

numerosity standard imposed by Section 303(b)(1) applies.

7. The Court Concludes That on the Petition Date Fewer Than 12 Creditors on the Rule 1003(b) List Held Claims Against Mr. Petrus That Met the Qualification Standards Imposed by Section 303(b)

Careful scrutiny of the evidentiary record is required to determine whether Dogwood, as a single qualified creditor, could properly sign and file the involuntary petition against Mr. Petrus under Section 303(b)(2), or whether instead three qualified creditors (i.e., Dogwood and two others) had to sign or join in the involuntary petition against Mr. Petrus under Sections 303(b)(1) and (c). The Court has carefully analyzed the evidence related to each claim against Mr. Petrus shown on the Rule 1003(b) List.¹³³ The results of that analysis follow.

133 ECF No. 51, pp. 3-10 of 10.

a. Credibility of Mr. Petrus's Testimony Generally and on the Issue of Personal Guarantees in Particular

Initially, the Court considers the credibility of Mr. Petrus's trial testimony regarding the creditor claims shown on the Rule 1003(b) List. The Court finds that Mr. Petrus's demeanor at trial was generally appropriate given the gravity of the involuntary bankruptcy petition pending against him. The Court finds further that his trial testimony was generally responsive to the questions put to him. He did not completely refuse to answer any questions at trial.

But the Court expressly finds that Mr. Petrus's trial testimony was evasive, lacked credibility, and was unsupported by any meaningful corroborative evidence on the specific issue of whether he had personally guaranteed any of the debts shown on the Rule 1003(b) List. When asked at trial about the debts he claimed to have personally guaranteed, Mr. Petrus's memory and related testimony proved to be inconsistent, unclear, and uncertain. His testimony was consistently to the effect that he "believed" he had personally guaranteed various debts, and that while he "believed" that he could produce written proof of such personal guarantees, he simply had not done so. For example, Mr. Petrus offered into evidence Loan Authorization and Agreement document packages regarding the 9 Distribution SBA Loan¹³⁴ and the O&M SBA Loan.¹³⁵ Conspicuously absent from both of those Loan Authorization and Agreement packages is a written personal guarantee signed by Mr. Petrus. Similarly, statements of account issued by Pinnacle Bank to 9 Distribution (not Mr. Petrus) for the prepetition period between November 2, 2020, and January 31, 2021, were offered as proof by Mr. Petrus and were admitted into evidence at trial.¹³⁶ But those statements of account do not include any written evidence of a debt owed by Mr. Petrus personally to Pinnacle Bank, nor any written evidence that Mr. Petrus had personally guaranteed repayment of any debt owed to Pinnacle bank by 9 Distribution or any another person or entity.

134 Trial Ex. L.

135 See Trial Ex. M. At trial, Mr. Petrus also claimed to have personally guaranteed claims held by AmEx, NCSI, Paradigm, Pinnacle Bank, as well as the O&M PPP Loan. All of those claims are shown on the Rule 1003(b) List. No written guarantees related to any of those claims were offered or admitted into evidence at trial.

136 Trial Ex. B. Dogwood's involuntary petition was filed over a year later, on May 24, 2022. ECF No. 1.

Having carefully considered Mr. Petrus's demeanor at trial, as well as the

entire trial record, the Court finds Mr. Petrus's trial testimony on the specific issue of whether he personally guaranteed any debt, including without limitation the debts referenced in the Rule 1003(b) List, to be without credibility. The Court gives that testimony no evidentiary weight.

b. TD Auto Finance

TD Auto Finance is shown on the Rule 1003(b) List as the holder of a $27,604.00 claim against Mr. Petrus, secured by an "Automobile."¹³⁷

137 ECF 51, p. 3 of 10; Trial Ex. A, Bates No. DP 1.

i. Contingent Liability Analysis

At trial, Mr. Petrus testified credibly that his personal vehicle was a 2019 Dodge Ram 1500 pickup truck.¹³⁸ He explained that repayment of the TD Auto Finance debt shown on the Rule 1003(b) List was collateralized by his Truck. He verified that the debt owed to TD Auto Finance shown on the Rule 1003(b) List was his personal debt. He stated that on the Petition Date there was an unpaid balance on the TD Auto Finance debt. He confirmed that the payments on the TD Auto Finance debt were current on the Petition Date.

138 Hereafter, "Truck."

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the TD Auto Finance debt shown on the Rule 1003(b) List was a claim against Mr. Petrus personally that was not contingent as to liability on the Petition Date in the context of Section 303(b). Seko Inv., Inc., 156 F.3d at 1008; see generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due or future rental payments, defaulted promissory notes, and overdue trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Very little corroborating evidence was offered in support of Mr. Petrus's credible testimony that he was personally liable for repayment of the TD Auto Finance debt shown on the Rule 1003(b) List. At trial, Mr. Petrus did testify about a payment history he had obtained via the internet regarding the TD Auto Finance debt.¹³⁹ The payment history covers the period from March 28, 2022, through March 23, 2023. The payment history purportedly shows payments made to, and various fees that had been assessed by, TD Auto Finance in connection with the loan secured by Mr. Petrus's Truck. It does not, however, expressly identify Mr. Petrus as the borrower.¹⁴⁰ No monthly statements showing that Mr. Petrus was personally liable for the debt to TD Auto Finance, or how much was actually owed to TD Auto Finance on the Petition Date, were offered or admitted into evidence.

139 Trial Ex. E.

140 Id.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the TD Auto Finance debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists

regarding Mr. Petrus's personal liability for the TD Auto Finance debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

TD Auto Finance is identified on the Rule 1003(b) List as the holder of a claim against Mr. Petrus personally in the amount of $27,604.00. Very little evidence was offered at trial regarding the amount of the TD Auto Finance debt as of the Petition Date.

Mr. Petrus did testify about the "payment history" he had obtained via the internet regarding the TD Auto Finance debt covering the time period from March 28, 2022, through March 23, 2023.¹⁴¹ The payment history purportedly shows payments Mr. Petrus made to, and various fees that had been assessed by, TD Auto Finance in connection with the loan secured by his Truck. The payment history does not, however, show how much Mr. Petrus actually owed to TD Auto Finance on the Petition Date. The record is bereft of any monthly statements showing how much Mr. Petrus owed to TD Auto Finance on the Petition Date. No evidence was offered or admitted establishing the value of Mr. Petrus's Truck, or whether the TD Auto Finance claim was fully secured, as of the Petition Date.

141 Trial Ex. E.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute regarding the amount of the TD Auto Finance debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the TD Auto Finance debt shown on the Rule 1003(b) List as of the Petition Date.

iv. TD Auto Finance is Not a Qualified Creditor

In summary, the Court concludes that the TD Auto Finance claim against Mr. Petrus shown on the Rule 1003(b) List was neither contingent as to liability, nor the subject of bona fide dispute as to Mr. Petrus's liability, on the Petition Date. The Court concludes, however, that a bona fide dispute exists regarding the amount of the TD Auto Finance claim against Mr. Petrus shown on the Rule 1003(b) List as of the Petition Date. TD Auto Finance does not count as a qualified creditor in the numerosity calculus under Section 303(b).

b. AmEx

AmEx is shown on the Rule 1003(b) List as the holder of an unsecured claim in an "Unknown" amount.¹⁴²

142 ECF 51, p. 4 of 10; Trial Ex. A, Bates No. DP 2, Part 2, Item 4.1.

i. Contingent Liability Analysis

No account statements confirming that Mr. Petrus was personally obligated to repay the AmEx debt shown on the Rule 1003(b) List, or showing how much was owed to AmEx on the Petition Date, were offered or admitted into evidence at trial. Mr. Petrus testified credibly that the AmEx debt shown on the Rule 1003(b) List arose from four corporate credit cards AmEx had issued two companies that Mr. Petrus owned, not from AmEx credit cards issued to Mr. Petrus personally. He testified further that as of the Petition Date he was personally and contractually obligated to repay the "unknown" amount owed to

AmEx as shown on the Rule 1003(b) List because, as a predicate to issuing the corporate credit cards, AmEx had required him to personally guarantee payment. Mr. Petrus was unsure if any amounts owed to AmEx were in default on the Petition Date.

There is no written evidence in the record to corroborate Mr. Petrus's testimony that he personally guaranteed payment of the corporate AmEx card accounts comprising the AmEx debt shown on the Rule 1003(b) List. Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the AmEx debt shown on the Rule 1003(b) List lacks credibility and the Court affords it no evidentiary weight. Even if credible evidence had been offered to establish that Mr. Petrus personally guaranteed payment of the AmEx debt shown on the Rule 1003(b) List, debts arising from personal guarantees are contingent as to liability in the Section 303(b) analysis. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that a guarantee of payment is contingent as to liability under Section 303(b)).

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the AmEx debt shown on the Rule 1003(b) List was contingent as to liability on the Petition Date in the context of Section 303(b).

ii. Bona Fide Dispute Analysis — Liability

No account statements confirming that Mr. Petrus was personally obligated to repay the AmEx debt shown on the Rule 1003(b) List were offered or admitted into evidence at trial. There is no written evidence to corroborate Mr. Petrus's testimony that he had personally guaranteed payment of the corporate credit card accounts comprising the AmEx debt shown on the Rule 1003(b) List. The Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the AmEx debt shown on the Rule 1003(b) List lacks credibility and affords that testimony no evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual and legal dispute as to Mr. Petrus's personal liability for the AmEx debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding Mr. Petrus's personal liability for the AmEx debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List filed by Mr. Petrus shows an "Unknown" amount due to AmEx. Mr. Petrus's trial testimony was that the amount then due to AmEx was "about $40,000.00." He also acknowledged that the relevant corporate AmEx accounts typically required payment in full each month. Mr. Petrus stated that he believed money was owed to AmEx on the filing date but conceded that he would have to look at related account statements to be certain. He acknowledged that while documents existed that would verify the amount (if any) owed to AmEx on the Petition Date, no such documents had been produced.

The Court has considered the evidentiary record in its entirety, with no single fact

or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute as to the amount of the AmEx debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the AmEx debt shown on the Rule 1003(b) List as of the Petition Date.

iv. AmEx is Not a Qualified Creditor

In summary, the Court concludes that AmEx claim shown on the Rule 1003(b) list was premised upon Mr. Petrus's purported personal guarantee and was therefore contingent as to liability on the Petition Date. The Court further concludes that the preponderance of the evidence established that the AmEx claim is the subject of bona fide dispute as to both liability and amount on the Petition Date. AmEx does not count as a qualified creditor in the numerosity calculus under Section 303(b).

c. BWI

BWI is shown on the Rule 1003(b) List as the holder of an unsecured claim in the amount of $664.00.¹⁴³

143 ECF 51, p. 5 of 10; Trial Ex. A, Bates No. DP 3, Part 2, Item 4.2.

i. Contingent Liability Analysis

Mr. Petrus testified credibly that he personally owed money to Cox on the Petition Date and did not dispute that debt. He stated that BWI was the collection agent for Cox. He explained that to the best of his knowledge he still owed money for the unpaid Cox invoices being collected by BWI and remained personally and contractually obligated to repay that debt. According to Mr. Petrus, BWI had opened an account as a collection agent for Cox in January 2023, seeking to collect unpaid invoices for services Cox had provided on account to Mr. Petrus personally during or before October 2022. While no invoices or statements showing that Mr. Petrus owed money to Cox on the Petition Date were admitted in evidence at trial, there is no evidence in the record contradicting Mr. Petrus's credible testimony that he was personally liable for the unpaid Cox invoices underpinning the BWI Claim.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the unpaid Cox invoices being collected by BWI were for services rendered by Cox for the personal benefit of Mr. Petrus. The preponderance of the evidence further established that the BWI debt shown on the Rule 1003(b) List is a claim against Mr. Petrus personally that was not contingent as to liability on the Petition Date in the context of Section 303(b). See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that he personally owed money to Cox on the Petition Date and did not dispute that debt. He testified that BWI was the collection agent for Cox. He testified further that to the best of his knowledge he still owed money for the unpaid Cox invoices being collected by BWI, and that he remained personally and contractually obligated to repay that debt. According to Mr. Petrus, BWI had opened an account as a collection

agent for Cox in January 2023, seeking to collect unpaid invoices for services Cox had provided to Mr. Petrus on account during or before October 2022. No invoices or statements showing that Mr. Petrus owed money to Cox on the Petition Date were admitted in evidence at trial. But there is no evidence in the record contradicting Mr. Petrus's credible testimony that he was personally liable for the unpaid Cox invoices that underpin the BWI Claim.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the BWI debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the BWI debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List filed by Mr. Petrus shows that the amount of the BWI claim is $664.00.¹⁴⁴ At trial, Mr. Petrus acknowledged that the Rule 1003(b) List showed that the Cox account was last active in October 2022, and that BWI opened its collection account in January 2023. He was not able to definitively state how much he owed on the unpaid Cox invoices that underpin the BWI Claim on the Rule 1003(b) List as of the Petition Date. He testified that he believed he could provide documentation as to the amount he owed to Cox on the Petition Date since Cox was providing services to him at that time. But no documentation was offered or admitted into evidence by either party to establish the amount of the unpaid Cox invoices that underpin the BWI Claim shown on the Rule 1003(b) List as of the Petition Date.

144 ECF 51, p. 3 of 10; Trial Ex. A, Bates No. DP 3, Part 2, Item 4.2.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute as to the amount of the BWI debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the BWI debt shown on the Rule 1003(b) List as of the Petition Date.

iv. BWI is Not a Qualified Creditor

In summary, the Court concludes that the BWI claim against Mr. Petrus shown on the Rule 1003(b) List was neither contingent as to liability, nor the subject of bona fide dispute as to liability, on the Petition Date. The Court concludes, however, that a bona fide dispute exists regarding the amount of the BWI claim against Mr. Petrus shown on the Rule 1003(b) List as of the Petition Date. BWI does not count as a qualified creditor in the numerosity calculus under Section 303(b).

d. Capital One

Capital One is identified on the Rule 1003(b) List the holder of an unsecured claim in the amount of $298.00.¹⁴⁵ i. Contingent Liability Analysis

145 ECF 51, p. 5 of 10; Trial Ex. A, Bates No. DP 3, Part 2, Item 4.3.

Asked to review a periodic credit card account statement issued to him by Capital One,¹⁴⁶ Mr. Petrus acknowledged that the statement was for the post-petition period of February 3, 2023, through March 2, 2023. Mr. Petrus conceded that Capital One issued the related credit card to him several months after the Petition Date¹⁴⁷ with a credit limit of just $300.00.

146 Trial Ex. I.

147 ECF 51, p. 5 of 10; Trial Ex. A, Bates No. DP 3, Part 2, Item 4.3.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Capital One claim on the Rule 1003(b) List relates to a credit card debt Mr. Petrus owed personally to Capital One on a credit card account that did not exist on the Petition Date. The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

On the Petition Date, Mr. Petrus's duty to pay the Capital One debt would arise only after the occurrence of several future events (i.e., Mr. Petrus's application to Capital One for credit, Capital One's approval of that application and issuance of a credit card to Mr. Petrus, and Mr. Petrus's use of the credit card once issued). Since the Capital One claim shown on the Rule 1003(b) List is for a debt Mr. Petrus first incurred several months post-petition, it was plainly contingent as to liability in the Section 303(b) calculus as of the Petition Date. See Seko Inv., Inc., 156 F.3d at 1008.

ii. Bona Fide Dispute Analysis — Liability

The Capital One debt is shown on the Rule 1003(b) List is an obligation for which Mr. Petrus is personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted. The post-petition Capital One statement offered as support for the Rule 1003(b) List was directed to Mr. Petrus personally. Importantly, Mr. Petrus acknowledged, and the preponderance of the evidence established, that Capital One only issued the related credit card to him several months after the Petition Date.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. The bona fide dispute as to liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

The preponderance of the evidence established that Capital One first issued the relevant credit card to Mr. Petrus several months after the Petition Date. Resultantly, there is an objective basis for a factual and legal dispute regarding Mr. Petrus's personal liability for the Capital One debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding Mr. Petrus's personal liability for the Capital One debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The amount of the Capital One claim shown on the Rule 1003(b) List filed by Mr. Petrus is $298.00.¹⁴⁸ Mr. Petrus conceded

148 ECF No. 51, p. 5 of 10; Trial Ex. A, Bates No. DP 3, Part 2, Item 4.3. The precise amount shown on the Capital One statement underpinning the Rule 1003(b) List is $298.26. Trial Ex. I, Bates No. DP 93.

that the Capital One account was opened several months after the Petition Date. Mr. Petrus acknowledged that the Capital One account statement underpinning the debt shown on his Rule 1003(b) List was for the post-petition period of February 3, 2023, through March 2, 2023.¹⁴⁹ Asked if he believed that the $298.26 balance shown on that statement was the amount he owed to Capital One on the Petition Date, Mr. Petrus indicated that he didn't know, and would have to look at the statement encompassing the filing date. No statement confirming that Mr. Petrus owed any money to Capital One on the Petition Date was ever admitted into evidence. That is unsurprising, since the Capital One account wasn't opened until well after the Petition Date.

149 Trial Ex. I, Bates No. DP 93.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. The bona fide dispute as to amount determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

The preponderance of the evidence established that Capital One first issued the relevant credit card to Mr. Petrus several months after the Petition Date. Resultantly, there is an objective basis for a factual and legal dispute regarding the amount (if any) of Mr. Petrus's personal liability for the Capital One debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount (if any) of the Capital One debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Capital One is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to Capital One on the account shown in the Rule 1003(b) List was contingent and was also the subject of bona fide dispute as to liability and amount on the Petition Date. Capital One does not count as a qualified creditor in the numerosity calculus under Section 303(b).

e. Cash 1

The Court first observes that Cash 1 is not listed anywhere on the Rule 1003(b) List originally filed with the Court and served with Mr. Petrus's Amended Answer.¹⁵⁰ But Cash 1 is shown on the Rule 1003(b) List offered and admitted into evidence at trial as the holder of a $300.00 unsecured claim.¹⁵¹

150 See ECF No. 51, p. 5 of 10, Items 4.3 and 4.4.

151 See Trial Ex. A, Bates No. DP 3, Item 4.4.

i. Contingent Liability Analysis

In his trial testimony, Mr. Petrus acknowledged that the revolving credit account underpinning the Cash 1 claim, shown only on the version of the Rule 1003(b) List offered and admitted into evidence at trial, was opened well after the Petition Date in December 2022.¹⁵² He testified credibly that the Cash 1 debt was a personal and revolving debt, and that he still owed Cash 1 money.

152 Id.

The Court has considered the evidentiary record in its entirety, with no single fact

or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Cash 1 claim relates to a revolving debt Mr. Petrus owed personally to Cash 1 on an account that did not exist on the Petition Date. The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

On the Petition Date, Mr. Petrus's duty to pay the Cash 1 debt would arise only after the occurrence of several future events (i.e., Mr. Petrus's application to Cash 1 for credit, Cash 1's approval of that application, and Mr. Petrus's use of the revolving credit account thereafter). Since the Cash 1 claim relates to a debt Mr. Petrus first incurred several months post-petition, it was plainly contingent as to liability in the Section 303(b) calculus as of the Petition Date. See Seko Inv., Inc., 156 F.3d at 1008.

ii. Bona Fide Dispute Analysis — Liability

The Cash 1 debt is an obligation for which Mr. Petrus is personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted. The Cash 1 LLC — High-Interest Loan Agreement dated March 20, 2023, corroborates Mr. Petrus's testimony and identifies Mr. Petrus personally as the borrower.¹⁵³ Importantly, Mr. Petrus acknowledged, and the preponderance of the evidence established, that the Cash 1 revolving account was not opened until several months after the Petition Date.

153 Trial Ex. J, Bates Nos. DP 97-100.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. The bona fide dispute as to liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

The preponderance of the evidence established that Cash 1 first opened Mr. Petrus's revolving credit account several months after the Petition Date. Resultantly, there is an objective basis for a factual and legal dispute regarding Mr. Petrus's personal liability for the Cash 1 debt as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding Mr. Petrus's personal liability for the Cash 1 debt as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The amount of the Cash 1 claim shown on the Rule 1003(b) List admitted into evidence¹⁵⁴ is $300.00.¹⁵⁵ Mr. Petrus testified credibly that the Cash 1 account was opened several months after the Petition Date. Corroboration for that testimony is provided by the March 20, 2023, Cash 1, LLC — High Interest Loan Agreement he signed.¹⁵⁶ No statements confirming that Mr. Petrus ever made any payments to Cash 1, or the amount or dates of any such payments if made, were admitted into evidence.

154 But not included on the Rule 1003(b) List attached to Mr. Petrus's Amended Answer; see note 98, supra.

155 Trial Ex. A, Bates No. DP 3, Part 2, Item 4.4. The Cash 1, LLC — High Interest Loan Agreement shows that Mr. Petrus originally borrowed the principal sum of $210.00 from Cash 1 bearing interests at an annual percentage rate of 387.124%, to be repaid via payments of $101.86 due on April 1 and May 1 of 2023, and a final payment of $101.85 on June 1, 2023. Trial Ex. J, Bates No. DP 97.

156 Trial Ex. J, Bates Nos. DP 97-100.

Nor were any statements confirming that Mr. Petrus owed money to Cash 1 on the Petition Date offered or admitted into evidence.¹⁵⁷ That is unsurprising, since the Cash 1 revolving credit account wasn't opened until some point in 2023, well after the Petition Date.¹⁵⁸

157 The Court notes that the last payment to Cash 1 was due prior to trial on June 1, 2023. Trial Ex. J, Bates No. DP 97. The trial record does not, however, establish whether Mr. Petrus made any or all of the scheduled payments to Cash 1 in a timely way.

158 Trial Ex. J, Bates No. DP 97.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. The bona fide dispute as to amount determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98.

The preponderance of the evidence established that Mr. Petrus's Cash 1 revolving credit account wasn't opened until some point in 2023, well after the Petition Date. Resultantly, there is an objective basis for a factual and legal dispute regarding the amount (if any) of Mr. Petrus's personal liability for the Cash 1 debt as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount (if any) of the Cash 1 debt as of the Petition Date.

iv. Cash 1 is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to Cash 1 was contingent and was also the subject of bona fide dispute as to liability and amount on the Petition Date. For those reasons, and because the Cash 1 claim was not included on the Rule 1003(b) list appended to Mr. Petrus's Amended Answer, Cash 1 does not count as a qualified creditor in the numerosity calculus under Section 303(b).

f. Chase

Chase is shown on the Rule 1003(b) List as originally filed,¹⁵⁹ and as admitted into evidence at trial,¹⁶⁰ as the holder of an unsecured claim in the amount of $8,507.00.

159 ECF No. 51, p. 5 of 10, Item 4.4.

160 Trial Ex. A, Bates No. DP 4, Item 4.5.

i. Contingent Liability Analysis

Mr. Petrus testified credibly that Chase was identified as a creditor on the Rule 1003(b) List because he owed money to Chase on a personal credit card on the Petition Date. He testified further that to the best of his knowledge he still owed money on his Chase credit card account, did not dispute that money was owed to Chase on that credit card account, and affirmed that he was personally and contractually obligated to repay that debt to Chase.

The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98. It is noteworthy that the record does not include any periodic statements corroborating Mr. Petrus's credible testimony that he personally owed money to Chase on his credit card account on the Petition Date. Equally noteworthy is the fact that no countervailing evidence came into the record at trial.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence

established that the Chase claim shown on the Rule 1003(b) List was not contingent as to liability in the Section 303(b) calculus on the Petition date. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

The preponderance of the evidence established that Mr. Petrus opened the Chase credit card account shown on the Rule 1003(b) in December 2003, almost two decades prior to the Petition Date. Mr. Petrus testified credibly that the Chase credit card account was an obligation for which he was personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the Chase debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the Chase debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

Mr. Petrus testified credibly that Chase was listed as a creditor on the Rule 1003(b) List because he owed $8,507.00 to Chase on his personal credit card account on the Petition Date. No periodic statements were admitted into evidence to corroborate Mr. Petrus's credible testimony in that regard, but no countervailing evidence is found in the trial record.

This is a very close call.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual dispute regarding the amount of the Chase debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes, by the thinnest of margins, that no bona fide dispute exists regarding the amount of the Chase debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Chase is a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to Chase on the credit card account shown on the Rule 1003(b) List was neither contingent nor the subject of bona fide dispute as to liability or amount on the Petition Date. Resultantly, the Court concludes that Chase does count as a qualified creditor in the numerosity calculus under Section 303(b).

g. Discover

Discover is shown on the Rule 1003(b) List as originally filed,¹⁶¹ and as admitted into evidence at trial,¹⁶² as the holder of an unsecured claim in an "Unknown" amount. i. Contingent Liability Analysis

161 ECF No. 51, p. 6 of 10, Item 4.5.

162 Trial Ex. A, Bates No. DP 4, Item 4.6.

Mr. Petrus testified credibly that the debt to Discover shown on the Rule 1003(b) List was attributable his personal Discover credit card, which was last active on November 17, 2021, well prior to the Petition Date. He testified credibly that he still owed money on his Discover credit card account on the Petition Date, did not dispute that debt, and believed that he was personally and contractually obligated to repay it.

The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98. It is noteworthy that the record does not include any periodic statements corroborating Mr. Petrus's credible testimony that he personally owed money to Discover on his credit card account as of the Petition Date. Equally noteworthy is the fact that no countervailing evidence came into the record at trial.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Discover claim shown on the Rule 1003(b) List was not contingent as to liability in the Section 303(b) calculus on the Petition date. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that the debt to Discover shown on the Rule 1003(b) List was attributable his personal Discover credit card. He also testified credibly that the Discover card account was last active on November 17, 2021, well before the Petition Date. He also credibly testified that he still owed Discover money on his credit card account on the Petition Date, did not dispute that debt, and believed that he was personally and contractually obligated to repay it. It is again noteworthy that no periodic statements were offered or admitted into evidence to corroborate Mr. Petrus's credible testimony that he personally owed money to Discover on his credit card account on the Petition Date. It is again equally noteworthy that no countervailing evidence came into the record at trial, either.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the debt to Discover shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the debt to Discover shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The evidence as to the amount Mr. Petrus owed to Discover on the Petition Date is uneven. Mr. Petrus testified that Discover was listed as a creditor on the Rule 1003(b) List because he owed Discover money on his personal credit card account as of the Petition Date. But the Rule 1003(b) List shows an "Unknown" amount owed to Discover on Mr. Petrus's personal credit card on the Petition Date. Mr. Petrus's trial testimony indicated that he truly did not know the actual amount owed to Discover on the Petition Date. His trial testimony was only to the effect that he still owed Discover "about $8,000.00" when the involuntary petition was filed. When pressed, he ultimately conceded that he did not know whether any exhibits produced in connection with the trial would corroborate his testimony as to the amount owed to Discover on the Petition Date. No periodic statements were admitted into evidence to corroborate Mr. Petrus's testimony in that regard, but the Court again notes that no countervailing evidence is present in the trial record.

This is also a very close call.

After careful review of the record, because the Rule 1003(b) List shows the amount of the Discover debt as "Unknown,"¹⁶³ because Mr. Petrus's trial testimony revealed a lack of personal knowledge as to the actual amount he owed to Discover on the Petition Date, and in the absence of any periodic statements issued by Discover to clarify Mr. Petrus's indefinite and self-serving testimony about how much (if anything) was actually owed to Discover on the Petition Date, the Court concludes that there is an objective basis for a factual dispute regarding the amount of the Discover debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the debt to Discover shown on the Rule 1003(b) List as of the Petition Date.

163 ECF No. 51, p. 6 of 10, Item 4.5; Trial Ex. A, Bates No. DP 4, Item 4.6.

iv. Discover is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to Discover for the account shown on the Rule 1003(b) List was neither contingent nor the subject of bona fide dispute on the Petition Date. However, the preponderance of the evidence established that the amount of Mr. Petrus's personal liability for the Discover debt shown on the Rule 1003(b) List as of the Petition Date is subject to bona fide dispute. As a result, Discover does not count as a qualified creditor in the numerosity calculus under Section 303(b).

h. Jefferson Capital

Jefferson Capital is shown on the Rule 1003(b) List as originally filed,¹⁶⁴ and as admitted into evidence at trial,¹⁶⁵ as the holder of a $3,000.00 unsecured claim.

164 ECF No. 51, p. 6 of 10, Item 4.7.

165 Trial Ex. A, Bates No. DP 5, Item 4.8.

i. Contingent Liability Analysis

The Rule 1003(b) List does not reveal when the debt to Jefferson Capital was incurred, or whether it remained unpaid on the Petition Date.¹⁶⁶ Mr. Petrus testified credibly, though, that the debt to Jefferson Capital shown on the Rule 1003(b) List was for a personal loan used to pay personal expenses. He stated that he owed money to Jefferson Capital on the Petition Date, still owed money to Jefferson Capital, and believed that he was personally and contractually obligated to repay it.

166 ECF No. 51, p. 6 of 10, Item 4.7; Trial Ex. A, Bates No. DP 5, Item 4.8.

The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98. Once again, there were no periodic statements to corroborate Mr. Petrus's credible testimony that he personally owed money to Jefferson Capital on the Petition

Date. And again, no countervailing evidence came into the record at trial.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Jefferson Capital claim shown on the Rule 1003(b) List was not contingent as to liability in the Section 303(b) calculus on the Petition date. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that the debt to Jefferson Capital shown on the Rule 1003(b) List was an obligation for which he was personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the Jefferson Capital debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the Jefferson Capital debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

Mr. Petrus testified credibly that the $3,000.00 debt to Jefferson Capital shown on the Rule 1003(b) List was an obligation for which he was personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted. No periodic statements were admitted into evidence to corroborate Mr. Petrus's credible testimony in that regard, but no countervailing evidence is found in the trial record.

Once again, this is again a very close call.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual dispute regarding the amount of the Jefferson Capital debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes, by the thinnest of margins, that no bona fide dispute exists regarding the amount of the Jefferson Capital debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Jefferson Capital is a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's $3,000.00 personal liability to Jefferson Capital for the account shown on the Rule 1003(b) List was neither contingent nor the subject of bona fide dispute as to liability or amount on the Petition Date. Resultantly, the Court concludes that Jefferson Capital does count as a qualified creditor in the numerosity calculus under Section 303(b). i. Mariner Finance

Mariner Finance is shown on the Rule 1003(b) List as originally filed,¹⁶⁷ and as admitted into evidence at trial,¹⁶⁸ as the holder of a $5,781.00 unsecured claim.

167 ECF No. 51, p. 7 of 10, Item 4.8.

168 Trial Ex. A, Bates No. DP 5, Item 4.9.

i. Contingent Liability Analysis

The Rule 1003(b) List shows that the debt to Mariner Finance was opened in September 2020, and was last active in April 2021, just over a year before the Petition Date. Mr. Petrus testified credibly that the Mariner Finance debt reflected a personal loan he had taken out, that he still owed money to Mariner Finance on the Petition Date, that he did not dispute that he was still indebted to Mariner Finance, and that he believed that he was personally and contractually obligated to repay the Mariner Finance debt.

The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98. Yet again, there were no periodic statements admitted into evidence to corroborate Mr. Petrus's credible testimony that he personally owed money to Mariner Finance on account on the Petition Date. And yet again, no countervailing evidence came into the record at trial.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Mariner Finance claim shown on the Rule 1003(b) List was not contingent as to liability in the Section 303(b) calculus on the Petition date. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

As noted previously, Mr. Petrus testified at trial that the debt to Mariner Finance shown on the Rule 1003(b) List reflected a personal loan he had taken out. He stated that he still owed money to Mariner Finance on the Petition Date and did not dispute that debt. He testified further that he still owed money to Mariner Finance and believed that he was personally and contractually obligated to repay it. Mr. Petrus's testimony in that regard was both credible and unrebutted. No periodic statements were admitted into evidence to corroborate Mr. Petrus's credible testimony in that regard. No countervailing evidence is found in the trial record, either.

Once again, this is a very close call.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the Mariner Finance debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the Mariner Finance debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List shows a debt owed to Mariner Finance in the amount of

$5,781.00. Mr. Petrus testified credibly that the $5,781.00 debt to Mariner Finance shown on the Rule 1003(b) List was owed to Mariner Finance on the Petition Date, that he still owed money to Mariner Finance at the time of trial, and that he was personally and contractually obligated to repay the Mariner Finance debt. Mr. Petrus's testimony in that regard was both credible and unrebutted. No periodic statements were admitted into evidence to corroborate Mr. Petrus's credible testimony in that regard, but no countervailing evidence is found in the trial record.

This is another close call.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual dispute regarding the amount of the Mariner Finance debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes, by the thinnest of margins, that no bona fide dispute exists regarding the amount of the Mariner Finance debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Mariner Finance is a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's $5,781.00 personal liability to Mariner Finance on the account shown in the Rule 1003(b) List was neither contingent nor the subject of bona fide dispute as to liability or amount on the Petition Date. Resultantly, the Court concludes that Mariner Finance does count as a qualified creditor in the numerosity calculus under Section 303(b).

j. NCSI

NCSI is shown on the Rule 1003(b) List as originally filed,¹⁶⁹ and as admitted into evidence at trial,¹⁷⁰ as the holder of a $4,130.00 unsecured claim.

169 ECF No. 51, p. 7 of 10, Item 4.9.

170 Trial Ex. A, Bates No. DP 5, Item 4.10.

i. Contingent Liability Analysis

Mr. Petrus testified at trial that the NCSI debt was due to his personal guarantee of amounts due under a business lease with Rock Ridge, and that NCSI was pursuing related collection remedies on behalf of Rock Ridge. He testified that by virtue of that purported personal guarantee, he owed money to Rock Ridge and/or NCSI on the Petition Date, did not dispute that debt, still owed money to Rock Ridge and/or NCSI, and believed that he was personally and contractually obligated to repay it.

That testimony established that the debt to NCSI shown on the Rule 1003(b) List resulted from a business lease, not a transaction that Mr. Petrus entered into personally. Mr. Petrus claimed at trial to be a personal guarantor for the business lease underpinning the NCSI debt shown on the Rule 1003(b) List. But there was no corroborating written evidence to establish that Mr. Petrus had in fact personally guaranteed payment of the NCSI debt shown on the Rule 1003(b) List. Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the NCSI debt shown on the Rule 1003(b) List lacks credibility and the Court affords it no evidentiary weight. Even if credible evidence had been offered to establish that Mr. Petrus personally guaranteed payment of the NCSI debt shown on the Rule 1003(b) List, debts arising from personal guarantees

are contingent as to liability in the Section 303(b) analysis. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that a guarantee of payment is contingent as to liability under Section 303(b)).

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the NCSI debt shown on the Rule 1003(b) List was contingent as to liability on the Petition Date in the context of Section 303(b).

ii. Bona Fide Dispute Analysis — Liability

Again, no account statements confirming that Mr. Petrus was personally obligated to repay the NCSI debt on the Petition Date were offered or admitted into evidence at trial. There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of the business lease with Rock Ridge underpinning the NCSI debt shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated trial testimony regarding his personal guarantee of debts lacks credibility and declines to afford that testimony any evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual and legal dispute as to Mr. Petrus's personal liability for the NCSI debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding Mr. Petrus's personal liability for the NCSI debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List filed by Mr. Petrus shows that the amount of the NCSI claim is $4,1340.00.¹⁷¹ But as noted previously, Mr. Petrus claimed that sum was the result of a business lease that he claimed to have personally guaranteed. There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of the amounts due under the business lease with Rock Ridge underpinning the NCSI debt shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated trial testimony regarding his personal guarantee of the NCSI debt lacks credibility and declines to afford that testimony any evidentiary weight. No corroborating evidence that a personal guarantee of the NCSI debt actually existed was offered into evidence at trial, nor was any corroborating evidence presented to verify the amount of the NCSI claim shown on the Rule 1003(b) List as of the Petition Date.

171 ECF No. 51, p. 7 of 10, Item 4.9; Trial Ex. A, Bates No. DP 5, Item 4.10.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute as to the amount of the NCSI debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding

the amount of the NCSI debt shown on the Rule 1003(b) List as of the Petition Date.

iv. NCSI is Not a Qualified Creditor

In summary, the Court concludes that the NCSI claim against Mr. Petrus as shown on the Rule 1003(b) List was premised upon Mr. Petrus's purported personal guarantee of a business debt and was therefore contingent as to liability on the Petition Date. The Court further concludes that the preponderance of the evidence established that the NCSI claim is the subject of bona fide dispute both as to Mr. Petrus's personal liability and amount on the Petition Date. NCSI does not count as a qualified creditor in the numerosity calculus under Section 303(b).

k. NV Energy

NV Energy is shown on the Rule 1003(b) List as originally filed,¹⁷² and as admitted into evidence at trial,¹⁷³ as the holder of an unsecured claim in an "Unknown" amount.

172 ECF No. 51, p. 7 of 10, Item 4.10.

173 Trial Ex. A, Bates No. DP 6, Item 4.11.

i. Contingent Liability Analysis

At trial, Mr. Petrus testified credibly that the debt to NV Energy shown on the Rule 1003(b) List related to recurring energy billings for services rendered on an account bearing his name,¹⁷⁴ and that he stayed current on the billings he received from NV Energy. He stated that if he failed to pay NV Energy invoices, his electrical service would be turned off, and noted that his electrical service had continued uninterrupted for about two years. He said that he owed money to NV Energy on the Petition Date, as he owed them money every month in connection with his electric service. He stated that he currently owed money to NV Energy and affirmed that he was personally paying the amounts owed to NV Energy in connection with his electric service. A written statement showing that NV Energy had billed Mr. Petrus for the post-petition service period from February 6, 2023, through March 7, 2023, was admitted into evidence at trial,¹⁷⁵ providing some corroboration for Mr. Petrus's testimony.

174 The evidence at trial showed that the relevant NV Energy account resulted in billings addressed jointly to Mr. Petrus and his wife, Suzanne Petrus. See Trial Ex. G.

175 Trial Ex. G.

The contingent liability determination under Section 303(b) is made as of the Petition Date. See, e.g., Isbell, 529 B.R. at 797-98. It is noteworthy that the record does not include any periodic statements corroborating Mr. Petrus's credible testimony that he personally owed money to NV Energy on the Petition Date. Equally noteworthy is the fact that no countervailing evidence came into the record at trial.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the NV Energy claim shown on the Rule 1003(b) List was not contingent as to liability in the Section 303(b) calculus on the Petition date. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly at trial that the account debt to NV Energy shown on

the Rule 1003(b) List was a debt for which he was personally liable. Mr. Petrus's testimony in that regard was both credible and unrebutted. A periodic statement from NV Energy, albeit for the post-petition service period of February 6, 2023, through March 7, 2023, was admitted into evidence and provides some degree of corroboration for Mr. Petrus's testimony.¹⁷⁶ No countervailing evidence is found in the trial record.

176 Id.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the NV Energy debt shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for the NV Energy debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The evidence as to the amount Mr. Petrus owed to NV Energy on the Petition Date, is uneven. The Rule 1003(b) List shows the amount owed by Mr. Petrus to NV Energy for services rendered as of the Petition Date as "Unknown."¹⁷⁷ No periodic statement(s) showing the amount Mr. Petrus owed to NV Energy on the Petition Date was offered or admitted into evidence by either party. The only NV Energy billing statement admitted into evidence at trial was for the post-petition service period from February 6, 2023, through March 7, 2023, which was in the total amount of $304.94 and included a past due amount of $168.36.¹⁷⁸ Aside from stating that he generally kept current with his NV Energy billings, Mr. Petrus's trial testimony did little to establish the actual amount (if any) owed to NV Energy on the Petition Date.

177 ECF No. 51, p. 7 of 10, Item 4.10; Trial Ex. A, Bates No. DP 6, Item 4.11.

178 Trial Ex. G.

This is yet another close call.

After careful review of the record, because the Rule 1003(b) List shows the amount (if any) owed by Mr. Petrus to NV Energy on the Petition Date as "Unknown," because Mr. Petrus's trial testimony did not establish that he had any personal knowledge as to the actual amount owed to NV Energy on the Petition Date, and in the absence of any periodic statements issued by NV Energy showing how much (if anything) was owed to NV Energy on the Petition Date, the Court concluded that there is an objective basis for a factual dispute regarding the amount of the NV Energy debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the debt to NV Energy shown on the Rule 1003(b) List as of the Petition Date.

iv. NV Energy is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to NV Energy on the account shown in the Rule 1003(b) List was neither contingent nor the subject of bona fide dispute on the Petition Date. The preponderance of the evidence established, however, that the amount of Mr. Petrus's personal liability attributable to the NV

Energy account shown on the Rule 1003(b) List as of the Petition Date is subject to bona fide dispute. As a result, NV Energy does not count as a qualified creditor in the numerosity calculus under Section 303(b).

I. Paradigm

Paradigm is shown on the Rule 1003(b) List as originally filed,¹⁷⁹ and as admitted into evidence at trial,¹⁸⁰ as the holder of an unsecured claim in the amount of $17,479.00.

179 ECF No. 51, p. 8 of 10, Item 4.11.

180 Trial Ex. A, Bates No. DP 6, Item 4.12.

i. Contingent Liability Analysis

Mr. Petrus testified that Paradigm's claim arose from "a loan that one of [his] companies got that [he] had to personally guarantee."¹⁸¹ More specifically, Mr. Petrus testified that one of his businesses had originally taken out a loan from Headway Capital which he had personally guaranteed.¹⁸² He testified that Paradigm was shown on the creditor list because Paradigm had purchased that business loan and his personal guarantee from Headway Capital. He testified further that he did not dispute the fact that he was personally and contractually obligated under a personal guarantee to repay the money owed to Headway Capital on the Petition Date. He testified that he did not dispute his personal obligation to repay the Paradigm debt.

181 No written evidence of such a personal guarantee was offered or admitted into evidence at trial.

182 The Rule 1003(b) List identifies Paradigm as a "Factoring Company Account Headway Capital, Llc [sic]." See ECF No. 51, p. 7 of 10, Item 4.10; Trial Ex. A, Bates No. DP 6, Item 4.11.

Mr. Petrus also testified that he had worked out a payment plan with Paradigm in early 2023. An "Electronic Payment Arrangement Approval" as between Mr. Petrus on the one hand, and Frontline Asset Strategies, LLC, on the other, was admitted into evidence at trial.¹⁸³ It shows only that Mr. Petrus had agreed to allow Frontline Asset Strategies, LLC, to make twelve $100.00 monthly debits to a credit card between March 23, 2023, and February 23, 2024. It identifies Headway Capital, LLC as the "Original Creditor," and Paradigm as the "Current Creditor." But that document is not a settlement agreement. The only reference to Mr. Petrus personally is under the heading "Authorizor Name." It does not identify the original borrower. It does not include any loan documents. It provides no detail as to why the $100.00 monthly credit card payments were to be made. It does not include a copy of a written personal guaranty executed by Mr. Petrus regarding a debt originally owed by one of Mr. Petrus's businesses to Headway Capital. It does not include a copy of an assignment of such a debt and/or personal guaranty from Headway Capital to Paradigm. Asked whether any written documents existed that would confirm that he had personally guaranteed a loan to one of his businesses in connection with the Paradigm claim, Mr. Petrus testified that while he was sure such documents existed, to his knowledge they had not been produced in connection with the trial.

183 Trial Ex. K.

There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of a debt originally owed by one of his businesses to Headway Capital underpinning the Paradigm claim on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal

guarantee of the debts of others lacks credibility or any evidentiary weight. Even if there had been corroborating evidence to establish that Mr. Petrus had personally guaranteed a debt originally owed by one of Mr. Petrus's businesses to Headway Capital, debts arising from personal guarantees are contingent as to liability in the Section 303(b) analysis. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that a guarantee of payment is contingent as to liability under Section 303(b)).

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Paradigm debt shown on the Rule 1003(b) List was contingent as to liability on the Petition Date in the context of Section 303(b).

ii. Bona Fide Dispute Analysis — Liability

The "Electronic Payment Arrangement Approval" between Mr. Petrus and Frontline Asset Strategies, LLC identifies Headway Capital, LLC as the "Original Creditor," and Paradigm as the "Current Creditor."¹⁸⁴ But that document is not a settlement agreement. The only reference to Mr. Petrus personally is under the heading "Authorizor Name." It does not identify the original borrower. It does not include any loan documents. It provides no detail as to why the $100.00 monthly credit card payments were to be made. It does not include a copy of a written personal guaranty executed by Mr. Petrus regarding a debt originally owed by one of Mr. Petrus's businesses to Headway Capital. It does not include a copy of an assignment of such a debt and/or personal guaranty from Headway Capital to Paradigm. There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of a debt originally owed by one of his businesses to Headway Capital underpinning the Paradigm claim on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of debts lacks credibility and declines to afford that testimony any evidentiary weight.

184 Trial Ex. K.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the Paradigm debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute does exist regarding Mr. Petrus's personal liability for the Paradigm debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List suggests that the amount of the Paradigm claim is $17,479.00.¹⁸⁵ That amount is largely consistent with the "Electronic Payment Arrangement Approval" between Mr. Petrus and Frontline Asset Strategies, LLC, which references a "Current Balance" of $17,478.86.¹⁸⁶ But the "Electronic Payment

185 See ECF No. 51, p. 8 of 10, Item 4.11; Trial Ex. A, Bates No. DP 6, Item 4.12.

186 Trial Ex. K.

Arrangement Approval" is not a settlement agreement. The only reference to Mr. Petrus personally is under the heading "Authorizor Name." It does not identify the original borrower. It does not include any loan documents. It provides no detail as to why the $100.00 monthly credit card payments were to be made. It does not include a copy of a written personal guaranty executed by Mr. Petrus regarding a debt originally owed by one of Mr. Petrus's businesses to Headway Capital. It does not include a copy of an assignment of such a debt and/or personal guaranty from Headway Capital to Paradigm. There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of a debt originally owed by one of his businesses to Headway Capital underpinning the Paradigm claim on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of debts lacks credibility and declines to afford that testimony any evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute regarding the amount of the Paradigm debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the Paradigm debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Paradigm is Not a Qualified Creditor

In summary, the Court concludes that the Paradigm claim against Mr. Petrus as shown on the Rule 1003(b) List was premised upon Mr. Petrus's purported personal guarantee of a business debt and was therefore contingent as to liability on the Petition Date. The Court further concludes that the preponderance of the evidence established that the Paradigm claim was the subject of bona fide dispute as to both liability and amount on the Petition Date. Paradigm does not count as a qualified creditor in the numerosity calculus under Section 303(b).

m. Pinnacle Bank

Pinnacle Bank is shown on the Rule 1003(b) List as originally filed,¹⁸⁷ and as admitted into evidence at trial,¹⁸⁸ as the holder of an unsecured claim in the amount of $291,660.00.

187 ECF No. 51, p. 8 of 10, Item 4.12.

188 Trial Ex. A, Bates No. DP 6, Item 4.13.

i. Contingent Liability Analysis

Mr. Petrus testified that Pinnacle Bank's claim related to a PPP loan made to one of his companies, and that he had personally guaranteed repayment of that loan. He testified that he did not believe that the PPP loan had been forgiven, did not dispute that he personally owed money to Pinnacle Bank as the result of his personal guarantee, and believed that the loan was reflected on his personal credit report. Asked whether any written documents existed that would confirm his personal guarantee of Pinnacle Bank's PPP loan to one of his companies, Mr. Petrus stated again that he believed he was required to sign a personal guarantee. But he also conceded that to his knowledge no documents evidencing such a personal guarantee had been produced in connection with the trial. The only documents in the trial record that specifically relate to Pinnacle Bank are three Statements of Account issued by Pinnacle Bank to 9 Distribution — not to Mr. Petrus personally.¹⁸⁹ Those statements regarding 9 Distribution's account cover the period of time from November 2, 2020, through January 31, 2021.¹⁹⁰ Careful review of those statements reveals that the proceeds from Paycheck Protection Loan #7187748306 in the amount of $51,500.00 were deposited into 9 Distribution's account at Pinnacle Bank on January 29, 2021.¹⁹¹ The Court also notes that the trial record includes a Paycheck Protection Program Second Draw Borrower Application Form for O&M.¹⁹²

189 Trial Ex. B.

190 Id.

191 See Trial Ex. B, Bates No. DP 21. There is no written evidence in the trial record to show whether this application was granted; whether Pinnacle Bank actually made any related PPP loan; if so, in what amount; or whether Mr. Petrus personally guaranteed repayment if in fact such a PPP loan was made by Pinnacle Bank to O&M.

192 Trial Ex. O.

But there is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed repayment of a PPP loan made by Pinnacle Bank to 9 Distribution (or any of his other companies) underpinning the Pinnacle Bank claim on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight. Even if there had been corroborating evidence to establish that Mr. Petrus had personally guaranteed a PPP loan made by Pinnacle Bank to one of his companies, debts arising from personal guarantees are contingent as to liability in the Section 303(b) analysis. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that a guarantee of payment is contingent as to liability under Section 303(b)).

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the Pinnacle Bank debt shown on the Rule 1003(b) List was contingent as to liability on the Petition Date in the context of Section 303(b).

ii. Bona Fide Dispute Analysis — Liability

As noted previously, the only documents in the trial record that specifically relate to Pinnacle Bank are three Statements of Account issued by Pinnacle Bank to 9 Distribution — not to Mr. Petrus personally.¹⁹³ Those statements regarding 9 Distribution's account cover the period of time from November 2, 2020, through January 31, 2021.¹⁹⁴ Careful review of those statements reveals that the proceeds from Paycheck Protection Loan #7187748306 in the amount of $51,500.00 were deposited into 9 Distribution's account at Pinnacle Bank on January 29, 2021.¹⁹⁵ The Court also notes that the trial record includes a Paycheck

193 Trial Ex. B.

194 Id.

195 See Trial Ex. B, Bates No. DP 21. There is no written evidence in the trial record to show whether this application was granted; whether Pinnacle Bank actually made any related PPP loan; if so, in what amount; or whether Mr. Petrus personally guaranteed repayment if in fact such a PPP loan was made by Pinnacle Bank to O&M.

Protection Program Second Draw Borrower Application Form for O&M.¹⁹⁶

196 Trial Ex. O.

But there is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed repayment of a PPP loan made by Pinnacle Bank to 9 Distribution (or any of his other companies) underpinning the Pinnacle Bank claim shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual or legal dispute as to Mr. Petrus's personal liability for the Pinnacle Bank debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute does exist regarding Mr. Petrus's personal liability for the Pinnacle Bank debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

Pinnacle Bank is shown on the Rule 1003(b) List as originally filed,¹⁹⁷ and as admitted into evidence at trial,¹⁹⁸ as the holder of an unsecured claim in the amount of $291,660.00. But the only documents in the trial record that specifically relate to Pinnacle Bank are three Statements of Account issued by Pinnacle Bank to 9 Distribution — not to Mr. Petrus personally.¹⁹⁹ Those statements regarding 9 Distribution's account cover the period of time from November 2, 2020, through January 31, 2021.²⁰⁰ Careful review of those statements reveals that the proceeds from Paycheck Protection Loan #7187748306 in the amount of $51,500.00 were deposited into 9 Distribution's account at Pinnacle Bank on January 29, 2021.²⁰¹ The Court also notes that the trial record includes a Paycheck Protection Program Second Draw Borrower Application Form for O&M.²⁰²

197 ECF No. 51, p. 8 of 10, Item 4.12.

198 Trial Ex. A, Bates No. DP 6, Item 4.13.

199 Trial Ex. B.

200 Id.

201 See Trial Ex. B, Bates No. DP 21. There is no written evidence in the trial record to show whether this application was granted; whether Pinnacle Bank actually made any related PPP loan; if so, in what amount; or whether Mr. Petrus personally guaranteed repayment if in fact such a PPP loan was made by Pinnacle Bank to O&M.

202 Trial Ex. O.

But there is simply no written evidence in the record to establish how much (if anything) was owed to Pinnacle Bank under PPP loan(s) it had made to Mr. Petrus's companies (i.e., 9 Distribution and O&M) as of the Petition Date. Nor is there any written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed repayment of any PPP loans made by Pinnacle Bank to 9 Distribution (or any of his other companies) underpinning the Pinnacle Bank claim shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight. The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute regarding the amount of the Pinnacle Bank debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the Pinnacle Bank debt shown on the Rule 1003(b) List as of the Petition Date.

iv. Pinnacle Bank is Not a Qualified Creditor

In summary, the Court concludes that the Pinnacle Bank claim against Mr. Petrus as shown on the Rule 1003(b) List was premised upon Mr. Petrus's purported personal guarantee of PPP loans Pinnacle Bank had made to Mr. Petrus's companies (i.e., 9 Distribution and O&M), and was therefore contingent as to liability on the Petition Date. The Court further concludes that the preponderance of the evidence established that the Pinnacle Bank claim was the subject of bona fide dispute as to both liability and amount on the Petition Date. Pinnacle Bank does not count as a qualified creditor in the numerosity calculus under Section 303(b).

n. The Taylors' Claim Under the Taylor Judgment

The Taylors are shown on the Rule 1003(b) List as originally filed,²⁰³ and as admitted into evidence at trial,²⁰⁴ as holding an unsecured claim in the amount of $2,616,196.00.

203 ECF No. 51, p. 8 of 10, Item 4.13.

204 Trial Ex. A, Bates No. DP 7, Item 4.14.

i. Contingent Liability Analysis

The Taylor Judgment was admitted into evidence at trial.²⁰⁵ Mr. Petrus testified that he was aware that the Taylor Judgment was for approximately $1.4 million. When asked if he had taken any steps to set aside the Taylor Judgment, Mr. Petrus stated simply "not yet." He testified further that he did not dispute that he owed money to the Taylors pursuant to the Taylor Judgment.

205 Trial Ex. N.

The preponderance of the evidence developed at trial clearly established that on the Petition Date Mr. Petrus's duty to pay under the Taylor Judgment was not dependent upon the occurrence of a future event. The Taylors obtained the Taylor Judgment against Mr. Petrus prior to the Petition Date and Mr. Petrus testified quite credibly that he has never taken action to obtain relief from it.²⁰⁶ Under the controlling Ninth Circuit decisions in Blixseth and Priddis, as well as the persuasive holding in Marciano BAP, this Court concludes that the Taylors held a claim against Mr. Petrus, in the form of the Taylor Judgment, that was not contingent as to liability on the Petition Date in the context of 11 U.S.C. § 303(b).

206 The Court is mindful that the Taylor Judgment was entered by default. But the Court is also aware that the preponderance of the evidence established that the Taylor Judgment was entered on May 14, 2022, and Mr. Petrus acknowledged that he had taken no action to contest it as of the hearing on this involuntary petition. Under the particular facts of this case, the Court concludes that the default nature of the Taylor Judgment does not remove it from the scope of the holdings in Blixseth, Priddis, and Marciano BAP, supra.

ii. Bona Fide Dispute Analysis — Liability

Again, the Taylor Judgment was admitted

into evidence at trial.²⁰⁷ Mr. Petrus testified that he was aware that the Taylor Judgment was for approximately $1.4 million. When asked if he had taken any steps to set aside the Taylor Judgment, Mr. Petrus simply testified "not yet." He testified further that he did not dispute that he owed money to the Taylors pursuant to the Taylor Judgment.

207 Trial Ex. N.

Having carefully reviewed the evidentiary record, the Court concludes that there is no objective basis for either a factual or legal dispute as to the validity of the Taylor Judgment. There is neither a genuine issue of material fact that bears upon Mr. Petrus's liability to the Taylors under the Taylor Judgment, nor a meritorious contention as to the application of law to undisputed facts that would support a contrary finding. See Vortex Fishing, 277 F.3d at 1064. Under the controlling Ninth Circuit decisions in Blixseth, Priddis, and the persuasive holding in Marciano BAP, this Court concludes that Mr. Petrus's liability to the Taylors pursuant to the Taylor Judgment was not subject to bona fide dispute as to liability on the Petition Date in the context of 11 U.S.C. § 303(b), See also In re EB Holdings II, Inc., 589 B.R. 704, 722 (Bankr. D. Nev. 2017).

iii. Bona Fide Dispute Analysis — Amount

As noted previously, the Taylor Judgment was admitted into evidence at trial.²⁰⁸ Mr. Petrus testified that he was aware that the Taylor Judgment was for approximately $1.4 million. The precise amount due to the Taylors by Mr. Petrus under the Taylor Judgment is readily calculable by reference to the terms of the Taylor Judgment itself. When asked if he had taken any steps to set aside the Taylor Judgment, Mr. Petrus simply testified "not yet." He testified further that he did not dispute that he owed money to the Taylors pursuant to the Taylor Judgment.

208 Trial Ex. N.

Having carefully reviewed the evidentiary record, the Court concludes that there is no objective basis for either a factual or legal dispute as to the amount of the Taylor Judgment. There is neither a genuine issue of material fact suggesting that the amount owed to the Taylors by Mr. Petrus under the Taylor Judgment cannot be readily calculated by reference to the terms of the Taylor Judgment itself, nor a meritorious contention as to the application of law to undisputed facts that would support a contrary finding. See Vortex Fishing, 277 F.3d at 1064. Under the controlling Ninth Circuit decisions in Blixseth, Priddis, and the persuasive holding in Marciano BAP, this Court concludes that the amount of Mr. Petrus's liability to the Taylors under the Taylor Judgment on the Petition Date was not subject to bona fide dispute in the context of 11 U.S.C. § 303(b). See also In re EB Holdings II, Inc., 589 B.R. 704, 722 (Bankr. D. Nev. 2017).

iv. The Taylors are a Single Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to the Taylors under the Taylor Judgment as reflected in the Rule 1003(b) List is neither contingent, nor the subject of bona fide dispute as to liability or amount as of the Petition Date. Resultantly, the Court concludes that the Taylors count as a single qualified creditor in the numerosity calculus under Section 303(b).²⁰⁹ o. Small Business Administration

209 The Court is mindful that Shawn Taylor and Kimberly Taylor were separately named plaintiffs in the lawsuit giving rise to the Taylor Judgment. Trial Ex. N. Under the facts of this case, the Court concludes that entry of the Taylor Judgment merged their claims into a single debt for purposes of the numerosity calculus under 11 U.S.C. § 303(b). See In re Edwards, 501 B.R. 666, 674-80 (Bankr. N.D. Tex. 2013), comparing In re Forster, 465 B.R. 97 (Bankr. W.D. Va. 2012) with In re Mid-Am. Indus., Inc., 236 B.R. 640, 645 (Bankr. N.D. Ill. 1999) and In re Richard A. Turner Co., Inc., 209 B.R. 177, 179 (Bankr. D. Mass. 1997); but see Priddis, 2023 WL 2203562 at *1-3 (9th Cir. Feb. 24, 2023) (discussing whether and when claims held by multiple parties are merged into a single judgment for purposes of the Section 303(b) numerosity analysis).

The SBA is shown on the Rule 1003(b) List as originally filed,²¹⁰ and as admitted into evidence at trial,²¹¹ as the holder of an unsecured claim in the amount of $224,100.00.

210 ECF No. 51, p. 9 of 10, Item 4.14.

211 Trial Ex. A, Bates No. DP 7, Item 4.15.

i. Contingent Liability Analysis

Mr. Petrus testified that the larger portion of the SBA debt shown on the Rule 1003(b) List related to the O&M SBA Loan in the principal amount of $150,000.00.²¹² Mr. Petrus explained that O&M was a government contracting business wholly owned by Mr. Petrus that operated utilities for the Department of Defense. He acknowledged that the documents memorializing the O&M SBA Loan provided the SBA with "recourse to collect all of the amounts owing from any borrower and guarantor, if any."²¹³ While Mr. Petrus stated that he believed that he was required to personally guarantee repayment of the O&M SBA Loan, he proved unable to point to either a written personal guarantee or to any O&M SBA Loan documents he had signed in his individual capacity.

212 Trial Ex. M.

213 See Trial Ex. M, p. DP 142, para. 5, titled "SBA's Rights if There is a Default" (emphasis added).

Mr. Petrus testified that the balance of the SBA debt shown on the Rule 1003(b) List related to the separate 9 Distribution SBA Loan in the principal amount of $74,200.00.²¹⁴ He acknowledged that the documents memorializing the 9 Distribution SBA Loan provided the SBA with "recourse to collect all of the amounts owing from any borrower and guarantor, if any."²¹⁵ Asked if he recalled executing a personal guarantee for the amounts advanced by the SBA under the 9 Distribution SBA Loan, Mr. Petrus stated that he was uncertain whether the amount of the loan required him to execute a personal guarantee. Mr. Petrus was pressed further on the issue of whether he had personally guaranteed the debt under the 9 Distribution SBA Loan or had signed any 9 Distribution SBA Loan documents in his personal capacity. Mr. Petrus was again unable to point to either a written personal guarantee or to any 9 Distribution SBA Loan documents that he had signed in his individual capacity. Mr. Petrus also testified that he did not dispute that the debt under the 9 Distribution SBA Loan was unpaid on the Petition Date.

214 Trial Ex. L.

215 See Trial Ex. L, p. DP 123, para. 5, titled "SBA's Rights if There is a Default" (emphasis added).

There is no written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed payment of either the O&M SBA Loan, or the 9 Distribution SBA Loan, that would substantiate the SBA claim shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated

testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight. Even if there had been corroborating evidence to establish that Mr. Petrus had personally guaranteed payment of either the O&M SBA Loan or the 9 Distribution SBA Loan, debts arising from personal guarantees are contingent as to liability in the Section 303(b) analysis. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that a guarantee of payment is contingent as to liability under Section 303(b)).

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that the SBA debt shown on the Rule 1003(b) List was contingent as to liability on the Petition Date in the context of Section 303(b).

ii. Bona Fide Dispute Analysis — Liability

The preponderance of the evidence demonstrates that the SBA made separate loans to O&M and 9 Distribution, both of which are companies controlled by Mr. Petrus. The preponderance of the evidence does not, however, show that the SBA made any loans at all to Mr. Petrus in his individual capacity. Once again, there is no written evidence to corroborate Mr. Petrus's self-serving testimony that he personally guaranteed payment of either the O&M SBA Loan, or the 9 Distribution SBA Loan, that would substantiate the SBA claim shown on the Rule 1003(b) List. As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual and legal dispute as to Mr. Petrus's personal liability for the SBA debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute does exist regarding Mr. Petrus's personal liability for the SBA debt shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The Rule 1003(b) List shows that the SBA is the holder of an unsecured claim against Mr. Petrus in the amount of $224,100.00.²¹⁶ The preponderance of the evidence demonstrates that the O&M SBA Loan and 9 Distribution SBA Loan were loans the SBA made to companies controlled by Mr. Petrus, not to Mr. Petrus himself. The preponderance of the evidence demonstrates that the principal sum of the O&M SBA Loan was $150,000.00,²¹⁷ and that the principal sum of the 9 Distribution SBA Loan was $74,200.00.²¹⁸

216 ECF No. 51, p. 9 of 10, Item 4.14; Trial Ex. A, Bates No. DP 7, Item 4.15.

217 Trial Ex. M.

218 Trial Ex. L.

The preponderance of the evidence does not show that the SBA made any loans at all to Mr. Petrus in his individual capacity. Moreover, there is no written evidence in the record to establish how much (if anything) was owed under either the O&M

SBA Loan or the 9 Distribution SBA Loan on the Petition Date. Nor is there any written evidence to corroborate Mr. Petrus's self-serving testimony that he had personally guaranteed repayment of either the O&M SBA Loan or the 9 Distribution SBA Loan As noted previously, the Court finds that Mr. Petrus's uncorroborated testimony regarding his personal guarantee of the debts of others lacks credibility or any evidentiary weight.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is an objective basis for a factual dispute regarding the amount of the SBA debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the SBA debt shown on the Rule 1003(b) List as of the Petition Date.

iv. The SBA is Not a Qualified Creditor

In summary, the Court concludes that the SBA claim against Mr. Petrus as shown on the Rule 1003(b) List was premised upon Mr. Petrus's purported personal guarantee of two separate loans the SBA had made to Mr. Petrus's companies (i.e., the O&M SBA Loan and the 9 Distribution SBA Loan) and was thus contingent as to liability on the Petition Date. The Court further concludes that the preponderance of the evidence established that the SBA claim shown on the Rule 1003(b) List was the subject of bona fide dispute both as to Mr. Petrus's personal liability and amount as of the Petition Date. As a result, the SBA does not count as a qualified creditor in the numerosity calculus under Section 303(b).

p. AT&T

AT&T is shown on the Rule 1003(b) List as originally filed,²¹⁹ and as admitted into evidence at trial,²²⁰ only as a party to an executory contract with Mr. Petrus for cellular telephone services.

219 ECF No. 51, p. 10 of 10, Item 2.1.

220 Trial Ex. A, Bates No. DP 9, Item 2.1.

i. Contingent Liability Analysis

Asked about his contract with AT&T for cellular telephone service, Mr. Petrus testified that the relevant contract with AT&T was in existence on the filing date of the involuntary petition. He acknowledged that while he had made some payments late, he generally remained current on the required payments to AT&T. He noted that default in payments would generally result in termination of cell phone services under his contract with AT&T. He stated that he had remained current on the payment obligations under the contract with AT&T through the Petition Date, and that the contract had not expired. He stated that he was still current on his payments to AT&T under the contract. A written statement showing that AT&T had billed Mr. Petrus personally for post-petition cellular phone services provided between January 25, 2023, and February 24, 2023, was admitted into evidence at trial.²²¹ That statement provides at least some corroboration for Mr. Petrus's testimony regarding his contract with AT&T.

221 Trial Ex. H.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that any amounts owed

by Mr. Petrus to AT&T under the cellular telephone service contract as shown on the Rule 1003(b) List were not contingent as to liability on the Petition Date in the Section 303(b) calculus. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly at trial that amounts due under his cellular telephone service contract with AT&T as shown on the Rule 1003(b) List were debts for which he was personally liable. He testified that the contract with AT&T was in existence on the filing date of the involuntary petition, that while he had made some payments late, he generally remained current on the required payments to AT&T, and that default in payments would generally result in termination of cell phone service under his contract with AT&T. He stated that he had remained current on the payment obligations under the contract with AT&T through the Petition Date, that the contract had not expired, and that he was still current on his payments to AT&T under the contract. Mr. Petrus's testimony in that regard was both credible and unrebutted. A periodic statement from AT&T, albeit for the post-petition service period of February 6, 2023, through March 7, 2023, was admitted into evidence and provides some degree of corroboration for Mr. Petrus's testimony.²²² No countervailing evidence is found in the trial record.

222 Id.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute regarding Mr. Petrus's personal liability for any amounts due under his cellular telephone service contract with AT&T as shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for amounts due under his cellular telephone service contract with AT&T as shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The only monthly statement issue to Mr. Petrus under his contract for cellular telephone service from AT&T admitted into evidence was for cellular phone service provided during the post-petition period from January 25 — February 24, 2023.²²³ The amount of that statement was $135.04, and showed no past due balance from prior months.²²⁴ But the record evidence fails to establish how much money (if any) Mr. Petrus owed under his cellular telephone service contract with AT&T on the Petition Date. The Court is mindful of Mr. Petrus's own testimony to the effect that he was current on the payments required under his cellular phone service contract with AT&T on the Petition Date.

223 Trial Ex. H.

224 Id.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. In the absence of any periodic statements

issued by AT&T showing how much (if anything) Mr. Petrus owed to AT&T for cellular services rendered on the Petition Date, and mindful of Mr. Petrus's testimony that he was current on the payments due to AT&T on the Petition Date, the Court concludes that there is an objective basis for a legal and factual dispute regarding the amount of the AT&T debt shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount of the AT&T debt shown on the Rule 1003(b) List as of the Petition Date.

iv. AT&T is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability for amounts due under the cellular telephone service contract with AT&T referenced on the Rule 1003(b) List is neither contingent nor the subject of bona fide dispute. However, the preponderance of the evidence failed to establish how much (if anything) was owed by Mr. Petrus to AT&T under the cellular telephone service contract referenced on the Rule 1003(b) List as of the Petition Date. As a result, a bona fide dispute exists regarding the amount of the AT&T debt shown on the Rule 1003(b) List as of the Petition Date. AT&T does not count as a qualified creditor in the numerosity calculus under Section 303(b).

q. Berkshire

Berkshire is shown on the Rule 1003(b) List as originally filed,²²⁵ and as admitted into evidence at trial,²²⁶ only as a party to an unexpired residential lease agreement with Mr. Petrus.

225 ECF No. 51, p. 10 of 10, Item 2.2.

226 Trial Ex. A, Bates No. DP 9, Item 2.2.

i. Contingent Liability Analysis

An unsigned copy of a Residential Lease Agreement was admitted into evidence at trial.²²⁷ The landlord identified in that document is South Blvd Acquisitions LLC, Mr. Petrus is personally identified at the "Resident," and the lease term commenced on July 4, 2022, and expired on July 3, 2023.²²⁸ The unsigned Residential Lease Agreement provided that lease payments were to be remitted by Mr. Petrus to TriCon Residential.²²⁹

227 Trial Ex. C.

228 Trial Ex. C, Bates No. DP 25.

229 Trial Ex. C, Bates No. DP 26.

Mr. Petrus testified credibly that Berkshire had subsequently purchased the lease and was his current landlord. He explained that he had lived in the same apartment prior to July 4, 2022, that the term of his written lease with Berkshire would expire on July 3, 2023, that he was living in the premises leased from Berkshire on the involuntary Petition Date, and that he was current on his lease payments when the involuntary petition was filed. He testified that he did not dispute that he was personally obligated to pay monthly rent to Berkshire under his lease agreement.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. The preponderance of the evidence established that any amounts owed by Mr. Petrus to Berkshire under the Residential Lease Agreement referenced in the Rule 1003(b) List as of the Petition Date were not contingent as to liability in the Section 303(b) calculus. Chicago Title Ins. Co. v. Seko

Inv., Inc., (In re Seko Inv., Inc.), 156 F.3d 1005, 1008 (9th Cir. 1998), cert. denied, 526 U.S. 1066, 119 S.Ct. 1458, 143 L.Ed.2d 544 (1999); see generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the proposition that past due or future rental payments are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that Berkshire had subsequently purchased the lease for his personal residence and was his current landlord. He explained that he had lived in the same apartment prior to July 4, 2022, that the term of his written lease with Berkshire would expire on July 3, 2023, that he was living in the premises leased from Berkshire on the involuntary Petition Date, and that he was current on his lease payments when the involuntary petition was filed. He testified that he did not dispute that he was personally obligated to pay monthly rent to Berkshire under the lease agreement. His testimony on those points was not rebutted, and a modicum of corroboration was provided by admission of the unsigned Residential Lease Agreement into evidence at trial.²³⁰

230 Trial Ex. C.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute regarding Mr. Petrus's personal liability for any amounts due under the residential lease with Berkshire as referenced in the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for amounts due under the residential lease with Berkshire shown on the Rule 1003(b) List as of the Petition Date.

iii. Bona Fide Dispute Analysis — Amount

The record evidence fails, however, to establish how much money (if any) Mr. Petrus owed under his lease agreement with Berkshire on the Petition Date. What little evidence exists in the record is Mr. Petrus's own testimony to the effect that he was current on his lease payments to Berkshire on the Petition Date.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. In the absence of any evidence showing how much (if anything) Mr. Petrus owed under the residential lease with Berkshire as of the Petition Date, and mindful of Mr. Petrus's testimony that he was current on the lease payments due to Berkshire on the Petition Date, the Court concludes that there is an objective basis for a legal and factual dispute regarding the amount owed under the residential lease with Berkshire shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount owed under the residential lease with Berkshire shown on the Rule 1003(b) List as of the Petition Date.

iv. Berkshire is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal

liability for any amounts owed on the Petition Date under the lease for his personal residence held by Berkshire as referenced on the Rule 1003(b) List is neither contingent nor the subject of bona fide dispute. However, the preponderance of the evidence failed to establish how much (if anything) was owed by Mr. Petrus to Berkshire under the lease for his personal residence as referenced on the Rule 1003(b) List on the Petition Date. As a result, a bona fide dispute exists regarding the amount owed under Mr. Petrus's residential lease with Berkshire shown on the Rule 1003(b) List as of the Petition Date. Berkshire does not count as a qualified creditor in the numerosity calculus under Section 303(b).

r. Progressive Insurance

Progressive is shown on the Rule 1003(b) List as originally filed,²³¹ and as admitted into evidence at trial,²³² only as a party to an executory contract with Mr. Petrus in the form of a vehicle insurance policy.

231 ECF No. 51, p. 10 of 10, Item 2.3.

232 Trial Ex. A, Bates No. DP 9, Item 2.3.

i. Contingent Liability Analysis

At trial, Mr. Petrus testified that he had previously obtained a vehicle insurance policy through Progressive providing insurance coverage for his 2019 Ram pickup truck. Although no copy of the relevant insurance policy issued by Progressive is present in the record, a post-petition payment receipt issued by Progressive to Mr. Petrus dated January 4, 2023, was admitted into evidence at trial.²³³

233 Trial Ex. F.

Mr. Petrus testified that he had maintained vehicle insurance with Progressive for at least 2-3 years, that the insurance policy with Progressive was in existence when the involuntary petition was filed, and that he was current on the related policy premium payments on the filing date. Mr. Petrus acknowledged that while he had made some policy premium payments to Progressive late, he generally kept the premium payments current because a default would result in termination of insurance coverage for his vehicle. He testified that he did not dispute that he was personally and contractually obligated to make the payments required by his insurance contract with Progressive. He acknowledged that as of the trial date, though, his vehicle insurance was provided by GEICO. He confirmed that he was current on his premium installment payments with Progressive when he switched to GEICO.

Mr. Petrus's testimony on those points was not rebutted. A modicum of corroboration was provided by the post-petition payment receipt Progressive issued to Mr. Petrus that was admitted into evidence at trial.²³⁴ The Court concludes that the preponderance of the evidence established that any amounts Mr. Petrus owed to Progressive for premium payments under the vehicle insurance contract shown on the Rule 1003(b) List as of the Petition Date are not contingent as to liability in the Section 303(b) calculus. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

234 Trial Ex. C.

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that he had maintained vehicle insurance with Progressive

for at least 2-3 years, that the insurance policy with Progressive was in existence when the involuntary petition was filed, and that he was current on the related policy premium payments on the filing date. Mr. Petrus acknowledged that while he had made some policy premium payments to Progressive late, he generally kept the premium payments current because a default would result in termination of insurance coverage for his vehicle. He testified that he did not dispute that he was personally and contractually obligated to make the payments required by his insurance contract with Progressive. He acknowledged that he was current on his insurance premium payments to Progressive when he switched to GEICO prior to trial. Mr. Petrus's testimony on those points was not rebutted. A modicum of corroboration for Mr. Petrus's testimony was provided by the post-petition payment receipt Progressive issued to Mr. Petrus that was admitted into evidence at trial.²³⁵

235 Trial Ex. C.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute regarding Mr. Petrus's personal liability for any amounts due as of the Petition Date under the vehicle insurance contract with Progressive as shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for amounts due as of the Petition Date under the vehicle insurance contract with Progressive shown on the Rule 1003(b) List.

iii. Bona Fide Dispute Analysis — Amount

Mr. Petrus's testimony was that he had maintained vehicle insurance with Progressive for at least 2-3 years, that the insurance policy with Progressive was in existence when the involuntary petition was filed and, importantly, that he was current on the related policy premium payments on the filing date. Mr. Petrus acknowledged that while he had made some policy premium payments to Progressive late, he generally kept the premium payments current because a default would result in termination of insurance coverage for his vehicle. He testified that he did not dispute that he was personally and contractually obligated to make the payments required by his insurance contract with Progressive. He acknowledged that as of the trial date, though, his vehicle insurance was provided by GEICO. He confirmed that he was current on his premium installment payments with Progressive when he switched to GEICO.

As noted previously, a post-petition payment receipt Progressive issued to Mr. Petrus was admitted into evidence at trial.²³⁶ That payment receipt is dated January 4, 2023, and references a payment in the amount of $292.28.²³⁷ Mr. Petrus testified that the payment receipt confirmed a regular payment made on his automobile insurance with Progressive. But the payment receipt itself shows that it was a "Payment Receipt for balance on your prior policy" (emphasis added), the top of the payment receipt references "Policy Number 964758231," and the text of the payment receipt shows that $292.28 was an "Amount paid on policy 948739548." The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. In the absence of any periodic statements issued by Progressive to Mr. Petrus showing how much (if anything) Mr. Petrus owed to Progressive for premium payments on his vehicle insurance policy on the Petition Date, and in view of Mr. Petrus's testimony that he was current on the related policy premium payments on the Petition Date (and when he later switched his vehicle insurance coverage to GEICO), the Court concludes that there is an objective basis for a factual dispute regarding the amount owed to Progressive under the vehicle insurance contract shown on the Rule 1003(b) List as of the Petition Date. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount owed to Progressive under the vehicle insurance contract shown on the Rule 1003(b) List as of the Petition Date.

236 Trial Ex. C.

237 Trial Ex. F.

iv. Progressive is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability to Progressive for premium payments required under the vehicle insurance policy referenced on the Rule 1003(b) List is neither contingent nor the subject of bona fide dispute. However, the preponderance of the evidence failed to establish how much (if anything) was owed by Mr. Petrus to Progressive for premium payments due under the vehicle insurance policy shown on the Rule 1003(b) List as of the Petition Date. Resultantly, the Court concludes that the amount of Mr. Petrus's personal liability for premium payments due to Progressive under the vehicle insurance policy shown on the Rule 1003(b) List as of the Petition Date is subject to bona fide dispute. Progressive therefore does not count as a qualified creditor in the numerosity calculus under Section 303(b).

s. Verizon

Verizon is shown on the Rule 1003(b) List as originally filed,²³⁸ and as admitted into evidence at trial,²³⁹ only as a party to an executory contract with Mr. Petrus for high-speed internet service.

238 ECF No. 51, p. 10 of 10, Item 2.4.

239 Trial Ex. A, Bates No. DP 9, Item 2.4.

i. Contingent Liability Analysis

At trial, Mr. Petrus testified that he was a party to a contract with Verizon to provide his personal high-speed internet service. While he was uncertain about the precise date when his personal internet service through Verizon commenced, he testified that "it's been a while, though."

Mr. Petrus acknowledged that he had made some late payments to Verizon. That is consistent with a post-petition statement issued to him personally by Verizon for the time period between March 22, 2023, and April 21, 2023,²⁴⁰ showing unpaid balances due of $157.42 for February 2023, and $85.02 for March 2023.²⁴¹ Still, Mr. Petrus testified credibly that he had typically remained current on the amounts owed to Verizon under the contract for his personal high-speed internet service to avoid termination of his personal internet services. He also testified that he was current on the payments due to Verizon for his personal high-speed internet service on the Petition Date. He acknowledged that he remained personally and contractually obligated to

240 Trial Ex. P.

241 Trial Ex. P, Bates No. DP 154.

Verizon for his personal high-speed internet service.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The preponderance of the evidence established that any amounts owed by Mr. Petrus on the Petition Date under the personal high-speed internet service contract with Verizon shown on the Rule 1003(b) List were not contingent as to liability in the Section 303(b) calculus. See generally 2 COLLIER ON BANKRUPTCY, ¶ 303.10[1] (Alan N. Resnick and Henry J. Sommer, eds., 16th ed. 2023) (collecting cases for the propositions that that past due trade invoices are not contingent as to liability in the context of Section 303(b)).

ii. Bona Fide Dispute Analysis — Liability

Mr. Petrus testified credibly that he was a party to a contract with Verizon to provide his personal high-speed internet service. That is at least consistent with the post-petition statement issued to him personally by Verizon for the time period between March 22, 2023, and April 21, 2023.²⁴² He also testified credibly that he was current on the payments due to Verizon for his personal high-speed internet service on the Petition Date, and that he remained personally and contractually obligated to Verizon for his personal high-speed internet service. Mr. Petrus's testimony on those points was not rebutted.

242 Trial Ex. P.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. There is no objective basis for a factual or legal dispute regarding Mr. Petrus's personal liability for any amounts due on the Petition Date under his high-speed internet service contract with Verizon as shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that no bona fide dispute exists regarding Mr. Petrus's personal liability for amounts due on the Petition Date under the high-speed internet service contract with Verizon shown on the Rule 1003(b) List.

iii. Bona Fide Dispute Analysis — Amount

The only monthly statement issued to Mr. Petrus by Verizon admitted into evidence was for high-speed internet service provided during the post-petition period between March 22, 2023, and April 21, 2023.²⁴³ That statement showed unpaid balances due to Verizon of $157.42 for February 2023, and $85.02 for March 2023.²⁴⁴ But the record evidence fails to establish how much money (if any) Mr. Petrus owed for the personal high-speed internet service provided under his contract with Verizon on the Petition Date. The Court is mindful of Mr. Petrus's own testimony to the effect that he was current on the payments required under his personal high-speed internet service contract with Verizon on the Petition Date.

243 Trial Ex. P.

244 Trial Ex. P, Bates No. DP 154.

The Court has considered the evidentiary record in its entirety, with no single fact or factor controlling its analysis, and has considered the credibility of Mr. Petrus's testimony. The relatively low preponderance of the evidence standard applies. In the absence of any periodic statements issued by Verizon showing how much (if anything) Mr. Petrus owed Verizon on the

Petition Date for high-speed internet services rendered, and mindful of Mr. Petrus's testimony that he was current on the payments due to Verizon as of the Petition Date, the Court concludes that there is an objective basis for a legal and factual dispute regarding the amount of debt Mr. Petrus owed to Verizon under the high-speed internet service contract shown on the Rule 1003(b) List. EB Holdings II, 589 B.R. at 722, citing Vortex Fishing, 277 F.3d at 1064. The Court concludes that a bona fide dispute exists regarding the amount owed to Verizon on the Petition Date under the high-speed internet contract shown on the Rule 1003(b) List.

iv. Verizon is Not a Qualified Creditor

In summary, the preponderance of the evidence established that Mr. Petrus's personal liability for amounts due under the high-speed internet service contract with Verizon referenced on the Rule 1003(b) List is neither contingent nor the subject of bona fide dispute. However, the preponderance of the evidence failed to establish how much (if anything) was owed by Mr. Petrus to Verizon under the high-speed internet service contract referenced on the Rule 1003(b) List as of the Petition Date. As a result, a bona fide dispute exists regarding the amount of the debt owed by Mr. Petrus to Verizon under the high-speed internet service contract shown on the Rule 1003(b) List as of the Petition Date. Verizon does not count as a qualified creditor in the numerosity calculus under Section 303(b).

t. Summary of the Numerosity Calculation Under 11 U.S.C. § 303(b)

The Rule 1003(b) annexed to Mr. Petrus's Amended Answer²⁴⁵ identifies a total of nineteen claims. The Rule 1003(b) List admitted into evidence at trial²⁴⁶ identifies a total of twenty claims. The Court's conclusions as to which of those claims are qualified claims in the numerosity calculus under 11 U.S.C. § 303(b) are summarized in the table below:

245 ECF No. 51, pp. 3-10 of 10.

246 Trial Ex. A. Cash 1 is the creditor included in this trial exhibit that was not included in the Rule 1003(b) List attached to Mr. Petrus's Amended Answer.

Bona Fide Dispute re: Contingent Bona Fide the Amount Qualifying as to Mr. Dispute re: of Mr. Creditor in the Petrus's Mr. Petrus's Petrus's § 303(b) Personal Personal Personal Numerosity Creditor Name Liability? Liability? Liability? Calculus? 1. Dogwood No No No Yes 2. TD Auto Finance No No Yes No 3. AmEx Yes Yes Yes No 4. BWT No No Yes No 5. Capital One Yes Yes Yes No 6. Cashl Yes Yes Yes No 7. Chase No No No Yes 8. Discover No No Yes No 9. Jefferson Capital No No No Yes 10. Mariner Finance No No No Yes 11. NCSI Yes Yes Yes No 12. NV Energy No No Yes No 13. Paradigm Yes Yes Yes No 14. Pinnacle Bank Yes Yes Yes No 15. Taylor Judgment No No No Yes 16. SBA Yes Yes Yes No 17. AT&T No No Yes No 18. Berkshire No No Yes No 19. Progressive No No Yes No 20. Verizon No No Yes No

In summary, the Court concludes that Dogwood satisfied its initial burden of proving by a preponderance of the evidence that on the Petition Date it held a claim against Mr. Petrus under the Dogwood Judgment that was not contingent as to liability, nor subject to bona fide dispute as to liability or amount. The Court also concludes that Dogwood satisfied the initial burden of proving by a preponderance of the evidence that its claim against Mr. Petrus under the Dogwood Judgment exceeded the $18,600.00 minimum threshold imposed by 11 U.S.C. § 303(b) as a prerequisite to the filing of an involuntary bankruptcy petition. The burden of proof therefore shifted to Mr. Petrus.

The Court next finds that Mr. Petrus met his burden of proving by a preponderance of the evidence that he filed an Amended Answer which asserted that he had more than 12 creditors holding claims that qualified under Section 303(b) on the Petition Date. The preponderance of the evidence plainly shows that when Mr. Petrus filed his Amended Answer, he also filed the Rule 1003(b) List, substantiating his assertion that he had more than 12 qualifying creditors on the Petition Date. By doing so, Mr. Petrus returned the ultimate burden of persuading the court that the involuntary petition should be granted to Dogwood as the petitioning creditor. In re QDOS, Inc., 607 B.R. at 345, citing In re Vortex Fishing Sys., Inc., 277 F.3d at 1071 and In re Clignett, 567 B.R. 583, 587 (Bankr. C.D. Cal. 2017).

The Court next finds that while the Rule 1003(b) List Mr. Petrus created identified as many as 20 creditors holding claims against him,²⁴⁷ Dogwood satisfied its ultimate burden of persuading the Court by a preponderance of the evidence that fewer than 12 of those claims were "neither contingent as to liability, nor the subject of bona fide dispute as to liability or amount" on the Petition Date in the context of Section 303(b). Specifically, the Court finds that Dogwood proved by a preponderance

247 See note 98, supra.

of the evidence that Mr. Petrus had only five qualified creditors in the numerosity calculus under Section 303(b) on the Petition Date.²⁴⁸ Since Dogwood satisfied its ultimate burden of persuading the Court by a preponderance of the evidence that Mr. Petrus had fewer than 12 qualified creditors holding claims against Mr. Petrus that were "neither contingent as to liability, nor the subject of bona fide dispute as to liability or amount" on the Petition Date, the one petitioning creditor numerosity standard imposed by 11 U.S.C. § 303(b)(2) applies. The involuntary petition against Mr. Petrus was properly filed by one qualified petitioning creditor — Dogwood — without the need for joinder from any other qualified creditors. The next issue is whether Mr. Petrus was generally paying his debts as they became due on the Petition Date.

248 Specifically, the qualified claims are the claims held by Dogwood under the Dogwood Judgment, Chase, Jefferson Capital, Mariner Finance, and the Taylors under the Taylor Judgment. See summary chart, supra.

8. The Court Concludes That On the Petition Date Mr. Petrus Was Not Generally Paying His Debts as They Became Due.

As explained by the United' States Bankruptcy Court for the Central District of California in the Marciano BK decision:

The Ninth Circuit has adopted a "totality of the circumstances" test for determining whether a debtor is generally not paying its debts under 11 U.S.C. § 303(h)." Liberty Tool & Mfg. v. Vortex Fishing Sys., Inc. (In re Vortex Fishing Sys., Inc.), 277 F.3d 1057, 1072 (9th Cir. 2002), quoting In re Bishop, Baldwin, Rewald, Dillingham & Wong, Inc., 779 F.2d 471, 475 (9th Cir.1985). "[M]erely establishing the existence of a few unpaid debts" is not sufficient. Semel v. Dill (In re Dill), 731 F.2d 629, 632 (9th Cir.1984). Nonetheless, there is "substantial authority for the proposition that even though an alleged debtor may owe only one debt, or very few debts, an order for relief may be granted where such debt or debts are sufficiently substantial to establish the generality of the alleged debtor's default." Crown Heights Jewish Cmty. Council, Inc. v. Fischer (In re Fischer), 202 B.R. 341, 350-351 (Bankr.E.D.N.Y. [E.D.N.Y.] 1996). For example, courts have entered an order for relief "where the creditors were few in number but a large amount was owed to them." Id. at 351. An alleged debtor's ability or plan to pay creditors is also important. In one instance, the Ninth Circuit Court of Appeals affirmed the bankruptcy court's entry of an order for relief based on the finding that the alleged debtor was "a company that had substantial amounts of unpaid bills and no plans or ability to pay them." Focus Media, Inc. v. Nat'l Broad. Co. (In re Focus Media), 378 F.3d 916, 929 (9th Cir. 2004).

Marciano BK, 446 B.R. at 421.

In discussing the proper application of the "totality of the circumstances" test for determining whether a debtor is generally not paying its debts under Section § 303(h), the Ninth Circuit Bankruptcy Appellate Panel made the following observations:

In the Ninth Circuit, a flexible "totality of the circumstances" test is used to determine whether a debtor is generally paying its debts as they come due. Vortex, 277 F.3d at 1072; Focus Media, 378 F.3d at 928-29. The test is to be applied as of the date of the filing of the involuntary petition. In re St. Marie Dev. Corp. of Montana, Inc., 334 B.R. 663, 671 (Bankr. D. Mont. 2005).

Laxmi Jewel, Inc. v. C & C Jewelry Mfg., Inc. (In re C & C Jewelry Mfg., Inc.), 2001 WL 36340326 at *12 (9th Cir. BAP April 14, 2009). In C & C Jewelry, the Ninth Circuit Bankruptcy Appellate Panel also identified the factors courts generally consider when applying the flexible "totality of the circumstances" test to determine whether a debtor is generally paying debts as they come due in the context of Section 303:

A finding that [an alleged debtor] is generally not paying its debts "requires a more general showing of the debtor's financial condition and debt structure than merely establishing the existence of a few unpaid debts." In re Dill, 731 F.2d 629, 632 (9th Cir.1984); Vortex, 277 F.3d at 1072; Focus Media, 378 F.3d at 929. The following factors are generally considered under the totality of the circumstances: (1) the number of unpaid claims; (2) the amount of such claims; (3) the materiality of the nonpayments; and, (4) the debtor's overall conduct of its financial affairs. Id.; In re Euro-Am. Lodging Corp., 357 B.R. 700, 713 (Bankr. S.D.N.Y. 2007).

C & C Jewelry, 2001 WL 36340326 at *12; see also In re St. Marie Development Corp. 334 B.R. 663, 671 (Bankr. D. Mont. 2005) (noting that "[t]he cases disclose that the courts have used four factors in determining whether a debtor is generally not paying his debts: the number of debts, the amount of delinquency, the materiality of nonpayment and the nature of the debtor's conduct of his financial affairs.").

With respect to the number of unpaid claims in this case, the Rule 1003(b) List as originally filed by Mr. Petrus,²⁴⁹ and as admitted into evidence at trial,²⁵⁰ shows that approximately 20 creditors held unpaid claims against him on the Petition Date.

249 ECF No. 51.

250 Trial Ex. A.

The amount of the various unpaid claims reflected on the Rule 1003(b) List as originally filed by Mr. Petrus,²⁵¹ and as admitted into evidence at trial,²⁵² ranged from "Unknown"²⁵³ to over $2.6 million owed to the Taylors on the unpaid Taylor Judgment. The creditor claims shown on Mr. Petrus's Rule 1003(b) List total nearly $3.5 million in the aggregate,²⁵⁴ with the unsatisfied Dogwood Judgment held by Dogwood and the Taylor Judgment held by the Taylors alone comprising $2.9 million of that total.

251 ECF No. 51.

252 Trial Ex. A.

253 The "Unknown" claims included those held by AmEx, Discover, NV Energy, and the amounts due under Mr. Petrus's executory contracts and unexpired leases with AT&T, Berkshire, Progressive, and Verizon. See generally ECF No. 51 and Trial Ex. A.

254 ECF No. 51, p. 9 of 10, Part 4, Item 6, Lines 6(i) and (j) ($3,471,815.00 in total claims); Trial Ex. A, Bates Nos. DP 7-8, Part 4, Item 6, Lines 6(i) and (j) ($3,472,115.00 in total claims).

The materiality of the unpaid creditor claims listed on the Rule 1003(b) List as originally filed by Mr. Petrus,²⁵⁵ and as admitted into evidence at trial,²⁵⁶ is readily apparent. This is a case where the creditors shown on the Rule 1003(b) List as originally filed by Mr. Petrus,²⁵⁷ and as

255 ECF No. 51.

256 Trial Ex. A.

257 ECF No. 51.

admitted into evidence at trial,²⁵⁸ were relatively few in number, but a large amount of money is owed to the creditors holding those claims. See, e.g., Marciano BK, 446 B.R. at 421 (citing Crown Heights Jewish Cmty. Council, Inc. v. Fischer (In re Fischer), 202 B.R. 341, 350-351 (E.D.N.Y. 1996) and noting that "substantial authority" exists to grant an involuntary bankruptcy petition where one or a few unpaid debts "are sufficiently substantial to establish the generality of the alleged debtor's default.") As noted previously, the creditor claims shown on Mr. Petrus's Rule 1003(b) List total nearly $3.5 million in the aggregate,²⁵⁹ with the unsatisfied Dogwood Judgment held by Dogwood and the Taylor Judgment held by the Taylors alone comprising $2.9 million of that total.

258 Trial Ex. A.

259 ECF No. 51, p. 9 of 10, Part 4, Item 6, Lines 6(i) and (j) ($3,471,815.00 in total claims); Trial Ex. A, Bates Nos. DP 7-8, Part 4, Item 6, Lines 6(i) and (j) ($3,472,115.00 in total claims).

As to Mr. Petrus's overall conduct in connection with his financial affairs, the preponderance of the evidence showed that in the months leading up to the filing of Dogwood's involuntary petition, Mr. Petrus was sued twice in connection with his business dealings; allowed the Dogwood Judgment and the Taylor Judgment to be entered by default; did nothing to challenge the validity or amount of either of those judgments, which total over $2.9 million in the aggregate; did not establish any voluntary payment arrangements related to those judgments; and stopped actively operating at least one of his businesses when collection activities related to those judgments ensued in multiple states. The preponderance of the evidence in this case established that Mr. Petrus is a businessman who plainly has "substantial amounts of unpaid bills and no plans or ability to pay them." Marciano BK, 446 B.R. at 421, quoting Focus Media, Inc. v. Nat'l Broad. Co. (In re Focus Media), 378 F.3d 916, 929 (9th Cir. 2004).

The Court concludes that when the flexible "totality of the circumstances" test is properly applied to all of the facts present in the evidentiary record, with no single fact or factor controlling the analytical calculus, the preponderance of the evidence established that on the Petition Date Mr. Petrus was not generally paying his debts as they became due.

9. The Court Concludes that Dogwood Met the Ultimate Burden of Establishing, by the Preponderance of the Evidence, All of the Elements Required to Grant its Involuntary Bankruptcy Petition Against Mr. Petrus.

In summary, the Court is satisfied that Dogwood met the ultimate burden of establishing, by the preponderance of the evidence, each and all of the essential elements necessary to grant its involuntary petition against Mr. Petrus and for entry of a related order for relief, to wit:

1. The involuntary petition was filed by the appropriate number of creditors (one creditor, Dogwood, since 11 U.S.C. § 303(b)(2) applies here); and

2. As the sole petitioning creditor, Dogwood is the holder of a claim against Mr. Petrus under the long-final Dogwood Judgment that is not contingent as to liability; and

3. As the sole petitioning creditor, Dogwood is the holder of a claim against Mr. Petrus under the long-final Dogwood Judgment that is also not the subject of a bona fide dispute as to liability or amount; and

4. As the sole petitioning creditor, Dogwood is the holder of a claim against Mr. Petrus under the long-final Dogwood Judgment in an aggregate amount well in excess of $18,600.00;²⁶⁰ and

5. Proper application of the flexible "totality of the circumstances" test to all of the facts present in the evidentiary record, with no single fact or factor controlling the analytical calculus, established that when Dogwood filed the involuntary petition against Mr. Petrus on May 24, 2022, Mr. Petrus was generally not paying his debts as those debts become due.

260 See notes 80, 100, and accompanying text, supra.

In re Georges Marciano, 446 B.R. 407, 420 (Bankr. C.D. Cal. 2010), aff'd, 459 B.R. 27 (9th Cir. BAP 2011), aff'd, 708 F.3d 1123 (9th Cir. 2013).

10. The Court Concludes That the Dogwood's Good Faith in Filing the Involuntary Petition Against Mr. Petrus is Irrelevant to the Issues Pending Before the Court as a Matter of Law.

As observed in Marciano BAP, the text of 11 U.S.C. § 303(b) does not contain any language regarding the good faith of the petitioning creditors. Nor does § 303(h). See Marciano BAP, 459 B.R. at 44, citing Marciano BK, 446 B.R. at 430. As noted by the court in Marciano BK:

"[T]here is a presumption of good faith in favor of the petitioning creditor, and thus the alleged debtor has the burden of proving bad faith." Lubow Machine Co. v. Bayshore Wire Products Corp. (In re Bayshore Wire Products Corp.), 209 F.3d 100, 105 (2d Cir.2000) (internal citation omitted). "Whether a party acted in bad faith is essentially a question of fact. Bad faith should be measured by an 'objective test' that asks 'what a reasonable person would have believed.'" Jaffe v. Wavelength, Inc. (In re Wavelength, Inc.), 61 B.R. 614, 620 (9th Cir. BAP 1986) (internal citation omitted); see also In re Mi La Sul, 380 B.R. 546, 557 (Bankr.C.D.Cal.2007) (same).

Marciano BK, 446 B.R. at 431 (Bankr. C.D. Cal. 2010).

Additionally, the issue of the good faith or bad faith of Dogwood as the petitioning creditor is simply not relevant to the threshold issue of whether the Court should enter an order for relief in this case. As the Marciano BK court explained:

At the outset, it is generally inappropriate for the court to consider the good faith or bad faith of petitioning creditors when determining whether to enter the order for relief. See, e.g., Kaplan v. Breslow (In re WLB-RSK Venture), 320 B.R. 221, 2004 WL 3119789, at *6 n. 13 (9th Cir. BAP 2004) (unpublished disposition) ("If the grounds for relief exist under section 303, the good faith or bad faith of the petitioning creditor appears irrelevant"); Ross, 63 B.R. at 955 (stating that an inquiry into whether the petitioning creditors commenced the involuntary petition in "bad faith," to "harass and annoy the debtor," or with "malice and lack of justification" would be unnecessary if the court sustained the involuntary petition and entered an order for relief).

Marciano BK, 446 B.R. at 430-31; see also Marciano BAP, 459 B.R. at 45 (noting that ordinarily "the bankruptcy court would not reach the issue of bad faith unless and until the Involuntary Petition was dismissed" and citing In re Ross, 63 B.R. 951, 955 (Bankr. S.D.N.Y. 1986) for the proposition that "the court need not reach the affirmative defense that the involuntary

petition was not filed in good faith if an order for relief is entered."); accord, In re Basil Street Partners, LLC, 477 B.R. 846, 849 (Bankr. M.D. Fla. 2012) (observing that "[t]he concept of bad faith has no bearing on a bankruptcy court's determination of whether to dismiss the petition in the first place.").

As succinctly summarized by the Basil Street Partners court:

In sum, a petitioning creditor's good or bad faith in filing an involuntary petition is not a basis for dismissal. If the statutory requirements for filing the petition are satisfied, then the petitioning creditors' motivations for filing the petition are not subject to judicial scrutiny, as the petitioning creditors will be deemed to have filed the petition per se in good faith. Thus, if an alleged debtor under an involuntary petition seeks to controvert the petition and have it dismissed, it must either (i) establish that the alleged debtor is ineligible for relief under chapter 7 or chapter 11, because, for example, the person is a family farmer or is not a moneyed business; or (ii) attack the nature of the petitioning creditors' claims as being contingent or the subject of a bona fide dispute as to liability or amount; or (iii) dispute the allegation that it is not generally paying its debts as they become due. See 11 U.S.C. § 303(a) (b), (h).

Basil Street Partners, 477 B.R. at 851.

Under the authorities just cited, there is a presumption that Dogwood filed the involuntary petition against Mr. Petrus in good faith. Having carefully considered the totality of the facts present in this case, the Court has concluded, and states again here, that Dogwood has met its burden of proving that all statutory requirements for filing and granting the involuntary petition against Mr. Petrus have been established by a preponderance of the evidence. Resultantly, Dogwood's motivations for filing the involuntary petition are neither relevant nor the proper subject of judicial scrutiny, as Dogwood is deemed to have filed the petition in good faith as a matter of law. For the sake of analytical completeness and avoidance of any doubt, if Dogwood's good faith in filing the involuntary petition against Mr. Petrus was somehow relevant in determining whether to enter a related order for relief (and the Court expressly holds to the contrary), the Court would have concluded that Mr. Petrus failed to prove by a preponderance of the evidence that Dogwood filed the involuntary petition against him in bad faith.

ORDER

For the reasons and under the authorities cited in the Memorandum above, which constitute the Court's findings of fact and conclusions of law under Fed. R. Civ. P. 52, applicable to this contested matter under Fed. R. Bankr. P. 9014 and 7052:

IT IS ORDERED, ADJUDGED, AND DECREED that the involuntary Chapter 7 bankruptcy petition filed by Dogwood against Mr. Petrus be, and is hereby GRANTED.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that a separate order for relief under Chapter 7 of the Bankruptcy Code will be entered on the docket as against Mr. Petrus.

IT IS SO ORDERED.