Opinion
No. 13-13688 D.C. Docket No. 12-61289
05-06-2014
In Re: LYNETTE DAIS MALONE, Debtor. WILMINGTON TRUST, NATIONAL ASSOCIATION, Plaintiff - Appellant, v. LYNETTE DAIS MALONE, Defendant - Appellee.
[DO NOT PUBLISH]
Non-Argument Calendar
Appeal from the United States Bankruptcy Court
for the Northern District of Georgia
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.
Ms. Malone filed no answer brief in this appeal.
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 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.
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.
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AFFIRMED.