Opinion ID: 2834679
Heading Depth: 2
Heading Rank: 3

Heading: The Required Uniformity of Bankruptcy Laws Mitigates Against Development of

Text: State Common Law Claims for Misconduct in Bankruptcy Proceedings . The Constitution grants Congress the authority to establish “uniform Laws” on the subject of bankruptcies. U.S. Const . art. I, § 8. Utilizing this power, Congress created comprehensive regulations on the subject of bankruptcy and vested original and exclusive jurisdiction over bankruptcy petitions in the federal district courts. 28 U.S.C. § 1334(a). Allowing state court actions for abuse of the bankruptcy process conflicts with this goal of uniformity. “[T]he unique, historical, and even constitutional need for uniformity in the administration of the bankruptcy laws is another indication that Congress wished to leave the regulation of parties before the bankruptcy court in the hands of the federal courts alone.” See MSR Exploration , 74 F.3d at 915. There are several reasons to preclude these types of state common law claims to ensure the uniformity of bankruptcy law. First, Congress’s authorization of certain penalties for frivolous filings in its pervasive promulgation of bankruptcy laws “should be read as an implicit rejection of other penalties, including the kind of substantial damage awards that might be available in state court tort suits.” Gonzales , 830 F.2d at 1036. Second, the ability to sue parties in bankruptcy in civil proceedings under state law that is inconsistent with the Bankruptcy Code would threaten the uniformity of federal bankruptcy law by potentially affecting parties’ rights before the bankruptcy court. See Gonzales , 830 F.2d at 1035 (discussing a claim against debtor for maliciously filing a voluntary petition). Third, the threat of being sued in tort in state court could deter persons from exercising their rights in bankruptcy, for instance by making them reluctant to file an adversary proceeding. See id. at 1036; MSR Exploration , 74 F.3d at 916. “While it is true that bankruptcy law makes reference to state law at many points, the adjustment of rights and duties within the bankruptcy process itself is uniquely and exclusively federal.” MSR Exploration , 74 F.3d at 916 . Moreover, It is very unlikely that Congress intended to permit the superimposition of state remedies on the many activities that might be undertaken in the management of the bankruptcy process . . . [T]he highly complex laws needed to constitute the bankruptcy courts and regulate the rights of debtors and creditors also underscore the need to jealously guard the bankruptcy process from even slight incursions and disruptions brought about by state malicious prosecution actions. Id. at 914. Even what may be slight incursions could very well collectively and over time, with fifty different jurisdictions considering them, even in a well-intentioned fashion, undermine the uniformity and objectives of the federal bankruptcy system. Fuqua argues that Congress intended state law to supplement this area of bankruptcy. I disagree and conclude that, based on the remedial scheme established and the need for uniformity, Congress intended to preempt state common law claims based on malicious proceedings in a bankruptcy case to avoid such claims presenting “an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” and to avoid undermining the constitutional mandate of “uniform Laws on the subject of Bankruptcies throughout the United States.” Hines , 312 U.S. at 67. See U.S. Const. art. I, § 8.