Idell v. Goodman

In Idell v. Goodman (1990) 224 Cal. App. 3d 262, the plaintiff's creditors brought an unsuccessful adversary proceeding in bankruptcy court under 11 United States Code section 727(a), alleging the plaintiff's debts should not be discharged. The plaintiff then sued the defendants in state court for malicious prosecution of that adversary proceeding. ( Idell, supra, 224 Cal. App. 3d at pp. 265-266.) In holding no state court action could be maintained, the court in Idell stated: "The existence of federal sanctions for the filing of frivolous and malicious bankruptcy pleadings must be read as an implicit rejection of state court remedies. The mere possibility of being sued in tort in state court, with the potential for substantial damage awards, could deter persons from exercising their rights in bankruptcy. Thus, it is for Congress and the federal courts, not state courts, to decide what incentives and penalties shall be utilized in the bankruptcy process." ( Id. at p. 271.) The Idell court also emphasized the admonition from the Gonzales v. Parks (9th Cir.1987) 830 F.2d 1033 court. "The existence of federal sanctions for the filing of frivolous and malicious bankruptcy pleadings must be read as an implicit rejection of state court remedies. The mere possibility of being sued in tort in state court, with the potential for substantial damage awards, could deter persons from exercising their rights in bankruptcy. Thus, it is for Congress and the federal courts, not state courts, to decide what incentives and penalties shall be utilized in the bankruptcy process." ( Id. at p. 271.)