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Charles Rodrick v. David Wadsworth
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE TENTH CIRCUIT
—————————————————
IN RE CID PROPERTIES, INC.,
Debtor.
__________________________________
CHARLES RODRICK,
Appellant,
v.
DAVID WADSWORTH, Chapter 7 Trustee, DAVID ELLIS, LOIS FLYNN, and CID PROPERTIES, INC., Appellees.
BAP No. WY-25-029
Bankr. No. 22-20404
Chapter 7
ORDER DISMISSING
APPEAL
————————————————— Before SOMERS, LOYD, and HUNT, Bankruptcy Judges. —————————————————
I. BACKGROUND
CID Properties, Inc. ("CID") filed a chapter 7 petition on December 5, 2022.1On May 20, 2025, the chapter 7 trustee ("Trustee")2filed a motion to sell its interest in real property in Page, Arizona. No parties objected, and the Bankruptcy Court granted the
1 Bankr. Case No. 22-20404.
2 On December 17, 2 02 5, David J. Warner, the initial chapter 7 trustee appointed in this bankruptcy case, resigned and David V. Wadsworth succeeded Mr. Warner [Bankr. ECF No. 264]. References to "Trustee" for events prior to December 17, 2025, refer to Mr. Warner in his capacity as chapter 7 trustee.
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motion on June 24, 2025.3On November 10, 2025, the Trustee filed a Motion to Approve Settlement Agreement Between Trustee, Lois Flynn, and David Ellis ("Settlement Motion").4No parties objected, and the Bankruptcy Court granted the Settlement Motion on December 10, 2025 ("Order").5
Appellant Charles Rodrick appealed the Order on December 12, 2025. That day, the Court entered an Order to Show Cause6requiring Rodrick to file a memorandum on whether he has standing to appeal the Order. Rodrick filed a response ("Memorandum")7 along with the Trustee ("Response")8and Flynn and Ellis ("Amended Response").9
II. LEGAL STANDARD
This Court reviews whether an appellant has both Article III standing10and prudential "person aggrieved" standing.11The Tenth Circuit recognizes "although the Bankruptcy Code 'does not contain an explicit grant or limitation on appellate standing,'
3 Bankr. ECF No. 224.
4 Bankr. ECF No. 24 6.
5 Bankr. ECF No. 25 9.
6 BAP ECF No. 4.
7 BAP ECF No. 19.
8 BAP ECF No. 23.
9 BAP ECF No. 24.
10 See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 10 1-03 (1998); In re Lacy, 335 B.R. 729, 736 (10th Cir. BAP 2006) (citing Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 255 (1994) (implicitly referencing Article III standing)).
11 In re Alpex Comput. Corp., 71 F.3d 353, 357 n.6 (10th Cir. 1995) (The "person aggrieved" prudential standing requirement is more stringent in bankruptcy appeals "than the 'case or controversy' standing requirement of Article III."). See also In re C.W. Mining Co., 636 F.3d 1257, 1261 n.5 (10th Cir. 2011) ("The 'person aggrieved' standing rule is a prudential limitation, not an Article III limitation. Accordingly, we may assume, without deciding, that [appellant] is a 'person aggrieved.'").
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only a 'person aggrieved' by a bankruptcy court's order may appeal."12"That is, only a person whose rights or interests are directly and adversely affected pecuniarily by the decree or order of the bankruptcy court may appeal."13To qualify as a person aggrieved, a party must show the bankruptcy court order at issue "diminish[ed his] property, increase[ed his] burdens, or impair[ed his] rights."14Additionally, "[p]rerequisites for being a person aggrieved are attendance and objection at a bankruptcy court proceeding."15The Tenth Circuit has clearly held that "failure to file an objection or appear at the hearing deprive[s] [a party] of standing to appeal the resulting order."16Appellant has the burden of demonstrating his "rights or interests are directly and adversely affected pecuniarily" by the order on appeal.17
III. APPELLANT'S ARGUMENTS
Rodrick clarifies he "does not assert the rights of the debtor, the estate, or any third party" but rather "asserts a personal contractual right to compensation" primarily due to an employment agreement between Rodrick and CID from 2018 ("Employment
12 In re Petroleum Prod. Mgmt., Inc., 282 B.R. 9, 13-14 (10th Cir. BAP 2002) (quoting In re Am. Ready Mix, Inc., 14 F.3d 1497, 1500 (10th Cir. 1994)).
13 Am. Ready Mix, Inc., 14 F.3d at 1500 (internal citation omitted).
14 Id. (internal citation omitted).
15 In re Weston, 18 F.3d 860, 864 (10th Cir. 1994) (internal citations omitted) (creditors did not have standing because they did not file an objection or response to motion to approve election of chapter 7 trustee and failed to appear at the related hearing); In re Parr, 732 F. App'x 714, 716 (10th Cir. 2018) (unpublished) (debtor was not a person aggrieved and did not have standing as he did not file an objection to the motion or request a hearing).
16 Parr, 732 F. App'x at 717.
17 Am. Ready Mix, Inc., 14 F.3d at 1500.
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Agreement").18Rodrick claims the Employment Agreement entitles him "to commission- based compensation equal to four percent (4%) of the Net Sale Proceeds from specified real properties,"19and as such, his "rights arise solely from his individual contractual capacity, separate from any shareholder status."20As to the connection with the settlement, Rodrick states the following:
the Order authorizes distribution on $2,680,686.78 in unsecured claims from estate assets. Rodrick's contractual commission is payable from Net Sale Proceeds of estate property. By fixing, allowing, and authorizing distribution on these claims, the [] Order diminishes the pool of proceeds presently available, renders those proceeds unavailable for satisfaction of Rodrick's contractual right, and impairs the rights the debtor expressly assumed.21
IV. ANALYSIS
A. Failing to Object
Pursuant to the standard outlined in Weston, Rodrick does not meet the prerequisites of being a "person aggrieved" because he did not object to the Settlement Motion.
B. Shareholder Status
Although Rodrick claims his rights are "separate from any shareholder status,"22 we note that the Tenth Circuit has recognized the prudential standing requirement encompassed in the "shareholder standing rule," which provides that "conduct which
18 Memorandum at 3.
19 Id.
20 Id.
21 Id. at 4-5.
22 Id. at 3.
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harms a corporation confers standing on the corporation, not its shareholders."23As such, Rodrick lacks standing as a shareholder of CID.24
C. Employment Agreement
As the Bankruptcy Court noted in its Order Denying Stay Pending Appeal, [t]here are no executory contracts listed on Bankruptcy Schedule G, nor is Mr. Rodrick listed as a creditor on any of the Bankruptcy Schedules on file, and Mr. Rodrick signed and filed these documents under penalty of perjury in this case, as Debtor's President. Even if any executory contracts such as the purported [Employment Agreement] had been disclosed, they would have been deemed rejected long ago - 60 days after the order for relief pursuant to 11 U.S.C. § 365(d)(1) - as there is no motion on file seeking to assume or reject them.25
23 Bixler v. Foster, 596 F.3d 751, 756-57 (10th Cir. 2010). Other Circuits have relied on the shareholder standing rule in holding that shareholders could not appeal a bankruptcy court decision where they asserted only a derivative interest. See, e.g., In re AFY, 734 F.3d 810, 821 (8th Cir. 2013) ("Because [Appellants] cannot assert a direct interest in the litigation, they lack appellate standing for bankruptcy purposes under the shareholder standing rule."); In re Troutman Enters., Inc., 286 F.3d 359, 365 (6th Cir. 2002) (concluding that without a direct interest in the asset at issue, shareholders could not invoke the exception to the shareholder standing rule and did not have standing to appeal); Zerbetz v. Holta (In re Anchorage Nautical Tours, Inc.), 145 B.R. 637, 641-42 (9th Cir. BAP 1992) (applying shareholder standing rule to determine shareholders lacked standing to appeal order for corporation to turn over funds).
24 While Rodrick appears to lack prudential standing to appeal as a shareholder, the Court disagrees with the Trustee's contention that this is so because of the Bankruptcy Court's prior standing determination as (i) appellate standing is different than standing before a bankruptcy court and (ii) the Court has an independent obligation to review Rodrick's appellate standing. See In re S. Med. Arts Co., 343 B.R. 258, 261-62 (10th Cir. BAP 2006) ("We have 'an independent duty to inquire into [our] jurisdiction over a dispute.'"); In re Pettine, 655 B.R. 196, 215 n.68 (10th Cir. BAP 2023) ("[T]he "person aggrieved" prudential standing requirement applies to appeals from bankruptcy proceedings, not to standing before the bankruptcy court."). See also In re Murray Energy Holdings Co., 624 B.R. 606, 612 (6th Cir. BAP 2021) ("[A]ppellate standing is different from standing in bankruptcy court."); In re A.P.I., Inc., 331 B.R. 828, 854 (Bankr. D. Minn. 2005) ("[C]ourts have generally recognized that appellate standing in the bankruptcy context is subject to considerations different from those relevant to standing at the trial level. Though the considerations look and 'feel' similar[.]").
25 Order Denying Stay Pending Appeal at 5 [Bankr. ECF No. 278].
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Given that the record reflects CID did not disclose the Employment Agreement in its schedules and, even if it had, the Employment Agreement would have been rejected pursuant to 11 U.S.C. § 365(d)(1),26the Employment Agreement does not confer standing to Rodrick. Additionally, Rodrick did not file a proof of claim, so he would not be entitled to a distribution from the estate. Thus, Rodrick cannot assert standing as a creditor.
V. CONCLUSION
For the foregoing reasons, it is HEREBY ORDERED that this appeal is DISMISSED for lack of jurisdiction.
For the Panel
Anne Zoltani
Clerk of Court
26 "In a case under chapter 7 of this title, if the trustee does not assume or reject an executory contract or unexpired lease of residential real property or of personal property of the debtor within 60 days after the order for relief, or within such additional time as the court, for cause, within such 60-day period, fixes, then such contract or lease is deemed rejected." 11 U.S.C. § 365(d)(1).
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