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 ____________ 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). 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

-2- 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) an