Court Opinion

ID: 3048927
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:25:12.639574+00
Date Added: 2024-06-11T15:44:53.013479
License: Public Domain

Case: 14-10518    Date Filed: 09/03/2014   Page: 1 of 4

                                                          [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 14-10518
                         Non-Argument Calendar
                       ________________________

                     D.C. Docket No. 6:13-cv-01933-JA,
                       Bkcy No. 6:13-bk-07503-KSJ

In re ALEXIS LOPEZ

                                                                         Debtor.

________________________________________________

BANK OF AMERICA,

                                                             Plaintiff-Appellant,

                                   versus

ALEXIS LOPEZ,

                                                           Defendant-Appellee.

                       ________________________

                Appeal from the United States District Court
                    for the Middle District of Florida
                      ________________________

                            (September 3, 2014)
                  Case: 14-10518       Date Filed: 09/03/2014        Page: 2 of 4

Before WILSON, ROSENBAUM, and FAY, Circuit Judges.

PER CURIAM:

         Bank of America appeals the bankruptcy judge’s order in a Chapter 7

bankruptcy proceeding that allowed Alexis Lopez to “strip off” Bank of America’s

second-priority lien. We affirm.

         Lopez has two mortgage liens on his house. The first has an outstanding

balance that exceeds the current value of the house. The second mortgage lien at

issue in this case is held by Bank of America and is junior to the first lien. Bank of

America’s lien is considered to be wholly “underwater,” because the debt secured

by the first lien exceeds the current value of the house. ROA at 67.

         Lopez moved to have Bank of America’s junior lien extinguished under §

506(d) of the Bankruptcy Code. See 11 U.S.C. § 506(d).1 The bankruptcy judge

granted Lopez’s motion and concluded binding circuit precedent holds § 506(d)

authorizes a Chapter 7 debtor to “strip off” (remove in its entirety) a junior lien,

where the amount of debt securing the senior lien exceeds the value of the house.

McNeal v. GMAC Mortgage, LLC (In re McNeal), 735 F.3d 1263, 1264-66 (11th

1
    Section 506(d) provides:

         To the extent that a lien secures a claim against the debtor that is not an allowed
         secured claim, such lien is void, unless—(1) such claim was disallowed only
         under section 502(b)(5) or 502(e) of this title; or (2) such claim is not an allowed
         secured claim due only to the failure of any entity to file a proof of such claim
         under section 501 of this title.

11 U.S.C. § 506(d).
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                Case: 14-10518        Date Filed: 09/03/2014       Page: 3 of 4

Cir. 2012) (per curiam) (holding a wholly unsecured junior lien may be stripped

off or voided under 11 U.S.C. § 502(d)); Folendore v. SBA (In re Folendore), 862
F.2d 1537, 1539 (11th Cir. 1989) (interpreting 11 U.S.C. § 506(a) and (d) and

concluding that an allowed claim that was wholly unsecured was voidable under

the plain language of 11 U.S.C. § 506(d)).

       Bank of America appealed to the district court. It subsequently moved for

summary affirmance in view of our binding precedent and noted a challenge to

McNeal’s reasoning would more appropriately be heard by this court or the

Supreme Court. The district judge granted the motion. Bank of America now

seeks the appellate review that its motion for summary affirmance was intended to

expedite.

       Bank of America argues the decision of the Supreme Court in Dewsnup v.

Timm, 502 U.S. 410, 112 S. Ct. 773 (1992), abrogated our construction of § 506(d)

in Folendore. As Bank of America acknowledges, however, we rejected that

argument in McNeal and concluded Dewsnup was not clearly on point, because it

disallowed only a “strip down” of a partially unsecured mortgage lien, rather than a

“strip off” of a wholly unsecured mortgage lien.2 McNeal, 735 F.3d at 1265-66.

2
  A “strip down” of an unsecured lien reduces the lien to the value of the collateral to which it
attaches, while a “strip off” removes a wholly unsecured lien in its entirety. McNeal, 735 F.3d at
1264 n.1.
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              Case: 14-10518     Date Filed: 09/03/2014    Page: 4 of 4

      Because we are bound to follow our prior published decisions in Folendore

and McNeal, we affirm the bankruptcy judge’s decision voiding Bank of

America’s lien on Lopez’s house. See World Holdings, LLC v. Fed. Republic of

Germany, 701 F.3d 641, 650 (11th Cir. 2012) (“[T]he holding of the first panel to

address an issue is the law of this Circuit, thereby binding all subsequent panels

unless and until the first panel’s holding is overruled by the Court sitting en banc

or by the Supreme Court.”) (citation and internal quotation marks omitted)).

      AFFIRMED.

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