Law v. Siegel

Whether a Bankruptcy Court should allow a surcharge to extend to a debtor’s protected homestead property.

Petitioner purchased a residential property and filed a Homestead Exemption in the county in which the property was located. Petitioner later filed for bankruptcy. A Bankruptcy Appellate Panel (BAP) granted an order surcharging Petitioner’s homestead exemption. Petitioner appealed the BAP’s decision. The Ninth Circuit Court of Appeals affirmed the BAP’s decision, finding that the debtor had engaged in misconduct which made the surcharge appropriate.

Petitioner contends that the homestead exemption claim filed by the debtor went unchallenged and should be recognized as valid, that the decision to surcharge the exemption was improper because there was no misconduct by the debtor, and that the Ninth Circuit Court of Appeals reasoning for affirming the surcharge violated Supreme Court precedent. The Supreme Court granted certiorari to determine whether a Bankruptcy Court should allow a surcharge to extend to a debtor’s protected homestead property.