Summary
ruling that Dewsnup bars a debtor from stripping down an attachment lien where the first mortgage on the real estate far exceeded the property's value
Summary of this case from In re PoirierOpinion
Bankruptcy No. 93-20256(7).
August 10, 1993.
Daniel R. Felkel, Richardson Troubh, Portland, ME, for debtors.
Robert F. MacDonald, Bernstein, Shur, Sawyer Nelson, Portland, ME, for First N.H. Bank.
MEMORANDUM OF DECISION
On March 30, 1993, Joseph and Antoinette Madjerac (the "Debtors") filed a petition under 11 U.S.C. Chapter 7. On the date of filing, the Debtors owned three parcels of real estate, each encumbered by the cross-collateralized first mortgage of First New Hampshire Mortgage Corporation ("First N.H.") in the amount of $2,100,000.00. The properties were also encumbered by the attachment lien of Fleet Bank of Maine ("Fleet") in the amount of $72,802.38 as against Joseph Madjerac and $52,694.27 as against Antoinette Madjerac. The parties have stipulated that the total value of the three properties is $1,852,000.00. Consequently, First N.H.'s mortgages far exceed the value of the properties such that, even excluding Fleet's attachment lien, there is no equity in the properties. The Debtors have filed a motion to avoid Fleet's lien, alleging that the lien is completely unsecured and therefore should be deemed void under 11 U.S.C. § 506(a) and (d).
There is no basis to distinguish the facts of this case from those of Dewsnup v. Timm, ___ U.S. ___, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992), in which the Supreme Court held that a Chapter 7 debtor could not, through 11 U.S.C. § 506(a) and (d), "strip down" a creditor's lien to the value of the collateral securing the lien. This Court rejects the Debtors' argument that In re Cullen, 150 B.R. 1 (D.Me. 1992), should be broadened to include Chapter 7 cases. Cullen recognized that in Dewsnup, a Chapter 7 proceeding, the Supreme Court made its holding applicable only to the particular facts before it. Implicit in Cullen was the fact that it was a Chapter 13 case, thereby rendering Dewsnup inapplicable. See In re Jones, 152 B.R. 155 (D.Mich. 1993) (enumerating reasons why Dewsnup does not apply in Chapter 13 cases). The language discussing judicial liens bolstered that decision, recognizing that certain policies considered by the Supreme Court would not be violated. However, Cullen was decided in the context of Chapter 13 and the policy considerations therein and, thus, cannot be extended to apply to this Chapter 7 debtor.
Since Dewsnup, other courts have addressed the issue and have not allowed lien stripping of consensual or non-consensual liens in Chapter 7 cases. See Matter of Windham, 136 B.R. 878 (D.Fla. 1992); In re Wise, 151 B.R. 116 (D.Ohio. 1992); In re Jablonski, 139 B.R. 150 (D.Pa. 1992); In re Warner, 146 B.R. 253 (D.Cal. 1992). Accordingly, this Court will apply the holding of the Supreme Court in Dewsnup to the case at hand.
The foregoing constitutes findings of fact and conclusions of law pursuant to F.R.Bky.P. 7052. An appropriate order shall enter.
ORDER
Pursuant to a Memorandum of Decision of even date herewith, it is hereby
ORDERED that the Debtors' motion to avoid judgment lien of Fleet Bank of Maine is denied.