Bank of America, NA v. James Jerome Phillips, et al., No. 14-12585 (11th Cir. 2014)

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Case: 14-12585 Date Filed: 09/29/2014 Page: 1 of 3 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT ________________________ No. 14-12585 Non-Argument Calendar ________________________ D.C. Docket Nos. 2:14-cv-00095-RWS; BK-13-23492-REB In Re: JAMES JEROME PHILLIPS, TAMARA JOHNSTON PHILLIPS, Debtors. __________________________________________________ BANK OF AMERICA, NA, Plaintiff - Appellant, versus JAMES JEROME PHILLIPS, TAMARA JOHNSTON PHILLIPS, Defendants - Appellees. ________________________ Appeal from the United States District Court for the Northern District of Georgia ________________________ (September 29, 2014) Case: 14-12585 Date Filed: 09/29/2014 Page: 2 of 3 Before WILSON, ROSENBAUM, and COX, Circuit Judges. PER CURIAM: Appellees, James and Tamara Phillips, are Chapter 7 debtors. They have two mortgages on their house. The parties do not dispute that the second lien is completely underwater. Appellant, Bank of America, N.A. ( Bank of America ), holds the second lien. The Phillipses moved in the bankruptcy court to have Bank of America s lien declared void under Section 506(d) of the Bankruptcy Code. The bankruptcy court granted the motion, and the district court affirmed. Section 506(d) of the Bankruptcy Code provides, in pertinent part, that [t]o 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. ยง506(d). This Court held in Folendore v. Small Business Administration, 862 F.2d 1537, 1540 (11th Cir. 1989), that Section 506(d) permitted a Chapter 7 debtor to strip off a wholly underwater lien, such as Bank of America s lien in this case. The Supreme Court of the United States rejected the reasoning of Folendore in Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773 (1992), holding that a lien partially underwater could not be stripped down to the value of the collateral under Section 506(d). Nevertheless, bound by this Court s prior panel precedent rule and reasoning that Dewsnup was not clearly on point with Folendore, this Court in McNeal v. GMAC Mortgage, LLC, 735 F.3d 1263, 1264 65 (11th Cir. 2012), 2 Case: 14-12585 Date Filed: 09/29/2014 Page: 3 of 3 declined to follow Dewsnup and other courts that had departed from Folendore. The McNeal panel held fast to Folendore and allowed the debtor to strip off an underwater junior lien pursuant to Section 506(d).1 We hold that McNeal and Folendore are the law in this circuit with respect to the issue presented here. Accordingly, we affirm the decision of the district court. Bank of America concedes that the McNeal holding is binding precedent, but seeks further appellate review of the issue. Should Bank of America choose to petition this Court for en banc consideration of the issue it raises here, this Court should seriously consider the petition. AFFIRMED 1 Although Folendore addressed the 1978 version of the Bankruptcy Code, the 1984 amendments to the Code did not alter the pertinent language of Section 506(a) or (d). McNeal, 735 F.3d at 1265 n.3. 3