United States District Court, E.D. Virginia, Richmond Division
STEPHEN A. PARSON, SR., Appellant
BRUCE MATSON, Appellee.
A. GIBNEY, JR. UNITED STATES DISTRICT JUDGE.
pro se appellant, Stephen Parson, Sr., served as
pastor and Board member for the Richmond Christian Center
("RCC") from 1984 to 2015. RCC filed for bankruptcy
in 2013 and, during the reorganization process, unanimously
removed Parson from the Board and terminated him as pastor in
2017. Parson objected to the Chapter 11 trustee's motion
to sell the church's property, arguing that his removal
constituted a violation of the First Amendment's Free
Exercise Clause. The Bankruptcy Court granted the motion to
sell, and Parson appealed that order to this Court. Bruce
Matson, the Chapter 11 trustee, moved to dismiss the appeal
for lack of standing and equitable mootness. The Court grants
the motion to dismiss because Parson lacks standing to appeal
and his appeal is equitably moot.
November 22, 2013, RCC filed for Chapter 11 bankruptcy in the
Bankruptcy Court for the Eastern District of Virginia. (No.
13-36312.) The Bankruptcy Court approved trustee Matson's
amended reorganization plan in January 2016. Part of that
plan transferred all of RCC's assets to a newly formed
Virginia corporation, Richmond Christian Center, Inc.
("RCCI"). After unsuccessful efforts to restructure
the debtor's loan, the secured lender, Foundation Capital
Resources ("FCR"), filed an adversary proceeding
(AP No. 17-04465) seeking to foreclose on the property.
November 10, 2017, Matson entered into a contract with United
Nations Church International ("UNCI") for the sale
of all RCCI real property. Matson filed a motion to sell the
property free and clear of liens under section 363(f) of the
Bankruptcy Code. The Bankruptcy Court granted the motion to
sell, the parties closed the sale in January 2018, and title
to RCCI's property transferred to UNCI. FCR accepted a
discounted payment in full satisfaction of its loan and
dismissed its adversary proceeding against RCCI. All other
creditors also received court-approved payments on their
the Chapter 11 proceedings started, Parson served on
RCC's Board and as its pastor. In February 2015, Parson
voluntarily resigned from the Board and took a leave of
absence as pastor, and ultimately RCCI's
Board terminated Parson as the church's
pastor. Parson appealed the Bankruptcy Court's order to
sell RCCI's property ("Sale Order"), and Matson
moved to dismiss the appeal.
seems to base his appeal of the Sale Order on RCCI's
decision to terminate him as its pastor. In his opposition
to the motion to dismiss, Parson claims that the Board's
decision violated the Free Exercise Clause and the Bankruptcy
Court's trustee order. Accordingly, Parson claims that
the trustee conducted an invalid sale of the property. Matson
moved to dismiss on two jurisdictional grounds. He argues
that (1) Parson lacks standing to appeal the Sale Order, and
(2) the appeal is equitably moot. The Court agrees with both
reviewing the merits of the appeal, the Court must first
consider whether the appellant has standing to appeal the
Sale Order. In a Chapter 11 bankruptcy proceeding, any
"party in interest. . . may appear and be heard on any
issue." To appeal a bankruptcy court's order, an
appellant must show that the bankruptcy order made him a
"person aggrieved." In re Urban Broad.
Corp., 401 F.3d 236, 243 (4th Cir. 2005). To qualify as
a "person aggrieved, " a bankruptcy appellant must
show that the bankruptcy court's order directly and
adversely affected his pecuniary interests. Id. at
244. In other words, the appellant must show that the order
diminished his property, increased his burdens, or impaired
his rights. Mar-Bow Value Partners, LLC v. McKinsey
Recovery & Transformation Servs. US, LLC, No.
3:16-cv-799, 2017 WL 4414155, at *17 (E.D. Va. Sept. 30,
fails the "person aggrieved" test. In re
Clark, 927 F.2d at 795. Parson has no financial stake in
the outcome of this appeal, and the Sale Order had no
pecuniary effect on Parson. He did not have title to the
property sold, and he cannot now act as a representative of
the debtor since he voluntarily resigned as a Board
member. Accordingly, he lacks standing to
appeal the Sale Order.
Parson could meet the standing requirements, his appeal would
still fail as equitably moot. In a bankruptcy appeal, the
doctrine of equitable mootness allows a district court to
dismiss an appeal when it becomes impractical and imprudent
to upset the bankruptcy court's order at a late date.
Behrman v. Nat'l Heritage Found., 663 F.3d 704,
713 (4th Cir. 2011). The Court considers four factors in
making this determination: (1) whether the appellant sought
and obtained a stay; (2) whether the parties have
substantially consummated the sale of the property; (3) the
extent to which the relief requested would affect the success
of the sale of the property; and (4) the extent to which the
relief requested would affect the interest of third parties.
Mac Panel Co. v. Va. Panel Corp., 283 F.3d 622, 625
(4th Cir. 2002) . In this case, all of these factors weigh in
favor of equitable mootness.
Parson did not seek or obtain a stay of the Sale Order in the
underlying proceeding. Second, the parties substantially
consummated the sale because the creditors have received full
payment and the Chapter 11 trustee no longer possesses the
funds from the sale. Third, the relief requested would undo
the sale and take away the payments made to creditors.
Fourth, the relief requested would harm the interests of
third parties by taking title from UNCI and forcing it to
move out of the property while the bankruptcy ...