By: WISCONSIN LAW JOURNAL STAFF//March 4, 2014//
U.S. Supreme Court
Civil
Bankruptcy — attorney fees
The Bankruptcy Court exceeded the limits of its authority when it ordered that the $75,000 protected by a debtor’s homestead exemption be made available to pay the trustee’s attorney’s fees.
A bankruptcy court may not exercise its authority to “carry out” the provisions of the Code, 11 U. S. C. §105(a), or its “inherent power . . . to sanction ‘abusive litigation practices,’ ” Marrama v. Citizens Bank of Mass., 549 U. S. 365, 375–376, by taking action prohibited elsewhere in the Code. Here, the Bankruptcy Court’s “surcharge” contravened §522, which (by reference to California law) entitled Law to exempt $75,000 of equity in his home from the bankruptcy estate,§522(b)(3)(A), and which made that $75,000 “not liable for payment of any administrative expense,” §522(k), including attorney’s fees, see §503(b)(2). The surcharge thus exceeded the limits of both the court’s authority under §105(a) and its inherent powers.
435 Fed. Appx. 697, reversed and remanded.
Scalia, J.