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NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-14-1246-DJuKu

)

WORLD BOTANICAL GARDENS, INC.,) Bk. No. 13-50833

)

Debtor. )

______________________________)

)

CALVIN ANDRUS; DOUGLAS LEE, )

)

Appellants, )

)

v. ) MEMORANDUM1

)

)

UNITED STATES TRUSTEE; WORLD )

BOTANICAL GARDENS, INC., )

)

Appellees. )

______________________________)

Submitted without Oral Argument

on March 19, 2015

Filed - April 7, 2015

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding

 

Appearances: Appellants Calvin Andrus and Douglas Lee, pro se,

on brief; Kevin A. Darby on brief for Appellee

World Botanical Gardens, Inc.; Ramona D. Elliott,

P. Matthew Sutko, Noah M. Schottenstein, Tracy

Hope Davis, Nicholas Strozza and William B.

Cossitt on brief for Appellee United States

Trustee.

 

Before: DUNN, JURY and KURTZ, Bankruptcy Judges.

FILED

APR 07 2015

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

1 This disposition is not appropriate for publication. 

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 Cir. BAP Rule 8024-1.
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Appellants, Douglas Lee and Calvin Andrus,2 shareholders of

the debtor, World Botanical Gardens, Inc. (“WBGI”), appeal the

bankruptcy court’s order converting WBGI’s chapter 11 case to

chapter 7 (“Conversion Order”).3 On appeal, Lee and Andrus seek

to overturn the Conversion Order on the ground that the majority

of WBGI’s shareholders did not receive notice of the hearing on

the conversion. For the reasons set forth below, we AFFIRM the

bankruptcy court’s Conversion Order.

FACTS4

A. Procedural background

WBGI operated a tourist attraction near Hilo, Hawaii; it

consisted of a botanical garden, a visitor center/gift shop, a

zip line operation and a Segway tour. With the exception of one

year, WBGI never generated a profit.

2 Walter Wagner (“Wagner”) was an appellant to this appeal

initially, but he was dismissed as an appellant. We describe in

more detail below his connection to and participation in the

underlying bankruptcy case and this appeal.

3 Unless otherwise indicated, all chapter and section

references are to the federal Bankruptcy Code, 11 U.S.C. §§ 101-

1532, and all “Rule” references are to the Federal Rules of

Bankruptcy Procedure, Rules 1001-9037. All “Local Rule”

references are to the Local Bankruptcy Rules, U.S. Bankruptcy

Court, District of Nevada, Local Rules 1001-9037.

4 Because we lack many of the relevant documents in the

excerpts of record submitted by the parties, we have exercised

our discretion to reach the merits of the appeal by independently

reviewing the bankruptcy court’s electronic docket and the imaged

documents therein. See O’Rourke v. Seaboard Sur. Co. (In re E.R.

Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1988); Atwood v.

Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9

(9th Cir. BAP 2003).

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Wagner was one of the founders of the botanical garden. He

also is a shareholder of WBGI.

WBGI filed its chapter 11 petition on April 30, 2013. 

Wagner filed a proof of claim in the amount of eleven million

dollars arising from two lawsuits, one in Hawaii state court

involving claims for back pay based on quantum meruit, and the

other in the U.S. District Court for the District of Utah

involving a defamation claim against former and current WBGI

officers and directors. Notably, WBGI obtained judgments against

Wagner in these lawsuits totaling more than two million dollars.

Wagner filed a notice of appeal and an opening brief in this

appeal with Lee and Andrus. On appeal, they challenged the

Conversion Order, among other “incidental matters.”

In an order entered on October 3, 2014, the motions panel

noted that the only issue on appeal as to the Conversion Order

was whether proper notice of the hearing on the Conversion Order

was provided. The motions panel pointed out that Wagner clearly

did receive notice of the hearing. It thus questioned why Wagner

should not be dismissed as an appellant to this appeal. The

motions panel required Wagner to respond to its Order re:

Response by October 27, 2014. 

Wagner did not respond to the Order re: Response. He

therefore was dismissed as an appellant to this appeal pursuant

to an order entered on November 14, 2014.

B. WBGI’s bankruptcy case

1. Sale of substantially all of WBGI’s assets

Among its assets, WBGI had a 26-acre parcel of real

property, associated land grants and improvements, several

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vehicles, garden tools and equipment, office equipment and gift

shop inventory.

Two days after filing its chapter 11 petition, WBGI filed

several first-day motions, including a motion to sell

substantially all of its assets to BWA, LLC under § 363(b), (f)

and (m)(“May Sale Motion”).5 BWA, LLC also agreed to assume

substantially all of WBGI’s debts, except for Wagner’s claims and

certain executory contracts.

On May 17, 2013, WBGI filed a notice concerning the firstday motions, including the May Sale Motion. In the notice, WBGI

stated that a hearing was set for May 21, 2013.6 It further

stated that any oppositions to the first-day motions had to be

filed by May 21, 2013. No proof of service accompanied the

notice.

The bankruptcy court held a hearing on the May Sale Motion,

but continued it to June 6, 2013.7 As far as we can tell from the

record and the bankruptcy court’s docket, no action ever was

taken on the May Sale Motion.

On July 22, 2013, Andrus filed a motion seeking to have

5 Steve Bryant was WBGI’s CEO. Mark Robinson was WBGI’s

CFO. Bryant and Robinson expressed interest in purchasing WBGI’s

assets. To that end, they formed BWA, LLC.

6 WBGI simultaneously moved to shorten time for the sale

hearing. However, no order appears to have been entered on the

motion.

7 We are unable to determine definitively whether any of

Wagner, Andrus or Lee appeared at the May 21, 2013 hearing. A

record of proceedings for the hearing was not filed on the

bankruptcy court’s docket nor included in the record before us.

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himself appointed as trustee for WBGI. He claimed that he had

formulated a chapter 11 plan that would allow WBGI to continue

operations profitably. Andrus also proposed that WBGI cease

prosecuting its claims against Wagner and instead enter into

mediation with Wagner. As far as we can tell from the record and

the bankruptcy court’s docket, no action ever was taken on this

motion.

On August 18, 2013, WBGI renewed its motion to sell

substantially all of its assets to BWA, LLC (“August Sale

Motion”). As in the May Sale Motion, WBGI proposed to sell

substantially all of its assets to BWA, LLC for cash and other

consideration under § 363(b), (f) and (m). BWA, LLC again agreed

to assume substantially all of WBGI’s debts, except for Wagner’s

claims and certain executory contracts. 

WBGI sought and obtained an order from the bankruptcy court

shortening time for hearing on the August Sale Motion as follows:

1) setting a hearing on the August Sale Motion for August 28,

2013; and 2) setting August 26, 2013, as the deadline to oppose

the August Sale Motion. On the same day it obtained the order

shortening time, WBGI filed a notice of the order. It attached

to the notice a list of parties served with the order; Wagner was

among those served.8

On August 26, 2013, Andrus filed a document titled, “Points

and Authorities in Support of Opposition to Motion for Sale of

WBGI Assets,” supported by affidavits from him and Wagner. 

8 The Service List indicated that Andrus may have been

bypassed because he had an undeliverable address.

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Andrus alleged that the proposed sale to BWA, LLC was designed to

“fleece” the shareholders and “line the pockets” of Robinson and

Bryant, who were purchasing WBGI’s assets for less than their

actual value. Andrus also contested BWA, LLC’s rejection of

Wagner’s claims. He again detailed his proposal to continue

WBGI’s operations, which included obtaining outside funding and

ceasing prosecution of WBGI’s claims against Wagner.

At the start of the August sale hearing, counsel for WBGI

pointed out that the May Sale Motion and the August Sale Motion

were “very similar.” As such, he claimed, “all parties in

interest that have been participating have known since at least

May 2nd that [WGBI was] moving towards proposing to sell all

[its] assets, how [WBGI] valued those assets, and a general

structure of the consideration that was being proposed to sell or

proposed for the sale of the assets.” Tr. of August 28, 2013

hr’g, 4:5-10.

Both Wagner and Andrus appeared at the August sale hearing. 

Wagner claimed that, contrary to WBGI’s assertions, WBGI was

operating at a profit. He then alleged that he had a secured

claim against WBGI arising from his Hawaii state court action. 

However, upon questioning by the bankruptcy court, Wagner

admitted that he had not obtained a judgment in the Hawaii state

court action.

Andrus claimed that he had not been provided notice of the

August sale hearing. Upon questioning by the bankruptcy court,

Andrus explained that he had received notice of the hearing the

week prior. But Andrus claimed that had he received notice

earlier, he would have provided more details in his proposed

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chapter 11 plan.

Andrus additionally argued that he had a right to propose a

chapter 11 plan. However, the bankruptcy court pointed out that

the exclusivity period for WGBI to file a plan had not yet

expired.

The bankruptcy court ultimately approved the August Sale

Motion. It acknowledged that “this may not be the best

proposition, but it’s certainly the one that provides cash and

preserves the entity going forward.” Tr. of August 28, 2013

hr’g, 21:16-18. The bankruptcy court added that “under the

circumstances, this [was] probably the best result . . . .” 

Tr. of August 28, 2013 hr’g, 22:2-3.

On September 16, 2013, Wagner filed a document titled,

“Objection to Form of Order.” He mentioned that he and Andrus

had appeared at the August sale hearing by phone. Wagner argued

that he objected to the form of the proposed sale order because:

1) he had discharged WBGI’s state court judgments in his personal

bankruptcy case;9 2) WBGI had obtained its judgments against him

by fraud; and 3) he held secured and unsecured claims against

9 Wagner filed his chapter 7 bankruptcy petition in Salt

Lake City, Utah, on December 12, 2012 (12-35494). It was closed

as a no asset case on March 20, 2013, and Wagner received his

discharge.

However, before he received his discharge, on March 14,

2013, WBGI initiated an adversary proceeding (13-2099) against

Wagner to except its judgments from discharge under 

§ 523(a)(2), (4) and (6). Ultimately, the Utah bankruptcy court

granted WBGI’s motion for summary judgment, determining that the

judgments were excepted from discharge. It entered a judgment in

the amount of $2,257,050.96 in favor of WGBI against Wagner on

December 2, 2013 (“Section 523(a) Judgment”).

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WBGI in amounts exceeding the amounts of the judgments against

him. Wagner argued that the proposed sale order did not account

for any of his claims against WBGI. He sought entry of a

modified order that provided for payment of his alleged claims

against WBGI.

The bankruptcy court entered a sale order (“Sale Order”) on

September 25, 2013. In the Sale Order, the bankruptcy court

reiterated the terms of the sale as set forth in the August Sale

Motion. It determined that entry of the Sale Order was in the

best interests of WBGI, its estate, its creditors and other

parties in interest. It further made findings and determined

that the purchaser, BWA, LLC, was a good faith purchaser of the

WBGI assets for purposes of § 363(m).

Unsurprisingly, immediately following its entry, Andrus and

Wagner filed objections to the Sale Order. In his objection,

Andrus admitted that he appeared at the August sale hearing by

phone. However, he contended that he and others had not been

notified of WBGI’s intent to sell substantially all of its

assets. Specifically, Andrus claimed that he had not been

“legally notified” of WBGI’s intent to liquidate its assets by

its board of directors or its counsel. He did not become aware

of WBGI’s intent to sell substantially all of its assets until

mid-August 2013 when Wagner informed him of it. He argued that

“federal rules of procedure” required that he receive “formal

notice.” Andrus moreover claimed that none of the other

shareholders of WBGI received notice of the sale, except Bryant,

Robinson and a few other current board members.

Andrus then went on to repeat his earlier arguments: that he

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be appointed as trustee, that litigation against Wagner cease,

that the sale to BWA, LLC favored current board members to the

detriment of WBGI’s shareholders, and that the sale price was

less than the actual value of WBGI’s assets.

In his objection, Wagner stated that neither he nor Andrus

received a copy of the Sale Order for their review. He also

stated that he and Andrus disapproved of the Sale Order.

Notably, neither he nor Andrus appealed the Sale Order, and

no stay of the Sale Order was sought or obtained.10 Instead,

Wagner, Andrus and Lee filed a chapter 11 plan in which they

proposed to reorganize WBGI. To that end, they proposed:

1) appointing a bankruptcy trustee; 2) forming a new board of

directors, which included themselves and others; and

3) continuing WBGI’s operations. They also sought rescission of

the Sale Order.

2. Conversion of WBGI’s chapter 11 case to chapter 7

On February 19, 2014, the United States Trustee (“UST”)

filed a motion to dismiss WBGI’s chapter 11 case for WBGI’s

failure to file monthly operating reports timely and to pay

quarterly fees timely (“UST Motion to Dismiss”). At the

April 23, 2014 hearing on the UST Motion to Dismiss (“Conversion

Hearing”), counsel for WBGI stated that WBGI was no longer

operating a business. But he noted that WBGI had obtained the

Section 523(a) Judgment against Wagner when it prevailed in its

adversary proceeding against him in his personal chapter 7

10 Based on our most recent review of the bankruptcy case

docket, we note that no shareholders or other parties in interest

appealed the Sale Order.

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bankruptcy case. Counsel for WBGI therefore proposed that WBGI’s

chapter 11 case be converted to chapter 7 so that a chapter 7

trustee could determine whether to pursue collection of the

Section 523(a) Judgment or sell it to another party.11

Both Wagner and Andrus appeared at the Conversion Hearing,

and Lee filed an affidavit in opposition to the UST Motion to

Dismiss well in advance of the Conversion Hearing. Andrus

requested that the bankruptcy court rescind the Sale Order on the

ground that the majority of WBGI’s shareholders had not been

notified of the sale. When the bankruptcy court asked if he had

appealed the Sale Order, Andrus responded that he had not.

Andrus then contested the conversion of WBGI’s chapter 11

case to chapter 7. Andrus argued that WBGI should continue in

chapter 11 “to address this problem with due process.” Tr. of

April 23, 2014 hr’g, 9:19.

Wagner echoed Andrus’ argument that none of WBGI’s

shareholders had been notified of the sale. He claimed that he

had been the only shareholder to receive notice of the sale – and

only “by happenstance.”

Wagner then urged the bankruptcy court to keep WBGI in

chapter 11. He offered to pay personally the delinquent UST

quarterly fees. Wagner also requested that the bankruptcy court

replace WBGI’s board of directors and appoint a chapter 11

trustee. He claimed that all of the shareholders wanted WBGI to

continue its operations as a reorganizing debtor.

11 The chapter 7 trustee ultimately filed a no asset report

on July 23, 2014.

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Counsel for WBGI pointed out that Wagner could not claim

that he did not receive notice of the sale because he appeared at

the August sale hearing. When the bankruptcy court asked Wagner

if he received notice of the August Sale, he answered in the

affirmative. 

Wagner explained that though he received notice of the sale,

the other shareholders had not. In response, the bankruptcy

court pointed out that he could not “speak on behalf of the other

[shareholders].” Tr. of April 23, 2014 hr’g, 19:22-23.

It then asked Wagner if he received notice of the sale and

if he appeared at the August Sale Hearing by phone. Wagner

answered both questions in the affirmative.

The bankruptcy court then turned to Andrus, asking him,

under oath, if he had received notice of the August sale hearing

and if he had filed an opposition to the August Sale Motion. 

Like Wagner, Andrus answered both questions in the affirmative. 

He also admitted that he had filed an opposition to the entry of

the Sale Order. When the bankruptcy court asked Andrus if he had

been notified of the August Sale Hearing “through another source”

and had participated in the August Sale Hearing, Andrus again

answered both questions in the affirmative.

The bankruptcy court ultimately decided to convert WBGI’s

chapter 11 case to chapter 7. It entered the Conversion Order on

May 1, 2014. The bankruptcy court took care to note in the

Conversion Order that both Andrus and Wagner appeared at the

Conversion Hearing.

Lee, Andrus and Wagner appealed the Conversion Order, as

well as “all incidental matters including the failure to notice

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Creditors, etc.”

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C.

§§ 1334 and 157(b)(2)(A) and (N). We discuss our jurisdiction

below, but generally, we have jurisdiction to review the

Conversion Order under 28 U.S.C. § 158.

ISSUE

Lee and Andrus essentially raise one relevant issue on

appeal: Did the bankruptcy court have authority to convert WBGI’s

chapter 11 case to chapter 7, given that most of WBGI’s

shareholders did not receive notice of the Conversion Hearing as

required under Rule 2002(d)(4) and Local Rule 2002(a)(1)?

STANDARDS OF REVIEW

We have a duty to consider sua sponte a justiciability issue

like standing. Am. Civil Liberties Union of Nev. v. Lomax,

471 F.3d 1010, 1015 (9th Cir. 2006). See also Palmdale Hills

Prop., LLC v. Lehman Comm. Paper, Inc. (In re Palmdale Hills

Prop., LLC), 654 F.3d 868, 873 (9th Cir. 2011)(“standing is a

necessary component of subject matter jurisdiction.”). “Standing

is an issue of law which we review de novo.” Id. De novo means

that we review a matter anew, as if no decision previously had

been rendered. Dawson v. Marshall, 561 F.3d 930, 933 (9th Cir.

2009).

We review a bankruptcy court’s order converting a case from

chapter 11 to chapter 7 for abuse of discretion. See, e.g.,

Pioneer Liquidating Corp. v. U.S. Trustee (In re Consol. Pioneer

Mortg. Entities), 264 F.3d 803, 807 (8th Cir. 2001); Johnston v.

JEM Dev’t Co. (In re Johnston), 149 B.R. 158, 160 (9th Cir. BAP

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1992). Abuse of discretion review involves a two element test:

First, we determine de novo whether the bankruptcy court

identified the correct legal rule for application. See United

States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en

banc). Second, we review whether the bankruptcy court erred in

applying the correct legal rule. We will affirm unless the

bankruptcy court’s fact findings were illogical, implausible or

without support from inferences that may be drawn from the

record. Id.

We may affirm a bankruptcy court’s decision on any basis

supported by the record. See ASARCO, LLC v. Union Pac. R. Co.,

765 F.3d 999, 1004 (9th Cir. 2014); Shanks v. Dressel, 540 F.3d

1082, 1086 (9th Cir. 2008).

DISCUSSION

A. Sale Order

We begin our analysis by noting what we will not consider in

this appeal. At the time this appeal was filed, Rule 8001 set

forth the procedure for appealing bankruptcy court orders and

judgments. Rule 8001(a), which was adapted from Rule 3(a) of the

Federal Rules of Appellate Procedure (“FRAP”), provided that:

An appeal from a judgment, order, or decree of a

bankruptcy judge to a district court or bankruptcy

appellate panel as permitted by 28 U.S.C. § 158(a)(1)

or (a)(2) shall be taken by filing a notice of appeal

with the clerk within the time allowed by Rule 8002 

. . . . The notice of appeal shall (1) conform

substantially to the appropriate Official Form, . . . .

The appropriate Official form was Form 17, which provided in its

initial paragraph as follows:

___________, the plaintiff [or defendant or other

party] appeals under 28 U.S.C. § 158(a) or (b) from the

judgment, order, or decree of the bankruptcy judge

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(describe) entered in this adversary proceeding [or

other proceeding, describe type] on the ____ day of

(month), (year). (Emphasis added.) 

Accordingly, the Appellants were required to designate in the

Notice of Appeal the specific judgment or order appealed from in

this case. (Effective December 1, 2014, the appellate Rules and

official forms were revised to make this requirement even

clearer.)

The only order attached to the Notice of Appeal is the

Conversion Order. The Notice of Appeal does not identify any

other order being appealed. Notably absent from the text or

attachment to the Notice of Appeal in light of the arguments

raised in Appellants’ briefs is the Sale Order, which cannot

credibly be characterized as “an incidental matter” to the

Conversion Order.

Consideration of the scope of an appeal is fairly forgiving

so long as it is clear what acts or orders the appeal

encompasses. See Torres v. Oakland Scavenger Co., 487 U.S. 312,

316-17 (1988); Foman v. Davis, 371 U.S. 178 (1962); United States

v. Arkison (In re Cascade Roads, Inc.), 34 F.3d 756, 761-61 and

particularly, n.5 (9th Cir. 1994), citing Foman v. Davis,

371 U.S. at 181. However, that flexibility is not unlimited. 

See Smith v. Barry, 502 U.S. 244, 248 (1992). “[A]lthough a

court may construe [FRAP] liberally in determining whether they

have been complied with, it may not waive the jurisdictional

requirements of Rules 3 and 4, even for ‘good cause shown’ under

Rule 2, if it finds that they have not been met.” Torres v.

Oakland Scavenger Co., 487 U.S. at 317.

Nothing in the Notice of Appeal gives any indication that

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Appellants sought to appeal the Sale Order. There is good reason

for that: As detailed in the factual background discussion

supra, Wagner and Andrus participated actively in proceedings

before the bankruptcy court leading up to the entry of the Sale

Order. Yet, no timely appeal from the Sale Order was filed

within the 14-day jurisdictional time limit of Rule 8002. The

Sale Order further included findings and a determination that

BWA, LLC was a good faith purchaser for purposes of § 363(m). 

Section 363(m) provides that:

The reversal or modification on appeal of an

authorization under subsection (b) or (c) of this

section of a sale or lease of property does not affect

the validity of a sale or lease under such

authorization to an entity that purchased or leased

such property in good faith, whether or not such entity

knew of the pendency of the appeal, unless such

authorization and such sale or lease were stayed

pending appeal. (Emphasis added.)

After the Sale Order was entered on September 25, 2013, no stay

of the sale to BWA, LLC was sought or obtained.

In addition, Lee signed the purported reorganization plan

for WBGI, proposed on his behalf together with Andrus and Wagner

and filed with the bankruptcy court in April 2014 shortly before

the Conversion Hearing. However, in spite of the fact that the

purported reorganization plan recognized that the bankruptcy

court had approved a sale of WBCI’s operating assets, Lee has

never appeared before the bankruptcy court at any time to

challenge the Sale Order on lack of notice or any other grounds.12

12Lee only tardily signed the Notice of Appeal, and he did

not sign any of Appellants’ pro se briefs filed in this appeal. 

He appears to be participating as a mere camp follower in

(continued...)

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We note that the deadline to seek relief from the Sale Order in

bankruptcy court on grounds of mistake, inadvertence, surprise or

excusable neglect; newly discovered evidence; and/or fraud,

misrepresentation or misconduct by an opposing party under Civil

Rule 60(b)(1), (2) or (3) is now long past.

Generally, and particularly in situations where § 363(m)

applies, where a sale of bankruptcy estate property has been

approved by order of the bankruptcy court, if no stay of the sale

is obtained, an appeal of the sale order is moot. See, e.g., Rev

Op Group v. ML Manager LLC (In re Mortgs. Ltd.), 2014 WL 5859300

(9th Cir. Nov. 12, 2014) (“[A]ppeals of unstayed sales orders to

good faith purchasers are moot under the broader ‘bankruptcy

mootness rule’ that complements bankruptcy law regardless of

whether the sales should have been made.”); Onouli-Kona Land Co.

v. Estate of Richards (In re Onouli-Kona Land Co.), 846 F.2d 1170

(9th Cir. 1988).

In this appeal, there is no reference in the Notice of

Appeal to the Sale Order, and a copy of the Sale Order was not

attached to the Notice of Appeal. Accordingly, this appeal does

not encompass the Sale Order, and we do not consider any issues

or arguments raised by the Appellants in their briefs with

respect to the Sale Order. See, e.g., Spookyworld, Inc. v. Town

of Berlin (In re Spookyworld, Inc.), 346 F.3d 1, 6 (1st Cir.

2003).

12(...continued)

Wagner’s litigation adventures.

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B. Appellants’ Lack of Standing to Raise Claims of Other

Shareholders

“In every federal case, the party bringing the suit must

establish standing to prosecute the action.” Elk Grove Unified

School Dist. v. Newdow, 542 U.S. 1, 11 (2004)(“Elk Grove”). 

“This inquiry involves both constitutional limitations on federal

court jurisdiction and prudential limitations on its exercise.” 

Warth v. Seldin, 422 U.S. 490, 498 (1975).

A litigant must have both constitutional standing and

prudential standing for a federal court to exercise jurisdiction

over the case. Elk Grove, 542 U.S. at 11-12. Constitutional

standing requires the litigant to demonstrate “that the conduct

of which he complains has caused him to suffer an ‘injury in

fact’ that a favorable judgment will redress.” Id. at 12. 

Prudential standing “encompasses the general prohibition on a

litigant’s raising another person’s legal rights.” Elk Grove,

542 U.S. at 12 (citation and quotation signals omitted). To

establish prudential standing, the litigant must: 1) assert his

own rights, rather than rely on the rights or interests of third

parties; 2) allege an injury that is more than a generalized

grievance; and 3) allege an interest that is within the zone of

interests protected by the statute or constitutional guarantee in

question. Hong Kong Supermarket v. Kizer, 830 F.2d 1078, 1081

(9th Cir. 1987). “Failure to satisfy any of these constitutional

or prudential requirements defeats standing.” Id. (citation

omitted).

Additionally, with respect to appeals involving bankruptcy

matters, the appellant must be “a person aggrieved” by the

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bankruptcy court’s order. Motor Veh. Cas. Co. v. Thorpe

Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 884

(9th Cir. 2012). That is, the appellant must be directly and

adversely affected by the bankruptcy court’s order – it must

diminish the appellant’s property, increase his burdens, or

detrimentally affect his rights. Id.

 On appeal, Lee and Andrus challenge the Conversion Order on

a single ground: the bankruptcy court lacked jurisdiction to

convert WBGI’s chapter 11 case to chapter 7 because most of

WBGI’s shareholders did not receive notice of the Conversion

Hearing as required under Rule 2002(d)(4) and Local Rule

2002(a)(1).13

Lee and Andrus acknowledge that they obtained notice of the

Conversion Hearing. Appellants’ Opening Brief at 3, 6;

Appellant’s Reply Brief at 2, 4. However, they want to make

arguments on behalf of the “600+ shareholders” of WBGI who

allegedly did not receive notice of the Conversion Hearing. In

short, we conclude that they have no standing to do so.

As the bankruptcy court pointed out at the Conversion

Hearing, Andrus (who was present) could not make any

13 Rule 2002(d) provides, in relevant part: “In a chapter 11

reorganization case, unless otherwise ordered by the court, the

clerk, or some other person as the court may direct, shall in the

manner and form directed by the court give notice to all equity

security holders of . . . (4) the hearing on the dismissal or

conversion of a case to another chapter . . . .”

Local Rule 2002(a) provides, in relevant part: “(1) Any

person who files a pleading, written motion or other document

that requires notice to another party is responsible for serving

all parties who must be served. Unless the court directs

otherwise, the clerk will not serve those notices.”

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representations on behalf of other, absent shareholders. Neither

Lee nor Andrus are licensed attorneys, employed by other

shareholders to represent them in WBGI’s bankruptcy case. Nor

have either of them demonstrated before the bankruptcy court or

before this Panel that they have any authorization from any other

shareholders to act on their behalf. Therefore, Lee and Andrus

cannot raise arguments that otherwise might have been available

to other shareholders based on an alleged lack of notice as they

lack prudential standing to do so.

C. Waiver of Arguments

Lee had notice of the UST Motion to Dismiss and, in fact,

filed an affidavit opposing the motion on March 28, 2014, well in

advance of the Conversion Hearing. Lee, however, did not attend

the Conversion Hearing personally. Andrus did attend the

Conversion Hearing and testified and argued against dismissal or

conversion to the bankruptcy court. 

Lee and Andrus personally do have standing to appeal the

Conversion Order in their own rights. However, other than

arguing the alleged lack of notice to other shareholders, they do

not present any arguments in their briefs as to how the

bankruptcy court abused its discretion in granting the UST Motion

to Dismiss and entering the Conversion Order. Accordingly, any

such arguments are deemed waived. “We review only issues which

are argued specifically and distinctly in a party’s opening

brief.” Greenwood v. F.A.A., 28 F.3d 971, 977 (9th Cir. 1994),

citing Miller v. Fairchild Indus., Inc., 797 F.2d 727, 738 (9th

Cir. 1986).

Even if we were to proceed to review the bankruptcy court’s

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decision to convert WBGI’s chapter 11 case to chapter 7 on the

merits, the record amply supports the bankruptcy court’s decision

on at least the following grounds: 1) WGBI was not filing its

required monthly operating reports; 2) WBGI was delinquent in

paying the UST quarterly fees; 3) WGBI was not an operating

entity, as its only operating assets had been sold months before

pursuant to the Sale Order that never was appealed; and 4) WGBI’s

sole remaining assets included limited cash and its

nondischargeable judgment against Wagner, that could be evaluated

for collectibility by a chapter 7 trustee.

CONCLUSION

Based on the foregoing analysis, we AFFIRM the Conversion

Order.

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