FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

ANN R. MILES,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical

Corporation, aka Okun No. 03-55963

Corporation; DAVID B. OKUN,  BAP No. M.D., F.A.C.P., a Medical CC-02-01528-KJP Corporation Money Purchase Plan,

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

16175
In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

MELINDA MILES,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical

Corporation, aka Okun No. 03-55964

Corporation; DAVID B. OKUN,  BAP No. M.D., F.A.C.P., a Medical CC-02-01529-KJP Corporation Money Purchase Plan,

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

16176 IN RE: MILES
In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

KELLY CUNNINGHAM,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical

Corporation, aka Okun No. 03-55965

Corporation; DAVID B. OKUN,  BAP No. M.D., F.A.C.P., a Medical CC-02-01537-KJP Corporation Money Purchase Plan,

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

IN RE: MILES 16177
In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

MELINDA MILES,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical

Corporation, aka Okun No. 03-55966

Corporation; DAVID B. OKUN,  BAP No. M.D., F.A.C.P., a Medical CC-02-01544-KJP Corporation Money Purchase Plan,

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

16178 IN RE: MILES
In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

ANN R. MILES,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical

Corporation, aka Okun No. 03-55967

Corporation; DAVID B. OKUN,  BAP No. M.D., F.A.C.P., a Medical CC-02-01545-KJP Corporation Money Purchase Plan,

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

IN RE: MILES 16179
In re: RODNEY CASSIMER MILES, 

aka Rodney C. Miles, Rod Miles,

Debtor,

KELLY CUNNINGHAM,

Appellant,

v.

DAVID B. OKUN; SHEILA REISEROKUN; DAVID B. OKUN, M.D.,

F.A.C.P., a California Medical No. 03-55969 Corporation, aka Okun

Corporation; DAVID BAP No. B. OKUN, 

M.D., F.A.C.P., a Medical CC-02-01546-KJP

Corporation Money Purchase Plan, OPINION

aka Okun Pension Plan; OKUN

FAMILY TRUST U/D/T/ MARCH 10,

1988; EMMANUEL & ANN S.N.

REISER REVOCABLE TRUST, aka

Reiser Trust; ANDREW K. MAUTHE;

M. STEPHEN COONTZ; MILBURN A.

MATTHEWS; COONTZ & MATTHEWS

LLP; LAUREN ELIZABETH MURPHY;

SUSAN A. SPITZO; VERA J.

FERGUSON; NANCY M. VOLD,

Appellees. 

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Perris, Jellen, and Klein, Bankruptcy Judges, Presiding

Argued and Submitted

February 16, 2005—Pasadena, California

Filed December 12, 2005

16180 IN RE: MILES
Before: Andrew J. Kleinfeld, Kim McLane Wardlaw, and

Marsha S. Berzon, Circuit Judges.

Opinion by Judge Wardlaw;

Concurrence by Judge Berzon

IN RE: MILES 16181
COUNSEL

Rodney C. Miles, Laguna Niguel, California, for the appellants. 

Nanette D. Sanders and Michael B. Reynolds, Snell & Wilmer L.L.P., Irvine, California, for the appellees.

OPINION

WARDLAW, Circuit Judge: 

Ann Miles, Melinda Miles, and Kelly Cunningham (collectively “Appellants”) appeal from a decision of the United

States Bankruptcy Appellate Panel of the Ninth Circuit

(“BAP”) affirming the removal and dismissal of their state

law causes of action for damages resulting from the filing of

involuntary bankruptcy petitions against their relatives. We

hold that because 11 U.S.C. § 303(i) completely preempts

state law tort causes of action for damages predicated upon

the filing of an involuntary bankruptcy petition, the bankruptcy court had “arising under” jurisdiction over the proceedings, and thus did not err in denying Appellants’ motions to

remand. Further, because Appellants lack standing to seek

damages under § 303(i), the bankruptcy court properly dismissed their complaints. 

I.

BACKGROUND

David Okun, Sheila Reiser-Okun, and several entities

owned by or affiliated with the Okuns filed ten involuntary

bankruptcy petitions against Rodney Miles, Ann Miles, and

related businesses owned by or affiliated with the Miles’s.

The bankruptcy court dismissed Rodney’s case on the ground

16184 IN RE: MILES
that he was generally paying his undisputed debts as they

became due. It dismissed the remaining nine involuntary

bankruptcy cases, including the one filed against Ann, on

multiple grounds, one of which was that the petitions were

filed in bad faith.1 The bankruptcy court retained jurisdiction

to determine the alleged debtors’ rights to attorneys’ fees,

costs, and damages under 11 U.S.C. § 303(i). 

After the bankruptcy court dismissed the involuntary bankruptcy cases, Ann and the Miles’s daughters, Melinda Miles

and Kelly Cunningham, filed three substantially identical tort

actions in California state court seeking damages for the filing

and prosecution of the involuntary petitions. The complaints

alleged state law causes of action for negligence, defamation,

false light, abuse of process, intentional and negligent infliction of emotional distress, and negligent misrepresentation.

No Appellant sought damages arising from an involuntary

petition filed against her. Rather, each Appellant sought damages arising solely from an involuntary petition filed against

one or two of her relatives. The causes of action asserted by

Melinda and Kelly were based on the bankruptcy court’s finding that the involuntary petition against their mother, Ann,

was filed in bad faith, and the bankruptcy court’s dismissal of

the involuntary petition against their father, Rodney, on the

basis that he was generally paying his undisputed debts as

they became due. The causes of action asserted by Ann were

based solely on the bankruptcy court’s dismissal of the involuntary petition against her husband, Rodney. The named

defendants included the petitioning creditors in the involuntary bankruptcy actions, their lawyers, and the law firm’s paralegals and secretaries who worked on the cases (collectively

“Appellees”). 

Appellees removed the three actions from state court to

1

In a memorandum disposition filed contemporaneously with this opinion, we address the bankruptcy court’s dismissal of the involuntary bankruptcy cases, including the factual findings of bad faith. 

IN RE: MILES 16185
bankruptcy court pursuant to 28 U.S.C. § 1452(a). They then

filed motions to dismiss the removed complaints, contending

that federal law preempted all of the state law causes of action

pleaded in the complaints. While these motions were pending,

Appellants moved for remand under 28 U.S.C. § 1452(b) on

the premises that the removal was untimely and that there was

no federal jurisdiction over damages claims by third parties

resulting from the filing of an involuntary bankruptcy petition. 

The bankruptcy court refused to remand the state law

causes of action, holding that it had “arising under” jurisdiction over those causes of action because they were completely

preempted by 11 U.S.C. § 303(i). It then dismissed the complaints on the basis that § 303(i) does not authorize damages

for third parties who claim to be harmed by the filing of an

involuntary bankruptcy petition. The BAP affirmed the reasoning and ultimate decision of the bankruptcy court in a published opinion, Miles v. Okun (In re Miles), 294 B.R. 756

(B.A.P. 9th Cir. 2003), and this appeal ensued. Because

appeals from the BAP are subject to de novo review, we independently review the bankruptcy court’s decision. Liberty

Tool, & Mfg. v. Vortex Fishing Sys., Inc. (In re Vortex Fishing

Sys., Inc.), 277 F.3d 1057, 1064 (9th Cir. 2002). 

II.

REMOVAL JURISDICTION

Appellants challenge the bankruptcy court’s exercise of

removal jurisdiction. To analyze this issue, we must determine whether jurisdiction over Appellants’ state law tort

actions existed in the district court to support the bankruptcy

court’s derivative jurisdiction. See Dunmore v. United States,

358 F.3d 1107, 1113 (9th Cir. 2004). 

[1] Jurisdiction was premised on 28 U.S.C. § 1452(a),

which provides for removal of a state action “to the district

16186 IN RE: MILES
court for the district where such civil action is pending, if

such district court has jurisdiction of such claim or cause of

action under section 1334 of this title.” 28 U.S.C. § 1452(a).

Section 1334(b), in turn, provides that “the district courts

shall have original but not exclusive jurisdiction of all civil

proceedings arising under title 11, or arising in or related to

cases under title 11.” 28 U.S.C. § 1334(b). 

The bankruptcy court and the BAP held that because 11

U.S.C. § 303(i) completely preempts state law tort actions for

damages resulting from the filing of an involuntary bankruptcy petition, Appellants’ complaints necessarily “arise

under” title 11, and thus were removable under 28 U.S.C.

§ 1452(a). See In re Miles, 294 B.R. at 762. Appellants contend that their claims are not preempted and that, in any event,

removal based on complete preemption was improper. We

review de novo the denial of a motion to remand an action to

state court for want of removal jurisdiction. Young v. Anthony’s Fish Grottos, Inc., 830 F.2d 993, 996 (9th Cir. 1987). 

A. General Principles of “Arising Under” Jurisdiction

The “arising under” language of 28 U.S.C. § 1334(b) is

analogous to the “arising under” language of 28 U.S.C.

§ 1331. See New England Power & Marine, Inc. v. Town of

Tyngsborough (In re Middlesex Power Equip. & Marine,

Inc.), 292 F.3d 61, 68 (1st Cir. 2002); 1 Collier on Bankruptcy

¶ 3.01[4][c][i] (L. King et al. eds., 15th rev. ed. 2001). Therefore, we draw freely from authorities discussing the circumstances under which a case “arises under” federal law within

the meaning of § 1331. See Hunter v. United Van Lines, 746

F.2d 635, 639 (9th Cir.), cert. denied, 474 U.S. 863 (1985).

[2] In general, “a cause of action arises under federal law

only when the plaintiff’s well-pleaded complaint raises issues

of federal law.” Metro. Life Ins. Co. v. Taylor, 481 U.S. 58,

63 (1987). A defense is not part of a plaintiff’s properly

pleaded statement of his claim. See Gully v. First Nat’l Bank

IN RE: MILES 16187
in Meridian, 299 U.S. 109, 113 (1936). Therefore, “a case

may not be removed to federal court on the basis of a federal

defense, including the defense of pre-emption, even if the

defense is anticipated in the plaintiff’s complaint, and even if

both parties concede that the federal defense is the only question truly at issue.” Caterpillar Inc. v. Williams, 482 U.S. 386,

393 (1987); see also Franchise Tax Bd. v. Constr. Laborers

Vacation Trust, 463 U.S. 1, 12 (1983). 

[3] The “complete preemption doctrine” provides an exception to this general proposition. The Supreme Court has concluded that the preemptive force of some federal statutes is so

strong that they “completely preempt” an area of state law.

Taylor, 481 U.S. at 63-64. “In such instances, any claim purportedly based on that preempted state law is considered,

from its inception, a federal claim, and therefore arises under

federal law.” Balcorta v. Twentieth Century-Fox Film Corp.,

208 F.3d 1102, 1107 (9th Cir. 2000). 

The Supreme Court has construed only three federal statutes to so preempt their respective fields as to authorize

removal of actions seeking relief exclusively under state law:

section 301 of the Labor and Management Relations Act

(“LMRA”), 29 U.S.C. § 185; section 502 of the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29

U.S.C. § 1132; and sections 85 and 86 of the National Bank

Act, 12 U.S.C. §§ 85, 86. See Avco Corp. v. Machinists, 390

U.S. 557, 561-62 (1968); Taylor, 481 U.S. at 65-67; Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6-11 (2003). Most

recently, in Beneficial National Bank, the Court clarified that

removal is proper under the complete preemption doctrine

only when Congress intended the federal cause of action to be

exclusive. Beneficial Nat’l Bank, 539 U.S. at 8-9 & n.5. Finding that sections 85 and 86 of the National Bank Act provided

the exclusive cause of action for usury claims against national

banks, the Court held that the plaintiffs’ cause of action arose

under federal law, and therefore could be removed to federal

court. Id. at 11. 

16188 IN RE: MILES
[4] Appellants’ properly pleaded complaints allege only

California state law causes of action and seek relief exclusively under those laws. Therefore, the dispositive question is

whether Congress intended 11 U.S.C. § 303(i) to provide “the

exclusive cause of action” for damages resulting from the filing of an involuntary bankruptcy petition. See id. at 8-9 & n.5;

see also Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d

1033, 1042 (9th Cir. 2003) (analyzing whether plaintiff’s state

law cause of action was completely preempted by section 27

of the 1934 Securities and Exchange Act). If so, then Appellants’ causes of action necessarily arise under title 11, and

their claims are removable under 28 U.S.C. § 1452(a). If not,

then Appellants’ complaints do not arise under title 11 and are

not removable under § 1452(a) pursuant to the “arising under”

provision of 28 U.S.C. § 1334(b). 

B. Congress’s Intent with Respect to 11 U.S.C. § 303(i)

[5] The Bankruptcy Code and its legislative history are

silent on whether Congress intended 11 U.S.C. § 303(i) to

provide the exclusive basis for awarding damages predicated

upon the filing of an involuntary bankruptcy petition. Therefore, we look to the structure and purpose of the Bankruptcy

Code to determine whether Congress did indeed intend for

§ 303(i) to provide the exclusive cause of action. See Air Conditioning & Refrigeration Inst. v. Energy Res. Conservation &

Dev. Comm’n, 410 F.3d 492, 495 (9th Cir. 2005). Although

we have not addressed this precise issue, we have previously

held that state law malicious prosecution actions are completely preempted by the structure and purpose of the Bankruptcy Code. See MSR Exploration, Ltd. v. Meridian Oil, Inc.,

74 F.3d 910, 916 (9th Cir. 1996).

[6] In MSR Exploration, plaintiffs brought a state law

action for malicious prosecution against defendants in federal

district court, claiming that the defendants had maliciously

filed and pursued creditors’ claims in the plaintiffs’ Chapter

11 bankruptcy proceeding. Id. at 911. The district court disIN RE: MILES 16189
missed for lack of jurisdiction, finding the action completely

preempted by the Bankruptcy Code. Id. We agreed that state

malicious prosecution actions for events taking place within

bankruptcy court proceedings are completely preempted by

the Bankruptcy Code. Id. at 916. Our reasoning was based on

(1) Congress’s placement of bankruptcy jurisdiction exclusively in the federal district courts as an initial matter, id. at

913-14; (2) the “complex, detailed, and comprehensive provisions of the lengthy Bankruptcy Code,” which “create a whole

system under federal control which is designed to bring

together and adjust all of the rights and duties of creditors and

embarrassed debtors alike,” and which needs to be “jealously

guard[ed] . . . from even slight incursions and disruptions”

from state malicious prosecution actions, id. at 914; (3) the

Founders’ grant of power to Congress “to establish . . . uniform Laws on the subject of Bankruptcies throughout the

United States,” Art. I, § 8, cl. 4, for the purpose of uniform

administration and regulation of the parties before the bankruptcy court; and (4) the extensive federal remedies for

improper conduct in bankruptcy proceedings provided by the

Bankruptcy Code, which “suggests that Congress has considered the need to deter misuse of the process and has not

merely overlooked the creation of additional deterrents.” MSR

Exploration, 74 F.3d at 915. 

[7] We are compelled by the logic of our decision in MSR

Exploration to hold that Congress intended 11 U.S.C. § 303(i)

to provide the exclusive basis for awarding damages predicated upon the filing of an involuntary bankruptcy petition.

See id. at 913-16; see also Gonzales v. Parks, 830 F.2d 1033,

1035-36 (9th Cir. 1987) (holding that state courts lack jurisdiction over a claim that the filing of a bankruptcy petition

constitutes an abuse of process). As we noted in MSR Exploration, Congress provided a number of remedies in the Bankruptcy Code to deter misuse of the bankruptcy process,

including § 303(i). See MSR Exploration, 74 F.3d at 915. The

Revision Notes and Legislative Reports to the Bankruptcy

Reform Act of 1978 indicate that Congress utilized both the

16190 IN RE: MILES
bonding requirements of § 303(e) and the damages provision

of § 303(i) as means of regulating abuse of the involuntary

bankruptcy process it created:

The court may, under subsection (e), require the petitioners to file a bond to indemnify the debtor for

such amounts as the court may later allow under subsection (i). Subsection (i) provides for costs, attorneys fees, and damages in certain circumstances.

The bonding requirement will discourage frivolous

petitions as well as spiteful petitions based on a

desire to embarrass the debtor (who may be a competitor of a petitioning creditor) or to put the debtor

out of business without good cause. An involuntary

petition may put a debtor out of business even if it

is without foundation and is later dismissed. 

11 U.S.C. § 303 (Historical and Statutory Notes, Revision

Notes and Legislative Reports, 1978 Acts). Moreover, as the

BAP noted, § 303(i)’s remedial scheme is comprehensive in

that it specifically addresses the full range of remedies, from

costs and attorneys’ fees for dismissed involuntary petitions

to compensatory and punitive damages for involuntary petitions filed in bad faith. See 11 U.S.C. § 303(i). 

Congress’s authorization of certain sanctions under § 303(i)

for involuntary bankruptcy petitions filed in bad faith suggests

that Congress rejected other penalties, including the kind of

substantial damage awards that might be available in state

court tort actions. See id.; Gonzales, 830 F.2d at 1035-36. A

debtor who believes an involuntary petition was filed in bad

faith has a comprehensive scheme of remedies available in the

federal courts. The existence of this comprehensive scheme

precludes collateral attacks on such filings in state courts.

Glannon v. Garrett & Assocs., Inc., 261 B.R. 259, 264 (D.

Kan. 2001).

Furthermore, as a policy matter, the potential costs of filing

an involuntary bankruptcy petition should not be governed by

IN RE: MILES 16191
state law. “[I]t is for Congress and the federal courts, not the

state courts, to decide what incentives and penalties are appropriate for use in connection with the bankruptcy process and

when those incentives and penalties shall be utilized.” Gonzales, 830 F.2d at 1036. Congress created involuntary bankruptcy proceedings to enable creditors who are unable to

extract preferences or unequal transfers from distressed debtors to achieve equitable treatment. See In re Miles, 294 B.R.

at 760. Allowing state court remedies for wrongful filings

may well interfere with the filings of involuntary bankruptcy

petitions by creditors and with other necessary actions that

they, and others, must or might take within the confines of the

bankruptcy process. See MSR Exploration, 74 F.3d at 916. 

Finally, here, as in MSR Exploration, the threat exists that

the exclusive jurisdiction of the bankruptcy court will be

invaded and that uniformity will be undercut. “Congress has

expressed its intent that bankruptcy matters be handled in a

federal forum by placing bankruptcy jurisdiction exclusively

in the district courts as an initial matter.” Id. at 913 (citing 28

U.S.C. § 1334(a)). Furthermore, the need for uniformity in the

administration of the bankruptcy laws persuaded the Framers

to expressly grant Congress the power “to establish . . . uniform Laws on the subject of Bankruptcies throughout the

United States.” Art. I, § 8, cl. 4. Permitting state courts to

decide whether the filing of an involuntary bankruptcy petition was appropriate would subvert the exclusive jurisdiction

of the federal courts and undermine uniformity in bankruptcy

law by allowing state courts to create their own standards as

to when a creditor may properly file an involuntary petition.

See MSR Exploration, 74 F.3d at 913-15. 

Therefore, we hold that 11 U.S.C. § 303(i) provides the

exclusive cause of action for damages predicated upon the filing of an involuntary bankruptcy petition. The “highly complex” nature of the Bankruptcy Code, id. at 914, and “the

unique, historical, and even constitutional need for uniformity

in the administration of bankruptcy laws,” id. at 915, under16192 IN RE: MILES
mine the argument that we can infer from Congress’s failure

to create a federal remedy for third parties that it intended to

allow such parties to pursue state court litigation as a form of

collateral attack on involuntary bankruptcy proceedings.

When Congress enacted the comprehensive Bankruptcy

Reform Act of 1978 after a decade-long debate, it could not

have gone unrecognized that debtors’ immediate family members might also suffer the same types of harm or emotional

distress as their family members who are subject to involuntary bankruptcy proceedings. Yet Congress determined that

bankruptcy courts could award damages predicated on the bad

faith filing of involuntary petitions only to the debtors

themselves—those participants in involuntary bankruptcy

proceedings who suffer most directly the harm from frivolous

or spiteful filings. The relevant Senate and House Reports

state:

[I]f a petitioning creditor filed the petition in bad

faith, the court may award the debtor any damages

proximately caused by the filing of the petition.

These damages may include such items as loss of

business during and after the pendency of the case,

and so on. 

H.R. Rep. No. 95-595, at 324 (1977), reprinted in 1978

U.S.C.C.A.N. 5963, 6280 (emphasis added); S. Rep. No. 95-

989, at 34 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5820

(identical text). Because Congress intended the Bankruptcy

Code to create a whole scheme under federal control that

would adjust all of the rights and duties of creditors and debtors alike, see MSR Exploration, 74 F.3d at 914, we can infer

from Congress’s clear intent to provide damage awards only

to the debtor in federal proceedings predicated upon the bad

faith filing of an involuntary petition that Congress did not

intend third parties to be able to circumvent this rule by pursuing those very claims in state court. 

IN RE: MILES 16193
C. Complete Preemption

[8] Like section 301 of the LMRA, section 502 of ERISA,

and sections 85 and 86 of the National Bank Act, § 303(i) of

the Bankruptcy Code “provide[s] the exclusive cause of

action for the claim[s] asserted and also set[s] forth procedures and remedies governing that cause of action.” Beneficial Nat’l Bank, 539 U.S. at 8. Therefore, complete

preemption is appropriate here, despite Appellants’ argument

that if they do not have standing to recover damages under

§ 303(i), their causes of action cannot “arise under” title 11.2

The test for complete preemption set forth by the Supreme

Court in Beneficial National Bank does not also require that

Congress permit third parties to recover under the exclusive

federal cause of action it created as a predicate to federal

removal jurisdiction. See id. at 11 (holding that the plaintiffs’

cause of action arose under federal law because sections 85

and 86 of the National Bank Act provide the exclusive cause

of action for usury claims against national banks, and thus

there is “no such thing as a state-law claim of usury against

a national bank”). Any possible error made by Congress in

granting or designing relief does not affect the jurisdiction of

the bankruptcy court. See Caterpillar, 482 U.S. at 391 n.4

(“ ‘The nature of the relief available after jurisdiction attaches

is, of course, different from the question whether there is

jurisdiction to adjudicate the controversy.’ ” (quoting Avco,

390 U.S. at 561)).3 It is for Congress to decide what penalties

2

In Part III of this Opinion, we hold that Appellants lack standing to

recover damages under 11 U.S.C. § 303(i). 

3Our cases holding that there is no ERISA preemption when the plaintiff lacks standing to bring a federal claim are not helpful to Appellants.

See, e.g., Curtis v. Nev. Bonding Corp., 53 F.3d 1023, 1027 (9th Cir.

1995) (establishing that “a plaintiff’s standing to enforce ERISA is a prerequisite to both subject matter jurisdiction and ERISA preemption”);

Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 934 (9th Cir.

1994) (holding that, for plaintiffs outside the enumerated categories of

those able to seek relief under ERISA’s civil enforcement provisions, their

16194 IN RE: MILES
are appropriate for use in connection with the bankruptcy process, when those penalties shall be utilized, and who may benefit from them. See Gonzales, 830 F.2d at 1036. If

individuals, such as Appellants, are not satisfied with the remedies available under the Bankruptcy Code, they should look

to Congress, not the state courts, to supplement the available

remedies. See Glannon, 261 B.R. at 266-67 (holding that

plaintiff could not avoid the effect of limited federal remedies

by filing a state law claim against defendants who were not

liable or subject to sanction under federal law). 

[9] We do not hold that all state actions related to bankruptcy proceedings are subject to the complete preemption

doctrine. We recognize that “because the common law of the

various states provides much of the legal framework for the

operation of the bankruptcy system, it cannot be said that

Congress has completely preempted all state regulation which

may affect the actions of parties in bankruptcy court.” Koffman v. Osteoimplant Tech., Inc., 182 B.R. 115, 124 (D. Md.

1995). However, “[r]emedies and sanctions for improper

behavior and filings in bankruptcy court . . . are matters on

state claims were not preempted). First, as we explained in Peralta v. Hispanic Business, Inc., these were claims “only loosely related to ERISA,”

with an “insufficient relation to the benefit plan for preemption to attach.”

419 F.3d 1064, 1069 (9th Cir. 2005). By contrast, the state law claims

raised by Appellants here would force state courts to pass judgment on

involuntary bankruptcy petitions and tread heavily into an area where

Congress has created an exclusive federal remedy. Second, the ERISA

cases were decided before Beneficial National Bank v. Anderson, which

expanded the scope of the complete preemption analysis. Beneficial Nat’l.

Bank, 539 U.S. 1, 16-17 (Scalia, J., dissenting). After Beneficial National

Bank, we are instructed to focus not on the parties protected but on

whether Congress intended to provide an “exclusive cause of action.” Id.

at 9 & n.5. We believe that Congress intended § 303(i) to do so. Finally,

as discussed above, bankruptcy has “unique, historical and even constitutional need[s] for uniformity” which are absent from the ERISA context

and further justify a finding of complete preemption. MSR Exploration, 74

F.3d at 915. 

IN RE: MILES 16195
which the Bankruptcy Code is far from silent and on which

uniform rules are particularly important.” Id. Therefore, we

hold that 11 U.S.C. § 303(i) completely preempts state law

tort actions for damages predicated upon the filing of an

involuntary bankruptcy petition. 

[10] As in MSR Exploration, Appellants’ complaints are

“self-consciously and entirely one[s] which seek[ ] damages

for [claims] filed and pursued in the bankruptcy court.” MSR

Exploration, 74 F.3d at 912. The complaints state on their

faces that Appellants seek damages for the filing and prosecution of the involuntary bankruptcy petitions against their relatives. Appellants go so far as to specifically allege that

“[t]hese various bankruptcy filings and/or prosecution of them

caused great emotional, physical, mental and psychological

suffering and distress, embarrassment, anxiety, fear, worry

and humiliation to [Appellants] and other members of the

family.” Because Appellants’ complaints allege state law tort

causes of action for damages entirely predicated upon the filing and prosecution of involuntary bankruptcy petitions, they

necessarily “arise under” title 11,4 and thus were removable

under 28 U.S.C. § 1452(a). Accordingly, the bankruptcy court

did not err in denying Appellants’ motions to remand.5

4Because we find that the bankruptcy court had “arising under” jurisdiction, we need not address whether it had “arising in” or “related to” jurisdiction. See 28 U.S.C. § 1334(b). 

5We conclude that Appellants’ causes of action depend on title 11 for

their existence and could not proceed in another court. Therefore, the proceedings are “core” proceedings. The bankruptcy court had derivative

jurisdiction to hear, determine, and enter final orders and judgments. See

Dunmore, 358 F.3d at 1113-14 (explaining a bankruptcy court’s two tiers

of judicial authority, depending on whether the proceeding before it is

“core” or “non-core”). 

16196 IN RE: MILES
III.

DISMISSAL OF APPELLANTS’ COMPLAINTS

Nor did the bankruptcy court err in dismissing Appellants’

complaints. It correctly determined that these parties lack

standing to recover damages under 11 U.S.C. § 303(i) for bad

faith filings of involuntary bankruptcy petitions.6

[11] Section 303(i) provides, in full:

(i) If the court dismisses a petition under this section other than on consent of all petitioners and the

debtor, and if the debtor does not waive the right to

judgment under this subsection, the court may grant

judgment—

(1) against the petitioners and in favor of

the debtor for—

(A) costs; or

(B) a reasonable attorney’s fee; or

(2) against any petitioner that filed the

petition in bad faith, for—

(A) any damages proximately caused

by such filing; or 

(B) punitive damages. 

6Because the state law tort causes of action alleged by Appellants are

completely preempted by 11 U.S.C. § 303(i), Appellants’ complaints are

recharacterized as alleging damages claims under § 303(i). See Stewart v.

U.S. Bancorp, 297 F.3d 953, 958 (9th Cir. 2002) (“[C]omplete preemption

‘recharacterizes’ a complaint with state law claims into one arising under

federal law.”). 

IN RE: MILES 16197
11 U.S.C. § 303(i) (emphasis added). The statute is ambiguous as to whether damages under § 303(i) can be awarded

only in favor of the debtor or in favor of other parties. One

possible reading is that by mentioning only the debtor and the

petitioning creditors in § 303(i)(1), Congress intended to limit

standing to the debtor. Another possible reading, however, is

that by omitting the words “and in favor of the debtor”

included in § 303(i)(1) from § 303(i)(2), Congress intended

persons other than the debtor to have standing to recover damages for bad faith filings of involuntary petitions. Because the

language is ambiguous, we consider legislative history, relevant case law, and public policy to resolve the question. See

Barstow v. IRS (In re Bankr. Estate of MarkAir, Inc.), 308

F.3d 1038, 1043-46 (9th Cir. 2002) (considering legislative

history, relevant cases, and public policy considerations in

interpreting 11 U.S.C. § 724(b)). 

As we noted earlier, the relevant House and Senate Reports

provide evidence that Congress intended only the debtor to

recover damages resulting from an involuntary bankruptcy

proceeding filed in bad faith:

[I]f a petitioning creditor filed the petition in bad

faith, the court may award the debtor any damages

proximately caused by the filing of the petition.

These damages may include such items as loss of

business during and after the pendency of the case,

and so on. 

H.R. Rep. No. 95-595, at 324 (1977), reprinted in 1978

U.S.C.C.A.N. 5963, 6280 (emphasis added); S. Rep. No. 95-

989, at 34 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5820

(identical text). 

[12] In addition, reading § 303(i)(2) to allow third parties

to seek damages could invite abuse of the system. The introductory clause to § 303(i) provides that “the debtor” may

waive the right to judgment, which would then enable the

16198 IN RE: MILES
debtor to waive the third parties’ damages. If such were the

case, “debtors could extort payments from either the petitioning creditors or the non-debtors seeking damages, in exchange

for either waiving or not waiving the damages claims.”

Franklin v. Four Media Co. (In re Mike Hammer Prods.,

Inc.), 294 B.R. 752, 754 (B.A.P. 9th Cir. 2003). The possible

abuse of the involuntary bankruptcy process that could result

makes it unlikely that Congress intended to permit third parties to seek damages under § 303(i)(2), as it took great care

to build into the Code provisions that would prevent abuse of

the process. 

[13] Finally, reading § 303(i) to limit standing to the debtor

is consistent with the admittedly rather sparse authority

addressing this issue. See id. at 755 (holding that § 303(i)(2)

“does not give standing to third parties to recover damages

from a bad-faith involuntary petitioner”); In re Ed Jansen’s

Patio, Inc., 183 B.R. 643, 644 (Bankr. M.D. Fla. 1995)

(“Even a cursory reading of this statute reveals that the relief

set forth in § 303(i) is available only to the debtor.”).7

[14] Therefore, we hold that Appellants do not have standing to recover damages under § 303(i) for bad faith filings of

involuntary bankruptcy petitions. Accordingly, the bankruptcy court was correct in dismissing their complaints. 

AFFIRMED.

BERZON, Circuit Judge, concurring in part and concurring in

the result:

I concur in Parts I and III of the majority opinion, except

7We leave open, however, the question of whether non-petitioning creditors may seek damages under § 303(i)(2). 

IN RE: MILES 16199
for footnote 6, and I concur in the result reached by the majority in Part II. 

I agree that there was removal jurisdiction in the present

case. I write separately because my reason for so concluding

differs from that of the majority. 

Gonzales v. Parks held that all actions, such as the present

one, that collaterally attack bankruptcy petitions are within

the exclusive jurisdiction of the federal courts under 28 U.S.C.

§ 1334(a). See 830 F.2d 1033, 1035 & n.6 (9th Cir. 1987)

(stating that “[f]ilings of bankruptcy petitions are a matter of

exclusive federal jurisdiction” and that “[s]tate courts are not

authorized to determine whether a person’s claim for relief

under a federal law, in a federal court, and within that court’s

exclusive jurisdiction, is an appropriate one” because “[s]uch

an exercise of authority would be inconsistent with and subvert the exclusive jurisdiction of the federal courts”); id. at

1036 (“A Congressional grant of exclusive jurisdiction to the

federal courts includes the implied power to protect that

grant.”); id. (stating that “[a] state court judgment entered in

a case that falls within the federal courts’ exclusive jurisdiction is subject to collateral attack in the federal courts” and

concluding that therefore “the bankruptcy court was correct in

vacating the state court judgment”). It follows that there is

original federal jurisdiction over the present case under

§ 1334(a) and removal jurisdiction under § 1441.1

1Things Remembered, Inc. v. Petrarca held that both §§ 1441 and 1452

govern removal in bankruptcy cases. See 516 U.S. 124, 129 (1995)

(“There is no express indication in § 1452 that Congress intended that statute to be the exclusive provision governing removals and remands in

bankruptcy.”). Thus, the fact that the state court lacked jurisdiction does

not defeat removal jurisdiction. See 28 U.S.C. § 1441(f) (“The court to

which a civil action is removed under this section is not precluded from

hearing and determining any claim in such civil action because the State

court from which such civil action is removed did not have jurisdiction

over that claim.”). 

16200 IN RE: MILES
I agree with the majority that the state law claims in the

present case are preempted because state law cannot add to

the remedial scheme Congress created under the Bankruptcy

Code. This result follows directly from our opinions in Gonzales and MSR Exploration, Ltd. v. Meridian Oil, Inc., 74

F.3d 910 (9th Cir. 1996). It is not clear to me, however, that

the state law claims are completely preempted in the sense

discussed in Beneficial National Bank v. Anderson, 539 U.S.

1 (2003), and its predecessor cases. 

Unlike the majority, I do not read Beneficial National Bank

to have changed the law regarding whether standing to bring

a federal claim is necessary to find complete preemption.

Instead, I believe that the cases decided in the ERISA context

holding the contrary are still good law. See, e.g., Curtis v.

Nev. Bonding Corp., 53 F.3d 1023, 1027 (9th Cir. 1995)

(holding that “plaintiff’s standing to enforce ERISA is a prerequisite to . . . subject matter jurisdiction”); Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 934 (9th Cir.

1994) (holding that because the plaintiffs are not in one of the

enumerated categories of parties entitled to seek relief under

ERISA’s civil enforcement provisions, their state claims are

not completely preempted by ERISA); see also Hobbs v. Blue

Cross Blue Shield of Ala., 276 F.3d 1236, 1240 (11th Cir.

2001) (“Under the doctrine of complete preemption, a plaintiff must have standing to sue under a relevant ERISA plan

before a state law claim can be recharacterized as arising

under federal law, subject to federal court jurisdiction.”).2

Indeed, the majority’s broad reading of Beneficial National

Bank would to a degree swallow the well-pleaded complaint

rule, by permitting removal to federal court in any circumstance in which federal law provides someone a cause of

2Peralta v. Hispanic Business, Inc., 419 F.3d 1064 (9th Cir. 2005), is

not to the contrary, as it addressed neither Beneficial National Bank nor

the standing rationale articulated in the ERISA complete preemption

cases. 

IN RE: MILES 16201
action and also precludes state law causes of action. Yet, state

courts are for the most part thought competent to deal with

such circumstances, by applying the Supremacy Clause when

a preemption defense is raised to a state law cause of action.

Only where federal law provides a particular class of plaintiffs with a federal cause of action is the case “completely preempted” in the special sense discussed in Avco Corp. v.

Machinists, 390 U.S. 557 (1968), and its progeny. Put another

way, just because a state law cause of action is entirely preempted by a federal statute, providing an iron-clad defense in

state court, does not mean that it is “completely preempted”

in the choice-of-law sense that governs removal jurisdiction.

Odd use of language, perhaps, but one that has remained consistent for many years and was not changed by Beneficial

National Bank. 

In short, there is removal jurisdiction under the exclusive

jurisdiction rationale described above. I see no reason to

expand the troublesome and confusing doctrine of complete

preemption, see Beneficial Nat’l Bank, 539 U.S. at 11-22

(Scalia, J., dissenting), as there is another, simpler ground for

reaching the same result. I therefore would not reach the question of whether there is complete preemption in this case. 

16202 IN RE: MILES