            United States Court of Appeals
                       For the First Circuit


No. 15-1340

                         STEVEN C. FUSTOLO,

                        Plaintiff, Appellant,

                                 v.

         50 THOMAS PATTON DRIVE, LLC; THE PATRIOT GROUP LLC;
                            RICHARD MAYER,

                       Defendants, Appellees.


            APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Rya W. Zobel, U.S. District Judge]


                               Before

                   Torruella, Lynch,* and Kayatta,
                           Circuit Judges.


     David M. Nickless, with whom Nickless, Phillips and O'Connor,
was on brief for appellant.
     Michael J. Fencer, with whom Howard P. Blatchford, Jonathan
M. Horne, and Jager Smith P.C., were on brief, for appellees 50
Thomas Patton Drive, LLC, and Richard Mayer.
     Colleen C. Cook, with whom Michael Paris, Jack I. Siegal, and
Nystrom Beckman & Paris LLP, were on brief, for appellee The
Patriot Group LLC.



     *   Judge Lynch heard oral argument in this matter and
participated in the semble, but she did not participate in the
issuance of the panel's opinion. The remaining two panelists issue
this opinion pursuant to 28 U.S.C. § 46(d).
February 24, 2016
            KAYATTA, Circuit Judge.              We hold in this case that a

claim to payment that 50 Thomas Patton Drive, LLC ("Patton Drive")

holds against Steven Fustolo ("Fustolo") "is not contingent as to

liability or the subject of a bona fide dispute as to liability or

amount" within the meaning of section 303(b)(1) of the Bankruptcy

Code.    11 U.S.C. § 303(b)(1).       We therefore affirm the decision of

the bankruptcy court, which found Patton Drive qualified to join

with two other creditors also holding non-contingent, undisputed

claims to force Fustolo into an involuntary bankruptcy proceeding.

                                           I.

            Patton Drive's claims against Fustolo arise out of four

promissory notes issued to Patton Drive by Fustolo's affiliate

companies in connection with two real estate transactions. Fustolo

personally guaranteed two of the notes (the "Guaranteed Notes"),

which together totaled $1.25 million, but did not guarantee the

other two notes (the "Unguaranteed Notes"), which together totaled

$1.5 million.       When the principal debtors defaulted on all four

notes,    Patton    Drive     sued   the    debtor    companies    and     Fustolo,

asserting that Fustolo was personally liable on his guarantee.

The Massachusetts state court found Fustolo liable for breach of

contract   and     rejected    Fustolo's        argument   that   Patton    Drive's

technical violation of a state usury statute should reduce the

amount of interest owed on the notes.                The court entered a final

judgment against Fustolo in favor of Patton Drive in the amount of


                                      - 3 -
roughly $6.76 million.1         Fustolo contends that this judgment

overstated his liability by approximately $4 million because it

erroneously assumed that he had guaranteed all of the notes.             In

response, Patton Drive demurs, declining to offer any defense of

the state court's damages calculation.           Fustolo lodged a timely

appeal of the state court judgment but did nothing further to

prosecute the appeal, which we are told has rested more or less

dormant on the state court's appellate docket for at least four

years.

           Meanwhile, Fustolo, who admittedly has at least twelve

creditors, failed to satisfy his financial obligations to at least

two of those other creditors, The Patriot Group LLC ("Patriot")

and Richard Mayer ("Mayer"). On May 6, 2013, eighteen months after

entry of the state court judgment, Patton Drive joined with Patriot

and Mayer to file a petition with the United States Bankruptcy

Court,   seeking   to   place   Fustolo   into   involuntary   Chapter    7

bankruptcy, and to thereby cause Fustolo's debts to be determined




     1  The court also found, inter alia, that Fustolo and his
affiliates had violated a state statute by engaging in unfair and
deceptive business practices. See Mass. Gen. Laws ch. 93A, §§ 2,
11.    The parties dispute whether Fustolo was assigned any
independent monetary liability for this violation, but it is
undisputed that the judgment held all defendants jointly and
severally liable for attorneys' fees and costs as to this and other
counts.



                                  - 4 -
and his assets gathered and liquidated in an orderly fashion to

satisfy those debts.     See 11 U.S.C. §§ 303(b)(1), 701 et seq.

             The creditors' ability to force Fustolo into bankruptcy

rests on 11 U.S.C. § 303(b)(1), which provides that involuntary

bankruptcy    proceedings    may   be   commenced   via   petition   to   the

bankruptcy court

             by three or more entities, each of which is
             . . . 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 . . . if such noncontingent,
             undisputed    claims   aggregate    at   least
             [$14,425] 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); see also id. § 104(a).             Fustolo does not

dispute that Patriot and Mayer hold eligible claims against him.

Nor does Fustolo dispute that the total amount of those undisputed

claims exceeds the value of any related liens on his property by

the statutorily requisite amount.        However, Fustolo maintains that

Patton Drive has not asserted a claim that qualifies it to serve

as a petitioning creditor because his pending state court appeal

subjects Patton Drive's judgment to "bona fide dispute as to

liability or amount."       Id. § 303(b)(1).

             Following an evidentiary hearing in the bankruptcy court

on Fustolo's challenge to their qualifications to initiate an

involuntary proceeding, the three petitioning creditors moved for

summary judgment.     Fustolo opposed the motion and filed his own


                                   - 5 -
cross-motion for summary judgment.               On December 16, 2013, the

bankruptcy    court    granted   summary       judgment   to   the   petitioning

creditors, thus authorizing involuntary bankruptcy proceedings to

commence against Fustolo.

             In assessing whether Patton Drive's state court judgment

constituted    a   qualifying    claim    despite     Fustolo's      appeal,   the

bankruptcy court employed the approach approved by the Fourth

Circuit in In re Byrd, 357 F.3d 433 (4th Cir. 2004).                  Under this

approach, the court did not accord the state court judgment against

Fustolo dispositive force in establishing the absence of a bona

fide   dispute     concerning    the   right    to   payment   recognized      and

affirmed in that judgment.             Instead, the court began with a

presumption that the judgment foreclosed any bona fide dispute,

but then proceeded to assess the merits of Fustolo's pending state

court appeal to determine whether Fustolo's case "exemplifie[d]

the rare circumstance where the amount of the judgment is in bona

fide dispute."        Upon examination, the court found a bona fide

dispute as to the portion of the judgment that awarded damages

against Fustolo on the Unguaranteed Notes because, among other

things, Patton Drive did not oppose the contention that it had no

right to recover against Fustolo on those notes. At the same time,

the bankruptcy court separately assessed Patton Drive's right to

payment on the portion of the state court judgment that covered

Fustolo's breach of contract on the Guaranteed Notes.                    Finding


                                       - 6 -
this portion of the judgment free of bona fide dispute, the

bankruptcy court granted summary judgment to Fustolo's creditors

and denied Fustolo's cross-motion.

           Fustolo then appealed to the district court and found

himself jumping from the frying pan into the fire.    The district

court eschewed the Fourth Circuit's merits-based analysis of the

preclusive effect of an appealed state court judgment, opting

instead for the approach announced in In re Drexler, 56 B.R. 960

(Bankr. S.D.N.Y. 1986), and adopted by the only other circuit court

to have decided this issue, see In re Marciano, 708 F.3d 1123,

1124 (9th Cir. 2013).     Under the so-called Drexler rule, an

unstayed state court judgment, whether or not subject to appeal,

per se constitutes a claim that is not subject to bona fide

dispute.   See Drexler, 56 B.R. at 967.    Therefore finding that

Fustolo's appeal in state court, however meritorious, could not

raise a bona fide dispute as to Patton Drive's claim, the district

court affirmed the bankruptcy court's order.

           Fustolo now appeals to this court pursuant to 28 U.S.C.

§ 158(d)(1),2 urging us, first, to reject the district court's


     2 Although no party addresses whether a bankruptcy court's
order for relief in favor of a petitioning creditor in an
involuntary suit is the sort of final order over which this court
has appellate jurisdiction, we follow our sister circuits in
finding no apparent impediment. See In re HealthTrio, Inc., 653
F.3d 1154, 1160 (10th Cir. 2011); In re McGinnis, 296 F.3d 730,
731 (8th Cir. 2002) (per curiam); In re Mason, 709 F.2d 1313, 1315–
18 (9th Cir. 1983); see also Bullard v. Blue Hills Bank, 135 S.


                               - 7 -
decision to apply Drexler's categorical rule and, second, to reject

the bankruptcy court's determination that, even under Byrd's more

debtor-friendly burden-shifting rule, Patton Drive qualifies as a

petitioning creditor because it holds a claim on the Guaranteed

Notes that is free of bona fide dispute.       For slightly different

reasons, we affirm.

                                   II.

                                   A.

            In     bankruptcy   proceedings,   summary   judgment   is

appropriate when the movant has shown that there is no genuine

dispute as to any material fact and that the movant is entitled to

judgment as a matter of law.     Fed. R. Bankr. P. 7056; Fed. R. Civ.

P. 56(a).        We review the bankruptcy court's grant of summary

judgment de novo.      In re Colarusso, 382 F.3d 51, 57–58 (1st Cir.

2004).   In undertaking this review, we afford no deference to the

district court's intermediate decision.        In re Healthco Int'l,

Inc., 132 F.3d 104, 107 (1st Cir. 1997).

                                   B.

            We begin with the creditors' argument that we can easily

resolve this appeal by adopting the district court's conclusion

that the Drexler rule applies and that Patton Drive's claim is




Ct. 1686, 1695 (2015) (suggesting that a bankruptcy court order
that "allows the bankruptcy to go forward and alters the legal
relationships among the parties" is appealable).


                                  - 8 -
therefore categorically free from bona fide dispute.        If the

creditors are correct on this point, we need not--and indeed

cannot--look behind the state court judgment to assess its merits.

On the facts of this case, however, we cannot hold that the Drexler

rule applies.

          The Drexler rule, followed by the Ninth Circuit, see

Marciano, 708 F.3d at 1124, has much to commend it.   It is simple

to apply, and it reduces the waste of assets inherent in opening

the opportunity for a financially troubled party to argue the

merits of issues previously adjudicated in state court.    It also

arguably accords to a state court judgment the sort of respect and

finality reflected in the Full Faith and Credit Act, which requires

that federal courts give state court judgments "the same full faith

and credit . . . as they have by law or usage in the courts of

such State . . . from which they are taken."     28 U.S.C. § 1738;

see also Marciano, 708 F.3d at 1128.3


     3 The creditors take this observation one step further and
argue that 28 U.S.C. § 1738 fully estops Fustolo from arguing the
existence of a bona fide dispute as to the state court judgment in
light of the fact that, under Massachusetts law, "a trial court
judgment is final and has preclusive effect regardless of the fact
that it is on appeal." O'Brien v. Hanover Ins. Co., 692 N.E.2d
39, 44 (Mass. 1998). Fustolo, though, does not ask us in this
litigation to reject the fact or legal effect of the state court
judgment. Rather, he seeks only to establish that the amount of
his liability is subject to bona fide dispute. See Marciano, 708
F.3d at 1134 (Ikuta, J., dissenting) ("[D]etermining whether a
claim based on a state court judgment is subject to a bona fide
dispute does not require us to [decide anew] any issue [already]
decided in a state court proceeding.").     And we have found no


                              - 9 -
           More importantly, the Drexler rule fits with Congress's

apparent purpose in requiring each claim underlying an involuntary

petition to be free of "bona fide dispute."       In usual course,

bankruptcy serves as a haven for debtors seeking protection from

creditors and hoping to make a fresh start.    See In re Fahey, 779

F.3d 1, 8–9 (1st Cir. 2015).   But the Bankruptcy Code also serves

another, "often conflicting," purpose: to "ensure fair payment to

creditors."    In re Energy Res. Co., 871 F.2d 223, 230 (1st Cir.

1989).    Section 303 of the Bankruptcy Code thus allows creditors

who satisfy certain conditions to force a debtor into bankruptcy,

so that the disposition of the debtor's assets can proceed in a

more orderly fashion.

           The requirement that the petitioning creditors' claims

be free of bona fide dispute was added by the Bankruptcy Amendments

and Federal Judgeship Act of 1984, Pub. L. No. 98-353, § 426(b),

98 Stat. 333, 369.    The Bankruptcy Code does not define the term

"bona fide dispute," but courts have more or less settled on

finding a bona fide dispute when "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."   In re BDC 56 LLC, 330 F.3d 111, 117 (2d Cir. 2003) (citing




Massachusetts precedent suggesting that the existence of a
judgment estops a litigant from arguing that the judgment is
persuasively contested.


                               - 10 -
cases), abrogated on other grounds as recognized in In re Zarnel,

619 F.3d 156, 169 (2d Cir. 2010).               The self-evident purpose of the

"no bona fide dispute" requirement, as courts have repeatedly

recognized,      is    "to    prevent        creditors        from    using      involuntary

bankruptcy 'to coerce a debtor to satisfy a judgment even when

substantial questions may remain concerning the liability of the

debtor.'"       Byrd, 357 F.3d at 438 (quoting In re Prisuta, 121 B.R.

474, 476 (Bankr. W.D. Pa. 1990)); see also BDC 56 LLC, 330 F.3d at

117–18; In re Tikijian, 76 B.R. 304, 313–14 (Bankr. S.D.N.Y. 1987)

("It was stated by the proponent of the [1984] amendment . . .

that the primary purpose of the addition of the bona fide dispute

language    was       to     prevent     creditors        from        using      involuntary

bankruptcy as a club to coerce a debtor to pay debts as to which

the debtor, in good faith, had legitimate defenses.").                               With that

purpose    in    mind,     courts      generally        try    to    determine        whether,

objectively, there is a dispute about a debt that reasonably

warrants resolution by a factfinder or, in the case of a dispute

of law, a court.           See In re Busick, 831 F.2d 745, 750 (7th Cir.

1987) ("[T]he bankruptcy court must determine whether there is an

objective basis for either a factual or a legal dispute as to the

validity of debt.").           When such a dispute exists, we do not allow

the   creditor        to   coerce      the    debtor's        surrender         by    credibly

threatening      to    use    the   claim      as   a    basis       for   an   involuntary

petition.


                                         - 11 -
          But   when   the   creditor     already       holds   a   state   court

judgment upon which execution is possible, allowing the creditor

to join in forcing a bankruptcy proceeding adds little material

weight to the creditor's ability to coerce payment of the debt.

The absence of a stay also undercuts the debtor's ability to argue

that the state courts view the debt as not quite collectable.

Consistent with these reasons, the Drexler rule applies only to

"unstayed" state court judgments--those judgments that actually

entitle a creditor to access the debtor's assets.                   Drexler, 56

B.R. at 967 n.11; see also, e.g., In re Raymark Indus., Inc., 99

B.R. 298, 299–300 (Bankr. E.D. Pa. 1989).

          Turning    to   the   instant    case,    a    Massachusetts      trial

court's judgment is effectively stayed by operation of state law

for the purposes of execution, even absent a court order, while an

appeal is pending.     See Mass. Gen. Laws ch. 231, § 115; id. ch.

235, § 16; Mass. R. Civ. P. 62(a).         Thus, Patton Drive could not

execute in Massachusetts courts on its judgment.                See, e.g., C.F.

Tr., Inc. v. Peterson, No. 961375H, 1998 WL 1284163, at *2–3 (Mass.

Super. Ct. May 21, 1998) (refusing execution on a confessed

judgment on a promissory note pending debtors' appeal).4


     4 The creditors have offered no argument that Massachusetts
law provides an equitable exception for appeals that have stagnated
as long as Fustolo's has, and so we consider any such argument
waived without fully foreclosing the possible existence of a state
law exception. See United States v. Zannino, 895 F.2d 1, 17 (1st
Cir. 1990).


                                  - 12 -
          The courts below treated this wrinkle as inconsequential

in light of the fact that Massachusetts law does not automatically

stay the other legal effects of a judgment pending appeal.                     In

particular, the courts below held that Patton Drive's state court

judgment is unstayed because of the availability of postjudgment

discovery and attachment under Massachusetts law regardless of a

pending appeal.     See A.W. Farrell Assocs., LLP v. Haddon, No. 07-

P-596, 2008 WL 4130828, at *3–4 (Mass. App. Ct. Sept. 9, 2008)

(unpublished    opinion)    (discovery);    Borne   v.    Haverhill     Golf    &

Country   Club,    791   N.E.2d   903,     919   (Mass.    App.   Ct.    2003)

(attachment).     But these tools would have been available to Patton

Drive even prior to the judgment that fixed its rights.            See Mass.

R. Civ. P. 4.1 (prejudgment attachment); id. 26 (discovery).               And

the fact that a trial court's judgment is stayed in some senses

under Massachusetts law pending appeal, while remaining unstayed

in others, does not by itself tell us whether the judgment is

stayed or unstayed for the purposes of the Drexler rule.

          We are not persuaded that a judgment is unstayed for

bankruptcy purposes merely because that judgment continues to have

some legal effects despite a creditor's legal inability to execute.

The Bankruptcy Code defines a "claim" as, in relevant part, a

"right to payment."        11 U.S.C. § 101(5)(A) (emphasis supplied).

And in construing the requirement that such a claim be free from

bona fide dispute, courts applying the Drexler rule have focused


                                  - 13 -
not on the abstract existence of a legal right, but rather on the

claim-holder's ability to vindicate that right in court.           See,

e.g., Marciano, 708 F.3d at 1127 (no bona fide dispute when

"Petitioning Creditors were free under California law to collect

the amounts owed under the judgments at the time the involuntary

petition was filed" (emphasis supplied)); id. at 1131 (Ikuta, J.,

dissenting) ("The majority's reasoning seems to be that . . .

because   an    unstayed   state     court   judgment   is   immediately

enforceable, there can be no objective basis for dispute as to the

'claim's' liability or amount." (emphasis supplied)); Drexler, 56

B.R. at 967 (unstayed state court judgment not subject to bona

fide dispute because a contrary holding would "effect a radical

alteration of[] the long-standing enforceability of unstayed final

judgments" (emphasis supplied)).       Because the ability to execute

on a state court judgment provides a crucial link in the rationale

that justifies the bright line, automatic nature of the Drexler

rule, we find that rule inapplicable when, as here, execution on

the judgment is stayed, even if only by automatic operation of

state law.5    Patton Drive's state court judgment is therefore not

categorically insulated from bona fide dispute.




     5 We leave open the question of whether the Drexler rule would
apply in the event of an unstayed state court judgment that has
been appealed.


                                   - 14 -
                                    C.

            Even though a state court judgment does not necessarily

establish the absence of bona fide dispute when that judgment is

effectively stayed, the judgment must nevertheless play some role

in   our   analysis.   The   fact   that   a   state   court   has   already

considered and adjudicated the merits of a claim, and entered

judgment on the claim, weighs heavily in favor of finding the claim

beyond bona fide dispute.     See Byrd, 357 F.3d at 438 (state court

judgments were "strong evidence that [the creditor's] claims were

valid").     This observation is particularly salient where the

judgment is stayed by virtue of the automatic operation of state

law and not because a state court has probed the merits of the

judgment and found reason to suspect that it may be incorrect.

            But despite the weight we would normally attach to a

state court judgment, here we have a judgment that appears on its

face to be in error because it holds Fustolo personally liable for

roughly $4 million on the Unguaranteed Notes and, notably, Patton

Drive as the holder of the judgment offers no reason at all to

think otherwise.       As the bankruptcy court recognized, Patton

Drive's de facto concession on this point certainly creates a bona

fide dispute as to the amount of Patton Drive's right to payment

on the judgment.

            As Patton Drive points out, however, the dispute over

the judgment concerns only a portion of the judgment.                Fustolo


                                - 15 -
makes no real effort to deny that he owes, at least, the principal

due under the Guaranteed Notes, which totals $1.25 million.6        Based

on this concession, Patton Drive asks us to rule that any dispute

concerning the amount of the liability represented by the judgment

can be ignored, because the amount admittedly owed well exceeds

the amount necessary to justify Patton Drive's joinder as a

petitioning creditor under 11 U.S.C. § 303(b)(1).

            In making this argument, the creditors essentially ask

us to read an implicit materiality requirement into the statutory

language "bona fide dispute as to liability or amount."         11 U.S.C.

§   303(b)(1).    Prior   to   2005,   some   courts   had   held--as   the

bankruptcy court held here--that a claim to a disputed amount could

nevertheless form the basis of an involuntary petition if the

undisputed portion of the claim could independently qualify the

creditor.   See, e.g., In re Focus Media, Inc., 378 F.3d 916, 925–

27 (9th Cir. 2004); BDC 56 LLC, 330 F.3d at 120; IBM Credit Corp.

v. Compuhouse Sys., Inc., 179 B.R. 474, 479 (W.D. Pa. 1995); In re

Willow Lake Partners II, L.P., 156 B.R. 638, 642–43 (Bankr. W.D.




      6Fustolo makes a fleeting intimation in his brief that, under
Begelfer v. Najarian, 409 N.E.2d 167 (Mass. 1980), Patton Drive's
failure to comply with state usury law should relieve him of his
debt even on the Guaranteed Notes' unpaid principal, see id. at
173–74. But Fustolo supplies this court with no developed reason
to entertain such a farfetched argument, and so any effort to claim
that Fustolo's liability on the Guaranteed Notes' principal is
subject to bona fide dispute is waived for lack of development.
See Zannino, 895 F.2d at 17.


                                 - 16 -
Mo. 1993).   In 2005, however, Congress amended section 303 to add

the language "as to liability or amount."         Bankruptcy Abuse

Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-

8, § 1234, 119 Stat. 23, 204.     Faced with a dearth of clarifying

legislative history, courts are more or less evenly split on

whether the 2005 amendment was intended to change the prevailing

law by establishing that "a dispute as to any portion of a claim,

even if some dollar amount would be left undisputed, means there

is a bona fide dispute as to the amount of the claim," In re Vicor

Techs., Inc., No. 12-39329, 2013 WL 1397460, at *5 (Bankr. S.D.

Fla. Apr. 5, 2013), or simply to reinforce the then-prevailing

interpretation, see In re DemirCo Holdings, Inc., No. 06-70122,

2006 WL 1663237, at *3 (Bankr. C.D. Ill. June 9, 2006) (a dispute

as to amount is immaterial unless it "ha[s] the potential to reduce

the total of [the petitioning creditors'] claims to an amount below

the statutory threshold.").7


     7 Compare, e.g., Vicor, 2013 WL 1397460, at *5; In re Skyworks
Ventures, Inc., 431 B.R. 573, 578 n.1 (Bankr. D.N.J. 2010); In re
Rosenberg, 414 B.R. 826, 845–46 (Bankr. S.D. Fla. 2009); In re
Excavation, Etc. LLC, No. 09-60953, 2009 WL 1871682, at *2 (Bankr.
D. Or. June 24, 2009); In re Metro Cremo & Sons, Inc., No. 1:08-
bk-01798, 2008 WL 5158288, at *4 n.8 (M.D. Pa. Sept. 29, 2008); In
re Mountain Dairies, Inc., 372 B.R. 623, 634 (Bankr. S.D.N.Y.
2007); In re Reg'l Anesthesia Assocs. PC, 360 B.R. 466, 469–70
(Bankr. W.D. Pa. 2007); In re Euro-Am. Lodging Corp., 357 B.R.
700, 712 n.8 (Bankr. S.D.N.Y. 2007) (no materiality requirement),
with, e.g., In re Stewart, Nos. 14-03177, 14-03179, 2015 WL
1282971, at *6 (Bankr. S.D. Ala. Mar. 18, 2015); In re EM Equip.,
LLC, 504 B.R. 8, 18 (Bankr. D. Conn. 2013); In re Roselli, No. 12-
32461, 2013 WL 828304, at *9 (Bankr. W.D.N.C. Mar. 6, 2013); In re


                                - 17 -
           We    decline    to   read   a    materiality    requirement    into

section 303.     As discussed above, the bona fide dispute provision

strikes a balance between the Bankruptcy Code's dual purposes of

ensuring   the    orderly    disposition       of   creditors'    claims   and

protecting debtors from coercive tactics.             See supra Part II.B.

Limiting petitioning creditors to only those claims that are of

undisputed value is in line with those aims.            Accordingly, and in

the   absence    of   persuasive   contrary     authority    or   illuminating

legislative history, we follow the straightforward reading of

section 303, which places no qualifiers on the requirement that

any asserted claim be free of "bona fide dispute as to . . .

amount."

                                        D.

           Our conclusions that this judgment upon which execution

is stayed under Massachusetts law is not categorically insulated

from bona fide dispute, that there exists a bona fide dispute as

to the amount that will ultimately be due under the judgment, and

that a dispute as to amount need not be material to generate a

disqualifying bona fide dispute under 11 U.S.C. § 303(b)(1), bring

us to Patton Drive's last, two-part argument:           First, Patton Drive




Miller, 489 B.R. 74, 82–83 (Bankr. E.D. Tenn. 2013); In re Mountain
Country Partners, LLC, No. 12-20094, 2012 WL 2394714, at *3 (Bankr.
S.D. W. Va. June 25, 2012); In re Tucker, No. 5:09-bk-914, 2010 WL
4823917, at *6 (Bankr. N.D. W. Va. Nov. 22, 2010); DemirCo, 2006
WL 1663237, at *3 (requiring materiality).


                                   - 18 -
contends that we should look beneath the state court judgment to

the underlying contract claims that gave rise to the judgment and

treat   its    right   to    payment    on    the   Guaranteed    Notes   as   its

qualifying claim.           Second, Patton Drive asks us to find that

Fustolo's efforts to contest the interest due on the Guaranteed

Notes do not suffice to subject its claim on those notes to bona

fide dispute as to amount.        We address these arguments in turn.

                                         1.

              To consider the claim on the Guaranteed Notes as the

claim held by Patton Drive that qualifies it as a petitioner under

section 303(b)(1), we first confront Fustolo's contention that

Patton Drive's claim on the Guaranteed Notes no longer exists

because it merged into and became part of the state court judgment.

Hence, in Fustolo's view, our conclusion that the judgment itself

is subject to a bona fide dispute ends the relevant inquiry.                   We

do not doubt that a merger of this type can occur.               See Restatement

(Second) of Judgments § 18, cmt. a ("When the plaintiff recovers

a   valid   and   final     personal    judgment,     his   original   claim    is

extinguished and rights upon the judgment are substituted for

it."). But we also see no reason to view such a merger as operative

in all contexts.       Cf. Boynton v. Ball, 121 U.S. 457, 466 (1887)

("[N]otwithstanding the change in [a debt's] form from that of a

simple contract debt . . . by merger into a judgment of a court of

record, it still remains the same debt[.]"); In re Richard A.


                                       - 19 -
Turner Co., 209 B.R. 177, 180 (Bankr. D. Mass. 1997) (separating

a single, jointly held judgment into its three underlying component

claims and so finding that the judgment-holders qualified as

petitioning creditors).   Here, for instance, Fustolo should not be

allowed to argue, on the one hand, that the judgment is not final

for purposes of establishing that Patton Drive's claim on the

judgment is subject to bona fide dispute, yet argue, on the other

hand, that we should treat the judgment as final for purposes of

displacing the underlying contract claims.   Once we have already,

to Fustolo's advantage, looked beneath the surface of the state

court judgment in order to identify its vulnerable components, we

see no principled reason to then ignore what is, but for the

potential operation of merger, an independent claim capable of

standing on its own merits.

          Alternatively, Fustolo argues that even if Patton Drive

could have asserted only its claim under the Guaranteed Notes as

its qualifying claim in the petition, it did not do so.     Rather,

the involuntary bankruptcy petition asserts as Patton Drive's

claim the entire state court judgment.   This is true.   But Fustolo

concededly knew from the start that the liability represented by

the judgment consisted of two separate components, one of which

was the liability under the Guaranteed Notes. Indeed, in Fustolo's

initial answer to the involuntary petition, Fustolo contested the

state court's calculation of the amount of interest due on the


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Guaranteed Notes specifically, and Fustolo has continued to raise

this    argument    throughout      the   litigation.        Patton     Drive's

memorandum in support of summary judgment before the bankruptcy

court, in turn, made clear that Patton Drive understood the state

court judgment to "encompass[] . . . separate damages components,"

one of which was Fustolo's liability on the Guaranteed Notes.

Fustolo gives us no reason to think that his strategy would have

changed   had    Patton   Drive     asserted   only   its   claim   under   the

Guaranteed Notes from the outset.

              Certainly, Patton Drive could have sought to formally

amend the claim it asserted in its involuntary petition.                See Fed.

R. Bankr. P. 7015; see also id. 1018; Fed. R. Civ. P. 15.                   But

given that Patton Drive had no way of knowing how the bankruptcy

court would rule on the preclusive effect of the state court

judgment or on the issue of merger, and given that Fustolo's

liability on the Guaranteed Notes formed an obvious, separately

calculated amount within the asserted claim, we cannot fault Patton

Drive   for    failing    to   do   so.   Accordingly,      we   hold    that   a

petitioning creditor may be permitted to rely on an undisputed

component claim that underlies a disputed multi-part judgment that

the creditor has asserted as its qualifying claim, where the amount

of that undisputed claim is clearly severable from the amount of

the total judgment and where the debtor both has notice of that

reliance and is not prejudiced by that reliance.                    See In re


                                     - 21 -
Cumberland Farms, Inc., 284 F.3d 216, 226 (1st Cir. 2002) ("Under

the liberal pleading regime prescribed by the Federal Rules of

Civil Procedure, non-compliance with . . . procedural rules does

not always preclude consideration of unpleaded claims . . . .").

                                 2.

          Our decision that neither merger of the claim on the

Guaranteed Notes into the judgment nor Patton Drive's assertion of

the state court judgment in the petition precludes Patton Drive

from relying only on the claim under the Guaranteed Notes to

qualify it as a petitioning creditor brings us to the second part

of Patton Drive's two-part argument: whether the claim under the

Guaranteed Notes is indeed free of bona fide dispute.       Fustolo

argues that the $2.7 million due on the Guaranteed Notes is

disputed as to amount, claiming that Patton Drive is not entitled

to the Guaranteed Notes' full default interest rate of 35% because

Patton Drive failed to timely submit a required "usury notification

form" to the state attorney general before levying interest rates

in excess of 20%.   Mass. Gen. Laws ch. 271, § 49(d); see also Clean

Harbors, Inc. v. John Hancock Life Ins. Co., 833 N.E.2d 611, 625

(Mass. App. Ct. 2005) (requiring usury notice to be on file with

state attorney general before disbursal of loan proceeds).      But

under Massachusetts law, "[t]he appropriate remedy" to a violation

of the usury statute




                               - 22 -
           is arrived at by balancing a number of factors
           including the importance of the public policy
           against usury, whether a refusal to enforce
           the [usurious] term will further that policy,
           the gravity of the misconduct involved, the
           materiality of the provision to the rest of
           the contract, and the impact of the remedy on
           the parties' rights and duties.

Begelfer   v.   Najarian,      409    N.E.2d     167,     189   (Mass.   1980).

"[D]etermining what relief is appropriate, if any," is a matter up

to "the [trial] judge's discretion, under equitable principles."

Clean Harbors, 833 N.E.2d at 625 (emphasis supplied) (noting that

"the de minimis nature of the delay in filing the [statutorily

required usury] notices" may be a factor in determining remedy).

Given the discretion that state law affords trial courts in this

matter, and given the state trial court's cogent explanation for

its determination that Patton Drive was entitled to the full

default interest rate on the Guaranteed Notes despite its technical

violation of the usury statute, Fustolo has failed to overcome our

strong   presumption    that   state    court    findings,      even   when   not

categorically binding, are free of bona fide dispute.

           Because     the   amount    of     Fustolo's    liability     on   the

Guaranteed Notes, which formed separately delineated counts of the

state court judgment, is not subject to bona fide dispute, and

because there is no injustice in considering Patton Drive's claim

on the Guaranteed Notes separately from Patton Drive's claim on

the judgment within which its underlying contract claims are



                                     - 23 -
submerged, we find that Patton Drive qualifies as a petitioning

creditor and that the bankruptcy court therefore did not err in

allowing Patton Drive to join with Patriot and Mayer to initiate

involuntary bankruptcy proceedings against Fustolo.

                              Conclusion

             To summarize: Patton Drive holds a claim against Fustolo

for $2.7 million under the Guaranteed Notes.        Fustolo conceded

that he owes the principal due.       His only challenge is to the

interest due, and that challenge rests on an entirely unsupported

assertion that a state trial court abused its broad equitable

discretion in not penalizing a technical timing requirement of

state usury law in a commercial transaction.        And while Patton

Drive's claim would otherwise be merged into a final judgment, in

this context--to Fustolo's benefit otherwise--we do not accord the

judgment its customary finality and effect. Accordingly, we affirm

the bankruptcy court's grant of summary judgment to Fustolo's

creditors.




                                - 24 -
