Bank of America v. Waits, No. 14-11408 (11th Cir. 2015)

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The court previously affirmed the district court’s affirmance of the bankruptcy court’s order granting debtor’s motion to strip Bank of America’s junior mortgage lien. The Supreme Court vacated the opinion and remanded the case for consideration in light of Bank of America, N.A. v. Caulkett. In Caulkett, the Supreme Court held “a debtor in a Chapter 7
bankruptcy proceeding may not void a junior mortgage lien under 11 U.S.C. 506(d) when
the debt owed on a senior mortgage lien exceeds the current value of the collateral.” Consequently, in light of Caulkett, the court's own holding in In re McNeal and Folendore v. United States Small Business Administration are overruled. Accordingly, the district court erred in affirming the bankruptcy court’s grant of debtor’s motion to strip off Bank of America’s junior lien. The court denied Bank of America’s motion for summary reversal, vacated the district court’s judgment affirming the bankruptcy court, and remanded for further proceedings.

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Case: 14-11408 Date Filed: 07/16/2015 Page: 1 of 3 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT ________________________ No. 14-11408 Non-Argument Calendar ________________________ D.C. Docket No. 1:14-cv-00460-WSD, Bkcy No. 11:bkc-70660-CRM In re: YVONNE ROBERTS WAITS, Debtor. _______________________________________________________ BANK OF AMERICA BANK, NA, Plaintiff - Appellant, versus YVONNE ROBERTS WAITS, Defendant - Appellee. ________________________ Appeal from the United States District Court for the Northern District of Georgia ________________________ (July 16, 2015) ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES Case: 14-11408 Date Filed: 07/16/2015 Page: 2 of 3 Before TJOFLAT, JORDAN and BLACK, Circuit Judges. 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 (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 F. App’x 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, __ S. Ct. __ (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 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. 2 Case: 14-11408 Date Filed: 07/16/2015 Page: 3 of 3 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. 3

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