Court Opinion

ID: 2672703
Source: CourtListenerOpinion
Date Created: 2014-05-06 19:23:49.411883+00
Date Added: 2024-06-11T09:17:58.927797
License: Public Domain

Case: 13-13688   Date Filed: 05/06/2014   Page: 1 of 3

                                                     [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 13-13688
                        Non-Argument Calendar
                      ________________________

                       D.C. Docket No. 12-61289

In Re: LYNETTE DAIS MALONE,

                                                                       Debtor.
___________________________________________________

WILMINGTON TRUST, NATIONAL ASSOCIATION,

                                                          Plaintiff - Appellant,

                                  versus

LYNETTE DAIS MALONE,

                                                         Defendant - Appellee.

                      ________________________

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

                              (May 6, 2014)
                  Case: 13-13688       Date Filed: 05/06/2014   Page: 2 of 3

Before TJOFLAT, JORDAN, and FAY, Circuit Judges.

PER CURIAM:

       Wilmington Trust appeals the bankruptcy court’s order in a Chapter 7

bankruptcy proceeding that allowed Lynette Malone to “strip off” Wilmington

Trust’s second-priority lien. After review of the record and Wilmington Trust’s

brief, we affirm. 1

       Ms. Malone has two mortgage liens on her house.                  The first has an

outstanding balance that exceeds the house’s current value, while the second, at

issue in this case and held by Wilmington Trust, is junior to the first lien.

Wilmington Trust’s lien is considered to be wholly “underwater” in that the debt

secured by the first lien exceeds the current value of the house. Accordingly, Ms.

Malone moved to have Wilmington Trust’s junior lien extinguished under § 506(d)

of the Bankruptcy Code. See 11 U.S.C. § 506(d). Notwithstanding certain stated

reservations, the bankruptcy court granted Ms. Malone’s motion, concluding that

binding circuit precedent holds that § 506(d) authorizes a Chapter 7 debtor to “strip

off,” i.e. remove in its entirety, a junior lien where the amount of debt securing the

senior lien exceeds the value of the house. See McNeal v. GMAC Mortgage, LLC

(In re McNeal), 735 F.3d 1263, 1266 (11th Cir. 2012); Folendore v. SBA (In re

Folendore), 862 F.2d 1537, 1539 (11th Cir. 1989). The bankruptcy court granted

       1
           Ms. Malone filed no answer brief in this appeal.
                                                  2
                Case: 13-13688        Date Filed: 05/06/2014       Page: 3 of 3

the parties’ joint motion to certify its order for direct appeal under 28 U.S.C. §

158(d)(2)(A) and Federal Rule of Bankruptcy Procedure 8001(f).

       Wilmington Trust argues that the Supreme Court’s intervening opinion in

Dewsnup v. Timm, 502 U.S. 410 (1992), abrogated our construction of § 506(d) as

set forth in Folendore, and that we therefore should re-visit this issue.                       As

Wilmington Trust also acknowledges, however, we recently rejected that very

argument in McNeal, concluding that Dewsnup was not clearly on point because

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

“strip off” of a wholly unsecured mortgage lien, and thus did not abrogate

Folendore. See McNeal, 735 F.3d at 1265-66.

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

and McNeal, we affirm the bankruptcy court’s decision voiding Wilmington

Trust’s lien on Ms. Malone’s house. 2

       AFFIRMED.

       2
          By separate order, Wilmington Trust’s petition for initial hearing en banc has been
denied. Wilmington Trust remains free, of course, to seek rehearing en banc of this panel’s
decision.
                                                3