Bankruptcy Experts Discuss Supreme Court's Ruling in Law v. Siegel

Tuesday, March 11, 2014

The Supreme Court on March 4 issued a unanimous ruling in the case of Law v. Siegel that a home remains exempt property even if the individual's deceptive conduct results in hundreds of thousands of dollars of litigation.

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Lynne Riley is an attorney at Casner Edwards in Boston, where she represents debtors, creditors, creditors' committees, trustees and plan administrators in all types of business and consumer bankruptcy proceedings. She has also served as a chapter 7 bankruptcy trustee for the District of Massachusetts for 18 years. Riley is a fellow of the American College of Bankruptcy. As a member of the executive board of the National Association of Bankruptcy Trustees, she chairs its amicus committee and serves as the NABT liaison to the National Conference of Bankruptcy Judges. Riley was the counsel of record for the amicus brief filed on behalf of the National Association of Bankruptcy Trustees in Law v. Siegel.

Danielle Spinelli is a partner in the Appellate and Supreme Court Litigation group of WilmerHale in Washington, D.C. She has represented parties and amici in numerous cases in the Supreme Court and courts of appeals, and has raised complex and novel bankruptcy issues in both the business and consumer arenas. Spinelli was the counsel of record for the amicus brief filed on behalf of the National Association of Consumer Bankruptcy Attorneys in Law v. Siegel.


ABI Spring 2014 Resident Scholar Prof. Charles Tabb, the Mildred Van Voorhis Jones Chair in Law at the University of Illinois


The debtor in the case, Law, made up fictitious mortgagees to make it look like he had no equity in his home so that the trustee, Siegel, would not object to his $75,000 homestead exemption claim. After years of litigation and half a million dollars in attorneys’ fees, the trustee was able to prove that Law's claim was wholly fabricated. Outraged by the conduct, the bankruptcy court held (and upheld by the BAP and Ninth Circuit) that the trustee could surcharge the homestead exemption with the costs of avoiding the fraudulent lien. However, the Supreme Court unanimously reversed. Writing for the Court, Justice Scalia held that “whatever other sanctions a bankruptcy court may impose on a dishonest debtor, it may not contravene express provisions of the Bankruptcy Code by ordering that the debtor's exempt property be used to pay debts and expenses for which that property is not liable under the Code.” The ABI media teleconference presents experts who filed amicus briefs in the case discussing the effect of the Supreme Court’s ruling. To contact any of the speakers on the teleconference, please contact ABI Public Affairs Manager John Hartgen at [email protected] or 703-894-5935.