Lehighton area lawyer William G. Schwab won his first Supreme Court case on June 17.
His victory marks the first time a lawyer from Pennsylvania's Middle District both appeared and successfully argued in front of the United States' highest judicial authority. Additionally, his case brings about a major alteration to bankruptcy law.
"This just doesn't happen that often," Schwab said. "To think that a case coming out of Carbon County will have a historical impact is amazing."
The case, Schwab v. Reilly, centered on an issue with the Chapter 7 bankruptcy code. Former Luzerne County caterer Nadeja Reilly filed for Chapter 7 in 2005. Per the code, all of Reilly's assets were liquidated, save a set of cooking utensils she claimed as exempt from distribution by creditors.
Under the former rule, a debtor can claim the value of exempt property using a specific dollar amount. Reilly estimated the utensils' value at $10,718, and Schwab, the bankruptcy estate's trustee, did not object the claim within the 30-day grace period.
Upon later appraisal, it was determined that these items were actually worth $17,200. Schwab asked the bankruptcy judge for permission to sell the property for its true value, providing Reilly with the $10,718 and giving the remainder to creditors. Reilly argued, claiming that Schwab no longer had such a right.
Undaunted, Schwab appealed to the U.S. District Court in Scranton. Its decision favored Reilly.
The attorney then turned to the Third Circuit Court. Again, Reilly was deemed correct.
Schwab took his case one step higher. Finally, he made some progress.
After a 6-3 decision, Justice Clarence Thomas announced that Schwab, as trustee, has the right to administer the assets over the amount of their actual value, rather than the value declared by Reilly, the debtor. This decision institutes a major change in bankruptcy law and has garnered Schwab national attention.
"I've already heard from lawyers from California and Alaska, thanking me for my help in changing this system" Schawb said.
The local attorney is also relieved that the case has finally been decided. First appearing in front of the Supreme Court on Nov. 3, 2009, Schwab v. Reilly holds the distinction of having the longest pending decision of the October 2009 term.
"It feels good to be vindicated," Schwab said. "To be told that you were correct by the highest court in our country, after three others said you were wrong, is very uplifting."