by United Bank has appealed to the Sixth Circuit BAP, the issue of whether Caulkett extends to lien stripping in chapter 13. The bankruptcy court held that it does not. In re Travers, No. 15-50844 (Bankr. E.D. Ky. Nov. 16, 2015) on appeal, No. 15-8051 (B.A.P. 6th Cir. filed Dec. 1, 2015).
United Bank held a wholly unsecured second lien on the Travers’ residence. The bank argued that while Sixth Circuit precedent, Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. 2002), permits strip-off of wholly unsecured liens in chapter 13, that case was implicitly overruled by the Supreme Court decision in Bank of America, N.A. v. Caulkett, — U.S. —-, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (2015).
In granting the Travers’ motion to avoid the lien, the bankruptcy court noted that for a circuit precedent to be implicitly overruled there must be “a clear directive from the Supreme Court.” It did not find such directive in Caulkett as that case merely applied Dewsnup v. Timm (In re Dewsnup), 502 U.S. 410 (1992) (addressing partially secured liens in chapter 7), to prohibit strip-off of wholly unsecured liens in chapter 7; a holding the Sixth Circuit had already reached in Talbert v. City Mortgage Services (In re Talbert), 344 F.3d 555 (6th Cir. 2003). Lane, on the other hand, relied on the post-Dewsnup case of Nobelman v. American Savings Bank (In re Nobelman), 508 U.S. 324 (1993). Unlike Dewsnup which interpreted section 506, paragraphs (a) and (d), the Nobelman Court addressed lien stripping under sections 506(a) and 1322(b)(2). Discussing the applicability of Nobelman to a case involving lien stripping in chapter 7, the Caulkett Court specifically found that “Nobelman offers no guidance.” The Travers court was thus satisfied that Caulkett did not disturb the line of chapter 13 cases relying on Nobelman to find that wholly unsecured liens could be stripped off.
As noted in NCBRC’s September, 2015 blog post, courts have generally found that Caulkett does not apply to lien stripping in chapter 13 cases. Later cases reaching that same holding include, Larson v. Nationstar Mortgage, No. 13-14443, Adv. Proc. No. 14-75 (Bankr. W.D. Wisc. Jan. 22, 2016); In re Roman, No. 14-3686, Adv. Proc. 14-255 (Bankr. D. P.R. Oct. 9, 2015).