Law prevails

A case called Law v. Siegel — handed down today by the Supreme Court — is indeed about the law catching up to Mr. Siegel, though it turns out that Siegel seems to be a perfectly fine fellow. It’s also a small counter-illustration to the cynical assumptions about the Justices just voting their ideologies.

Stephen Law filed for personal bankruptcy. His only substantial asset was his house, which was apparently worth about $360,000, though $75,000 of that was exempt from creditors under the so-called “homestead exemption.” Law claimed that the rest of the house wasn’t worth anything to creditors, either, because it was already subject to two mortgages that added up to more than $300,000 — more than the nonexempt value of the house.

But apparently Law was perpetrating a fraud: one of the supposed mortgages was fake. Alfred Siegel was the court-appointed trustee, and he went after Law and uncovered the scam, in the process incurring a lot of legal fees. As a result, he asked the court “to ‘surcharge’ the en­tirety of Law’s $75,000 homestead exemption, making those funds available to defray Siegel’s attorney’s fees.” And a Ninth Circuit panel, consisting of three liberal judges appointed by Democrats (Judges Pregerson, Thomas, and Paez), agreed with Siegel.

We thus have a small-time bankrupt cheater, with nothing positive about him except his name, up against a zealous lawyer who caught the bad guy. We have a Supreme Court composed of lawyers, lawyers who are much more of Siegel’s economic class than Law’s. And we have a Court with a conservative majority; conservatives are generally seen as more sympathetic to creditors than to debtors.

So the opinion, coming out from leading conservative Justice Antonin Scalia … holds unanimously for the cheating debtor. Here’s one of the Court’s concluding paragraphs:

We acknowledge that our ruling forces Siegel to shoul­der a heavy financial burden resulting from Law’s egre­gious misconduct, and that it may produce inequitable results for trustees and creditors in other cases. We have recognized, however, that in crafting the provisions of [the relevant section of the Bankruptcy Code], “Congress balanced the difficult choices that exemp­tion limits impose on debtors with the economic harm that exemptions visit on creditors.” The same can be said of the limits im­posed on recovery of administrative expenses by trustees. For the reasons we have explained, it is not for courts to alter the balance struck by the statute.

Lawless bankrupt Law wins; honest establishment lawyer Siegel loses. The cliche of the Supreme Court reversing the Ninth Circuit is reinforced — but only because the conservative-majority Supreme Court issued what would be called (on an ideological view of things) a “liberal” decision reversing the Ninth Circuit’s “conservative” decision (coming from an all-liberal panel). The law triumphs, though query whether abstract justice, setting aside rule-of-law values, would have yielded the same result.

Of course, I’m not calling for naivete to replace cynicism. Obviously, Justices often are influenced by their “ideologies” — sometimes the law leaves lots of room for judgment calls, and “ideology” is what we call one way that people make judgment calls about certain matters. Indeed, cases that come before the U.S. Supreme Court are more likely to be the sorts of close cases that leave such room for judgment calls. (The Court tends to hear cases on which there is disagreement among lower courts, which generally means that there are good arguments on both sides of the issue.) And beyond that, Justices are people and people can be biased, whether consciously or subconsciously.

But sometimes, Justices just follow the law, never mind what would likely be their prejudices for or against a particular litigant or (more likely) legal position. This seems to me to be a good example of such a case.

Eugene Volokh teaches free speech law, religious freedom law, church-state relations law, a First Amendment Amicus Brief Clinic, and tort law, at UCLA School of Law, where he has also often taught copyright law, criminal law, and a seminar on firearms regulation policy.
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