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Gupta v. Quincy Medical Center

United States Court of Appeals, First Circuit

June 2, 2017

APURV GUPTA, M.D.; VICTOR MUNGER, Plaintiffs, Appellants,
v.
QUINCY MEDICAL CENTER, A STEWARD FAMILY HOSPITAL, INC., Defendant, Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Rya W. Zobel, U.S. District Judge]

          Leah L. Miraldi, with whom Bruce W. Gladstone, Cameron & Mittleman LLP, Charles R. Bennett, Jr., and Murphy & King, P.C. were on brief, for appellants.

          Jonathan W. Young, with whom Scott R. Magee and Locke Lord LLP were on brief, for appellee.

          Before Howard, Chief Judge, Souter, Associate Justice, [*] Lipez, Circuit Judge.

          LIPEZ, Circuit Judge.

         This appeal involves the bankruptcy of Quincy Medical Center, Inc., QMC ED Physicians, Inc. and Quincy Physician Corporation ("Debtors"). Apurv Gupta and Victor Munger ("Appellants"), former senior executives of Debtors, appeal the district court's ruling that the bankruptcy court lacked subject matter jurisdiction over their post-confirmation claims for severance payments against the purchaser of Debtors' assets. Because we agree that the bankruptcy court had no jurisdiction over Gupta's and Munger's claims, we affirm.

         I.

         The facts pertinent to this appeal -- none of which are disputed -- are fully set forth in the opinions of the bankruptcy court and the district court. See Quincy Med. Ctr. v. Gupta, Nos. 12-cv-40128-RWZ and 12-cv-40131-RWZ, 2015 WL 58633, at *1-2 (D. Mass. Jan. 5, 2015); In re Quincy Med. Ctr., Inc., 479 B.R. 229, 231-33 (Bankr. D. Mass. 2012); In re Quincy Med. Ctr., Inc., 466 B.R. 26, 27-32 (Bankr. D. Mass. 2012). We assume familiarity with the decisions below and discuss only the pertinent facts here.

         Gupta and Munger were senior executives at Quincy Medical Center, a hospital operated by Debtors in Quincy, Massachusetts. On June 30, 2011, Debtors signed an Asset Purchase Agreement (the "APA") whereby they agreed to sell substantially all of their assets to Quincy Medical Center, a Steward Family Hospital, Inc. f/k/a Steward Medical Holdings Subsidiary Five, Inc. ("Steward").[1] One day later, on July 1, 2011, Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code, and a motion (the "Sale Motion") under sections 363 and 365 of the Bankruptcy Code seeking bankruptcy court approval of the APA. See 11 U.S.C. §§363, 365.

         Sections 5 and 9 of the APA, which deal with the continued employment of Debtors' former employees, are relevant to Appellants' claims. Specifically, section 9.1 provides:

Not later than ten (10) Business Days prior to the Closing, [Steward] shall offer employment by [Steward] to each of the Employees who remain employed by [Debtors] as of a recent date, . . . such employment to commence immediately following the Closing. . . . Such individuals who accept such offer of employment are hereinafter referred to as the "Transferred Employees."

Section 9.2 further provides that Steward is obligated to pay each transferred employee "base wage and salary levels provided to such Employees immediately prior to the Closing" for no less than three months after the closing date. Additionally, section 5.14(c) of the APA provides that "upon [Steward's] termination of the employment . . . of any employees . . . of [Debtors] at or following the Closing, [Steward] shall be liable to any of such persons for severance or retention pay or any other payments otherwise due them as employees . . . for [Debtors]."

         On September 26, 2011, the bankruptcy court issued an order (the "Sale Order") approving the APA as requested in the Sale Motion. The sale closed on October 1, 2011. Six days later, Debtors filed a proposed Chapter 11 plan of reorganization (the "Plan"). The bankruptcy court thereafter confirmed the Plan (the "Confirmation Order").

         The Sale Order and the Plan each contain provisions regarding the retention of jurisdiction by the bankruptcy court over any disputes arising under them. The Sale Order provides:

It is necessary and appropriate, in order to ensure the validity of the sale of the Assets to Steward and to ensure compliance with this Order, for this Court to retain jurisdiction to: (a) interpret and enforce the provisions of the APA, the Assigned Agreements, the Sale Motion and this Order; (b) protect Steward and any of the Assets against any Lien or Claim; (c) resolve any disputes arising under or relating to the APA, the Assigned Agreements, the Sale Motion and this Order; and (d) determine the validity, ...

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