In re: Louis C. Nemeth

FILED
FEB 13 2017
1 NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
4
5 In re: ) BAP No. CC-16-1230-LNTa
)
6 LOUIS C. NEMETH, ) Bk. No. 8:16-bk-11919-CB
)
7 Debtor. )
______________________________)
8 )
LOUIS C. NEMETH, )
9 )
Appellant, )
10 )
v. ) MEMORANDUM*
11 )
AMRANE COHEN, Chapter 13 )
12 Trustee; WELLS FARGO BANK, )
N.A., )
13 )
Appellees. )
14 ______________________________)
15 Submitted Without Oral Argument
on January 19, 2017
16
Filed - February 13, 2017
17
Appeal from the United States Bankruptcy Court
18 for the Central District of California
19 Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding
_________________________
20
Appearances: Appellant Louis C. Nemeth pro se on brief; Jay K.
21 Chien on brief for appellee Amrane Cohen,
Chapter 13 Trustee.
22 _________________________
23
24
25
26 *
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.
28 See 9th Cir. BAP Rule 8024-1.
 1 Before: LAFFERTY, TAYLOR, and NOVACK,** Bankruptcy Judges.
2 INTRODUCTION
3 Debtor filed a chapter 131 plan proposing no ongoing
4 payments to the mortgage creditor and understating the arrearage
5 owed to that creditor. The creditor filed an objection to
6 confirmation. The chapter 13 trustee filed a notice warning that
7 if the Debtor’s plan was not confirmed at the confirmation
8 hearing, the case could be dismissed upon an oral motion.
9 Debtor, who appeared pro se, contended at the confirmation
10 hearing that his obligation to the mortgage creditor had been
11 discharged in a prior chapter 7 case and that he had rescinded
12 the obligation. Debtor also contended that the mortgage creditor
13 was not entitled to payment because it had not filed a proof of
14 claim to substantiate the debt. At the confirmation hearing, the
15 chapter 13 trustee informed the court that the Debtor had not
16 made his first plan payment and was not making mortgage payments.
17 The bankruptcy court dismissed the case with a 180-day bar to
18 refiling.
19 We AFFIRM the dismissal; in the meantime, the 180-day bar
20 has expired, rendering moot the appeal of that aspect of the
21 court’s order.
22
**
23 Hon. Charles Novack, United States Bankruptcy Judge for
the Northern District of California, sitting by designation.
24
1
Unless otherwise indicated, all chapter and section
25 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
26 “Rule” references are to the Federal Rules of Bankruptcy
Procedure, and “Civil Rule” references are to the Federal Rules
27 of Civil Procedure. “LBR” references are to the Local Bankruptcy
Rules of the Bankruptcy Court for the Central District of
28 California.

-2-
 1 FACTS
2 Appellant Louis Nemeth filed a chapter 13 petition on May 5,
3 2016. This filing began Debtor’s third bankruptcy case. Debtor
4 had previously filed a chapter 7 petition on April 20, 2012 and
5 received a discharge. A few months later, on November 14, 2012,
6 he filed a chapter 13 petition, which was dismissed December 3,
7 2012 for failure to file schedules, statements, or a plan.
8 In this case, Debtor filed the required documents, including
9 a chapter 13 plan. Debtor listed on Schedule A/13 his residence
10 in Orange, California with a value of $620,000.2 Debtor listed
11 only two creditors, the IRS and “Nationstar Mortgage, LC” [sic].
12 The record reflects that Nationstar Mortgage, LLC (“Nationstar”)
13 was the servicing agent for Debtor’s secured obligation to Wells
14 Fargo Bank, National Association, as Trustee for Structured
15 Adjustable Rate Mortgage Loan Trust Mortgage Pass-Through
16 Certificates, Series 2007-3 (“Wells Fargo”).
17 No secured debt was listed on Schedule D. Schedule E/F
18 reflected a debt to the IRS of $35,000, of which $15,000 was
19 listed as a priority claim. Debtor also listed an unsecured
20 nonpriority debt to Nationstar of $624,000 with the notation “I
21 do not really owe this debt and it is disputed.” Schedules I and
22 J reflected a monthly net income of $1,350, and the plan provided
23 for monthly payments of $305.43 for 36 months, resulting in a
24 base plan amount of $10,995.50; the plan was estimated to pay
25
26 2
Debtor provided a limited record on appeal. Thus, we have
27 exercised our discretion to review the bankruptcy court’s docket,
as appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI,
28 Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).

-3-
 1 100% to allowed unsecured claims. The plan included a payment to
2 secured creditor “Nation Star (disputed)” of $138.89 per month on
3 a $5,000 arrearage claim.
4 On May 19, 2016, Appellee Amrane Cohen, chapter 13 trustee
5 (“Trustee”) filed a “Notice That Trustee May Make an Oral Motion
6 to Dismiss or Convert This Case for Cause” (the “Notice”). The
7 proof of service attached to the Notice reflects that it was
8 served on Debtor. The Notice provided that if the plan was not
9 confirmed by the court at the initial confirmation hearing,
10 the Court will also consider the Chapter 13 Trustee’s
motion to dismiss the case, including dismissal with a
11 180-day bar against refiling under 11 U.S.C. Section
109(g), or to convert the Chapter 13 Case to Chapter 7,
12 should the Debtor(s) fail to: (1) comply with 11 U.S.C.
Section 1307; (2) comply with 11 U.S.C. Section 1322;
13 (3) comply with 11 U.S.C. Section 1325; (4) comply with
Local Bankruptcy Rule 3015-1; and/or, (5) comply with
14 orders of the Court.
15 NOTICE IS FURTHER GIVEN that opposition, if any,
to such oral motion by the Trustee may be presented at
16 that hearing.
17 Shortly thereafter, Wells Fargo filed an objection to
18 confirmation. Wells Fargo alleged that it was the holder of a
19 promissory note and deed of trust against Debtor’s residence.
20 Wells Fargo objected to Debtor’s proposed plan on grounds that
21 the plan was not adequately funded to pay the pre-petition
22 arrearage of $152,160.34, did not provide for ongoing payments on
23 Debtor’s secured obligation to Wells Fargo, and that Debtor had
24 not made any monthly payments since filing his petition. Wells
25 Fargo also alleged that Debtor had filed the plan in bad faith
26 because Debtor had not made any payments “in years” and had filed
27 his prior bankruptcy cases to avoid making payments. The
28 objection requested that confirmation be denied and the case

-4-
 1 dismissed with a 180-day bar. The objection was supported by the
2 declaration of an assistant secretary for Nationstar.
3 In response to the objection to confirmation, Debtor filed
4 an “Objection with Motion to Strike” alleging that he had never
5 done business with either Wells Fargo or Nationstar, that in any
6 event the debt had been discharged in his prior chapter 7 case,
7 and that Debtor had rescinded the loan. Debtor also noted that
8 neither Wells Fargo nor Nationstar had filed a proof of claim.
9 On that basis, Debtor requested the objection to confirmation be
10 stricken as “an insufficient defense, redundant matter,
11 immaterial, impertinent, and/or scandalous matter” that would
12 “unfairly prejudice” Debtor. Attached to Debtor’s objection were
13 copies of certified letters dated April 21, 2015 from Debtor and
14 Brenda Nemeth to Nationstar and Wells Fargo purporting to rescind
15 the mortgage.
16 At the confirmation hearing, counsel for Trustee appeared
17 and informed the court that notice of the plan was insufficient,3
18 that Debtor was one plan payment delinquent, that Trustee would
19 be filing an objection to exemptions, and that although a post-
20 petition mortgage payment declaration had been filed, it
21 indicated that Debtor had not made any payments. Debtor took the
22 position that he did not need to make payments because neither
23 Wells Fargo nor Nationwide had filed a proof of claim to
24 “substantiate their debt.” The bankruptcy court told Debtor that
25
26 3
LBR 3015-1(b)(3) requires that the plan be served on
27 creditors at least 28 days before the 341 meeting. Here, the
plan was served on June 6, 2016; the 341 meeting was scheduled
28 for June 14, 2016.

-5-
 1 he was required to make the ongoing payments regardless of
2 whether the creditor had filed a proof of claim and noted that
3 Debtor had already unsuccessfully disputed the obligation in
4 state court. With that, the bankruptcy court dismissed the case.
5 Because it was not Debtor’s first bankruptcy filing, the court
6 also imposed a 180-day bar to refiling under § 109(g). The court
7 entered a written order of dismissal on July 8, 2016. Debtor
8 timely appealed. The 180-day bar expired January 4, 2017.
9 JURISDICTION
10 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
11 §§ 1334 and 157(b)(2)(A) and (L). We have jurisdiction under
12 28 U.S.C. § 158.
13 ISSUE
14 Did the bankruptcy court abuse its discretion in dismissing
15 Debtor’s bankruptcy case?
16 STANDARD OF REVIEW
17 We review the bankruptcy court’s decision to dismiss a case
18 for abuse of discretion. Leavitt v. Soto (In re Leavitt),
19 171 F.3d 1219, 1223 (9th Cir. 1999); Ellsworth v. Lifescape Med.
20 Assoc., P.C. (In re Ellsworth), 455 B.R. 904, 914 (9th Cir. BAP
21 2011). In applying this standard, we conduct a two-step inquiry:
22 (1) we review de novo whether the bankruptcy court identified the
23 correct legal rule to apply to the relief requested; and (2) if
24 it did, we consider whether the bankruptcy court’s application of
25 the legal standard was illogical, implausible or without support
26 in inferences that may be drawn from the facts in the record.
27 Id. (citing United States v. Hinkson, 585 F.3d 1247, 1261-62 &
28 n.21 (9th Cir. 2009) (en banc)).

-6-
 1 We may affirm on any basis supported by the record. Caviata
2 Attached Homes, LLC v. U.S. Bank, N.A. (In re Caviata Attached
3 Homes, LLC), 481 B.R. 34, 44 (9th Cir. BAP 2012).
4 DISCUSSION
5 Section 1307(c) provides, in relevant part:
6 on request of a party in interest or the United
States trustee and after notice and a hearing, the
7 court may convert a case under this chapter to a case
under chapter 7 of this title, or may dismiss a case
8 under this chapter, whichever is in the best interests
of creditors and the estate, for cause, including--
9
(1) unreasonable delay by the debtor that is
10 prejudicial to creditors;
11 . . .
12 (4) failure to commence making timely payments under
section 1326 of this title[.]
13
14 The enumerated list of causes in § 1307(c) is not exclusive,
15 and a bankruptcy court may find cause to dismiss in other
16 circumstances, such as when a debtor has filed a bankruptcy
17 petition or plan in bad faith. In re Ellsworth, 455 B.R. at 915.
18 Although the statute requires “notice and a hearing,” a
19 bankruptcy case may be dismissed sua sponte by the bankruptcy
20 court pursuant to § 105(a). Tennant v. Rojas (In re Tennant),
21 318 B.R. 860, 869-70 (9th Cir. BAP 2004).
22 Debtor argues on appeal that the bankruptcy court erred in
23 dismissing his case because (1) there was no pending motion to
24 dismiss; (2) the court based its ruling on an erroneous view of
25 the facts; (3) the court failed to rule on Debtor’s motion to
26 strike Wells Fargo’s objection to confirmation; and (4) the court
27 did not make findings of fact or conclusions of law as required
28 under Civil Rule 52, applicable in bankruptcy via Rule 7052.

-7-
 1 Accordingly, Debtor asks us to reverse and remand for further
2 factual findings and a ruling on Debtor’s motion to strike.
3 We find Debtor’s arguments unconvincing. In asserting that
4 there was no pending motion to dismiss, which is essentially a
5 due process argument, Debtor disregards both the language of the
6 Notice and the provisions of LBR 3015-1. The Notice explained
7 that if the Debtor’s plan was not confirmed at the confirmation
8 hearing, the case could be dismissed, including with a 180-day
9 bar, if the Debtor had not complied with §§ 1307, 1322, 1325 or
10 LBR 3015-1. LBR 3015-1 provides that a case may be dismissed for
11 failure to make plan payments (LBR 3015-1(k)(4)) or for failure
12 to make postpetition mortgage payments (LBR 3015-1(m)).
13 Section 1307(c)(4) provides that a case may be dismissed for
14 failure to commence making timely plan payments. Accordingly,
15 Debtor cannot fairly argue that he was not on notice that the
16 case could be dismissed at the confirmation hearing.
17 Debtor’s second contention, that the bankruptcy court based
18 its ruling on an erroneous view of the facts, is not supported by
19 the record. Debtor does not assert that he had made timely plan
20 payments. Instead Debtor focuses on the plan deficiencies noted
21 by the bankruptcy court. Debtor insists he owes nothing to Wells
22 Fargo because the obligation was discharged in Debtor’s prior
23 chapter 7 case and Debtor rescinded the loan. Debtor is correct
24 that his personal liability was discharged in his chapter 7.
25 However, this did not eliminate Wells Fargo’s security interest
26 or its ability to enforce that interest via foreclosure, absent
27 timely payments. See Dewsnup v. Timm, 502 U.S. 410, 418-19
28 (1992). And there is nothing in the record to suggest that any

-8-
 1 purported rescission was effective.4
2 Debtor also argues that he was not obligated to provide for
3 Wells Fargo in the plan because Wells Fargo had not filed a proof
4 of claim, and it was required to prove up its claim. However, a
5 creditor need not file a proof of claim before plan confirmation,
6 and a debtor bears the burden of proof on all elements of plan
7 confirmation. Meyer v. Hill (In re Hill), 268 B.R. 548, 552 (9th
8 Cir. BAP 2001). The cases Debtor cites to the contrary, Lundell
9 v. Anchor Construction Specialists, Inc. (In re Lundell),
10 223 F.3d 1035, 1039-40 (9th Cir. 2000), and Wright v. Holm
11 (In re Holm), 931 F.2d 620, 623 (9th Cir. 1991), involve claim
12 objections, which carry different burdens of proof. See
13 Rule 3001(f). Here, Debtor did not provide any plausible
14 evidence to support his proposed plan treatment of Wells Fargo.
15 That said, Debtor was not necessarily required to provide for the
16 discharged debt to Wells Fargo in his plan, but, to the extent he
17 did, he was required to comply with § 1325(a)(5) and 1322(b)(2).5
18
4
19 To the contrary, assuming the notice of rescission was
made under TILA, it was untimely. See 15 U.S.C. § 1635(f) (an
20 obligor’s right of rescission expires three years after the date
of consummation of the loan transaction). The letters attached
21 to Debtor’s objection/motion to strike indicate the loan date was
22 January 30, 2007; the letters are dated April 21, 2015, more than
eight years later.
23
5
Section 1325(a)(5) provides three options for the
24 treatment of allowed secured claims. Either (1) the holder of
the secured claim must have accepted the plan; (2) the plan must
25 provide for the retention of the lien and the value of property
26 to be distributed on that claim must be not less than the allowed
amount of the claim; or (3) the debtor must surrender the
27 collateral. Section 1322(b)(2) prohibits modification of the
rights of holders of claims secured only by a security interest
28 (continued...)

-9-
 1 Debtor’s plan did not comply with those provisions.
2 Next, Debtor argues that the bankruptcy court erred in not
3 ruling on Debtor’s motion to strike. However, once the
4 bankruptcy court found grounds to dismiss the case, there was no
5 purpose to be served by ruling on the motion to strike, which
6 became moot.
7 Finally, Debtor argues that the bankruptcy court erred by
8 not making findings of fact and conclusions of law as required
9 under Rule 7052. Although Rule 7052 requires the bankruptcy
10 court to make findings and conclusions in contested matters, the
11 failure to do so does not necessarily require remand if the
12 record supports the bankruptcy court’s ruling. We may consider
13 any issue supported by the record and may affirm on any basis
14 supported by the record, even where the issue was not expressly
15 considered by the bankruptcy court. Fernandez v. GE Capital
16 Mortg. Servs., Inc. (In re Fernandez), 227 B.R. 174, 177 (9th
17 Cir. BAP 1998), aff’d, 208 F.3d 220 (9th Cir. 2000) (citing
18 In re E.R. Fegert, Inc., 887 F.2d 955, 957 (9th Cir. 1989) and
19 In re Pizza of Hawaii, Inc., 761 F.2d 1374, 1379 (9th Cir.
20 1985)).
21 Here, the record supports the bankruptcy court’s ruling.
22 Debtor’s failure to make plan payments is an adequate ground for
23 dismissal under § 1307(c)(4) and LBR 3015-1. This circumstance
24 also supports a finding of unreasonable delay that is prejudicial
25 to creditors, a ground for dismissal under § 1307(c)(1).
26
27
5
(...continued)
28 in real property that is the debtor’s principal residence.

-10-
 1 Debtor also argues that the record does not support the
2 bankruptcy court’s imposition of a 180-day bar. Although we are
3 not convinced that the imposition of a bar to refiling was
4 justified without an explicit finding of a willful failure to
5 abide by an order of the bankruptcy court,6 this aspect of the
6 appeal is now moot because the 180 days expired January 4, 2017.
7 See In re Fernandez, 227 B.R. at 178. Because we cannot fashion
8 any effective relief from that aspect of the bankruptcy court’s
9 order, we have no jurisdiction to review its propriety.
10 CONCLUSION
11 For the reasons explained above, the bankruptcy court did
12 not abuse its discretion in dismissing Debtor’s chapter 13 case.
13 Accordingly, we AFFIRM.
14
15
16
17
18
19
20
21
22
23
24
25
26 6
Under § 109(g), a 180-day bar to refiling may be imposed
27 if “the case was dismissed by the court for willful failure of
the debtor to abide by orders of the court, or to appear before
28 the court in proper prosecution of the case.”

-11-