THE PREEMPTION OF STATE COURT CLAIMS
with the two motions it had filed in the bankruptcy action . Id .
Carmen was not satisfied with the bankruptcy sanctions alone , however . Carmen then filed an additional action in state court , alleging abuse of process based on the same bankruptcy petition . Murpenter moved to dismiss the case , arguing that federal law preempted any state law claim based on abuse of the bankruptcy process .
The trial court agreed with Murpenter , revisiting the analysis of the Pennsylvania Supreme Court in Stone Crushed P ’ ship v . Jackson , 908 A . 2d 875 ( Pa . 2006 ). The court noted that bankruptcy law provides for sanctions that are similar to relief under state abuse of process claims , suggesting that recognizing a separate claim would be akin to allowing double recovery . It also discussed the allencompassing nature of bankruptcy , as well as the constitutional indication that bankruptcy law be uniform across the country . Finally , the Carmen court found that allowing abuse of process claims in state courts may chill debtors from exercising their bankruptcy rights , a considerable public policy concern . The court thus concluded that Pennsylvania has rightly sided with the majority of states in holding that state abuse of process claims are preempted by federal bankruptcy law . See e . g . Longnecker v . Deutsche Bank Nat ’ l Trust Co ., No . 3-806 / 12-2304 , 2013 Iowa App . LEXIS 1303 ( Iowa Ct . App . 2013 ); see also PNH , Inc . v . Alfa Laval Flow , Inc ., 958 N . E . 2d 120 ( Ohio 2011 ).
When “ It Seems Only Fair ” to Invoke Preemption
While the Carmen court treated the filing of a petition as a black hole for any abuse of process claim , the Pennsylvania Superior Court also recently discussed the issue , providing more nuance to preemption . The case of Oberdick v . Trizechahn Gateway began when Trizechahn obtained a $ 3.3 million judgment against Oberdick in connection with unpaid rent for his law firm ’ s office space . Oberdick v . Trizechahn , 2017 Pa . Super . 112 , * 4 ( Apr . 19 , 2017 ). As part of its collection efforts , Trizechahn filed a state court action against Oberdick under the Pennsylvania Uniform Fraudulent Transfer Act . Id . After moving to dismiss the action , Oberdick filed a voluntary Chapter 7 bankruptcy petition and notice of removal in the state court action . Id . at 4-5 .
The Trizechahn claim then proceeded as an adversary action in the bankruptcy court . Id . After Oberdick was victorious , he filed suit against Trizechahn under the Dragonetti Act , Pennsylvania ’ s statute governing the wrongful use of civil proceedings . Id . Oberdick argued that the Trizechahn claim was “ procured , initiated and continued in Pennsylvania state court ,” and thus was not preempted by federal law . Id . at 9 . The trial court agreed , but also included the requisite language for a permissive appeal to the Superior Court . Id . at n . 6 .
The Superior Court reversed , returning to the principles of Stone Crushed . Id . at 12 . After discussing the general intent of Congress to preempt the entire field of bankruptcy , as well as the different bankruptcy provisions providing for “ equivalent protection ” to the Dragonetti Act , the Superior Court analyzed the specific allegations from Oberdick ’ s Amended Complaint . These included claims that Trizechahn failed to timely respond to discovery requests during the bankruptcy action , disregarded deadlines set by the court , failed to respond to efforts for resolution , and presented no specific allegedly fraudulent transfers to support its cause of action . Id . at 12 . Each of these claims , the Superior Court pointed out , referred to conduct of Trizechahn “ in bankruptcy court .” Id . at 12 ( emphasis in original ). Additionally , Oberdick had voluntarily removed the case from state court , and declined to seek sanctions while the matter was still pending in bankruptcy court . Id . at 12-13 . The appellate division thus reasoned that “ as a matter of policy , it seems only fair that [ Oberdick ] should now be precluded from benefitting from a similar state cause of action .” Id . at 13 .
Everything ’ s Bigger in Texas – Including Recovery for Frivolous Bankruptcy Actions
The appellate division ’ s discussion of when the conduct occurred , as well as the plaintiff ’ s voluntary use of the bankruptcy process , offers potential distinctions that are similar to those discussed in minority jurisdictions as justification for avoiding preemption . See N . J . Lawyers ’ Fund for Client Prot . v . Fornaro ( In re Fornaro ), 402 B . R . 104 ( Bankr . D . N . J . 2009 ); see also Rosenberg v . DVI Receivables , XIV , LLC ( In re Rosenberg ), 471 B . R . 307 ( Bankr . S . D . Fla . 2012 ) ( disagreeing with Florida appeals court decision that held abuse of process claims are not preempted by bankruptcy law ). These minority jurisdictions typically point to a Texas Supreme Court opinion that analyzed both sides of the issue , ultimately finding that only some abuse of process claims are preempted .
In Graber v . Fuqua a debtor accused one of his creditors of frivolous filings in a bankruptcy action . 279 S . W . 3d 608 , 610 ( Tex . 2009 ). Specifically , the debtor brought a state court suit alleging that an adversary action filed against him in bankruptcy court was improperly filed . Id . The case eventually reached the Texas Supreme Court , which discussed each of the concerns typically considered in majority jurisdictions .
The Graber Court began by noting that preemption occurs when ( 1 ) Congress sufficiently evidences the intent to exclusively occupy a field of law , or ( 2 ) when simultaneous compliance is impossible or creates an obstacle
National Association of Consumer Bankruptcy Attorneys Summer 2017 CONSUMER BANKRUPTCY JOURNAL 43