The Supreme Court Refuses to Revisit Dewsnup

The Supreme Court won’t be overruling Dewnsup this year, and probably never. Yesterday, the justices denied the petition for certiorari in Ritter v. Brady, 18-747 (Sup. Ct.).

Dewsnup was the notorious 1992 decision where the Supreme Court held that a chapter 7 debtor may not employ Sections 506(a) and 506(d) to “strip down” an undersecured mortgage. Dewsnup v. Timm, 502 U.S. 410 (1992). Justice Antonin Scalia wrote a vigorous dissent, accusing the majority of ignoring the plain language of the statute in adopting a policy contrary to decisions that Congress made by enacting the Bankruptcy Code.

Twenty-three years later, the justices seemed primed to revisit Dewsnup. At oral argument in Bank of America N.A. v. Caulkett, 135 S. Ct. 1995 (2015), several justices apparently thought Dewsnup was wrongly decided. Indeed, the unanimous opinion in Caulkett, written by Justice Clarence Thomas, said that “straightforward reading of the statute” would allow a debtor to strip off an underwater mortgage.

The Dewsnup issue arose in Ritter, where the chapter 7 debtor sought to strip off a wholly underwater mortgage. All the way through the Ninth Circuit, the courts summarily denied the debtor’s request, saying the issue had been decided definitively by the Supreme Court in Caulkett.

Scott L. Nelson of the Public Citizen Litigation Group of Washington, D.C., along with Bradley Girard and Brian Wolfman of the Georgetown Law Appellate Court Immersion Clinic, filed a certiorari petition in December. Several law professors and former judges, including Eugene Wedoff, Leif M. Clark and Bruce A. Markell, filed amicus briefs urging the Court to grant certiorari.

In a terse order, the Court denied the certiorari petition on February 19.

Craig Goldblatt, a partner at Wilmer Cutler Pickering Hale and Dorr LLP in Washington, D.C., explained why the court declined to re-examine Dewsnup. In a message to ABI, Goldblatt said, “The Court regularly notes that principles of stare decisis apply with special force in statutory cases, since Congress is presumed to acquiesce in the Court’s prior rulings and is able to enact legislation if it believes the Court got it wrong. Indeed, there are only a handful of occasions in recent decades in which the Court overruled prior statutory decisions.”

In the certiorari petition and in the amicus briefs, those who disagree with Dewsnup gave it their best shot. The papers persuasively explained where Dewsnup went off the rails, but the justices have shown their disinclination to revisit the issue, not now and perhaps never.