Court Opinion

ID: 2757105
Source: CourtListenerOpinion
Date Created: 2014-12-03 19:08:30.880612+00
Date Added: 2024-06-11T11:05:17.462739
License: Public Domain

FILED
                                                            MAY 24 2012
                                                        SUSAN M SPRAUL, CLERK
 1                                                        U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT

 2
 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.     WW-11-1378-KiJuH
                                   )
 6   MICAH SCHNALL,                )      Bk. No.     11-11420-MLB
                                   )
 7                  Debtor.        )
                                   )
 8                                 )
     MICAH SCHNALL,                )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      M E M O R A N D U M1
11                                 )
     K. MICHAEL FITZGERALD,        )
12   Chapter 13 Trustee,           )
                                   )
13                  Appellee.      )
     ______________________________)
14
                      Argued and Submitted on March 23, 2012
15                            at Seattle, Washington
16                             Filed - May 24, 2012
17                Appeal from the United States Bankruptcy Court
                      for the Western District of Washington
18
              Honorable Marc L. Barreca, Bankruptcy Judge, Presiding
19
20   Appearances:     Appellant Micha Schnall argued pro se;
                      Jason Wilson-Aguilar of the Office of K. Michael
21                    Fitzgerald, Chapter 13 Trustee, argued for
                      appellee, K. Michael Fitzgerald, Chapter 13
22                    Trustee.
23
24   Before: KIRSCHER, JURY, and HOLLOWELL, Bankruptcy Judges.
25
26
          1
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may have
     (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
28   Cir. BAP Rule 8013-1.
 1        Appellant, chapter 132 debtor Micah Schnall (“Schnall”),
 2   appeals the bankruptcy court orders (1) denying confirmation of
 3   his plan and dismissing his case and (2) denying his motion for
 4   reconsideration.   We AFFIRM.3
 5                   I. FACTUAL AND PROCEDURAL BACKGROUND
 6        Schnall filed a skeletal chapter 13 bankruptcy petition on
 7   February 10, 2011.   All other required documents, including
 8   schedules and a proposed plan, were due by February 24, 2011.     The
 9   claims bar date was set for July 11, 2011.
10        Schnall, appearing pro se, filed his schedules, Form B22C,
11   and a proposed chapter 13 plan on March 3, 2011.    In his
12   Schedule A, Schnall claimed a fee interest in real property
13   located in Redmond, Washington, valued at $440,000 and subject to
14   $0 in secured claims.   The property is Schnall’s primary
15   residence.   Schnall did not claim a homestead exemption for the
16   residence in his Schedule C.     His Schedule D was left blank.
17   Schnall’s Schedule F listed a mortgage held by BAC Home Loans
18   Servicing LP (“BAC”) with an unsecured claim of $133,000 and a
19   mortgage held by One West Bank (“One West”) with an unsecured
20   claim of $527,000. Schnall listed both mortgage debts as
21
22
23
          2
            Unless specified otherwise, all chapter and code references
24   are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and the Federal
     Rules of Bankruptcy Procedure, Rules 1001-9037. The Federal Rules
25   of Civil Procedure are referred to as “FRCP.”
26        3
            The order dismissing Schnall’s case was effective
     immediately because he was unable to obtain a stay of the order
27   from both the bankruptcy court (denied 9/27/11) and the BAP
     (denied 11/23/11), and the automatic stay terminated by operation
28   of law under § 362(c).

                                       -2-
 1   “disputed.”4   In his Schedule J, Schnall listed no amount for
 2   rent/home mortgage or real estate taxes.   His monthly net income
 3   (Schedule I minus Schedule J) was listed as $1,930.   Schnall’s
 4   Form B22C reflected a monthly disposable income of 369.88, or
 5   $22,192.80 over the 60-month plan.
 6          Schnall’s chapter 13 plan provided for payments of $1,015.44
 7   every two weeks for 60 months, or $2,200.12 per month, or
 8   approximately $132,000 over the term of the plan.   The liquidation
 9   value was listed as $11,692.24.    The plan did not provide for any
10   payments on Schnall’s mortgages or for the prepetition arrears.
11          On March 24, 2011, BAC filed a proof of secured claim
12   regarding the residence for $132,495.91, including a prepetition
13   arrearage of $19,474.80 for payments not made between July 2009
14   and February 2011.   Attached to the claim was a note in the amount
15   of $115,000 and a deed of trust, both dated October 30, 2006, both
16   signed by Schnall, and both executed in favor of Quicken Loans
17   Inc.
18          On April 26, 2011, appellee, chapter 13 trustee K. Michael
19   Fitzgerald (“Trustee”), filed an objection to confirmation and
20   motion to dismiss.   Trustee contended that Schnall’s plan was not
21   feasible because it failed to provide for treatment of secured
22   claims of his two mortgage lien creditors and it failed to set
23   forth any arrearage amounts or propose a cure for the arrears.
24   Trustee also contended that section IV.E.2.b. of Schnall’s plan
25
26          4
            Presuming these debts were unsecured, Schnall would be
     ineligible for chapter 13 due to exceeding the unsecured debt
27   limit of $360,475. Even “disputed” debts are included in the
     § 109(e) jurisdictional calculation. Nicholes v. Johnny Appleseed
28   (In re Nicholes), 184 B.R. 82, 89 (9th Cir. BAP 1995).

                                       -3-
 1   failed to reflect the disposable income amount of $22,192.80 set
 2   forth in his Form B22C.5   A hearing on Trustee’s motion was set
 3   for May 19, 2011.
 4        On May 2, 2011, Deutsche Bank National Trust Company
 5   (“Deutsche”) filed an entry of appearance and request for special
 6   notice identifying itself as creditor appearing through its
 7   servicing agent, One West.
 8        On May 12, 2011, Schnall moved to continue the hearing on
 9   Trustee’s plan objection and motion to dismiss.   In his supporting
10   declaration, Schnall contended that a continuance on Trustee’s
11   motion was warranted because he believed that “the party who
12   invoked Washington’s Deed of Trust Act (attempted the foreclosure
13   proceedings) is simply not the proper or legal party specified in
14   the aforementioned statutory scheme; therefore, making the
15   invocation of statutorily authorized foreclosure illegal.”6
16        On that same date, Schnall also filed his response to
17   Trustee’s motion.   Schnall asserted that “based on sound law and
18   fact” the mortgage debts were unsecured and that Trustee’s motion
19   should be denied so he could proceed to challenge BAC’s proof of
20   claim.   Schnall failed to explain why the mortgage debts were
21   “unsecured” or explain why his plan failed to provide for any
22   monthly payments or the amounts in arrears.   Attached to his
23   response was an April 6, 2010 appraisal of the residence for
24
25
          5
            Trustee also objected to Schnall’s Schedule J claimed
26   expense of $1,100 for monthly home maintenance as excessive and
     unreasonable.
27
          6
            Schnall set the hearing for his motion to continue on
28   May 19, 2011 - the same day as Trustee’s motion.

                                      -4-
 1   $440,000, receipts for some pet expenses, and print-outs from the
 2   Internet regarding guidelines for yearly home maintenance and
 3   repair costs.
 4        Also on May 12, 2011, Schnall filed an objection to the proof
 5   of secured claim filed by “MERS.”     Notably, MERS never filed a
 6   proof of secured claim in Schnall’s bankruptcy case.    Although the
 7   objection purported to set a hearing on the matter for May 19,
 8   2011, no notice of hearing was filed, and nothing indicates that
 9   Schnall served any party with notice of the claim objection.
10        On May 13, 2011, Deutsche filed an objection to confirmation
11   of Schnall’s chapter 13 plan for failing to provide any payments
12   on its secured claim.   Deutsche contended that Schnall had
13   executed a $460,000 note and a deed of trust to secure the note in
14   favor of Quicken Loans on October 30, 2006.    Deutsche claimed to
15   be the holder of the note and asserted that the principal balance
16   due was approximately $460,000, with prepetition arrears of
17   $71,933.69 and an ongoing monthly payment of $3,417.92.    Deutsche
18   did not include any supporting documents or affidavits with its
19   objection.
20        The hearing on Trustee’s motion proceeded on May 19, 2011.
21   Trustee contended that even if Schnall was able to strip off BAC’s
22   second lien due to the residence’s value being less than the
23   amount of Deutsche’s first lien, the monthly payment on the
24   Deutsche loan alone was $3,417.92.    When added to its prepetition
25   arrearage of approximately $72,000 and the projected disposable
26   income figure of $22,192.80, Trustee contended that Schnall’s plan
27   required a payment of about $5,500 per month.    Thus, Schnall’s
28   plan proposing payments of only $2,200 per month was not feasible.

                                     -5-
 1   Counsel for Deutsche briefly noted its objection to confirmation
 2   for the plan’s failure to propose any monthly payments on its
 3   claim or to cure the arrearages.
 4        Before allowing the parties to proceed further, the
 5   bankruptcy court denied Schnall’s motion to continue Trustee’s
 6   motion for failing to set forth any grounds for continuance.      Hr’g
 7   Tr. (May 19, 2011) at 4:18-5:4.    Simply needing more time due to
 8   his pro se status was insufficient.     Id.   The court then addressed
 9   Schnall’s claim objection, ruling that it was not being heard that
10   day since it was not properly noticed.    The court further
11   explained to Schnall that MERS’s potential involvement with one or
12   both loans did not make the secured liens disappear:
13        So you would still need to deal with -- and I don’t know
          if this is a case where we have any confusion over who the
14        right lender is or not. But whoever it is, you’re going
          to have to deal with the full amount of your secured debt,
15        unless the value of the property is such that you’re
          entitled to start an action to strip a junior lien off.
16        And it’s not clear to me what you’ve got right now
          regarding that.
17
          So if you’re going to keep the house, if that’s the whole
18        point of filing the Chapter 13, then you need to have
          enough income to make enough payments to make the secured
19        payments or at least make the payments or at least make
          the payment on the first if you think you have grounds to
20        strip the second. So that’s what I need to hear about.
21   Id. at 5:14-6:2.
22        Schnall asserted that he had good cause to list the mortgage
23   debts as unsecured.   Schnall further contended that he did not
24   acquiesce to the validity of the mortgage claims and to require
25   him to do so as a condition of bankruptcy protection denied him
26   the opportunity to contest the claims as secured and deprived him
27   of due process.    In light of the first lien’s value at $460,000,
28   Schnall observed that he could strip off the second lien due to

                                       -6-
 1   the residence’s value of $440,000.      Schnall also explained that a
 2   prior attempt to modify the first mortgage with One West was
 3   unsuccessful.   Schnall then requested that he be allowed to
 4   continue making the plan payments as proposed, and that the court
 5   allow him to commence an “adversary proceeding” against the two
 6   mortgage creditors in state court.      Schnall made note of
 7   Deutsche’s failure to file a proof of claim.     The bankruptcy court
 8   explained to Schnall that it was more concerned with Trustee’s
 9   objection to the plan, as opposed to Deutsche’s, even though the
10   two raised some similar objections.
11        In a colloquy with the court, Schnall admitted the monthly
12   payment on the first mortgage was about $3,500 per month.       Id. at
13   10:5-10.   Schnall then admitted that his monthly income was
14   $5,000.    Id. at 10:11-13.   Trustee informed the court that
15   Schnall’s Schedules I and J (which did not include any rent or
16   home mortgage payments) reflected figures of $4,815 and $2,885
17   respectively, thus leaving a monthly net income figure of $1,980.
18   Id. at 10:20-23.   Determining that Schnall lacked sufficient
19   income to even cover payments on the first mortgage, and that no
20   loan modifications were pending or approved, the bankruptcy court
21   concluded that Schnall’s proposed plan was inherently infeasible
22   and it dismissed the case.    Id. at 10:24-11:7.
23        Before the dismissal order was entered, Schnall filed a
24   motion for reconsideration on May 31, 2011.     Although difficult to
25   discern, the basis of Schnall’s motion was that Trustee
26   erroneously accepted Deutsche’s contention, without any proof,
27   that it was owed $3,417 per month on the first mortgage, and
28   therefore the bankruptcy court in turn erred by relying on this

                                       -7-
 1   information to dismiss the case.   Schnall contended that he had a
 2   valid basis to list the mortgage claims as unsecured, and because
 3   Deutsche failed to file a proof of claim or any other evidence to
 4   establish its claim, then it was subject to the proposed plan.    In
 5   other words, Schnall asserted that because he listed the mortgage
 6   claims as unsecured, and because Deutsche never filed a proof of
 7   claim, the mortgage claims were unsecured.
 8        Schnall’s motion argued extensively about how he was denied
 9   due process and equal protection for not being allowed to
10   challenge Deutsche’s Notice of Default (“NOD”) and its pending
11   foreclosure proceeding.   Specifically, Schnall took issue with the
12   fact that the deeds of trust reflected MERS as the original
13   beneficiary, but the NOD reflected Deutsche as the beneficiary.
14   Therefore, according to Schnall, Deutsche had failed to establish
15   standing to conduct the foreclosure sale, which was set for
16   June 10, 2011.   Attached to Schnall’s motion for reconsideration
17   were copies of the first and second deeds of trust, the executed
18   $460,000 note securing the first deed of trust, the NOD, and the
19   mortgage modification offer faxed to Schnall by One West on
20   July 28, 2010.   The NOD, filed by Regional Trustee Services
21   Corporation on behalf of Deutsche and dated August 24, 2010,
22   reflects Deutsche as One West’s successor in interest to the first
23   deed of trust.   According to the NOD, no payments had been made on
24   the Deutsche note since August 2009, and the payments due on the
25   note were, depending on the interest rate applied, $3,451.69 or
26   $3,487.24 per month.
27        The bankruptcy court subsequently entered an order denying
28   confirmation of the plan and dismissing Schnall’s case on June 1,

                                     -8-
 1   2011.       On June 28, 2011, the bankruptcy court entered an order
 2   denying Schnall’s motion for reconsideration, which it construed
 3   as a motion under Rule 9023.      The court rejected Schnall’s
 4   suggestion that its ruling to deny confirmation and dismiss the
 5   case relied on misinformation provided by Trustee or Deutsche; its
 6   ruling was based on information provided in Schnall’s own
 7   Schedules I and J and on statements he made on the record.       The
 8   court also found that Schnall’s due process rights were not
 9   violated because he received proper and timely notice of Trustee’s
10   motion, he was given an opportunity to present his arguments at
11   the May 19 hearing, and no issues other than confirmation and
12   dismissal were before the court on that date.      The court noted
13   that Schnall was free to pursue any causes of action he may have
14   regarding his mortgages in an appropriate forum.      Schnall timely
15   appealed.7
16                                 II. JURISDICTION
17           The bankruptcy court had jurisdiction under 28 U.S.C.
18   §§ 157(b)(2)(L) and 1334.      We have jurisdiction under 28 U.S.C.
19   § 158.
20                                   III. ISSUES
21   1.      Did the bankruptcy court abuse its discretion when it denied
22
23           7
            Trustee contends that Schnall’s notice of appeal of the
     June 1, 2011 dismissal order was untimely. We disagree. Under
24   Rule 8002(b), if any party makes a timely motion under Rule 9023
     (and others), the time for appeal for all parties runs from the
25   entry of the order disposing of that motion. Here, Schnall filed
     a timely (even though premature) motion for reconsideration of the
26   June 1 dismissal order on May 31, 2011. The bankruptcy court did
     not enter the order denying Schnall’s motion for reconsideration
27   until June 28, 2011. Schnall filed his notice of appeal on July
     12, 2011. Thus, Schnall’s appeal was within the 14-day period
28   specified under Rule 8002(a).

                                         -9-
 1   confirmation of Schnall’s chapter 13 plan and dismissed his case?
 2   2.   Did the bankruptcy court abuse its discretion when it denied
 3   Schnall’s motion for reconsideration?
 4                         IV. STANDARDS OF REVIEW
 5        We review the bankruptcy court’s ultimate decision to confirm
 6   or not to confirm a reorganization plan for an abuse of
 7   discretion.   Computer Task Group, Inc. v. Brotby (In re Brotby),
 8   303 B.R. 177, 184 (9th Cir. BAP 2003).     We also review for abuse
 9   of discretion a bankruptcy court’s decision to deny a motion for
10   reconsideration.   Arrow Elecs., Inc. v. Justus (In re Kaypro),
11   218 F.3d 1070, 1073 (9th Cir. 2000).
12        To determine whether the bankruptcy court abused its
13   discretion, we conduct a two-step inquiry: (1) we review de novo
14   whether the bankruptcy court “identified the correct legal rule
15   to apply to the relief requested” and, (2) if it did, whether the
16   bankruptcy court’s application of the legal standard was
17   illogical, implausible or “without support in inferences that may
18   be drawn from the facts in the record.”    United States v.
19   Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)(en banc).
20        We may affirm on any ground supported by the record.     Shanks
21   v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).
22                              V. DISCUSSION
23   A.   The bankruptcy court did not abuse its discretion when it
          denied confirmation of Schnall’s chapter 13 plan and
24        dismissed his case.
25        Schnall raises several arguments on appeal.     He primarily
26   argues that the bankruptcy court abused its discretion in denying
27   confirmation of the plan and dismissing his case without first
28   determining the validity of the mortgage creditors’ claims.

                                     -10-
 1   Essentially, Schnall contends that without addressing the
 2   creditors’ “standing” to conduct the pending foreclosure sale, the
 3   court’s denial of the plan, a plan based on invalid claims, was
 4   improper and denied Schnall due process.    We reject Schnall’s
 5   arguments.
 6        1.      Standing and proof of claim.
 7        Despite his belief to the contrary, Schnall’s attempt to turn
 8   the mortgage creditors’ secured liens into unsecured ones by
 9   scheduling them as unsecured and “disputed” in his Schedule F was
10   ineffective.    Merely scheduling claims as unsecured or filing
11   claim objections did not “avoid” the liens.    Schnall had to take
12   affirmative steps under § 506(d)(2) to avoid the mortgage liens,
13   at least BAC’s lien, which he did not do.    Therefore, the liens
14   remained secured for purposes of Schnall’s chapter 13 plan.
15        An unsecured creditor is required to file a proof claim for
16   its claim to be allowed, but filing is not mandatory for a secured
17   creditor.    See FRBP 3002(a).   A secured creditor may bypass the
18   debtor’s bankruptcy proceeding and look to its lien for
19   satisfaction of the debt.    Brawders v. Cnty. of Ventura (In re
20   Brawders), 503 F.3d 856, 872 (9th Cir. 2007).    This is the
21   principle that secured liens pass through bankruptcy unaffected.
22   Long v. Bullard, 117 U.S. 617, 620-21 (1886); Dewsnup v. Timm,
23   502 U.S. 410, 418 (1992); In re Brawders, 503 F.3d at 872.
24   Contrary to Schnall’s contention, Deutsche did not have to file a
25   proof of claim to preserve its secured lien against his residence.
26   In re Brawders, 503 F.3d at 872; Cen-Pen Corp. v. Hanson, 58 F.3d
27   89, 93 (4th Cir. 1995)(interpreting § 506(d)(2) to conclude that
28   failure of secured creditor to file a proof of claim is not a

                                       -11-
 1   basis for avoiding its lien); Meadowbrook Estates v. McElvany,
 2   Inc. (In re Meadowbrook Estates), 246 B.R. 898, 902 (Bankr. E.D.
 3   Cal. 2000)(“A secured creditor is not required to file a proof of
 4   claim.   And if it chooses not to file a claim, its lien will pass
 5   through the bankruptcy and remain in place.”).   Therefore, despite
 6   not filing a proof of claim or challenging Schnall’s scheduling of
 7   its debt as unsecured, Deutsche’s right to foreclose on the
 8   residence survived the bankruptcy.
 9        In this case, BAC chose to file a proof of claim presumably
10   because it knew its lien was entirely underwater and that Schnall
11   had the ability to strip it off.   Although Schnall had the right
12   to object to BAC’s claim under § 502(b), his objection was not
13   properly noticed or served, so it was not heard by the court.8   In
14   any event, Schnall made no effort to strip off BAC’s lien prior to
15   confirmation.   Thus, Schnall was required to treat BAC’s claim as
16   secured in the plan.   See de la Salle v. U.S. Bank, N.A. (In re de
17   la Salle), 461 B.R. 593, 602 (9th Cir. BAP 2011)(the claim
18
19        8
            Under LBR 9013-1(d)(2)(C), objections to claims shall be
     filed and served at least 30 days preceding the date fixed for
20   hearing. See also FRBP 3007. Schnall filed his objection to
     “MERS’s” proof of claim on May 12, 2011. MERS did not file a
21   proof of claim. Presumably, Schnall was objecting to BAC’s filed
     claim and Deutsche’s claim (even though it did not file one) since
22   the objection mentioned “MERS and other parties mortgage
     claim(s).” Although the objection referenced a hearing date of
23   May 19, 2011, Schnall failed to file a notice of hearing. The
     lack of a proof of service also indicates the objection was never
24   properly served. Even if Schnall had filed and properly served
     the required documents, his objection could not have been heard on
25   May 19, only seven days after filing the objection.
          We further observe that Schnall’s claim objection was
26   premised solely on his assertion that BAC and/or Deutsche lacked
     standing to enforce the note. Schnall has never disputed
27   receiving the loans or signing the notes and deeds of trust.
     Moreover, no party other than Deutsche had commenced foreclosure
28   proceedings on the residence.

                                     -12-
 1   objection procedure, which is separate and apart from plan
 2   confirmation, does not authorize debtors to reclassify a debt in
 3   their chapter 13 plan which was set forth in a properly filed
 4   proof of claim).
 5        As for Deutsche, even if Schnall could show that someone
 6   other than Deutsche owns the debt secured by the first deed of
 7   trust, he was still required to make payments to Trustee and
 8   propose a plan complying with §§ 1322 and 1326 for the benefit of
 9   the proper creditor.    The rights of the holder of the debt secured
10   by a deed of trust on the debtor’s primary residence cannot be
11   modified in the plan.   § 1322(b)(2).
12        Schnall’s desire to litigate Deutsche’s or BAC’s “standing”
13   did not excuse his obligation to make any payments to Trustee on
14   account of the secured loans, or to propose a plan providing for
15   any payments on the secured loans.      Because Schnall intended to
16   retain his residence, he was required under § 1322(b)(5) to
17   provide for the cure of the prepetition arrearages within a
18   reasonable time (in this case five years) and maintain his ongoing
19   mortgage payments, subject to a later determination as to which
20   entity actually held the note(s).9      See §§ 1322(b)(5) and 1322(d).
21   See also Alonso v. Summerville (In re Summerville), 361 B.R. 133
22   (9th Cir. BAP 2007)(where chapter 13 plan did not affect or
23   address the validity of a note or deed of trust debtor was not
24   precluded from challenging the validity of the note and deed of
25   trust in subsequent state court action).
26
27        9
            We note that under Local Rule 3015-1(j), all plan payments
     Schnall would have made regarding the mortgage liens would have
28   been paid directly to the chapter 13 trustee.

                                      -13-
 1        Section 1325(a)(5) requires debtors to provide for the
 2   payment of their secured claims in an amount equal to the claims
 3   absent consent of the secured creditors or surrender of the
 4   creditors' collateral.      The record shows that Schnall did not have
 5   sufficient income to cover even the ongoing monthly payments to
 6   Deutsche on its debt, much less provide for the collective
 7   prepetition arrearages of nearly $90,000.     Even if the mortgage
 8   debts were somehow deemed unsecured, thereby leaving Schnall with
 9   $440,000 of equity in his residence, Schnall failed to provide in
10   his proposed plan for liquidation of the residence and to provide
11   funds to pay his unsecured creditors.     Apparently Schnall’s plan
12   was to simply keep his residence without making any payments on
13   his loans and without liquidating the asset for the benefit of
14   creditors.    Clearly, this does not comply with the good faith
15   provision of § 1325(a)(3).     Accordingly, we conclude the
16   bankruptcy court properly denied confirmation of his plan.
17        2.      Due process.
18        Schnall argues his due process rights were violated when the
19   bankruptcy court denied his continuance request and issued its
20   “premature” decision to deny confirmation and dismiss his case
21   without determining the validity of the mortgage creditors’
22   claims.    We disagree.
23        “The fundamental requisite of due process of law is the
24   opportunity to be heard at a meaningful time and in a meaningful
25   manner.”   Mathews v. Eldridge, 424 U.S. 319, 333 (1976).     We have
26   already determined that resolution of whether BAC and/or Deutsche
27   were the proper parties entitled to enforce the notes was not
28   necessary for plan confirmation purposes.     Schnall’s purpose for

                                        -14-
 1   continuing the Trustee’s motion was to dispute the mortgage
 2   creditors’ standing to foreclose on the residence and to avoid
 3   making any payments on the secured debt; it was not so he could in
 4   good faith amend his plan to include any mortgage payments or cure
 5   the prepetition arrearages as required.
 6        Here, Schnall received notice of the hearing on Trustee’s
 7   objection to his plan and motion to dismiss.   Schnall timely filed
 8   a written response and included several exhibits.   He also
 9   appeared at the May 19 hearing and presented oral argument.      No
10   other matters were being heard that day.   Therefore, on this
11   record, we conclude the bankruptcy court gave Schnall his full due
12   process rights before it dismissed his case.
13        3.   Dismissal under § 1307(c).
14        Although the dismissal order does not state the statutory
15   basis for dismissing Schnall’s case, we believe cause existed for
16   dismissal under § 1307(c)(5).   That section provides in
17   relevant part:
18        (c) . . . on request of a party in interest or the United
          States trustee and after notice and a hearing, the court
19        may convert a case under this chapter to a case under
          chapter 7 of this title, or may dismiss a case under this
20        chapter, whichever is in the best interests of creditors
          and the estate, for cause, including —
21        . . .
22        (5) denial of confirmation of a plan under section 1325
          of this title and denial of a request made for additional
23        time for filing another plan or a modification of a
          plan[.]
24
25   Section 1307(c) establishes a two-step analysis for dealing with
26   questions of conversion and dismissal.    “First, it must be
27   determined that there is ‘cause’ to act.   Second, once a
28   determination of ‘cause’ has been made, a choice must be made

                                     -15-
 1   between conversion and dismissal based on the ‘best interests of
 2   the creditors and the estate.’”    Nelson v. Meyer (In re Nelson),
 3   343 B.R. 671, 675 (9th Cir. BAP 2006)(citations omitted).
 4        The record supports the bankruptcy court’s decision to deny
 5   confirmation of Schnall’s plan because he could not (and
 6   apparently refused to) submit a confirmable plan: (1) his income
 7   failed to cover the monthly payment on the first mortgage, much
 8   less the second, irrespective of the identity of the party with
 9   standing to enforce the note; (2) the plan impermissibly modified
10   the rights of Schnall’s secured creditors under § 1322(b)(2); and
11   (3) the plan did not provide for monthly payments or for
12   arrearages to be cured within a reasonable time in violation of
13   § 1322(b)(5).    Thus, Schnall’s plan was not confirmable as a
14   matter of law.
15        Second, the record shows that dismissal was in the best
16   interests of the creditors and the estate.    The only creditors
17   that participated in the case were the two mortgage lien creditors
18   and Schnall was in default by at least $90,000 between them.
19   Schnall has had the benefit of occupying the residence without
20   making any payments since July 2009.     Therefore, the element of
21   best interests of creditors resolves itself primarily to the
22   interest of Deutsche and BAC, which are by far Schnall’s largest
23   creditors.   Goodrich v. Lines, 284 F.2d 874, 877 (9th Cir. 1960)
24   (in determining the best interests of creditors, the interest of a
25   single creditor with a large enough claim will suffice).    Schnall
26   has not cited any authority that requires the bankruptcy court to
27   rule on the merits of a mortgage lien creditor’s standing before
28   dismissing the bankruptcy case for other reasons.    Schnall never

                                       -16-
 1   requested that his case be converted to chapter 7, and he does not
 2   challenge on appeal the court’s decision to dismiss rather than
 3   convert.   Accordingly, we conclude the bankruptcy court properly
 4   dismissed Schnall’s case for cause under § 1307(c)(5).
 5   B.   The bankruptcy court did not abuse its discretion when it
          denied Schnall’s motion for reconsideration.
 6
 7        Schnall offers no argument for how the bankruptcy court
 8   abused its discretion in denying his motion for reconsideration,
 9   other than simply contending in the conclusion of his opening
10   brief that we should reverse the bankruptcy court’s order.   He
11   also failed to present the matter as an issue on appeal.   As a
12   result, this issue is waived.   Wake v. Sedona Inst. (In re Sedona
13   Inst.), 220 B.R. 74, 76 (9th Cir. BAP 1998)(matters on appeal not
14   specifically and distinctly argued in appellant’s opening brief
15   are waived).   However, even if we did consider it, Schnall’s
16   motion did not present newly discovered evidence, demonstrate
17   clear error, or show an intervening change in controlling law.
18   See 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.
19   1999)(setting forth grounds for reconsideration under FRCP 59(e),
20   incorporated by Rule 9023).   Instead, the motion impermissibly
21   rehashed the same arguments already raised in his opposition to
22   Trustee’s objection to confirmation and motion to dismiss.
23   Motions for reconsideration are not for rehashing the same
24   arguments made the first time, or to assert new legal theories or
25   new facts that could have been raised at the initial hearing.
26   In re Greco, 113 B.R. 658, 664 (D. Haw. 1990), aff’d and remanded,
27   Greco v. Troy Corp., 952 F.2d 406 (9th Cir. 1991).   Thus, we
28   conclude the bankruptcy court did not abuse its discretion in

                                     -17-
 1   denying Schnall’s motion for reconsideration.
 2                             VI. CONCLUSION
 3        Based on the foregoing reasons, we AFFIRM.
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