When Law filed for Chapter 7 bankruptcy in 2004, his sole asset was a home in Hacienda Heights, California that was said to be worth $363,000.

The United States Bankruptcy Court for the Central District of California, in accordance with existing jurisprudence within the Ninth Circuit,[b] ordered that Law's homestead must be surcharged in its entirety.

§ 522(k) expressly states that a homestead exemption is "not liable for payment of any administrative expense," the court exceeded the limits of its authority under §105(a) and its inherent powers.

[8] The decision is described as "brisk and workmanlike," and "[t]he absence of qualifications or quibbles in its description of the relevant principles make it just the kind of opinion that is likely to be cited frequently in future briefs to the Court.

Although several of the lower courts had previously ruled in favour of such a remedy,[c] it appears that Law strongly supports the conclusion that equitable disallowance does not exist under the Code.