Bank of America Bank, NA v. Yvonne Roberts Waits

793 F.3d 1267, 2015 U.S. App. LEXIS 12311, 2015 WL 4378369

• Court: Court of Appeals for the Eleventh Circuit
• Decided: July 16, 2015
• Docket: 14-11408
• Status: Published

Opinion

ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES

PER CURIAM:

This case is before this Court for consideration in light of Bank of America, N.A. v. Caulkett, 575 U.S. -, 135 S.Ct. 1995, 192 L.Ed.2d 52 (2015). We previously affirmed the district court’s affirmance of the bankruptcy court’s order granting the debtor’s motion to strip Bank of America’s junior mortgage lien. See Bank of Am., N.A. v. Waits, 578 Fed.Appx. 827 (11th Cir.2014). The Supreme Court vacated the opinion and remanded the case to us for consideration in light of Caulkett. See Bank of Am., N.A. v. Waits, — U.S. -, 135 S.Ct. 2798, — L.Ed.3d - (2015). After consideration, we deny Bank of America’s motion for summary reversal, vacate the district court’s judgment, and remand for further proceedings consistent with Caulkett and this opinion. 1

In this Chapter 7 case, the debtor, Yvonne Roberts Waits, had two mortgages on her house, a senior mortgage lien and a junior mortgage lien. The outstanding balance on the senior mortgage lien exceeded the house’s current value. Bank of America’s junior mortgage lien was thus completely underwater.

Waits moved to “strip off’ Bank of America’s junior lien under § 506(d) of the Bankruptcy Code, which states, “To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void.” 11 U.S.C. § 506(d). The bankruptcy court granted Waits’s motion, and this Court affirmed. We explained our prior precedents in In re McNeal, 735 F.3d 1263 (11th Cir.2012), and Folendore v. United States Small Business Administration, 862 F.2d 1537 (11th Cir.1989), dictated the conclusion that § 506(d) allows a Chapter 7 debtor to void a junior mortgage lien when the senior lien exceeds the home’s value.

In Caulkett, the Supreme Court vacated two Eleventh Circuit decisions that followed this same reasoning. The Supreme Court held “a debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under § 506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral.” Caulkett, 575 U.S. -, 135 S.Ct. at 2001.

In light of the Supreme Court’s holding in Caulkett, our holdings in McNeal and Folendore are overruled. Accordingly, the district court erred in affirming the bankruptcy court’s grant of Waits’s motion to strip off Bank of America’s junior lien. We deny Bank of America’s motion for summary reversal, vacate the district court’s judgment affirming the bankruptcy court, and remand for further proceedings consistent with Caulkett and this opinion.

VACATED AND REMANDED.

1 . On June 15, 2015, the parties were directed to file supplemental letter briefs addressing how the Caulkett decision applies to this case. Bank of America timely filed its brief. To date, however, this Court has not received a response from Waits, whose brief was due July 13, 2015.