Appeal from the United States Bankruptcy Court for the Western District of Washington Honorable Marc L. Barreca, Bankruptcy Judge, Presiding Bk. No. 11-11420-MLB
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Argued and Submitted on March 23, 2012 15 at Seattle, Washington
Before: KIRSCHER, JURY, and HOLLOWELL, Bankruptcy Judges.
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.
Appellant, chapter 13*fn2 debtor Micah Schnall ("Schnall"), appeals the bankruptcy court orders (1) denying confirmation of his plan and dismissing his case and (2) denying his motion for reconsideration. We AFFIRM.*fn3
I. FACTUAL AND PROCEDURAL BACKGROUND
Schnall filed a skeletal chapter 13 bankruptcy petition on February 10, 2011. All other required documents, including schedules and a proposed plan, were due by February 24, 2011. The claims bar date was set for July 11, 2011.
Schnall, appearing pro se, filed his schedules, Form B22C, and a proposed chapter 13 plan on March 3, 2011. In his Schedule A, Schnall claimed a fee interest in real property located in Redmond, Washington, valued at $440,000 and subject to $0 in secured claims. The property is Schnall's primary residence. Schnall did not claim a homestead exemption for the residence in his Schedule C. His Schedule D was left blank.
Schnall's Schedule F listed a mortgage held by BAC Home Loans Servicing LP ("BAC") with an unsecured claim of $133,000 and a mortgage held by One West Bank ("One West") with an unsecured claim of $527,000. Schnall listed both mortgage debts as "disputed."*fn4 In his Schedule J, Schnall listed no amount for rent/home mortgage or real estate taxes. His monthly net income (Schedule I minus Schedule J) was listed as $1,930. Schnall's Form B22C reflected a monthly disposable income of 369.88, or $22,192.80 over the 60-month plan.
Schnall's chapter 13 plan provided for payments of $1,015.44 every two weeks for 60 months, or $2,200.12 per month, or approximately $132,000 over the term of the plan. The liquidation value was listed as $11,692.24. The plan did not provide for any payments on Schnall's mortgages or for the prepetition arrears.
On March 24, 2011, BAC filed a proof of secured claim regarding the residence for $132,495.91, including a prepetition arrearage of $19,474.80 for payments not made between July 2009 and February 2011. Attached to the claim was a note in the amount of $115,000 and a deed of trust, both dated October 30, 2006, both signed by Schnall, and both executed in favor of Quicken Loans Inc.
On April 26, 2011, appellee, chapter 13 trustee K. Michael Fitzgerald ("Trustee"), filed an objection to confirmation and motion to dismiss. Trustee contended that Schnall's plan was not feasible because it failed to provide for treatment of secured claims of his two mortgage lien creditors and it failed to set forth any arrearage amounts or propose a cure for the arrears. Trustee also contended that section IV.E.2.b. of Schnall's plan failed to reflect the disposable income amount of $22,192.80 set forth in his Form B22C.*fn5 A hearing on Trustee's motion was set for May 19, 2011.
On May 2, 2011, Deutsche Bank National Trust Company ("Deutsche") filed an entry of appearance and request for special notice identifying itself as creditor appearing through its servicing agent, One West.
On May 12, 2011, Schnall moved to continue the hearing on Trustee's plan objection and motion to dismiss. In his supporting declaration, Schnall contended that a continuance on Trustee's motion was warranted because he believed that "the party who invoked Washington's Deed of Trust Act (attempted the foreclosure proceedings) is simply not the proper or legal party specified in the aforementioned statutory scheme; therefore, making the invocation of statutorily authorized foreclosure illegal."*fn6
On that same date, Schnall also filed his response to Trustee's motion. Schnall asserted that "based on sound law and fact" the mortgage debts were unsecured and that Trustee's motion should be denied so he could proceed to challenge BAC's proof of claim. Schnall failed to explain why the mortgage debts were "unsecured" or explain why his plan failed to provide for any monthly payments or the amounts in arrears. Attached to his response was an April 6, 2010 appraisal of the residence for 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 ...