05 March 2014

Law in Plain English: Law v. Siegel

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogLaw v. Siegel

Argument: Jan 13 2014 (Aud.)

Did you know? The plaintiff, Stephen Law, filed a pro se (by himself), in forma pauperis petition to the Supreme Court. Based on recent statistics, such a petition has less than two tenths of one percent chance of being accepted.

Background: Law filed for Chapter 7 bankruptcy. He indicated two liens on his house and a homestead exemption of $75,000. While the homestead exemption would ordinarily be protected in bankruptcy, Siegel (the bankruptcy trustee) sought to compensate the estate for the monetary costs imposed by Law's misconduct by imposing a surcharge on the homestead exemption (effectively eliminating it). The Bankruptcy Court allowed Siegel's surcharge motion, and both the Bankruptcy Appellate Panel and the Ninth Circuit affirmed.

Issue: The question before the Court is whether the Ninth Circuit erred in allowing the bankruptcy trustee to surcharge the debtor’s constitutionally protected homestead property.

Holding: In a unanimous decision, the Supreme Court ruled that the Bankruptcy Court exceeded the limits of its authority when it ordered that the $75,000 protected by Law’s homestead exemption be made available to pay Siegel’s attorney’s fees. As a result, Law's homestead exemption was protected even despite his egregious misconduct.
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