Taylor v. Freeland & Kronz

Summary

The Supreme Court held that a bankruptcy trustee who fails to object to a claimed exemption within the 30-day period fixed by Federal Rule of Bankruptcy Procedure 4003(b) cannot later challenge the exemption's validity, even where the debtor had no colorable statutory basis for the claim, because 11 U.S.C. § 522(l) makes property claimed as exempt on the debtor's schedule exempt unless a party in interest timely objects. The Court affirmed the Third Circuit, which had reversed a turnover order requiring the debtor's attorneys to disgorge fees paid out of a $110,000 discrimination-settlement recovery. The Court declined to consider the trustee's alternative argument under 11 U.S.C. § 105(a) because he raised it for the first time in his opening brief on the merits. Justice Stevens dissented, contending that equitable tolling applies to the 30-day period and that a frivolous exemption claim should be treated as tantamount to fraud.