Henry Stursberg v. Morrison Sund PLLC

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 23-1186
___________________________
Henry Stursberg
lllllllllllllllllllllPlaintiff - Appellant
v.
Morrison Sund PLLC
lllllllllllllllllllllDefendant - Appellee
____________
Appeal from United States District Court
for the District of Minnesota
____________
Submitted: October 18, 2023
Filed: August 13, 2024
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Before SMITH, Chief Judge, LOKEN and COLLOTON,* Circuit Judges.
____________
LOKEN, Circuit Judge.
Henry Stursberg, a resident of Philadelphia, owns a financial consulting firm
that manages and coordinates commercial loans and arranges financing for, among
*Judge Smith completed his term as chief judge of the circuit on March 10,
2024. See 28 U.S.C. § 45(a)(3)(A). Judge Colloton became chief judge of the circuit
on March 11, 2024. See 28 U.S.C. § 45(a)(1).

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other clients, mobile home parks around the country, including two parks in Big Lake
and Princeton, Minnesota. In mid-2018, Stursberg commenced a lawsuit in
Minnesota state court alleging misconduct by the co-owner of those two distressed
parks. On March 18, 2019, Stursberg retained Matthew Burton, a member of the
Minnesota law firm Morrison Sund PLLC, to represent the plaintiff. In November
2019, alleging that Morrison Sund had run up legal fees of approximately $300,000
“and accomplished basically nothing,” Stursberg notified Burton that he intended to
change counsel.
Morrison Sund withdrew and sent Stursberg emails advising him of
outstanding legal fees owed. In early December, Burton warned Stursberg that if an
agreement for payment was not reached, “I am going to commence collection steps.”
On January 8, 2020, Morrison Sund filed an involuntary bankruptcy petition in the
United States Bankruptcy Court for the District of Minnesota, naming Stursberg as
the debtor. After three years of contentious litigation by both parties in state and
federal courts in Minnesota and Pennsylvania, Stursberg appeals the district court’s
order dismissing state law tort claims against Morrison Sund as preempted by 11
U.S.C. § 303(i) of the Bankruptcy Code. Reviewing the grant of a motion to dismiss
de novo, we affirm. See R. J. Reynolds Tobacco Co. v. City of Edina, 60 F.4th 1170,
1174 (8th Cir 2023) (standard of review).
I. The Bankruptcy Code Context
While most bankruptcy cases are initiated by the debtor, involuntary cases are
initiated by a creditor. Section 303 governs the administration of involuntary
bankruptcy cases. “[T]he filing of an involuntary petition is an extreme remedy with
serious consequences to the alleged debtor, such as loss of credit standing, inability
to transfer assets and carry on business affairs, and public embarrassment.” In re Reid,
773 F.2d 945, 946 (7th Cir. 1985). In § 303(i), Congress recognized that creditors
may file involuntary petitions for the improper purpose of harassing the debtor, rather
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than protecting all creditors, and provided debtors with specific remedies for that
misconduct:
(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.
Section 303(j) authorizes the bankruptcy court to dismiss an involuntary petition filed
under § 303 with “notice to all creditors.”
In Section 305, entitled “Abstention,” Congress gave bankruptcy courts the
discretion, after notice and hearing, to dismiss or suspend any bankruptcy case at any
time if it determines that “the interests of creditors and the debtor would be better
served by such dismissal or suspension.” 11 U.S.C. § 305(a)(1). Section 305
“authoriz[es] bankruptcy courts to abstain from jurisdiction when so doing better
serves the interests of creditors and the debtor.” In re Kujawa, 270 F.3d 578, 581 (8th
Cir. 2001). An order dismissing or suspending under § 305(a) “is not reviewable by
appeal or otherwise” to the court of appeals or to the Supreme Court. § 305(c).
Section 305 contains no remedial provision. When used in this context -- the filing
of an allegedly bad faith involuntary petition -- a § 305(a)(1) dismissal affords
petitioning creditor(s) an opportunity to mitigate the alleged harm they have caused
the debtor by dismissing the involuntary case.
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II. The Bankruptcy Court Proceedings
On January 15, 2020, one week after Morrison Sund filed the involuntary
petition, the bankruptcy court held a hearing on Stursberg’s request, not opposed by
Morrison Sund, to dismiss the case under 11 U.S.C. § 305(a)(1). Bankruptcy Judge
Kathleen Sanberg expressed “a little surprise[] to have the request under a 305 rather
than 303,” which governs involuntary cases. Counsel for Stursberg explained that,
while Stursberg was seeking attorney’s fees and damages under § 303 for a wrongful
involuntary petition, a dismissal under § 303 requires notice to all creditors and a
hearing, see § 303(j), which would magnify the financial damage to Stursberg,
whereas the court may dismiss under § 305 “after notice and a hearing.”
After extensive argument the bankruptcy court granted the requested § 305
dismissal. Noting prior cases holding that an involuntary petition “is not to be used
as a debt collection practice,” the court stated to counsel for Morrison Sund that this
involuntary petition “was used as pressure, if you will, in order to collect the firm’s
fees. It wasn’t done in the interest of all creditors, and that’s what an involuntary is
to do. . . . It was being used as a hammer . . . . [W]hen I look at this whole case . . .
quite frankly, it smells bad.” The court dismissed the case under § 305(a); granted
Stursberg’s request for an order under § 303(k)(2) prohibiting consumer protection
agencies from reporting information relating to the involuntary petition; and sealed
the case records. In ruling that it lacked Bankruptcy Code authority to grant
Stursberg’s request to expunge the record, the court observed: “in terms of . . . his
business is over or his . . . career is ruined . . . there’s another remedy for that . . . .
either coming back to this court or going to another court.”
On March 26, 2020, Stursberg filed a diversity action in the United States
District Court for the Eastern District of Pennsylvania, accusing Morrison Sund and
Burton of “extreme bad faith in filing a frivolous involuntary bankruptcy petition”
and asserting six state law tort claims -- abuse of process, wrongful use of civil
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proceedings, intentional infliction of emotional distress, intentional interference with
existing and prospective contractual relations, breach of contract, and credit
defamation. Morrison Sund moved to dismiss.
On May 18, Stursberg filed a motion in the Minnesota bankruptcy court to
recover attorney’s fees and costs under 11 U.S.C. § 303(i)(1), “reserving [his] right
to file and pursue claims and remedies under 11 U.S.C. § 303(i)(2) or otherwise.” At
the end of a June 10 hearing, the bankruptcy court denied the motion. First, the court
held that under Bankruptcy Rule 7054, the request for fees and costs was untimely.
Cf. Fed. R. Civ. P. 54(d)(2)(B)(i). Second, noting “a lack of binding Eighth Circuit
authority,” the court applied “the Bankruptcy Code’s plain language and follow[ed]
the underlying intent of Congress” and held “that dismissal under Section 305
precludes [Stursberg’s] recovery of Section 303(i) damages.” Third, expressing
concern that Stursberg “is pursuing double recovery” because the Pennsylvania
complaint cites Stursberg’s fees and costs as part of the damages, the court held that
it “declines to exercise its discretion to award fees and costs under Section 303(i).”
III. The District Court Proceedings
In December 2020, the Eastern District of Pennsylvania dismissed Stursberg’s
state law claims without prejudice, concluding it lacked personal jurisdiction over
four claims and venue was improper for the other two. The court declined to consider
whether Stursberg’s state law tort claims were preempted by the Bankruptcy Code.
On February 23, 2021, Stursberg filed this case in the Eastern District of
Pennsylvania, again asserting state law claims for abuse of process and wrongful use
of civil proceedings. Morrison Sund moved to dismiss the complaint or to transfer
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the case to the District of Minnesota due to improper venue. The district court
granted the motion to transfer under both 28 U.S.C. § 1406 and § 1404(a).1
Back in the District of Minnesota, Morrison Sund renewed its motion to
dismiss the transferred case, relying in part on the bankruptcy court’s ruling that
Stursberg could not pursue damages under § 303(i) because the case was dismissed
under § 305. The district court did not take a position on this issue, noting “there are
cases going the other way.” Stursberg v. Morrison Sund PLLC, 648 F. Supp. 3d
1075, 1089 n.9 (D. Minn. 2023). The court rejected Morrison Sund’s argument that
the bankruptcy court’s judgment dismissing Stursberg’s involuntary petition
precluded this damages action because a § 305 abstention order “is not ‘on the merits’
for purposes of claim preclusion.” Id. at 1085. However, the court granted Morrison
Sund’s motion to dismiss because “Stursberg’s state tort claims are at least conflict
preempted.” Id. at 1087. “The conflict arises from Congress’s evident objective to
create a damages claim arising from an involuntary case’s bad faith filing and place
exclusive responsibility for adjudicating such claims in bankruptcy courts.” Id.
IV. The Interplay Between Section 303(i) and Section 305
The parties’ appellate briefs focus almost entirely on the question of federal
preemption, a complex subject. That focus ignores the complex procedural history
of this litigation, a history driven by Stursberg’s attempt to split his claims for
attorney’s fees and costs, and for tort-based damages proximately caused by the filing
of a “bad faith” involuntary petition, between federal courts in Minnesota and
1As this is a diversity case, whether the case was transferred under § 1406 or
§ 1404 may affect the substantive state law that applies. See Wisland v. Admiral
Beverage Corp., 119 F.3d 733, 736 (8th Cir. 1997) (law of transferee court applies
to § 1406(a) transfer), cert. denied, 522 U.S. 1112 (1998); Ferens v. John Deere Co.,
494 U.S. 516, 531 (1990) (law of transferor court applies to § 1404 transfer). We
need not consider that issue to resolve this appeal.
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Pennsylvania. The rules barring claim splitting, which lie at the heart of res judicata
(claim preclusion), are also a complex subject, but they apply even in cases where
federal preemption is not an issue. See generally Restatement (Second) of Judgments
§§ 19, 24-26 (Am. L. Inst. 1982). Section 303(i) does not expressly preempt state law
tort remedies. In the absence of explicit preempting statutory language, courts apply
a presumption “that the historic police powers of the States [are] not to be superseded
by [federal law].” Altria Grp., Inc. v. Good, 555 U.S. 70, 77 (2008) (quotation
omitted). “It is, to say the least, difficult to believe that Congress would, without
comment, remove all means of judicial recourse for those injured by illegal conduct.”
Medtronic, Inc. v. Lohr, 518 U.S. 470, 487 (1996) (quotation omitted).
In this case, we review the grant of Morrison Sund’s motion to dismiss a
complaint that the Eastern District of Pennsylvania transferred to the District of
Minnesota for proper venue. The complaint raised only state common law tort
claims. The transferring court did not rule on Morrison Sund’s motion to dismiss
those claims on the merits. Federal jurisdiction is based on diversity, so federal
question removal issues that have dominated the preemption analysis in cases such
as In re Miles, 430 F.3d 1083 (9th Cir. 2005), are not at issue. Rather, our task as a
federal appellate court exercising diversity jurisdiction is to determine the merits of
a Rule 12(b)(6) motion the Eastern District of Pennsylvania did not reach.
A federal cause of action can preempt overlapping state law tort claims, for
example, when the federal statute reflects the congressional intent “to replace the
patchwork of existing state regulations with a national standard.” In re Aurora Dairy
Corp. Organic Milk Mktg & Sales Pracs. Litig., 621 F.3d 781, 794 (8th Cir. 2010).
Or when state common law actions would impose substantive requirements in conflict
with those imposed by federal law. E.g., Symens v. SmithKline Beecham Corp., 152
F.3d 1050, 1056 (8th Cir. 1998). There is no indication of any substantive
inconsistency here; the issue is interference with uniform federal court administration
of the Bankruptcy Code.
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The question is whether an involuntary bankruptcy debtor may bring a state
common law action to remedy alleged harm caused by a creditor’s improper
involuntary petition. This is a question of federal law, but the answer does not
necessarily turn on preemption principles. As Justice Scalia explained, “[t]he proper
response to the presentation of a nonexistent claim to a state court is dismissal.”
Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 18 (Scalia, J., dissenting) (emphasis
in original). That is equally true when a nonexistent state law claim is presented to
a federal court exercising diversity jurisdiction. As the concurring judge in Miles
observed, citing Justice Scalia’s opinion, “there is another, simpler ground for
reaching the same result” than preemption. 430 F.3d at 1096 (Berzon, J., concurring).
We agree.
We think it obvious from the structure and purpose of § 303 that Congress
intended that the federal court that dismisses an involuntary case has exclusive
jurisdiction to enforce the debtor remedies provided in § 303, including remedies for
bad faith filings under § 303(i), and for fraudulent filings under § 303(k)(1).2 Indeed,
Bankruptcy Judge Sanberg acted on this principle when she granted Stursberg
§ 303(k)(2) relief in granting his motion to dismiss the involuntary case. We agree
with the Ninth Circuit Bankruptcy Panel that:
the plain meaning of § 303(i) provides that, unless an involuntary
petition has been dismissed with the parties’ consent, and without the
debtor’s waiver of the right to judgment under § 303(i), the bankruptcy
court, based upon the totality of the circumstances, may, in its
discretion, award attorney’s fees and costs under § 303(i)(1) for a
§ 305(a)(1) dismissal of an involuntary petition.
2This analysis does not apply to state law claims by non-debtors because only
debtors may recover damages under § 303(i). See Rosenberg v. DVI Receivables
XVII, LLC, 835 F.3d 414 (3d Cir. 2016).
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In re Macke Int’l Trade Inc., 370 B.R. 236, 248-53 (B.A.P. 9th Cir. 2007). All
involuntary petitions are filed under § 303. The words “under this section” in
§ 303(i) immediately follow the word “petition,” not the word “dismisses.”
Therefore, applying the canon of statutory construction known as the doctrine of the
last antecedent, the court in Macke concluded that § 303(i) applies to all involuntary
case dismissals, including “abstention” dismissals under § 305(a)(1). We agree.
The same principle of statutory construction applies to the award of damages
under § 303(i)(2), although damage awards raise additional issues, as this case
illustrates, because state tort law principles and remedies may well be relevant.
Federal courts in many diversity cases look to state law in applying federal statutes.
We see no reason why state tort law is irrelevant in determining whether a petitioning
creditor’s harassing involuntary petition was a “bad faith” filing.3 Courts taking the
contrary view when the involuntary case has been dismissed under § 305(a)(1) have
relied on a single statement in the legislative history of § 303(i) -- “[d]ismissal in the
best interests of creditors under section 305(a)(1) would not give rise to a damages
claim.” Koffman v. Osteoimplant Tech., Inc., 182 B.R. 115, 127 (D. Md. 1995); see
Macke, 370 B.R. at 250 n.12. We seldom rely on legislative history and never when
it is contrary to the plain meaning of the statute. Here, as § 305(a)(1) is silent on the
3An involuntary case is a “core” bankruptcy proceeding. It is accepted that the
bankruptcy court has jurisdiction to order the petitioning creditor to pay the
involuntary debtor’s costs and attorney’s fees under § 303(i)(1). It may not always
be clear that the bankruptcy court, a non-Article III court, has the power “to
adjudicate, render final judgment, and issue binding orders” in a § 303(i)(2) damage
action by the debtor based on traditional state law tort theories. See Stern v.
Marshall, 564 U.S. 462, 494 (2011). We need not address this potential issue but
note that, if it arises, federal law gives the district court practical authority to resolve
any bankruptcy court authority uncertainty by de novo review and final judgment of
the bankruptcy court’s § 303(i)(2) order, as it does with matters “related to” the
bankruptcy proceeding, see 28 U.S.C. § 157(c)(1), or by withdrawing part of the
referred case. See id. at 502, discussing 28 U.S.C. § 157(d).
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question of remedies and its abstention order is not subject to appellate review, we
think it likely that this ambiguous legislative history referred to damages for the
abstention order, not that damages for a fraudulent or bad faith involuntary petition
are never available under § 303(i) when the involuntary case was dismissed by a
§ 305(a)(1) abstention order.
V. Discussion
If the federal court in Minnesota had exclusive jurisdiction to enforce the
remedies for an alleged bad faith involuntary petition, the answer to this appeal is
simple -- the district court’s dismissal of Stursberg’s state common law action
transferred by the Eastern District of Pennsylvania must be affirmed because that
court lacked jurisdiction to afford this relief. As Justice Scalia put it, “The proper
response to the presentation of a nonexistent claim to a state court,” here, a federal
court exercising diversity jurisdiction, “is dismissal.” Beneficial Nat’l Bank, 539
U.S. at 18.
Stursberg argues that if the limited § 303(i) remedy excludes state common law
tort remedies for a bad faith involuntary petition, then an involuntary debtor in his
situation faces a Hobson’s choice that leaves him with a right without a remedy --
filing a motion to dismiss under § 303(j) requires notice to all creditors and a hearing,
greatly increasing the financial and reputational harm caused by the involuntary
petition; filing a motion to dismiss under § 305(a)(1) greatly reduces that risk but
leaves the involuntary debtor with no claim for damages under § 303(i)(2).
This argument turns on an assumption -- that the bankruptcy court correctly
ruled at the end of the June 10, 2020 motion hearing, based on “the plain language
and the legislative history” of § 303(i), “that a dismissal in the best interests of
creditors under 305(a)(1) would not give rise to a damages claim” under § 303(i).
The court accurately stated “there’s a lack of binding Eighth Circuit authority” on this
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issue. But it is not an issue with which we are totally unfamiliar. In In re Kujawa, we
affirmed but reduced a bankruptcy court’s award of attorney’s fees and a punitive
monetary sanction to an involuntary debtor against an attorney who “behaved
improperly in assisting in the drafting of the involuntary petition” that was
subsequently dismissed pursuant to 11 U.S.C. § 305(a). 270 F.3d at 581. Though not
controlling authority, Kujawa supports our conclusion in Part IV that a dismissal in
the best interests of creditors under § 305(a)(1) does not preclude an involuntary
debtor’s subsequent damages claim under § 303(i)(2).
If § 303(i) provides an exclusive remedy in federal court, then a debtor’s state
common law claims are precluded and/or preempted. Complete remedial preemption
permits the removal of state court actions based on federal question jurisdiction in
very limited circumstances, primarily the LMRA, ERISA, and the National Bank Act.
See Beneficial Nat’l Bank, 539 U.S. at 8-11. But this is an action Stursberg filed in
federal court based on diversity jurisdiction seeking damages § 303(i)(2) authorizes
for a creditor’s filing of a “bad faith” involuntary petition. Removal is not at issue.
Federal courts will look to state tort law principles in determining an issue such
as bad faith. Determination of the proper remedy for a bad faith filing is a fact-
intensive question of federal law, and some state law remedies might be beyond what
a bankruptcy court should award. And because Congress and the federal courts
“decide what incentives and penalties are appropriate for use in connection with the
bankruptcy process and when those incentives or penalties shall be utilized,” we
disagree with the argument that the Constitution’s Bankruptcy Clause is undermined
by allowing a debtor victim to seek remedies that mirror state tort law remedies in a
§ 303(i) damages motion. See Gonzales v. Parks, 830 F.2d 1033, 1036 (9th Cir.
1987). Tort liability for bad faith filings, in federal diversity as well as in state court
litigation, is traditionally the province of state law. Cf. U.S. Express Lines Ltd. v.
Higgins, 281 F.3d 383 (3d Cir. 2002) (the Federal Rules of Civil Procedure do not
preempt state law tort claims based on misconduct in federal litigation). To rule that
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a bankruptcy court is conflict-preempted from awarding damages in a § 303(i)(2)
action after a § 305 dismissal because § 305 confers no remedial authority would
likely “preempt” many § 303(i)(2) damage claims that a federal court looking to state
law should allow.
In sum, § 303(i)(2) damages are allowed when an involuntary petition is
dismissed under § 305(a)(1). But § 303(i)(2) conflict preempts specific state law tort
claims. Instead, a debtor victim can use general state law principles to show that one
or more creditors acted in bad faith when they filed the involuntary petition.
This conclusion does Stursberg no good in this case for a simple reason basic
to the law of claim and issue preclusion. The district court rejected Morrison Sund’s
preclusion argument based on Bankruptcy Judge Sanberg’s initial order dismissing
the involuntary case under § 305. But the proper focus was Judge Sanberg’s
subsequent order denying Stursberg’s motion for attorney’s fees and costs under
§ 303(i)(1) because “dismissal under Section 305 precludes recovery of Section
303(i) damages.” That was a final order of the bankruptcy court Stursberg did not
appeal. It therefore governs this subsequent proceeding between the same parties
arising out of the same operative facts. Had Stursberg successfully appealed Judge
Sanberg’s order, he could then have brought § 303(i)(2) tort claims in the bankruptcy
forum. See 28 U.S.C. §§ 1334(b), 157(b)(1) and (c)(1); Stern, 564 U.S. at 473-75,
499. The state law claims would have been preempted by § 303 but not the claim for
damages in federal court. It is fair to infer that Stursberg did not appeal because that
likely would have frustrated his claim-splitting strategy to seek fees in Minnesota and
tort damages in Pennsylvania. In addition, he would have had to overcome Judge
Sanberg’s ruling that his § 303(i)(1) motion was untimely. Whatever the reason, his
present assertion that the bankruptcy court’s rulings left him “with no remedy for
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damages under the Bankruptcy Code” for Morrison Sund’s alleged bad faith
involuntary petition is without merit.
The judgment of the district court is affirmed.
COLLOTON, Circuit Judge, concurring in the judgment.
The question presented in this appeal is whether appellant Stursberg’s state law
tort claims are preempted by the Bankruptcy Code. The district court ruled that the
claims are preempted and dismissed Stursberg’s complaint. I would affirm the
judgment on the ground that the preemption ruling was correct.
The Bankruptcy Code establishes a comprehensive remedial scheme to
compensate a debtor who is harmed by the filing of an involuntary bankruptcy
petition that is dismissed other than on consent of the parties. 11 U.S.C. § 303(i).
The court may award costs and attorney’s fees in favor of the debtor; when an
involuntary petition is filed in bad faith, the court may award damages proximately
caused by the filing and punitive damages. Id. “Congress rejected other penalties,
including the kind of substantial damage awards that might be available in state court
tort actions.” Miles v. Okun (In re Miles), 430 F.3d 1083, 1090 (9th Cir. 2005); see
Gonzales v. Parks, 830 F.2d 1033, 1036 (9th Cir. 1987). The tort claims brought by
Stursberg are preempted because “state law cannot add to the remedial scheme
Congress created under the Bankruptcy Code.” Miles, 430 F.3d at 1095 (Berzon, J.,
concurring in part and concurring in the result). This is a matter of ordinary
preemption. The separate doctrine of “complete preemption” need not be considered
in this case.
Stursberg’s principal argument against preemption is that the inability to pursue
state tort claims would force a putative debtor to make a “Hobson’s choice.” He
maintains that in order to seek damages under § 303(i) on dismissal of a petition, he
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must notify all of his creditors and endure a public hearing under 11 U.S.C. § 303(j)
that would serve only to increase his damages. He posits that his other choice is to
seek “dismissal through abstention” under 11 U.S.C. § 305(a)(1), but forego any right
to damages for wrongful filing of an involuntary petition.
The Bankruptcy Code does not force such a choice because a debtor like
Stursberg may seek damages under § 303(i) after a dismissal under § 305(a)(1). A
dismissal under § 305(a)(1) requires a judicial determination that “the interests of
creditors and the debtor would be better served by such dismissal.” The court thus
dismisses the petition “other than on consent of all petitioners and the debtor,” 11
U.S.C. § 303(i); cf. id. § 303(j)(2), and may proceed to award costs, fees, and
damages as appropriate. Stursberg’s argument proceeds on a mistaken premise that
§ 303(i) applies only when a court dismisses a petition under § 303. See Wechsler v.
Macke Int’l Trade, Inc., (In re Macke Int’l Trade, Inc.), 370 B.R. 236, 251 (B.A.P.
9th Cir. 2007).
I respectfully disagree with the majority’s disposition of the appeal first as a
matter of judicial process. The majority concludes that Stursberg’s action is barred
by the law of claim preclusion, because the bankruptcy court denied his post-
dismissal motion for fees and costs under § 303(i), and Stursberg did not appeal the
denial. Morrison Sund did not raise this theory of claim preclusion in the district
court or on appeal. Stursberg has had no opportunity to address the issue. Morrison
Sund raised a different argument for claim preclusion in the district court that was
properly rejected by the court and then abandoned on appeal by Morrison Sund. (The
district court ruled that the bankruptcy court’s judgment dismissing the involuntary
petition did not preclude this action because it was not a judgment on the merits.)
The majority’s theory of claim preclusion is also a doubtful application of the
doctrine. Claim preclusion prevents a party from bringing claims that could have
litigated between the same parties in a previous action. Petrie ex rel. PPW Royalty
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Tr. v. Barton, 841 F.3d 746, 754 (8th Cir. 2016). When Stursberg filed his motion
for damages under § 303(i), however, the bankruptcy court already had dismissed the
involuntary bankruptcy petition. Whether or not the bankruptcy court should have
entertained a motion for an award of damages under federal law based on § 303(i)(2),
no party has suggested that Stursberg could have brought state tort claims under
§ 303(i) in a dismissed bankruptcy case.
For these reasons, I would affirm the district court’s conclusion that Stursberg’s
state tort claims are preempted by federal law. I therefore concur in the judgment.
______________________________
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