Court Opinion

ID: 3049071
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:25:46.172739+00
Date Added: 2024-06-11T07:38:12.263621
License: Public Domain

Case: 14-11353   Date Filed: 08/21/2014   Page: 1 of 3

                                                         [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 14-11353
                        Non-Argument Calendar
                      ________________________

        D.C. Docket Nos. 1:14-cv-00547-CAP; 13-bkc-72055-MHM

In Re: ROBBIE THOMAS LEE,
       CHRISTINA REDIC LEE,

                                                                       Debtors.

_______________________________________________________

BANK OF AMERICA, N.A.,

                                                            Plaintiff-Appellant,

                                  versus

ROBBIE THOMAS LEE,
CHRISTINA REDIC LEE,

                                                        Defendants-Appellees.
                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Georgia
                     ________________________

                            (August 21, 2014)
              Case: 14-11353     Date Filed: 08/21/2014   Page: 2 of 3

Before TJOFLAT, JORDAN and ROSENBAUM, Circuit Judges.

PER CURIAM:

      Bank of America, N.A., appeals from the district court’s affirmance of an

order from the bankruptcy court voiding Bank of America’s second-priority

mortgage lien on Robbie Lee and Christina Lee’s residential property in a

Chapter 7 bankruptcy proceeding.        The Lees’ property was subject to two

mortgage liens at the time they filed for bankruptcy. The outstanding debt on the

first-priority mortgage exceeded the fair market value of the property. Bank of

America held a second-priority mortgage, which had a value of around $23,000.

Because the debt on the first-priority mortgage exceeded the value of the property,

the Lees moved to “strip off,” or void in its entirety, the unsecured junior lien held

by Bank of America.

      The bankruptcy court granted the Lees’ motion, concluding that binding

circuit precedent authorized the Lees to avoid Bank of America’s junior mortgage

lien under 11 U.S.C. § 506(a) and (d). See McNeal v. GMAC Mortg., LLC (In re

McNeal), 735 F.3d 1263, 1265-66 (11th Cir. 2012); Folendore v. U.S. Small Bus.

Admin. (In re Folendore), 862 F.2d 1537, 1538-39 (11th Cir. 1989). Bank of

America appealed to the district court but moved for summary affirmance,

acknowledging that McNeal and Folendore were controlling. The district court

affirmed, and Bank of America now appeals to this Court.

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              Case: 14-11353     Date Filed: 08/21/2014   Page: 3 of 3

      Bank of America maintains that the Supreme Court’s opinion in Dewsnup v.

Timm, 502 U.S. 410, 112 S. Ct. 773 (1992), makes clear that Folendore was

wrongly decided and should be overturned. Dewsnup held that a Chapter 7 debtor

could not “strip down,” or partially void, a creditor’s lien on real property where

the value of the property is less than what is due the creditor. 502 U.S. at 417, 112
S. Ct. 773. According to Bank of America, after Dewsnup, the Eleventh Circuit

stands alone in holding that underwater junior liens may be “stripped off.”

      However, in McNeal, we reaffirmed Folendore despite the holding in

Dewsnup. McNeal, 735 F.3d at 1265-66. Accordingly, it remains the law of this

Circuit that a wholly unsecured junior lien—such as the one held here by Bank of

America—is voidable under § 506(d). Id. Bank of America concedes that this

panel is bound by McNeal and Folendore to affirm the bankruptcy court’s order

but reserves the right to seek rehearing of the issue by the Court sitting en banc.

We therefore affirm.

      AFFIRMED.

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