Benoit v. Deutsche Bank National Trust Co. (In re Benoit), 564 B.R. 799

Debtor filed Chapter 13 (Sept. 2013) listing two neighboring Maine properties: an oceanfront "First Property" heavily mortgaged to Deutsche and a Second Property with a $108,000 mortgage; Debtor also listed potential lender-liability counterclaims against Deutsche.
Deutsche (serviced by OneWest/Ocwen) filed a secured proof of claim for roughly $813,000 with substantial prepetition arrears; servicer transfers were reflected in the record.
Debtor proposed a plan that (a) disputed Deutsche’s claim, (b) paid Deutsche far less than contractual mortgage payments pending litigation, and (c) included deadlines to commence an adversary proceeding and a foreclosure on the Second Property.
Court entered interim confirmation orders imposing specific deadlines (commence adversary within 180 days, foreclose Second Property within 60 days, move to allow/disallow claims, etc.); Debtor repeatedly failed to comply with those deadlines.
Deutsche moved to dismiss under 11 U.S.C. § 1307(c)(1) and (c)(6) for unreasonable delay and material default; after hearings the bankruptcy court found Debtor’s admitted noncompliance prejudicial to creditors and dismissed the case; Debtor appealed.

Issue	Debtor's Argument	Deutsche's Argument	Held
Whether court acted ultra vires by effectively requiring Plan modification to avoid dismissal	Court required impossible Plan modification; dismissal condition unlawful	Court acted within equitable powers and may set reasonable deadlines; dismissal for noncompliance proper	Waived and meritless; court merely warned dismissal absent agreement; no ultra vires action
Whether Deutsche had standing to move to dismiss despite alleged missing proof of claim	Deutsche lacked standing if it had not filed a claim	Any creditor with a right to payment is a party in interest and may seek dismissal; Deutsche is a secured creditor	Debtor’s claim waived below; filing a proof of claim is not required for standing
Whether court erred in finding Deutsche inadequately secured	Deutsche was adequately secured; court erred if it concluded otherwise	Debtor’s payments were deficient and prejudicial regardless of lien status	No record the court made a finding on secured status; argument waived
Whether dismissal under § 1307 was an abuse of discretion given Debtor’s mitigating explanations	Debtor’s health, difficulty retaining counsel, intent to litigate justified delay	Delay was unreasonable and prejudicial; plan was not feasible and sought to modify protected rights	No abuse of discretion; Debtor admitted noncompliance and failed to show mitigating factors outweighed cause for dismissal

Roberts v. Boyajian, 279 F.3d 91 (1st Cir. 2002) (dismissal under § 1307 reviewed for abuse of discretion)
Howard v. Lexington Invs., Inc., 284 F.3d 320 (1st Cir. 2002) (standards for conversion or dismissal under § 1307)
In re Zizza, 500 B.R. 288 (1st Cir. BAP 2013) (procedural standards and review for § 1307 dismissals)
Azam v. U.S. Bank Nat’l Ass’n, [citation="642 F. App'x 777"] (9th Cir. 2016) (creditor with a right to payment has standing to request dismissal)
Belser v. Nationstar Mortg., LLC (In re Belser), 534 B.R. 228 (1st Cir. BAP 2015) (standards for review of factual findings and legal conclusions on appeal)