Pauletto v. Reliance Ins. Co

In Pauletto v. Reliance Ins. Co. (1998) 64 Cal.App.4th 597, the defendant insurers filed proceedings in the bankruptcy court to contest the dischargeability of a debt owed to the insurers by the bankruptcy debtor on the ground that money had been obtained from them fraudulently. After the bankruptcy court had ruled in the debtor's favor and rejected the insurers' objections to dischargeability, the debtor filed an action for malicious prosecution in state court. The trial court sustained the defendant insurers' general demurrer without leave to amend. The court concluded that the debtor's malicious prosecution claim was implicitly preempted by federal bankruptcy law under principles of both field and conflict preemption.